<PAGE> 1
As filed with the Securities and Exchange Commission on June 26, 1998
Registration No. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------
UNION PLANTERS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
TENNESSEE 6712 62-0859007
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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:
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FRANK M. CONNER III CARL F. GRISWOLD LEONARD E. ZEDECK
ALSTON & BIRD LLP PRESIDENT AND CHIEF EXECUTIVE OFFICER ZEDECK & ZEDECK
NORTH BUILDING, 11TH FLOOR TRANSFLORIDA BANK 1820 NORTHEAST 163RD STREET
601 PENNSYLVANIA AVENUE, N.W. 1489 WEST PALMETTO PARK ROAD, SUITE 300 NORTH MIAMI BEACH, FLORIDA 33162
WASHINGTON, D.C. 20004 BOCA RATON, FLORIDA 33486 (305) 944-8688
(202) 756-3303 (561) 347-0007
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after the merger (the "Merger") described in this
Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED (1) PER UNIT (2) OFFERING PRICE (2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$5.00 par value (and associated 1,750,000 shares $24.15 $42,259,620 $12,470
Preferred Share Rights)
================================================================================================================
</TABLE>
(1) This Registration Statement covers the maximum number of shares of the
common stock of the Registrant which is expected to be issued in connection
with the Merger.
(2) Estimated solely for purposes of calculating the registration fee and
based, pursuant to Rule 457 (f) under the Securities Act of 1933, as
amended, on the book value of the shares of common stock of Transflorida
Bank.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), SHALL
DETERMINE.
================================================================================
<PAGE> 2
TRANSFLORIDA BANK
1489 WEST PALMETTO PARK ROAD, SUITE 300
BOCA RATON, FLORIDA 33486
June 30, 1998
TO THE SHAREHOLDERS OF TRANSFLORIDA BANK
You are cordially invited to attend a special meeting of the shareholders (the
"Transflorida Special Meeting") of Transflorida Bank ("Transflorida") to be held
at Transflorida at 1489 West Palmetto Park Road, Suite 300, Boca Raton, Florida
33486 at 11:00 a.m., local time, on August 18, 1998, notice of which is
enclosed.
At the Transflorida Special Meeting, you will be asked to consider and vote on a
proposal to approve the Agreement and Plan of Reorganization, as amended (the
"Agreement"), by and between Transflorida and Union Planters Corporation, a
Tennessee corporation ("UPC"), and the related Plan of Merger by and between
Transflorida and Union Planters Bank, National Association ("UPBNA"), a
multi-state national banking association and wholly-owned subsidiary of UPC..
Pursuant to the Agreement and the Plan of Merger, Transflorida will merge (the
"Merger") with and into UPBNA, with the effect that UPBNA will be the surviving
bank resulting from the Merger. Upon consummation of the Merger each share of
the common stock of Transflorida ("Transflorida Common Stock") issued and
outstanding will be converted into and exchanged for .8489 of a share of the
common stock of UPC (subject to possible adjustment as set forth in the
Agreement, the "Exchange Ratio") (together with the associated Preferred Share
Rights as defined in the accompanying Proxy Statement/Prospectus), with cash
being paid in lieu of issuing fractional share.
The Agreement provides that in the event that the average trading price of UPC
common stock during a specified period (i) is less than $52.59 and declines by
more than 15% in comparison to the average trading price of a group of 14 bank
holding companies specified in the Agreement, or (ii) is less than $49.50, then
Transflorida will have the right to terminate the Agreement unless UPC elects to
increase the Exchange Ratio pursuant to a formula included in the Agreement. For
information with respect to the operation of this provision and the
considerations of the Board of Directors of Transflorida in determining whether
to terminate the Agreement and of the Board of Directors of UPC in determining
whether to increase the Exchange Ratio, see "Summary -- The Merger" and
"Description of Transaction -- Possible Adjustment of Exchange Ratio" in the
accompanying Proxy Statement/Prospectus. Under no circumstances would the
Exchange Ratio be less than .8489.
Approval of the Agreement and the Plan of Merger by the Transflorida
shareholders will also authorize the Transflorida Board of Directors to exercise
its discretion whether to proceed with the Merger in the event that Transflorida
has the right to exercise its termination right as described above. THE
TRANSFLORIDA BOARD OF DIRECTORS EXPECTS IT WOULD EXERCISE SUCH DISCRETION AND
DECIDE WHETHER TO TERMINATE THE AGREEMENT AND THE PLAN OF MERGER WITHOUT A
RESOLICITATION OF SHAREHOLDERS.
Enclosed are the (i) Notice of Transflorida Special Meeting, (ii) Proxy
Statement/Prospectus, (iii) proxy card for the Transflorida Special Meeting, and
(iv) pre-addressed return envelope for the proxy card. The Proxy
Statement/Prospectus describes in more detail the Agreement, the Plan of Merger,
and the proposed Merger, including a description of the conditions to
consummation of the Merger and the effects of the Merger on the rights of
Transflorida's shareholders. Please read these materials carefully and consider
thoughtfully the information set forth in them.
<PAGE> 3
Alex Sheshunoff & Co., Transflorida's financial advisor, has issued its
opinion to your Board of Directors regarding the fairness, from a financial
point of view, of the Exchange Ratio to be paid by UPC pursuant to the
Agreement. A copy of the opinion is included at Appendix C to the Proxy
Statement/Prospectus.
THE BOARD OF DIRECTORS OF TRANSFLORIDA HAS UNANIMOUSLY APPROVED THE
AGREEMENT AND THE PLAN OF MERGER AND RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE AGREEMENT AND THE PLAN OF MERGER.
Approval of the Agreement and the Plan of Merger will require the
affirmative vote of the holders of a majority of the issued and outstanding
shares of Transflorida Common Stock entitled to be voted at the Transflorida
Special Meeting. Whether or not you plan to attend the Transflorida Special
Meeting, you are urged to complete, sign, date, and return promptly the enclosed
proxy card. If you attend the Transflorida Special Meeting, you may vote in
person even if you previously returned your proxy card. The proposed Merger with
UPC is a significant step for Transflorida and your vote on this matter is of
great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF
THE AGREEMENT AND THE PLAN OF MERGER BY MARKING THE ENCLOSED PROXY CARD "FOR"
ITEM 1.
I look forward to seeing you at the Transflorida Special Meeting.
Sincerely,
Carl F. Griswold
President and
Chief Executive Officer
<PAGE> 4
TRANSFLORIDA BANK
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 11:00 A.M. ON AUGUST 18, 1998
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders (the
"Transflorida Special Meeting") of Transflorida Bank ("Transflorida") will be
held at Transflorida at 1489 West Palmetto Park Road, Suite 300, Boca Raton,
Florida 33486, on August 18, 1998, at 11:00 a.m., local time, for the following
purposes:
1. MERGER. To consider and vote upon a proposal to adopt the Agreement
and Plan of Reorganization, as amended (the "Agreement"), dated as of February
26, 1998, by and between Transflorida and Union Planters Corporation, a
Tennessee corporation ("UPC"), and the related Plan of Merger (the "Plan of
Merger"), by and between Transflorida and Union Planters Bank, National
Association ("UPBNA"), a multi-state national banking association and
wholly-owned subsidiary of UPC, pursuant to which (i) Transflorida will merge
(the "Merger") with and into UPBNA, with the effect that UPBNA will be the
surviving bank resulting from the Merger, and (ii) each share of the $1.00 par
value common stock of Transflorida ("Transflorida Common Stock") issued and
outstanding at the effective time of the Merger (excluding shares held by
Transflorida or UPC, or their respective subsidiaries, in each case other than
shares held in a fiduciary capacity or as a result of debts previously
contracted) will be converted into and exchanged for .8489 of a share of the
$5.00 par value common stock of UPC (subject to possible adjustment as set forth
in the Agreement, the "Exchange Ratio"), (together with the associated Preferred
Share Rights (as defined in the accompanying Proxy Statement/Prospectus)), and
cash in lieu of issuing any fractional share. Copies of each of the Agreement
and the Plan of Merger are included at Appendices A and B, respectively, to the
accompanying Proxy Statement/Prospectus and are incorporated by reference
therein.
2. OTHER BUSINESS. To transact such other business as may come properly
before the Transflorida Special Meeting or any adjournments or postponements of
the Transflorida Special Meeting.
Only shareholders of record at the close of business on June 25, 1998,
will be entitled to receive notice of and to vote at the Transflorida Special
Meeting or any adjournment or postponement thereof. APPROVAL OF THE AGREEMENT
AND THE PLAN OF MERGER REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF TRANSFLORIDA COMMON STOCK
ENTITLED TO BE VOTED AT THE TRANSFLORIDA SPECIAL MEETING.
THE BOARD OF DIRECTORS OF TRANSFLORIDA UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT AND THE PLAN OF MERGER.
BY ORDER OF THE BOARD OF DIRECTORS
Carl F. Griswold
President and Chief Executive Officer
Boca Raton, Florida
WHETHER OR NOT YOU PLAN TO ATTEND THE TRANSFLORIDA SPECIAL MEETING,
PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID RETURN ENVELOPE
IN ORDER TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT
THE TRANSFLORIDA SPECIAL MEETING.
<PAGE> 5
PROSPECTUS
UNION PLANTERS CORPORATION
COMMON STOCK, $5.00 PAR VALUE
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS OF
TRANSFLORIDA BANK
1489 WEST PALMETTO PARK ROAD, SUITE 300
BOCA RATON, FLORIDA 33486
This Prospectus of Union Planters Corporation ("UPC"), a bank holding
company organized and existing under the laws of the State of Tennessee, relates
to up to 1,655,477 shares of common stock, $5.00 par value, of UPC (together
with associated Preferred Share Rights (as defined herein), "UPC Common Stock"),
which are issuable to the shareholders of Transflorida Bank ("Transflorida"),
state bank organized and existing under the laws of the State of Florida, upon
consummation of the proposed merger (the "Merger") of Transflorida with and into
Union Planters Bank, National Association ("UPBNA"), a multi-state national
banking association, and wholly-owned subsidiary of UPC, with the effect that
UPBNA will be the surviving bank of the Merger. UPBNA is a wholly-owned
subsidiary of Union Planters Holding Corporation ("UPHC"), a corporation
organized and existing under the laws of the State of Tennessee and in turn a
wholly-owned subsidiary of UPC.
The Merger will be consummated pursuant to the terms of the Agreement and
Plan of Reorganization, as amended, dated as of February 26, 1998 (the
"Agreement"), by and between UPC and Transflorida and the related Plan of Merger
(the "Plan of Merger") by and between Transflorida and UPBNA. Each of UPHC and
UPBNA has supplementally joined in the Agreement as amended. At the effective
time of the Merger (the "Effective Time"), except as described herein, each
issued and outstanding share of the $1.00 par value common stock of Transflorida
("Transflorida Common Stock") (excluding shares held by Transflorida or UPC, or
their respective subsidiaries, in each case other than shares held in a
fiduciary capacity or as a result of debts previously contracted) will be
converted into and exchanged for .8489 of a share of UPC Common Stock (subject
to possible adjustment as set forth in the Agreement, the "Exchange Ratio").
Cash (without interest) will be paid in lieu of the issuance of any fractional
shares of UPC Common Stock.
This Prospectus also serves as a Proxy Statement of Transflorida, and is
being furnished to the shareholders of Transflorida in connection with the
solicitation of proxies by the Board of Directors of Transflorida (the
"Transflorida Board") for use at its special meeting of shareholders (including
any adjournments or postponements thereof, the "Transflorida Special Meeting"),
to be held on August 18, 1998, to consider and vote upon the Agreement and the
Plan of Merger. This Proxy Statement/Prospectus (the "Proxy Statement") and
related materials enclosed herewith are being mailed to the shareholders of
Transflorida on or about June 30, 1998.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS, OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
--------------
The date of this Proxy Statement is June 30, 1998.
<PAGE> 6
AVAILABLE INFORMATION
UPC is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, is
required to file reports, proxy and information statements, and other
information with the Securities and Exchange Commission (the "SEC"). Copies of
such reports, proxy and information statements, and other information can be
obtained, at prescribed rates, from the SEC by addressing written requests for
such copies to the Public Reference Section at the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy
and information statements, and other information can be inspected and copied at
the public reference facilities referred to above and at the regional offices of
the SEC at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. The SEC also maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxy and information statements, and other information
regarding registrants that file electronically with the SEC. The shares of UPC
Common Stock are listed and traded on the New York Stock Exchange, Inc. (the
"NYSE") under the symbol "UPC." Reports, proxy and information statements, and
other information concerning UPC may be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005 .
This Proxy Statement constitutes part of the Registration Statement on
Form S-4 of UPC (including any exhibits and amendments thereto, the
"Registration Statement") filed with the SEC under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the securities offered hereby.
This Proxy Statement does not include all of the information in the Registration
Statement, certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. For further information about UPC, Transflorida, and the
securities offered hereby, reference is made to the Registration Statement. The
Registration Statement may be inspected and copied, at prescribed rates, at the
SEC's public reference facilities at the addresses set forth above.
All information contained in this Proxy Statement or incorporated herein
by reference with respect to UPC was supplied by UPC, and all information
contained in this Proxy Statement with respect to Transflorida was supplied by
Transflorida.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION
OF THE SECURITIES BEING OFFERED PURSUANT TO THIS PROXY STATEMENT SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF UPC OR TRANSFLORIDA OR THE INFORMATION SET FORTH OR INCORPORATED BY
REFERENCE HEREIN SINCE THE DATE OF THIS PROXY STATEMENT.
THIS PROXY STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH
RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS, AND BUSINESS OF UPC
AND TRANSFLORIDA, AND OF UPC FOLLOWING THE CONSUMMATION OF THE MERGER AND THE
OTHER ACQUISITIONS (AS DEFINED UNDER "BUSINESS OF UPC -- RECENT DEVELOPMENTS"),
INCLUDING STATEMENTS RELATING TO THE COST SAVINGS AND REVENUE ENHANCEMENTS THAT
ARE EXPECTED TO BE REALIZED FROM THE MERGER AND THE OTHER ACQUISITIONS AND THE
EXPECTED IMPACT OF THE MERGER AND THE OTHER ACQUISITIONS ON UPC'S FINANCIAL
PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHER
THINGS, THE FOLLOWING POSSIBILITIES: (i) EXPECTED COST SAVINGS FROM THE MERGER
AND THE OTHER ACQUISITIONS CANNOT BE FULLY REALIZED; (ii) DEPOSIT ATTRITION,
CUSTOMER LOSS, OR REVENUE LOSS FOLLOWING THE MERGER AND THE OTHER ACQUISITIONS
IS GREATER THAN EXPECTED; (iii) COMPETITIVE PRESSURE IN THE BANKING INDUSTRY
INCREASES SIGNIFICANTLY; (iv) COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION
OF THE BUSINESSES OF UPC AND THE INSTITUTIONS TO BE ACQUIRED ARE GREATER THAN
EXPECTED; (v) CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE MARGINS; (vi)
GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR REGIONALLY, ARE LESS FAVORABLE
THAN EXPECTED, RESULTING IN, AMONG OTHER THINGS, A DETERIORATION IN CREDIT
QUALITY; (vii) CHANGES OCCUR IN THE REGULATORY ENVIRONMENT; (viii) CHANGES OCCUR
IN BUSINESS CONDITIONS AND INFLATION; (ix) CHANGES OCCUR IN THE SECURITIES
MARKETS; AND (x) DISRUPTIONS OF THE
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<PAGE> 7
OPERATIONS OF UPC, TRANSFLORIDA, 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 HAVE NOT
BEEN EXAMINED OR COMPILED BY THE INDEPENDENT PUBLIC ACCOUNTANTS OF UPC OR
TRANSFLORIDA, NOR HAVE SUCH ACCOUNTANTS APPLIED ANY PROCEDURES THERETO.
ACCORDINGLY, SUCH ACCOUNTANTS DO NOT EXPRESS AN OPINION OR ANY OTHER FORM OF
ASSURANCE ON THEM. FURTHER INFORMATION ON OTHER FACTORS THAT COULD AFFECT THE
FINANCIAL RESULTS OF UPC AFTER THE MERGER AND THE OTHER ACQUISITIONS IS INCLUDED
IN THE SEC FILINGS INCORPORATED BY REFERENCE HEREIN.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by UPC pursuant to
the Exchange Act are hereby incorporated by reference herein (SEC File No.
1-10160):
(a) UPC's Annual Report on Form 10-K for the year ended December 31,
1997 (provided that any information included or incorporated by
reference in response to Items 402 (a)(8), (i), (k), or (1) of
Regulation S-K of the SEC shall not be deemed to be incorporated
herein and is not part of the Registration Statement) (the "UPC 1997
Form 10-K");
(b) UPC's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998 and its amendment to such form on Form 10-Q/A (the "UPC March
31, 1998 Form 10-Q");
(c) UPC's Current Reports on Form 8-K dated January 15, February 23, and
April 16, 1998;
(d) The description of the current management and Board of Directors of
UPC contained in the proxy statement of UPC (the "UPC Annual Meeting
Proxy Statement") filed pursuant to Section 14(a) of the Exchange
Act with respect to UPC's 1998 Annual Meeting of shareholders held
on April 16, 1998;
(e) UPC's Registration Statement on Form 8-A dated January 19, 1989,
filed on February 1, 1989; (SEC File No. 0-6919) in connection with
UPC's designation and authorization of its Series A Preferred Stock;
and
(f) The description of the UPC Common Stock contained in UPC's
Registration Statement under Section 12(b) of the Exchange Act and
any amendment or report filed for the purpose of updating such
description.
All documents filed by UPC pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement and prior to
final adjournment of the Transflorida Special Meeting shall be deemed to be
incorporated by reference in this Proxy Statement and to be a part hereof from
the date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part hereof, except as so modified or superseded.
UPC will provide without charge, upon the written or oral request of any
person, including any beneficial owner, to whom this Proxy Statement is
delivered, a copy of any and all information (excluding certain exhibits)
relating to UPC that has been incorporated by reference in the Registration
Statement. Such requests should be directed to E. James House, Jr., Secretary
and Manager of the Legal Department, Union Planters Corporation, 7130 Goodlett
Farms Parkway, Memphis, Tennessee 38018 (telephone (901) 580-6584). In order to
ensure timely delivery of the documents, any request should be made by August
18, 1998.
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TABLE OF CONTENTS
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SUMMARY .......................................................................... 1
The Parties .............................................................. 1
Meeting of Shareholders .................................................. 2
The Merger ............................................................... 3
Comparative Market Prices of Common Stock ................................ 7
Selected Consolidated Financial Data ..................................... 8
Historical and Pro Forma Comparative Per Share Data ...................... 13
MEETING OF SHAREHOLDERS .......................................................... 15
Date, Place, Time, and Purpose ........................................... 15
Record Date, Voting Rights, Required Vote, and Revocability of Proxies ... 15
Solicitation of Proxies .................................................. 16
Dissenters' Rights ....................................................... 16
DESCRIPTION OF TRANSACTION ....................................................... 18
General .................................................................. 18
Possible Adjustment of Exchange Ratio .................................... 18
Background of and Reasons for the Merger ................................. 20
Opinion of Transflorida's Financial Advisor .............................. 22
Effective Time of the Merger ............................................. 25
Distribution of Consideration ............................................ 26
Conditions to Consummation of the Merger ................................. 26
Regulatory Approval ...................................................... 27
Waiver, Amendment, and Termination ....................................... 27
Conduct of Business Pending the Merger ................................... 28
Management and Operations After the Merger ............................... 30
Interests of Certain Persons in the Merger ............................... 30
Certain Federal Income Tax Consequences of the Merger .................... 30
Accounting Treatment ..................................................... 32
Expenses and Fees ........................................................ 32
Resales of UPC Common Stock .............................................. 32
Termination Fee Agreement ................................................ 33
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS ................................... 34
Anti-takeover Provisions Generally ....................................... 34
Authorized Transflorida Stock ............................................ 35
Preemptive Rights ........................................................ 36
Amendment of Charter and Bylaws .......................................... 36
Classified Board of Directors and Absence of Cumulative Voting ........... 37
Director Removal and Vacancies ........................................... 37
Limitations on Director Liability ........................................ 38
Indemnification .......................................................... 38
Special Meetings of Shareholders ......................................... 39
Actions by Shareholders Without a Meeting ................................ 39
Shareholder Nominations and Proposals .................................... 40
Business Combinations .................................................... 40
Limitations on Ability to Vote Stock ..................................... 42
Dissenters' Rights of Appraisal .......................................... 42
Shareholders' Rights to Examine Books and Records ........................ 43
Dividends ................................................................ 43
COMPARATIVE MARKET PRICES AND DIVIDENDS .......................................... 44
BUSINESS OF TRANSFLORIDA ......................................................... 45
General .................................................................. 45
Business and Properties .................................................. 45
Competition .............................................................. 45
</TABLE>
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<PAGE> 9
<TABLE>
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Legal Proceedings ........................................................ 46
Management ............................................................... 46
Employee Benefit Plans ................................................... 46
Transactions with Management ............................................. 47
TRANSFLORIDA'S MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ..................................... 48
Quarters ended March 31, 1998 and 1997 ................................... 48
Years ended December 31, 1997, 1996, and 1995 ............................ 55
BUSINESS OF UPC .................................................................. 64
General .................................................................. 64
Recent Developments ...................................................... 65
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION ........................... 67
CERTAIN REGULATORY CONSIDERATIONS ................................................ 73
General .................................................................. 73
Payment of Dividends ..................................................... 74
Capital Adequacy ......................................................... 75
Support of Subsidiary Institutions ....................................... 76
Prompt Corrective Action ................................................. 76
DESCRIPTION OF UPC CAPITAL STOCK ................................................. 77
UPC Common Stock ......................................................... 78
UPC Preferred Stock ...................................................... 78
SHAREHOLDER PROPOSALS ............................................................ 79
EXPERTS .......................................................................... 79
OPINIONS ......................................................................... 79
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ....................................... F-1
</TABLE>
APPENDICES:
Appendix A -- Agreement and Plan of Reorganization, as amended, dated as of
February 26, 1998, by and between Union Planters Corporation and
Transflorida Bank
Appendix B -- Plan of Merger of Transflorida Bank into and with Union Planters
Bank, National Association
Appendix C -- Opinion of Alex Sheshunoff & Co.
Appendix D -- Florida Banking Code, as amended, Section 658.44
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<PAGE> 10
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS PROXY
STATEMENT AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. THIS SUMMARY IS
NOT INTENDED TO BE A COMPLETE DESCRIPTION OF THE MATTERS COVERED IN THIS PROXY
STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION
APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT.
SHAREHOLDERS ARE URGED TO READ CAREFULLY THE ENTIRE PROXY STATEMENT, INCLUDING
THE APPENDICES. AS USED IN THIS PROXY STATEMENT, THE TERMS "UPC" AND
"TRANSFLORIDA" REFER TO UNION PLANTERS CORPORATION AND TRANSFLORIDA BANK,
RESPECTIVELY, AND, WHERE THE CONTEXT REQUIRES, TO THOSE ENTITIES AND THEIR
RESPECTIVE SUBSIDIARIES.
THE PARTIES
TRANSFLORIDA Transflorida is a Florida state bank headquartered in Boca
Raton, Florida. Transflorida operates 13 banking offices in 4 counties in
Florida. At March 31, 1998, Transflorida had total consolidated assets of
approximately $318 million, total consolidated loans of approximately $201
million, total consolidated deposits of approximately $273 million, and total
consolidated shareholders' equity of approximately $42 million.
The principal executive offices of Transflorida are located at 1489 West
Palmetto Park Road, Suite 300, Boca Raton, Florida 33486 and its telephone
number at such address is (561) 347-0007. Additional information with respect to
Transflorida and its subsidiaries is included elsewhere herein. See "Business of
Transflorida."
UPC. UPC, a Tennessee corporation, is a bank holding company registered
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve") under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). As of March 31, 1998, UPC had total consolidated assets of approximately
$18.4 billion, total consolidated loans of approximately $12.7 billion, total
consolidated deposits of approximately $13.6 billion, and total consolidated
shareholders' equity of approximately $1.8 billion.
UPC conducts its business activities through its principal bank
subsidiary, the $15.7 billion asset, UPBNA, a multi-state national banking
association headquartered in Memphis, Tennessee, with branches in Alabama,
Arkansas, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee, one
federally-chartered savings association headquartered in Tennessee, two other
Tennessee state-chartered banks headquartered in Tennessee, two recently
acquired Arkansas state-chartered banks, and one Florida state-chartered bank
headquartered in Miami, Florida (collectively with UPBNA, the "UPC Banking
Subsidiaries"). Through the UPC Banking Subsidiaries, UPC provides a diversified
range of financial services in the communities in which it operates and
maintains approximately 518 banking offices and 676 automated teller machines
("ATMs"). UPC's total deposits at March 31, 1998 are allocable by state (before
consolidating adjustments) approximately as follows: $6.7 billion in Tennessee;
$2.9 billion in Mississippi; $1.3 billion in Florida; $1.2 billion in Missouri;
$596 million in Arkansas; $598 million in Louisiana; $412 million in Alabama;
and $103 million in Kentucky.
Acquisitions have been, and are expected to continue to be, an important
part of UPC's business strategy. UPC completed 13 acquisitions in 1994, three in
1995, seven in 1996, six in 1997, and has recently completed two in 1998, adding
approximately $3.8 billion in total assets in 1994, $1.3 billion in 1995, $4.2
billion in 1996, and $3.6 billion in 1997, and $520 million in 1998 (the
"Recently Completed Acquisitions"). As of June 1, 1998, UPC was a party to
definitive agreements to acquire ten financial institutions, not including
Transflorida, and to purchase certain branch locations and assume deposit
liabilities of California Federal Bank in Florida ("CalFed Branch Purchase")
(collectively referred to herein as the "Other Pending Acquisitions.") The Other
Pending Acquisitions had aggregate total assets of approximately $12.8 billion
at March 31, 1998. For purposes of this Proxy Statement, the terms "Recently
Completed Acquisitions" and "Other Pending Acquisitions" are collectively
referred to as "Other Acquisitions." The largest of the Other Pending
Acquisitions is UPC's proposed acquisition of Magna Group, Inc. ("Magna"), St.
Louis, Missouri, which had total consolidated assets of approximately $7.3
billion at March 31, 1998. On May 1, 1998, Magna acquired Charter Financial,
Inc., and its subsidiary, Charter Bank, S.B. (the "Charter Acquisition") in a
transaction accounted for as a purchase. Located in Sparta, Illinois, Charter
Financial, Inc. had at the time of consummation total assets of approximately
$406 million, total
<PAGE> 11
deposits of approximately $309 million, and total shareholders' equity of
approximately $67 million. For purposes of this Proxy Statement, including the
historical and equivalent pro forma data, the terms "Other Acquisitions" and
"Other Pending Acquisitions" include the Charter Acquisition. For a description
of the acquisitions in addition to the Merger which are currently pending, see
"Business of UPC - Recent Developments."
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions and other entities engaged in lines of
business permissible for banks and bank holding companies. Future acquisitions
may entail the payment by UPC of consideration in excess of the book value of
the underlying net assets acquired, may result in the issuance of additional
shares of UPC Common Stock or the incurring of additional indebtedness by UPC,
and could have a dilutive effect on the earnings or book value per share of UPC
Common Stock. Moreover, significant charges against earnings are sometimes
required incidental to acquisitions. For a description of the acquisitions in
addition to the Merger which are currently pending, see "Business of UPC --
Recent Developments."
For a discussion of UPC's acquisition program, including a discussion of
the significant charges UPC has incurred incidental to acquisitions in the past
three fiscal years, see the caption "Acquisitions" (on page 10) in UPC's 1997
Annual Report to Shareholders and Note 2 to UPC's audited consolidated financial
statements for the years ended December 31, 1997, 1996, and 1995 (on pages 49
and 50) contained in UPC's 1997 Annual Report to Shareholders. UPC's 1997 Annual
Report to Shareholders is included as Exhibit 13 to UPC's 1997 Form 10-K and
Exhibit 13 is incorporated by reference herein to the extent indicated herein.
The principal executive offices of UPC are located at 7130 Goodlett Farms
Parkway, Memphis, Tennessee 38018, and its telephone number at such address is
(901) 580-6000. Additional information with respect to UPC and its subsidiaries
is included elsewhere herein and in documents incorporated by reference in this
Proxy Statement. See "Available Information," "Documents Incorporated by
Reference," and "Business of UPC."
MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished to the holders of Transflorida
Common Stock in connection with the solicitation by the Transflorida Board of
proxies for use at the Transflorida Special Meeting to be held at Transflorida
at 1489 West Palmetto Park Road, Suite 300, Boca Raton, Florida 33486 at 11:00
a.m., local time, on August 18, 1998. At the Transflorida Special Meeting,
Transflorida shareholders will be asked to consider and vote upon a proposal to
approve the Agreement and the Plan of Merger. See "Meeting of Shareholders."
The Transflorida Board has fixed the close of business on June 25, 1998
as the record date (the "Transflorida Record Date") for determination of the
Transflorida shareholders who are entitled to notice of and to vote at the
Transflorida Special Meeting. Only Transflorida shareholders of record on the
Transflorida Record Date will be entitled to receive notice of and to vote at
the Transflorida Special Meeting. Each share of Transflorida Common Stock
validly issued and outstanding on the Transflorida Record Date is entitled to
one vote. On the Transflorida Record Date, there were 1,950,144 shares of
Transflorida Common Stock validly issued and outstanding. In order for the
Transflorida Special Meeting to be held, a quorum must be achieved. A quorum
would be achieved if a majority of the outstanding shares of Transflorida Common
Stock are represented at the Transflorida Special Meeting in person or by proxy.
Assuming a quorum is achieved, the affirmative vote of a majority of the
outstanding shares of Transflorida Common Stock is required to approve the
Agreement and Plan of Merger. Each vote is important and all Transflorida
shareholders are encouraged to vote their shares, in person or by proxy, at the
Transflorida Special Meeting. See "Meeting of Shareholders -- Record Date,
Voting Rights, Required Vote, and the Revocability of Proxies."
The directors and executive officers of Transflorida beneficially owned
or controlled 1,491,183 shares of Transflorida Common Stock as of the
Transflorida Record Date, or approximately 76.47%, of the outstanding shares.
The members of the Transflorida Board have entered into written agreements with
UPC agreeing to vote "FOR" approval of the Agreement and the Plan of Merger. For
information with respect to the number and percentage of shares of Transflorida
Common Stock beneficially owned by directors and executive officers of
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<PAGE> 12
Transflorida as well as to the beneficial owners of 5% or more of the
outstanding shares of Transflorida Common Stock, see "Meeting of Shareholders"
and "Business of Transflorida -- Management."
THE MERGER
GENERAL. The Agreement provides for the acquisition of Transflorida by
UPC pursuant to the merger of Transflorida with and into UPBNA, with the effect
that UPBNA will be the surviving bank resulting from the Merger. At the
Effective Time, each share of Transflorida Common Stock then issued and
outstanding (excluding shares held by Transflorida, UPC, or their respective
subsidiaries, in each case other than shares held in a fiduciary capacity or as
a result of debts previously contracted) will be converted into and exchanged
for .8489 of a share of UPC Common Stock (subject to possible adjustment as set
forth in the Agreement, the "Exchange Ratio").
In the event either of the following conditions are satisfied, (x)(i) the
"Average Closing Price" (defined in the Agreement as the average of the daily
last sale prices of UPC Common Stock quoted on the NYSE-Composite Transactions
List (as reported by The Wall Street Journal or, if not reported therein,
another authoritative source as reasonably selected by UPC) for the 20
consecutive full trading days for which such shares are traded on the NYSE
ending at the close of trading on the later of the date of the Transflorida
Special Meeting and the date on which the required consent of the Office of the
Comptroller of the Currency (the "OCC"), shall be received (the "Determination
Date")) is less than $52.59 and (ii)(1)) the quotient obtained by dividing the
Average Closing Price by $61.875 (such quotient being the "UPC Ratio") is less
than (2) the quotient obtained by dividing the weighted average of the closing
prices (the "Index Price") of 14 bank holding companies designated in the
Agreement (the "Index Group") on the Determination Date by the Index Price on
March 10, 1998, less 15% (such quotient being the "Index Ratio"), or (y) the
Average Closing Price is less than $49.50, then, Transflorida will have the
right to terminate the Agreement unless UPC elects to adjust the Exchange Ratio
in the manner described under "Description of Transaction -- Possible Adjustment
of Exchange Ratio." Under no circumstances would the Exchange Ratio be less than
.8489 of a share of UPC Common Stock for each share of Transflorida Common
Stock.
In making its determination of whether to terminate the Agreement, the
Transflorida Board will take into account, consistent with its fiduciary duties,
all relevant facts and circumstances that exist at such time, including, without
limitation, information concerning the business, financial condition, results of
operations, and prospects of UPC (including the recent performance of UPC Common
Stock, the historical financial data of UPC, customary statistical measurements
of UPC's financial performance, and the future prospects for UPC Common Stock
following the Merger), and the advice of its financial advisor and legal
counsel. If the Transflorida Board elects to terminate the Agreement, UPC would
then determine whether to proceed with the Merger at the higher Exchange Ratio.
In making this determination, the principal factors UPC will consider include
the projected effect of the Merger on UPC's pro forma earnings per share and
whether UPC's assessment of Transflorida's earning potential as part of UPC
justifies the issuance of an increased number of UPC's shares. If UPC declines
to adjust the Exchange Ratio, Transflorida may elect to proceed without the
adjustment, provided it does so within 10 days of the Determination Date. UPC IS
UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO.
Approval of the Agreement and the Plan of Merger by the Transflorida
shareholders will also authorize the Transflorida Board to exercise its
discretion whether to proceed with the Merger in the event that Transflorida has
the right to exercise its termination right as described above. THE TRANSFLORIDA
BOARD EXPECTS IT WOULD EXERCISE SUCH DISCRETION AND DECIDE WHETHER TO TERMINATE
THE AGREEMENT AND THE PLAN OF MERGER WITHOUT A RESOLICITATION OF SHAREHOLDERS.
No fractional shares of UPC Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any holder of Transflorida Common Stock would otherwise be entitled upon
consummation of the Merger, in an amount equal to such fractional part of a
share of UPC Common Stock multiplied by the closing price of one share of UPC
Common Stock on the NYSE (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as reasonably selected by UPC) on
the last trading day preceding the Effective Time. See "Description of
Transaction -- General."
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<PAGE> 13
REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF
TRANSFLORIDA. The Transflorida Board believes that the Agreement, the Plan of
Merger, and the Merger are in the best interests of Transflorida and its
shareholders. The Transflorida Board has approved the matters to be adopted or
approved by its shareholders. The Transflorida Board recommends that the
Transflorida shareholders vote FOR approval of the Agreement and the Plan of
Merger. The Transflorida Board believes that, among other things, the Merger
will result in a company with expanded opportunities for profitable growth and
that the combined resources and capital of Transflorida and UPC will provide an
enhanced ability to compete in the changing and competitive financial services
industry. See "Description of Transaction -- Background of and Reasons for the
Merger."
OPINION OF FINANCIAL ADVISOR. Alex Sheshunoff & Co. Investment Banking,
Austin, Texas ("ASC") has rendered an opinion to the Transflorida Board dated as
of the date of the Agreement and updated as of the date of the Proxy Statement
that, based upon the matters set forth in such opinion and such other matters as
it deemed relevant, as of the date of its opinion, the Exchange Ratio is fair to
the holders of Transflorida Common Stock from a financial point of view. The
opinion of ASC dated as of the date of this Proxy Statement is included at
Appendix C to this Proxy Statement. Transflorida shareholders are urged to read
the ASC opinion in its entirety for a description of the procedures followed,
matters considered, and limitations on the reviews undertaken in connection
therewith. See "Description of Transaction -- Opinion of Transflorida's
Financial Advisor."
EFFECTIVE TIME. Subject to the conditions to the obligations of the
parties to effect the Merger, the Effective Time will occur on the date and at
the time that the Certificate of Merger (as defined in the Agreement) becomes
effective with the OCC. Subject to the terms and conditions of the Agreement,
unless otherwise agreed upon in writing by the duly authorized officers of
Transflorida and UPC. The Agreement provides that the parties will use their
reasonable efforts to cause the Effective Time to occur within 30 days (as
designated by UPC) following the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last consent of
any regulatory authority having authority over and approving or exempting the
Merger, (ii) the date on which the shareholders of Transflorida approve the
Agreement and the Plan of Merger, and (iii) the date on which all other
conditions precedent (other than those conditions which relate to actions to be
taken at the closing of the transactions contemplated by the Agreement) to each
of UPC's or Transflorida's obligations under the Agreement shall have been
satisfied or waived (to the extent such obligations are waivable under the
Agreement). See "Description of Transaction -- Effective Time of the Merger,"
"-- Conditions to Consummation of the Merger," and "-- Waiver, Amendment, and
Termination."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY SHAREHOLDER AND
REGULATORY APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO
THE MERGER CAN OR WILL BE SATISFIED. TRANSFLORIDA AND UPC ANTICIPATE THAT ALL
CONDITIONS TO THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE
MERGER CAN BE CONSUMMATED ON OR ABOUT AUGUST 31, 1998. HOWEVER, DELAYS IN
THE CONSUMMATION OF THE MERGER COULD OCCUR.
DISTRIBUTION OF CONSIDERATION. Promptly after the Effective Time, UPC
will cause the exchange agent selected by UPC (the "Exchange Agent"), to mail to
each holder of record of a certificate or certificates (collectively, the
"Certificates") which, immediately prior to the Effective Time, represented
outstanding shares of Transflorida Common Stock, a letter of transmittal and
instructions for use in effecting the surrender and cancellation of the
Certificates in exchange for certificates representing shares of UPC Common
Stock. Cash will be paid to the holders of Transflorida Common Stock in lieu of
issuing any fractional shares of UPC Common Stock. In no event will the holder
of any surrendered Certificate(s) be entitled to receive interest on any cash to
be issued to such holder, and in no event will Transflorida, UPC, or the
Exchange Agent be liable to any holder of Transflorida Common Stock for any
consideration delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat, or similar law. See "Description of
Transaction -- Distribution of Consideration."
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<PAGE> 14
REGULATORY APPROVAL AND OTHER CONDITIONS. The Merger is subject to the
prior approval of the OCC and other applicable federal and state regulatory
authorities. THERE CAN BE NO ASSURANCE THAT SUCH REGULATORY APPROVAL WILL BE
OBTAINED OR AS TO THE TIMING OF SUCH APPROVAL.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approvals of the Transflorida shareholders,
receipt of opinions of counsel as to the tax-free nature of certain aspects of
the Merger, receipt of a letter from UPC's independent accountants to the effect
that the Merger will qualify for pooling-of-interests accounting treatment, and
certain other conditions at the Effective Time. See "Description of Transaction
- -- Regulatory Approval" and "-- Conditions to Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION. The Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time by mutual consent
of the Transflorida Board and the Board of Directors of UPC (the "UPC Board"),
or by the action of the Board of Directors of either company under certain
circumstances, including, but not limited to, (i) if the Merger is not
consummated by December 31, 1998, unless the failure to consummate by such date
is due to a breach of the Agreement by the party seeking to terminate, or (ii)
in certain circumstances, if an adjustment is not made to the Exchange Ratio. To
the extent permitted by law and as set forth in the Agreement, the Agreement may
be amended upon the written agreement of UPC and Transflorida without the
approval of Transflorida shareholders before or after the matters relating to
the Agreement required to be approved by the Transflorida shareholders are
approved by such shareholders, provided, that after any such approval by the
Transflorida shareholders, there shall be no amendment that modifies in any
material respect the consideration to be received by such shareholders without
the further approval of such shareholders. The Merger may be abandoned
notwithstanding approval of the matters relating to the Agreement required to be
approved by the Transflorida shareholders. See "Description of Transaction --
Waiver, Amendment, and Termination."
DISSENTERS' RIGHTS. Holders of Transflorida Common Stock as of the Record
Date are entitled to dissenters' rights of appraisal pursuant to Section 658.44
of the Florida Banking Code, as amended, (the "FBC"). A holder of Transflorida
Common Stock who complies with the provisions of applicable law relating to
dissenters' rights will be entitled to receive payment in cash of the value of
only those shares held by the shareholder (i) which are voted against the
approval of the Agreement at the Transflorida Special Meeting, or (ii) with
respect to which the holder thereof has given written notice to Transflorida at
or prior to the Transflorida Special Meeting that the shareholder dissents from
the Agreement. To the extent that a Transflorida shareholder exercises
dissenters' rights, that shareholder will lose the right to receive UPC Common
Stock in the Merger and will instead receive a cash payment for the fair value
of his or her shares. Such "fair value" may be determined by appraisal, the
result of which cannot be predicted. Shareholders wishing to exercise
dissenters' rights of appraisal must follow properly all requirements for the
exercise of such rights as set forth in Section 658.44 of the FBC, a copy of
which is attached as Appendix D to this Proxy Statement. See "Meeting of
Shareholders -- Dissenters' Rights."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Certain members of
Transflorida's management and the Transflorida Board may be deemed to have
certain interests in the Merger that are in addition to their interests as
shareholders of Transflorida generally. These additional interests may be deemed
to arise from certain actions UPC has agreed to take regarding the
indemnification of Transflorida directors. The Transflorida Board was aware of
these interests and considered them, among other matters, in approving the
Merger. For a more detailed description of the interests of certain persons in
the Merger, see "Description of Transaction -- Interests of Certain Persons in
the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. It is intended
that the Merger will be treated as a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, for federal income tax purposes, no gain or loss will be recognized
by holders of Transflorida Common Stock upon the exchange of all of such
shareholders' shares of Transflorida Common Stock solely for shares of UPC
Common Stock (except with respect to cash received in lieu of a fractional share
of UPC Common Stock). Consummation of the Merger is conditioned upon receipt by
UPC and Transflorida of an opinion of Alston & Bird llp, dated the date of the
Effective Time substantially to this effect. The conditions relating to the
receipt of the tax opinion may be waived by both Transflorida and UPC. Neither
Transflorida nor UPC
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<PAGE> 15
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
materially different from those described in this Proxy Statement, Transflorida
would resolicit the approval of its shareholders prior to consummating the
Merger. TAX CONSEQUENCES OF THE MERGER FOR INDIVIDUAL TAXPAYERS CAN VARY,
HOWEVER, AND ALL TRANSFLORIDA SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE,
LOCAL, FOREIGN, AND OTHER TAX LAWS. For a further discussion of the federal
income tax consequences of the Merger, including a description of the tax
opinion to be issued in connection with the filing of the Registration
Statement, see "Description of Transaction -- Certain Federal Income Tax
Consequences of the Merger."
ACCOUNTING TREATMENT. It is intended that the Merger will be accounted
for as a pooling-of-interests transaction for accounting and financial reporting
purposes, and UPC will not consummate the Merger if such accounting treatment is
not available See "Description of Transaction -- Accounting Treatment."
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS. At the Effective Time
holders of Transflorida Common Stock, whose rights are governed by
Transflorida's Articles of Incorporation (the "Transflorida Charter") and
Transflorida's Bylaws (the "Transflorida Bylaws") FBC and (when not in direct
conflict with or superseded by specific provisions of the financial institutions
codes) the Florida Business Corporation Act ("FBCA"), will automatically become
UPC shareholders, and their rights as UPC shareholders will be governed by UPC's
Amended and Restated Charter (the "UPC Charter") and UPC's Bylaws (the "UPC
Bylaws") and the Tennessee Business Corporation Act (the "TBCA"). The rights of
UPC shareholders differ from the rights of Transflorida shareholders in certain
important respects, including but not limited to: (i) anti-takeover provisions
generally, (ii) authorized Transflorida stock, (iii) preemptive rights, (iv)
amendment of charter and bylaws, (v) classified board of directors and absence
of cumulative voting, (vi) director removal and vacancies, (vii) limitations on
director liability, (viii) indemnification, (ix) special meeting of shareholders
(x) actions by shareholders without a meeting, (xi) shareholder nominations and
proposals, (xii) business combinations, (xiii) limitations on ability to vote
stock, (xiv) dissenters' rights of appraisal, (xv) shareholders' rights to
examine books and records, and (xvi) dividends. See "Effect of the Merger on
Rights of Shareholders."
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Agreement,
Transflorida generally has agreed that unless the prior written consent of UPC
has been obtained, and except as otherwise expressly contemplated in the
Agreement, Transflorida and its subsidiaries will (i) operate its business only
in the usual, regular, and ordinary course, (ii) preserve intact its business
organization and assets and maintain its rights and franchises, and (iii) take
no action which would (a) materially adversely affect the ability of any party
to obtain any consents required for the transactions contemplated by the
Agreement without imposition of a condition or restriction of the type referred
to in the Agreement or (b) adversely affect the ability of either party to
perform its covenants and agreements under the Agreement.
In addition, Transflorida has agreed that until the earlier of the
Effective Time or termination of the Agreement, Transflorida will not, except
with the prior written consent of the chief executive officer, president, or
chief financial officer of UPC (which consent shall not be unreasonably
withheld), agree or commit to, or permit its subsidiaries to agree or commit to,
take certain actions, including generally, but not limited to: (i) amending the
Transflorida Charter or the Transflorida Bylaws or the Charter or bylaws of any
subsidiary of Transflorida (ii) incurring, any additional debt obligation for
borrowed money in excess of $500,000 for Transflorida and its subsidiaries on a
consolidated basis except in the ordinary course of business consistent with
past practices; (iii) declare or pay any dividends; (iv) subject to certain
exceptions, permit to become outstanding, any additional shares of Transflorida
Common Stock, or any other capital stock of Transflorida or any of its
subsidiaries or any rights to acquire such stock or any security convertible
into such stock; (v) subject to certain exceptions, acquire direct or indirect
control of any other entity; (vi) subject to certain exceptions, grant any
increase in compensation or benefits or pay any bonus to the employees or
officers of Transflorida or any of its subsidiaries; or (vii) subject to certain
exceptions, enter into or amend any employment contract between Transflorida or
any of its subsidiaries and any person, which Transflorida or the relevant
subsidiary does not have an unconditional right to terminate without liability.
See "Description of Transaction -- Conduct of Business Pending the Merger."
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<PAGE> 16
TERMINATION FEE AGREEMENT. Transflorida and UPC entered into a
Termination Fee Agreement (the "Termination Fee Agreement") pursuant to which
Transflorida has agreed to pay to UPC a termination fee of $3.5 million (the
"Fee") under certain circumstances if the Merger is not consummated. See
"Description of Transaction -- Termination Fee Agreement."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Shares of UPC Common Stock are traded on the NYSE under the symbol "UPC."
Transflorida Common Stock is not traded in any established market. The following
table sets forth the reported closing sale prices per share for UPC Common Stock
and the equivalent per share prices giving effect to the Merger (as explained
below) for Transflorida Common Stock on (i) March 3, 1998, the last trading day
preceding the public announcement of the execution of the Agreement, and (ii)
June 29, 1998, the latest practicable date prior to the mailing of this Proxy
Statement.
<TABLE>
<CAPTION>
UPC Transflorida Equivalent Price
Common Stock Common Stock Per Transflorida Share(1)
------------ ------------ -------------------------
<S> <C> <C> <C>
March 3 , 1998 $61.25 n/a $52.00
June 29, 1998 $_____ n/a $_____
</TABLE>
- ----------------------------------
(1) The equivalent price per share of Transflorida Common Stock at each
specified date represents the closing sale price of a share of UPC Common
Stock on such date multiplied by an Exchange Ratio of .8489. See
"Comparative Market Prices and Dividends."
There can be no assurance as to what the market price of the UPC Common
Stock will be if and when the Merger is consummated, or anytime thereafter.
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<PAGE> 17
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present for UPC, selected consolidated financial
data for the three-month periods ended March 31, 1998 and 1997, and for the
five-year period ended December 31, 1997, and for Transflorida, selected
consolidated financial data for the three -month periods ended March 31, 1998
and 1997, and for the five-year period ended December 31, 1997. The information
for UPC has been derived from the consolidated financial statements of UPC,
including the unaudited consolidated financial statements of UPC incorporated in
this Proxy Statement by reference to the UPC March 31, 1998 Form 10-Q, and the
audited consolidated financial statements of UPC incorporated in this Proxy
Statement by reference to the UPC 1997 Form 10-K, and should be read in
conjunction therewith and with the notes thereto. See "Documents Incorporated By
Reference." The information for Transflorida has been derived from the
consolidated financial statements of Transflorida including the unaudited
consolidated financial statements of Transflorida for the three months ended
March 31, 1998 and 1997, included herein, and the audited consolidated financial
statements of Transflorida for the year ended December 31, 1997, and should be
read in conjunction therewith and with the notes thereto, all as included herein
under "Index to Consolidated Financial Statements." Historical results are not
necessarily indicative of results to be expected for any future period. In the
opinion of the respective managements of UPC and Transflorida, all adjustments
(which include only normal recurring adjustments) necessary to arrive at a fair
statement of interim results of operations of UPC and Transflorida,
respectively, have been included. With respect to UPC and Transflorida, results
for the three-month period ended March 31, 1998 are not necessarily indicative
of results which may be expected for any other interim period or for the year as
a whole. See "Business of UPC -- Recent Developments" for information concerning
UPC's Other Acquisitions.
-8-
<PAGE> 18
UPC SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31,(1)
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
INCOME STATEMENT DATA
Net interest income .......................... $ 190,707 $ 190,590
Provision for losses on loans ................ 17,909 22,004
Investment securities gains (losses) ......... 5,215 173
Other noninterest income ..................... 90,503 82,811
Noninterest expense .......................... 153,624 148,646
------------ ------------
Earnings before income taxes,
extraordinary item, and
accounting changes ........................ 114,892 102,924
Applicable income taxes ...................... 40,320 36,479
------------ ------------
Earnings before extraordinary item
and accounting changes .................... 74,572 66,445
Extraordinary item and accounting
changes, net of taxes ..................... -- --
------------ ------------
Net earnings ................................. $ 74,572 $ 66,445
============ ============
PER COMMON SHARE DATA (3)
Basic
Earnings before extraordinary
item and accounting
changes ................................ $ .89 $ .82
Net earnings .............................. .89 .82
Diluted
Earnings before extraordinary
item and accounting
changes ................................ .86 .79
Net earnings .............................. .86 .79
Cash dividends ............................... .50 .32
Book value ................................... 21.13 20.00
BALANCE SHEET DATA (AT
PERIOD END)
Total assets ................................. $ 18,413,614 $ 18,054,916
Loans, net of unearned income ................ 12,727,659 12,560,838
Allowance for losses on loans ................ 223,837 192,943
Investment securities ........................ 3,287,664 3,449,824
Total Deposits ............................... 13,581,227 13,386,397
Short-term borrowings ........................ 442,051 611,757
Long-term debt (4)
Parent company ............................ 373,242 373,468
Subsidiary banks .......................... 1,630,693 1,473,599
Total shareholders' equity ................... 1,809,442 1,663,363
Average assets ............................... 18,005,794 18,031,648
Average shareholders' equity ................. 1,760,458 1,615,979
Average shares outstanding
(in thousands)(3)
Basic ..................................... 83,379 78,904
Diluted ................................... 86,974 84,465
<CAPTION>
Years Ended December 31, (2)
-----------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income .......................... $ 770,385 $ 744,852 $ 669,451 $ 627,439 $ 558,036
Provision for losses on loans ................ 113,633 68,948 33,917 15,989 35,235
Investment securities gains (losses) ......... 2,104 4,099 1,433 (21,302) 6,686
Other noninterest income ..................... 359,506 316,403 292,277 237,129 228,996
Noninterest expense .......................... 697,704 731,817 607,189 634,965 550,045
------------ ------------ ------------ ------------ ------------
Earnings before income taxes,
extraordinary item, and
accounting changes ........................ 320,658 264,589 322,055 192,312 208,438
Applicable income taxes ...................... 111,897 93,115 110,799 63,058 66,570
------------ ------------ ------------ ------------ ------------
Earnings before extraordinary item
and accounting changes .................... 208,761 171,474 211,256 129,254 141,868
Extraordinary item and accounting
changes, net of taxes ..................... -- -- -- -- 4,505
------------ ------------ ------------ ------------ ------------
Net earnings ................................. $ 208,761 $ 171,474 $ 211,256 $ 129,254 $ 146,373
============ ============ ============ ============ ============
PER COMMON SHARE DATA (3)
Basic
Earnings before extraordinary
item and accounting
changes ................................ $ 2.54 $ 2.13 $ 2.79 $ 1.67 $ 2.19
Net earnings .............................. 2.54 2.13 2.79 1.67 2.27
Diluted
Earnings before extraordinary
item and accounting
changes ................................ 2.45 2.05 2.66 1.63 2.13
Net earnings .............................. 2.45 2.05 2.66 1.63 2.21
Cash dividends ............................... 1.495 1.08 .98 .88 .72
Book value ................................... 20.72 19.57 18.34 15.28 14.50
BALANCE SHEET DATA (AT
PERIOD END)
Total assets ................................. $ 18,105,079 $ 18,330,588 $ 17,182,861 $ 15,893,162 $ 14,180,524
Loans, net of unearned income ................ 12,658,564 12,578,571 10,917,307 10,074,458 8,077,152
Allowance for losses on loans ................ 225,389 189,118 179,968 174,604 172,330
Investment securities ........................ 3,247,680 3,387,217 3,970,036 4,016,506 4,124,679
Total Deposits ............................... 13,440,269 13,514,144 13,047,488 12,506,212 11,732,707
Short-term borrowings ........................ 831,627 961,051 974,416 887,074 392,980
Long-term debt (4)
Parent company ............................ 373,746 373,459 214,758 114,790 114,729
Subsidiary banks .......................... 1,176,158 1,332,534 1,087,273 819,982 481,193
Total shareholders' equity ................... 1,746,866 1,618,883 1,450,546 1,202,686 1,111,158
Average assets ............................... 17,991,160 18,202,355 16,263,164 15,472,568 13,823,185
Average shareholders' equity ................. 1,690,992 1,533,348 1,334,995 1,226,852 973,087
Average shares outstanding
(in thousands)(3)
Basic ..................................... 80,336 77,240 72,512 71,678 56,169
Diluted ................................... 85,195 83,542 78,798 77,579 60,832
</TABLE>
(CONTINUED ON FOLLOWING PAGE)
-9-
<PAGE> 19
UPC SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
Three Months
Ended March 31,(1) Years Ended December 31, (2)
------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS
Return on average assets .................... 1.68% 1.49% 1.16% .94% 1.30% .84% 1.06%
Return on average common equity ............. 17.50 17.16 12.54 11.38 16.56 10.74 15.88
Net interest income (taxable-equivalent)/
average earning assets (5) ............... 4.80 4.80 4.79 4.56 4.60 4.56 4.58
Loans/deposits .............................. 93.72 93.83 94.18 93.08 83.67 80.56 68.84
Common and preferred dividend payout
ratio ................................... 57.03 37.71 54.96 44.57 29.25 35.03 24.42
Equity/assets (period end) .................. 9.83 9.21 9.65 8.83 8.44 7.57 7.84
Average shareholders' equity/average
total assets ............................ 9.78 8.96 9.40 8.42 8.21 7.93 7.04
Leverage ratio .............................. 10.72 10.05 10.48 9.50 8.11 7.56 7.73
Tier 1 capital/risk-weighted assets ......... 15.66 14.88 15.51 14.92 13.28 12.58 13.65
Total capital/risk-weighted assets .......... 20.71 17.55 18.12 17.60 16.21 14.67 15.92
CREDIT QUALITY RATIOS (6)
Allowance/period-end loans .................. 1.95% 1.76% 1.99% 1.72% 1.82% 1.87% 2.27%
Nonperforming loans/total loans ............. .81 .85 .92 .91 .85 .74 1.18
Allowance/nonperforming loans ............... 240 207 215 188 213 252 193
Nonperforming assets/loans and
foreclosed properties .................... 1.01 1.14 1.13 1.21 1.09 1.08 1.76
Provision/average loans ..................... .62 .81 1.01 .65 .35 .19 .47
Net charge-offs/average loans ............... .79 .67 .72 .61 .32 .27 .34
</TABLE>
- -------------------------------
(1) Interim period ratios are annualized where applicable.
(2) Reference is made to "Basis of Presentation" in Note 1 to UPC's
consolidated financial statements contained in UPC's 1997 Annual Report to
Shareholders.
(3) Share and per share amounts have been retroactively restated for
significant acquisitions accounted for as poolings of interests and to
reflect the change in presentation of EPS as discussed in Notes 2 and 16 to
the consolidated financial statements contained in UPC's 1997 Annual Report
to Shareholders.
(4) Long-term debt includes Medium-Term Bank Notes, Federal Home Loan Bank
(FHLB) advances, Trust Preferred Securities, variable rate asset-backed
certificates, subordinated notes and debentures, obligations under
Transflorida leases, mortgage indebtedness, and notes payable with
maturities greater than one year.
(5) Average balances and calculations do not include the impact of the net
unrealized gain or loss on available for sale securities.
(6) FHA/VA government-insured/guaranteed loans have been excluded, since they
represent minimal credit risk to UPC.
-10-
<PAGE> 20
TRANSFLORIDA SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31,(1)
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Income Statement Data
Net interest income ......................... $ 3,327 $ 3,115
Provision for losses on loans ............... (70) 15
Investment securities gains (losses) ........ (0) 2
Other noninterest income .................... 184 280
Noninterest expense ......................... 1,554 1,630
----------- -----------
Income from continuing operations
before income taxes, minority interests
and cumulative effect of a change of
a change in accounting principle ......... 2,007 1,752
Provision for income taxes .................. 649 561
----------- -----------
Income from continuing operations
before minority interests and
cumulative effect of a change in
accounting principle ..................... 1,358 1,182
Minority interests .......................... - -
----------- -----------
Income from continuing operations
before cumulative effect or a change
in accounting principle .................. 1,358 1,192
Cumulative effect or a change in
accounting principle ..................... 1,358 1,192
----------- -----------
Income from continuing operations ........... 1,358 1,192
Income (loss) from discontinued
real estate activities net or income
taxes ..................................... (43) (781)
----------- -----------
Net Income ..................................... $ 1,368 $ 1,192
=========== ===========
PER COMMON SHARE DATA
Basic
Income from continuing operations
before minority effect or a
change in accounting principle ......... $ 0.70 $ 0.61
Income from continuing operations
before cumulative effect of a
change in accounting principle ........ 0.70 0.61
Income from continuing operation .......... 0.70 0.61
Diluted
Income from continuing operations
before minority interests
and cumulative effect of a change
in accounting principle ............. 0.70 0.61
Income from continuing operations ......... 0.70 0.61
Cash dividends .............................. -- --
Book value .................................. 21.67 18.62
BALANCE SHEET DATA (AT PERIOD END)
Total assets ................................ $ 318,182 $ 294,562
Loans, net of unearned income ............... 200,672 188,194
Allowance for losses on loans ............... (2,015) (1,909)
Investment securities ....................... 33,715 48,062
Deposits .................................... 273,179 255,004
Short-term borrowings ....................... -- --
Long-term debt (FHLB/advances only) ........ -- --
Total shareholders' equity .................. 42,263 36,310
Average assets .............................. 318,756 288,493
Average shareholders' equity ................ 41,541 35,673
Average shares outstanding (in thousands)
Basic .................................... 1,950,144 1,950,144
Diluted .................................. 1,950,144 1,950,144
<CAPTION>
Years Ended December 31,
------------------------------------------------------------------------------
1997 1996(2) 1995(3) 1994 1993
----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data
Net interest income ......................... $ 13,639 $ 12,618 11,486 $ 9,909 $ 8,737
Provision for losses on loans ............... 190 120 146 335 457
Investment securities gains (losses) ........ 9 15 143 29 53
Other noninterest income .................... 1,493 1,471 1,609 3,745 2,558
Noninterest expense ......................... 6,367 6,255 6,582 5,767 5,257
----------- ----------- ----------- ----------- -----------
Income from continuing operations
before income taxes, minority interests
and cumulative effect of a change of
a change in accounting principle ......... 8,584 7,729 6,510 7,581 5,634
Provision for income taxes .................. 2,772 2,544 1,936 2,504 1,886
----------- ----------- ----------- ----------- -----------
Income from continuing operations
before minority interests and
cumulative effect of a change in
accounting principle ..................... 5,812 5,185 4,574 5,057 3,748
Minority interests .......................... - - - - 79
----------- ----------- ----------- ----------- -----------
Income from continuing operations
before cumulative effect or a change
in accounting principle .................. 5,812 5,142 4,574 5,057 3,669
Cumulative effect or a change in
accounting principle ..................... 5,812 5,142 4,574 5,057 450
----------- ----------- ----------- ----------- -----------
Income from continuing operations ........... 5,812 5,142 4,574 5,057 4,119
Income (loss) from discontinued
real estate activities net or income
taxes ..................................... - - - - -
----------- ----------- ----------- ----------- -----------
Net Income ..................................... $ 5,812 $ 5,142 $ 5,355 $ 5,057 $ 4,119
=========== =========== =========== =========== ===========
PER COMMON SHARE DATA
Basic
Income from continuing operations
before minority effect or a
change in accounting principle ......... $ 2.98 $ 2.66 $ 3.49 $ 7.52 $ 5.57
Income from continuing operations
before cumulative effect of a
change in accounting principle ........ 2.98 2.66 3.49 7.52 5.45
Income from continuing operation .......... 2.98 2.66 3.49 7.52 6.12
Diluted
Income from continuing operations
before minority interests
and cumulative effect of a change
in accounting principle ............. 2.98 2.66 3.49 7.52 5.57
Income from continuing operations ......... 2.98 2.66 3.39 7.52 5.54
Cash dividends .............................. -- -- -- -- --
Book value .................................. 20.96 18.02 26.75 45.56 38.04
BALANCE SHEET DATA (AT PERIOD END)
Total assets ................................ $ 315,979 $ 283,247 $ 263,678 $ 241,894 $ 210,887
Loans, net of unearned income ............... 208,661 183,825 166,216 152,464 133,715
Allowance for losses on loans ............... (2,095) (1,894) (1,698) (1,717) (1,498)
Investment securities ....................... 38,932 44,494 47,522 40,995 36,545
Deposits .................................... 272,799 245,171 225,257 206,188 178,621
Short-term borrowings ....................... -- -- -- -- --
Long-term debt (FHLB/advances only) ........ -- -- -- -- --
Total shareholders' equity .................. 40,913 35,138 35,082 30,643 25,585
Average assets .............................. 300,136 272,470 252,742 220,448 197,208
Average shareholders' equity ................ 37,668 36,600 32,338 28,282 23,354
Average shares outstanding (in thousands)
Basic .................................... 1,950,144 1,950,144 1,311,372 672,600 672,600
Diluted .................................. 1,950,144 1,950,144 1,311,372 672,600 672,600
</TABLE>
-11-
<PAGE> 21
<TABLE>
<CAPTION>
Three Months Ended
March 31,(1) Years Ended December 31,
------------------ ---------------------------------------------------------
1998 1997 1997 1996(2) 1995(3) 1994 1993(3)
------- ------- ------- ------- ------- ------- -------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS
Return on average assets ................. 1.73% 1.68% 1.93% 1.89% 2.10% 2.29% 2.09%
Return on average common equity .......... 13.26 13.55 15.43 14.05 16.53 17.88 17.64
Net interest income (taxable-
equivalent/average earning assets ...... 8.58 8.82 9.15 9.27 9.40 8.72 8.91
Loans/deposits ........................... 72.69 73.05 75.72 74.21 73.65 73.64 74.59
Common and preferred dividend
payout ratio ........................... n/a n/a n/a n/a n/a n/a n/a
Equity/assets (period end) ............... 13.28 12.33 12.95 12.41 13.30 12.67 12.12
Average shareholders' equity/average
total # assets ....................... 13.03 12.37 12.54 13.42 12.73 12.76 11.87
Leverage ratio ........................... 13.88 12.56 12.92 12.52 13.31 13.22 12.49
Tier 1 capital/risk weighted assets ...... 19.59 18.18 18.73 18.33 19.28 18.10 16.58
Total capital/risk weighted assets ....... 20.52 19.12 19.69 19.32 20.22 19.12 17.55
CREDIT QUALITY RATIOS
Allowance/period-end loans ............... 1.00% 1.01% 1.00% 1.03% 1.02% 1.12% 1.11%
Nonperforming loans/total loans .......... 1.23 1.86 2.85 1.67 1.90 2.81 0.35
Allowance/nonperforming loans ............ 81.51 54.03 35.22 51.77 53.79 39.63 320.30
Nonperforming assets/loans and
foreclosed properties ................. 4.32 4.36 4.58 3.72 4.25 5.17 2.37
Provision/average loans .................. -0.03 0.01 0.10 0.07 0.09 0.36 0.37
Net charge-offs/average loans ............ 0.00 n/a -0.01 -0.04 0.10 0.20 0.20
</TABLE>
- -------------------------------
(1) Interim period ratios are annualized where applicable.
(2) On October 31, 1996, Transflorida's 100% Investment in Orangewood Homes,
Inc. ("OHI") was spun off in a tax free distribution to Transflorida's
shareholders. Transflorida's shareholders of record as of September 30,
1996 received one share of OHI for each share of Transflorida Common Stock
owned. This transaction resulted in a noncash distribution to
Transflorida's shareholders totaling $5,000,000, the book value of OHI's
underlying net assets. A net loss of $43,211 was attributed to the
discontinued operations during 1996.
(3) In June 1995, Transflorida repurchased and subsequently retired, 22,552
shares of Transflorida Common Stock from former shareholders for an
aggregate purchase price of approximately $1.1 million. The difference
between the par value and the repurchase price of the shares was treated as
a reduction of capital surplus. Also, in June 1995, the Transflorida Board
approved a reduction in the par value per share of common stock from $2.50
to $1.00. Accordingly, $975,072 was reclassified from common stock to
capital surplus. In June 1995, Transflorida effected a three-for-one stock
split of its common stock. All share and per share amounts have been
restated to reflect the stock split. A total of 1,300,096 shares of
Transflorida Common Stock were issued in connection with the split.
-12-
<PAGE> 22
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data
relating to earnings before extraordinary items and accounting changes, cash
dividends, and book value on: (i) a historical basis for UPC and Transflorida;
(ii) a pro forma combined basis per share of UPC Common Stock, giving effect to
the Merger and the Other Acquisitions (as defined under "Business of UPC --
Recent Developments"); (iii) an equivalent pro forma basis per share of
Transflorida Common Stock, giving effect to UPC only; and (iv) an equivalent pro
forma basis per share of Transflorida Common Stock, giving effect to the Merger
and the Other Acquisitions. The UPC pro forma combined information and the
Transflorida equivalent pro forma information give effect to the Merger and the
Other Acquisitions and reflect an Exchange Ratio of .8489 of a share of UPC
Common Stock for each outstanding share of Transflorida Common Stock. The Merger
and each of the Other Pending Acquisitions (with the exception of the
acquisition of Duck Hill Bank, the Charter Acquisition, and the CalFed Branch
Purchase) are expected to be, and the Recently Completed Acquisition of Security
Bancshares, Inc. was, accounted for using the pooling of interests method of
accounting. The Recently Completed Acquisition of Sho-Me Financial Corp. and the
Charter Acquisition were, and the acquisition of Duck Hill Bank and the CalFed
Branch Purchase are expected to be, accounted for using the purchase method of
accounting. The pro forma information for the three months ended March 31, 1998,
and for 1997 reflects the acquisition of Transflorida and the Other Acquisitions
as of January 1, 1997. The pro forma information for 1996 and 1995 reflect only
the acquisitions of Magna, Peoples First Corporation ("Peoples"), AMBANC Corp.
("AMBANC"), and Merchants Bancshares, Inc. ("Merchants") because the Merger and
the Other Acquisitions (other than Magna, Peoples, AMBANC, and Merchants) are
not individually or in the aggregate, considered to be material to UPC from a
financial statement presentation standpoint. Furthermore, the pro forma impact
of the CalFed Branch Purchase on the pro forma statement of earnings for each of
the periods presented has been excluded due to the lack of information available
for operation of the branches on a historical basis. The pro forma data are
presented for information purposes only and are not necessarily indicative of
the results of operations or combined financial position that would have
resulted had the Merger or the Other Acquisitions been consummated at the dates
or during the periods indicated, nor are they necessarily indicative of future
results of operations or combined financial position. The pro forma book value
per share data reflects preliminary estimates by UPC of certain
acquisition-related charges to be incurred in connection with the Merger and the
Other Acquisitions; however the earnings per share amounts do not reflect the
estimated acquisition-related charges. For additional information with respect
to the estimated charges UPC anticipates it would incur in connection with the
Merger and the Other Acquisitions, see "Business of UPC -- Recent Developments."
For a discussion of UPC's acquisition program, including a discussion of the
significant charges UPC has incurred incidental to acquisitions over the past
three fiscal years, see the caption "Acquisitions" (on page 10) in UPC's 1997
Annual Report to Shareholders and Note 2 to UPC's audited consolidated financial
statements for the years ended December 31, 1997, 1996, and 1995 (on pages 49
and 50) contained in UPC's 1997 Annual Report to Shareholders. UPC's 1997 Annual
Report to Shareholders is included as Exhibit 13 to UPC's 1997 Form 10-K, and
Exhibit 13 is incorporated by reference herein to the extent indicated herein.
See "Documents Incorporated by Reference."
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical consolidated financial statements
of UPC and Transflorida, including the respective notes thereto. See "Documents
Incorporated by Reference," "-- Selected Consolidated Financial Data," "Business
of UPC -- Recent Developments," "Pro Forma Condensed Consolidated Financial
Information," and "Index to Consolidated Financial Statements."
-13-
<PAGE> 23
UPC AND TRANSFLORIDA HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
Three
Months
Ended
March 31, Years Ended December 31, (1)
---------- ------------------------------------
1998 1997 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES
UPC
Basic .................................................... $ .89 $ 2.54 $ 2.13 $ 2.79
Diluted .................................................. .86 2.45 2.05 2.66
Transflorida
Basic .................................................... .70 2.98 2.64 2.75
Diluted .................................................. .70 2.98 2.64 2.75
UPC pro forma (all Other Acquisitions and Transflorida)
Basic .................................................... .80 2.52 2.24 2.56
Diluted .................................................. .78 2.45 2.17 2.46
Transflorida equivalent pro forma (UPC only)
Basic ..................................................... .76 2.16 1.81 2.37
Diluted ................................................... .73 2.08 1.74 2.26
Transflorida equivalent pro forma (all Other Acquisitions
and Transflorida)(1)
Basic ..................................................... .68 2.14 1.90 2.17
Diluted ................................................... .66 2.08 1.84 2.09
CASH DIVIDENDS PER SHARE
UPC ......................................................... .50 1.495 1.08 .98
Transflorida ................................................ -- -- -- --
Transflorida equivalent pro forma (1) ....................... .42 1.27 .92 .83
</TABLE>
<TABLE>
<CAPTION>
December 31,
March 31, 1998 1997
-------------- ------------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE
UPC ......................................................... $ 21.13 $ 20.72
Transflorida ................................................ 21.67 20.98
UPC pro forma (Transflorida and all Other Acquisitions) ..... 20.82 21.73
Transflorida equivalent pro forma (UPC only)(1) ............. 17.94 17.81
Transflorida equivalent pro forma (all Other Acquisitions
and Transflorida) (1) .................................... 17.67 18.45
</TABLE>
- -----------------------------------------
(1) The equivalent pro forma per share data for Transflorida are computed by
multiplying UPC's pro forma information by .8489, the Exchange Ratio.
-14-
<PAGE> 24
MEETING OF SHAREHOLDERS
DATE, PLACE, TIME, AND PURPOSE
This Proxy Statement is being furnished to the holders of Transflorida
Common Stock in connection with the solicitation by the Transflorida Board of
proxies for use at the Transflorida Special Meeting at which Transflorida
shareholders will be asked to vote upon a proposal to adopt the Agreement and
the Plan of Merger, and such other business as may be properly come before the
Transflorida Special Meeting. The Transflorida Special Meeting will be held at
Transflorida, at 1489 West Palmetto Park Road, Suite 300, Boca Raton, Florida,
233486, on August 18, 1998. See "Description of Transaction."
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES
The close of business on June 25, 1998, has been fixed as the
Transflorida Record Date for determining holders of outstanding shares of
Transflorida Common Stock entitled to notice of and to vote at the Transflorida
Special Meeting. Only holders of Transflorida Common Stock of record on the
books of Transflorida at the close of business on the Transflorida Record Date
are entitled to notice of and to vote at the Transflorida Special Meeting. As of
the Transflorida Record Date, there were 1,950,144 shares of Transflorida Common
Stock issued and outstanding held by approximately 235 holders of record.
Each holder of record of shares of Transflorida Common Stock on the
Transflorida Record Date is entitled to cast one vote per share on the proposal
to adopt the Agreement and the Plan of Merger and on any other matter properly
submitted for the vote of the Transflorida shareholders at the Transflorida
Special Meeting. The presence, either in person or by properly executed proxy,
of the holders of a majority of the outstanding shares of Transflorida Common
Stock entitled to vote at the Transflorida Special Meeting is necessary to
constitute a quorum at the Transflorida Special Meeting.
Transflorida intends to count shares of Transflorida Common Stock
present in person at the Transflorida Special Meeting but not voting, and shares
of Transflorida Common Stock for which it has received proxies but with respect
to which holders of shares have abstained on any matter, as present at the
Transflorida Special Meeting for purposes of determining the presence or absence
of a quorum for the transaction of business. Adoption of the Agreement and the
Plan of Merger requires the affirmative vote of the holders of a majority of the
issued and outstanding shares of Transflorida Common Stock entitled to vote at
the Transflorida Special Meeting. Brokers who hold shares in street name for
customers who are the beneficial owners of such shares are prohibited from
giving a proxy to vote shares held for such customers on the adoption of the
Agreement and the Plan of Merger without specific instructions from such
customers. Given that the adoption of the Agreement and the Plan of Merger
requires the affirmative vote of the holders of a majority of the outstanding
shares of Transflorida Common Stock entitled to vote thereon, any abstention,
non-voting share or "broker non-vote" with respect to such shares of
Transflorida Common Stock will have the same effect as a vote against the
adoption of the Agreement and the Plan of Merger.
Shares of Transflorida Common Stock represented by properly executed
proxies, if such proxies are received prior to or at the Transflorida Special
Meeting and not revoked, will be voted in accordance with the instructions
indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE
VOTED FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND THE PLAN OF MERGER, AND IN
THE DISCRETION OF THE PROXYHOLDER AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY
BEFORE THE TRANSFLORIDA SPECIAL MEETING. IF NECESSARY, THE PROXYHOLDER MAY VOTE
IN FAVOR OF A PROPOSAL TO ADJOURN THE TRANSFLORIDA SPECIAL MEETING IN ORDER TO
PERMIT FURTHER SOLICITATION OF PROXIES IN THE EVENT THERE ARE NOT SUFFICIENT
VOTES TO APPROVE THE FOREGOING PROPOSAL AT THE TIME OF THE TRANSFLORIDA SPECIAL
MEETING. HOWEVER, NO PROXYHOLDER WILL VOTE ANY PROXIES VOTED AGAINST APPROVAL OF
THE AGREEMENT AND THE PLAN OF MERGER FOR A PROPOSAL TO ADJOURN THE TRANSFLORIDA
SPECIAL MEETING.
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A Transflorida shareholder who has given a proxy solicited by the
Transflorida Board may revoke it at any time prior to its exercise at the
Transflorida Special Meeting by either (i) giving written notice of revocation
to the Corporate Secretary of Transflorida (ii) properly submitting to
Transflorida a duly executed proxy bearing a later date, or (iii) attending the
Transflorida Special Meeting and voting in person. All written notices of
revocation and other communications with respect to revocation of proxies should
be addressed as follows: Transflorida Bank, 1489 West Palmetto Park Road, Suite
300, Boca Raton, Florida 33486, Attention: Terry Best, Cashier.
The directors and executive officers of Transflorida (including
immediate family members and affiliated entities) owned, as of the Transflorida
Record Date, 1,491,183 shares, or approximately 76.47% of the outstanding shares
of Transflorida Common Stock. The directors and executive officers of UPC owned,
as of the Transflorida Record Date, no shares of Transflorida Common Stock. The
members of the Transflorida Board have entered into written agreements with UPC
agreeing to vote "FOR" approval of the Agreement and the Plan of Merger.
For information with respect to beneficial owners of 5% or more of the
outstanding shares of Transflorida Common Stock, and information with respect to
the number and percentage of outstanding shares of Transflorida Common Stock
beneficially owned by the directors and executive officers of Transflorida, see
"Business of Transflorida -- Management."
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers, employees, and
agents of Transflorida by mail, in person, or by telephone or telegraph. Such
persons will receive no additional compensation for such services. Transflorida
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 Transflorida Common Stock held of record by such persons.
Any such brokers, custodians, nominees, and fiduciaries will be reimbursed for
the reasonable out-of-pocket expenses incurred by them for such services. All
expenses associated with the solicitation of proxies, other expenses associated
with the Transflorida Special Meeting and expenses related to the printing and
mailing of this Proxy Statement will be borne by UPC and Transflorida as
provided in the Agreement. See "Description of Transaction -- Expenses and
Fees."
DISSENTERS' RIGHTS
Holders of Transflorida Common Stock as of the Record Date are entitled
to dissenters' rights under Florida law. Pursuant to Section 658.44 of the FBC,
a Transflorida shareholder who votes his or her shares against the Merger, or
who otherwise gives written notice to Transflorida at or prior to the
Transflorida Special Meeting that the shareholder dissents from the Agreement,
will lose the right to receive the shares of UPC Common Stock to be received
pursuant to the terms of the Agreement and will instead receive a cash payment
for the value of his or her shares as of the Effective Time.
In order to exercise dissenters' rights, a dissenting shareholder of
Transflorida (a "Dissenting Shareholder") must fully comply with the statutory
procedures of Section 658.44 of the FBC, which is summarized below and attached
to this Proxy Statement as Appendix D. Shareholders of Transflorida are urged to
read this Section in its entirety and to consult with their legal advisors. Each
shareholder of Transflorida who desires to assert his or her rights is cautioned
that failure on his or her part to adhere strictly to the requirements of
Florida law in any regard will cause a forfeiture of any dissenters' rights. The
following summary of Florida law is qualified in its entirety by reference to
the full text of the provisions of the FBC attached to this Proxy Statement as
Appendix D.
Any shareholder of Transflorida who has voted against the Agreement by
proxy or in person at the Transflorida Special Meeting or has given notice in
writing at or prior to such meeting to the presiding officer that he or she
dissents from the Agreement, will be entitled to receive payment in cash of the
value of the shares so held by him or her. On or promptly after the Effective
Time, UPC may fix an amount which it considers to be not more
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than the fair market value of the shares of Transflorida Common Stock and which
it will pay to the holders of dissenting shares of Transflorida, and if it fixes
such amount, will offer to pay such amount to the holders of all dissenting
shares of Transflorida. The owners of dissenting shares who have accepted such
offer will be entitled to receive the amount so offered for such shares in cash
upon surrendering the stock certificates representing such shares at any time
within 30 days after the Effective Time.
The value of dissenting shares of Transflorida, the owners of which
have not accepted an offer for such shares made by UPC, will be determined as of
the Effective Time by three appraisers, one to be selected by the owners of at
least two-thirds of such dissenting shares, one to be selected by the UPC Board,
and the third to be selected by the two so chosen. The value agreed upon by any
two of the appraisers will control and be final and binding on all parties. If,
within 90 days from the Effective Time for any reason one or more of the
appraisers is not selected, or the appraisers fail to determine the value of
such dissenting shares, the Florida Department of Banking and Finance will cause
an appraisal of such dissenting shares to be made which will be final and
binding on all parties. The owners of dissenting shares, the value of which is
to be determined by appraisal, will be entitled to receive the value of such
shares in cash upon surrender of the stock certificates representing such shares
at any time within 30 days after the value of such shares has been determined by
appraisal made on or after the Effective Time.
Any shareholder of Transflorida who votes against the Agreement in
person or by proxy at the Transflorida Special Meeting or who gives notice in
writing at or prior to such meeting to the presiding officer that he or she
dissents, will be notified in writing of the date of consummation of the Merger.
The failure of a shareholder to vote against the Agreement will not constitute a
waiver of the above described dissenters' rights, provided that such shareholder
has given notice in writing at or prior to the Transflorida Special Meeting to
the presiding officer that such shareholder dissents from the Agreement.
The foregoing discussion is only a summary of the provisions of Florida
law and does not purport to be complete and is qualified in its entirety by
reference to Section 658.44 of the FBC, which is attached to this Proxy
Statement as Appendix D. Any shareholder who intends to dissent from the Merger
should review the text of Section 658.44 carefully and should also consult with
his or her attorney. Any shareholder who fails to strictly follow the procedures
set forth in said statute will forfeit dissenters' rights.
Any dissenting shareholder who perfects his or her right to be paid the
value of his or her shares will recognize gain or loss, if any, for federal
income tax purposes upon the receipt of cash for such shares. The amount of gain
or loss and its character as ordinary or capital gain or loss will be determined
in accordance with applicable provisions of the Code.
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DESCRIPTION OF TRANSACTION
The following information describes material aspects of the Merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the Appendices hereto, including the Agreement and the
Plan of Merger, which are included at Appendices A and B, respectively, to this
Proxy Statement and incorporated herein by reference. All shareholders are urged
to read the Appendices in their entirety.
GENERAL
The Agreement provides for the acquisition of Transflorida by UPC
pursuant to the merger of Transflorida with a subsidiary of UPC. At the
Effective Time, each share of Transflorida Common Stock then issued and
outstanding (excluding shares held by Transflorida, UPC, or their respective
subsidiaries, in each case other than shares held in a fiduciary capacity or as
a result of debts previously contracted) will be converted into and exchanged
for .8489 of a share of UPC Common Stock, subject to possible adjustment as
described below under "-- Possible Adjustment of Exchange Ratio."
No fractional shares of UPC Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share to which any
holder of Transflorida Common Stock would be entitled upon consummation of the
Merger, in an amount equal to such fractional part of a share of UPC Common
Stock multiplied by the closing price of such common stock on the NYSE (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source as reasonably selected by UPC) on the last trading day
preceding the Effective Time.
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
Under certain circumstances described below, the Exchange Ratio could
be adjusted pursuant to certain provisions of the Agreement. UNDER NO
CIRCUMSTANCES WOULD THE EXCHANGE RATIO BE LESS THAN .8489 OF A SHARE OF UPC
COMMON STOCK FOR EACH SHARE OF TRANSFLORIDA COMMON STOCK. An adjustment could
occur only if the Transflorida Board elects to terminate the Agreement pursuant
to the provisions of the Agreement described below, and if UPC then elects to
avoid termination of the Agreement by increasing the Exchange Ratio.
If: either
(x)(i) the Average Closing Price (as defined below) is less
than $52.59 and
(ii) (a) the quotient obtained by dividing the Average Closing
Price by $61.875 (the "UPC Ratio") is less than (b) the number obtained
by dividing the weighted average of the closing prices of the common
stock of the bank holding companies defined as the "Index Group" in the
Agreement (the "Index Price") on the Determination Date by the Index
Price on March 10, 1998, less 15% (the "Index Ratio") or
(y) the Average Closing Price is less than $49.50.
Transflorida may elect to terminate the Agreement (the "Stock Price Termination
Right") unless UPC increases the Exchange Ratio such that the shares of UPC
Common Stock issued in exchange for each share of Transflorida Common Stock have
a value (based on the Average Closing Price) equal to (x) if the Average Closing
Price is less than $52.59 and the UPC Ratio is less than the Index Ratio, to the
lesser of (i) $44.64 ($52.59 multiplied by the Exchange Ratio) and (ii) the
value (based on the Average Closing Price) of the shares of UPC Common Stock
that would have been exchanged for each share of Transflorida Common Stock if
the UPC Ratio were equal to the Index Ratio unless such number is less than
$42.02, in which case the Exchange Ratio will be increased such that the shares
of UPC Common Stock issued in exchange for each share of Transflorida Common
Stock will have a value of $42.02 or (y) $42.02 (if the Average Closing Price is
less than $49.50). If the Merger is approved by the Transflorida shareholders,
the Transflorida Board may elect not to terminate the Agreement and to
consummate the Merger without resoliciting the Transflorida shareholders even if
Transflorida's Stock Price Termination Right
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is triggered and as a result of the Exchange Ratio, the value of the shares of
UPC Common Stock (valued at the Average Closing Price) issued in exchange for
each share of Transflorida Common Stock would be less than (x) the lesser of (i)
$44.64 ($52.59 multiplied by the Exchange Ratio) and (ii) the value (based on
the Average Closing Price) of the shares of UPC Common Stock that would have
been exchanged for each share of Transflorida Common Stock if the UPC Ratio were
equal to the Index Ratio or (y) $42.02.
The Average Closing Price is the average of the daily last sales prices
of UPC Common Stock as reported on the NYSE (as reported by The Wall Street
Journal, or, if not reported thereby, another authoritative source as chosen by
UPC) for 20 consecutive full trading days in which such shares are traded on the
NYSE ending at the close of trading on the Determination Date.
The Determination Date is the later of the date of the Transflorida
Special Meeting and the date on which consent of the OCC shall be received
(without regard to any requisite waiting period thereof).
These conditions reflect the parties' agreement that Transflorida's
shareholders will assume the risk of declines in the value of UPC Common Stock
to $49.50 (so long as the UPC Ratio is not less than the Index Ratio) or $52.59
if the UPC Ratio is less than the Index Ratio.
In making its determination of whether to terminate the Agreement, the
Transflorida Board will take into account, consistent with its fiduciary duties,
all relevant facts and circumstances that exist at such time, including, without
limitation, information concerning the business, financial condition, results of
operations, and prospects of UPC (including the recent performance of UPC Common
Stock, the historical financial data of UPC, customary statistical measurements
of UPC's financial performance, and the future prospects for UPC Common Stock
following the Merger), and the advice of its financial advisor and legal
counsel. If the Transflorida Board elects to terminate the Agreement, UPC would
then determine whether to proceed with the Merger at the higher Exchange Ratio.
In making this determination, the principal factors UPC will consider include
the projected effect of the Merger on UPC's pro forma earnings per share and
whether UPC's assessment of Transflorida's earning potential as part of UPC
justifies the issuance of an increased number of UPC's shares. If UPC declines
to adjust the Exchange Ratio, Transflorida may elect to proceed without the
adjustment, provided it does so within 10 days of the Determination Date. UPC IS
UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO.
The operation of the adjustment mechanism can be illustrated by four
scenarios.
(1) The first scenario occurs if the Average Closing Price is not less
than $52.59 Under this scenario, regardless of any comparison
between the UPC Ratio and the Index Ratio, there would be no
possible adjustment to the Exchange Ratio, even though the value
of the consideration to be received by Transflorida shareholders
could have fallen from a pro forma $52.53 per share, as of the
Starting Date, to $44.64 per share, as of the Determination Date.
(2) The second scenario occurs if the Average Closing Price is less
than $52.59 but not less than $49.50 and does not represent a
decline from the Starting Price of more than 15% than the decline
of the common stock prices of the Index Group (meaning the UPC
Ratio is not below the Index Ratio). Under this scenario, there
also would be no possible adjustment to the Exchange Ratio, even
though the value of the consideration to be received by
Transflorida shareholders would have fallen from a pro forma
$52.53 per share, as of the Starting Date, to an amount based on
the then lower Average Closing Price of UPC Common Stock, as of
the Determination Date.
(3) The third scenario occurs if the Average Closing Price is less
than $52.59 but not less than $49.50 and the UPC Ratio is below
the Index Ratio. Under this scenario, the adjustment in the
Exchange Ratio is designed to ensure, subject to the Transflorida
Board exercising its right to terminate the Agreement and the UPC
Board electing to avoid such termination, that if the Merger is
consummated, the Transflorida shareholders receive shares of UPC
Common Stock for each share of Transflorida Common Stock having a
value (based upon the Average Closing Price) that corresponds to
at least
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$44.64 or a 15% decline from the stock price performance reflected
by the Index Group, whichever is less.
(4) The fourth scenario occurs if the Average Closing Price is less
than $49.50. Under this scenario, the adjustment in the Exchange
Ratio is designed to ensure, subject to the Transflorida Board
exercising its right to terminate the Agreement and the UPC Board
electing to avoid such termination, that if the Merger is
consummated, the Transflorida shareholders receive shares of UPC
Common Stock for each share of Transflorida Common Stock having a
value of at least $42.02, unless the UPC Ratio is less than the
Index Ratio in which case the Exchange Ratio will be adjusted so
that Transflorida shareholders receive shares of UPC Common Stock
having a value (based upon the Average Closing Price) of the
lesser of $44.64 or a 15% decline from the stock price performance
reflected by the Index Group unless the 15% decline from the stock
price performance reflected by the Index Group is less than $49.50
in which case the Exchange Ratio would be adjusted to assure that
the Transflorida shareholders receive consideration of at least
$42.02.
However, it is possible that the Transflorida Board would not elect to
exercise its termination right even if the Average Closing Price is below $49.50
or if it were less than $52.59 and the UPC Ratio is below the Index Ratio. Under
these circumstances, the Exchange Ratio would remain at .8489, regardless of the
fact that the Average Closing Price is below $49.50. Conversely it is possible
that if the Transflorida Board does elect to exercise and not withdraw its
termination right, the UPC Board would not elect to increase the Exchange Ratio
to prevent such termination, and under these circumstances the Agreement would
terminate.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND TO THE MERGER. On August 22, 1997, the Transflorida Board
authorized the retention of ASC to advise Transflorida on various matters
relating to the maximization of Transflorida's shareholders' value, including
the possible sale or merger of Transflorida with another institution.
Previously, Transflorida had employed the services of Southeast investment
banking firm in a similar capacity with no success. During September 1997, ASC
conducted its customary business review of Transflorida and prepared, on behalf
of Transflorida, various documents including a confidential offering memorandum
(the "Confidential Offering Memorandum") to solicit non-binding indications of
interest from institutions, including UPC, which may have had interest in
acquiring Transflorida. ASC contacted 33 institutions, 14 responded, and ASC
subsequently distributed a Confidential Offering Memorandum to such entities
upon ASC's receipt of a Confidentiality Agreement satisfactory to Transflorida.
On December 15, 1997, ASC received on behalf of Transflorida, written
non-binding indications of interest from three institutions and upon subsequent
review with Transflorida's principal shareholders and management invited these
three banking institutions to conduct on-site due diligence. Each of these three
institutions contemplated common stock exchanges and one included an option for
a combination of cash and/or common stock; comprised of a substantial non-voting
common stock component. During January, 1998, two of these three institutions
conducted on-site due diligence of Transflorida. Upon conclusion of UPC's due
diligence in January, 1998, UPC reaffirmed its non-binding indications of
interest and the principal shareholders, management and the Transflorida Board
entered into negotiations leading to the Agreement.
Subsequent to UPC's January, 1998 on site due diligence and pursuant to
management and shareholders' instructions, ASC solicited and received UPC's
clarification and reaffirmation of its earlier preliminary non-binding
indication of interest. ASC deemed UPC's revised non-binding indication of
interest superior in amount, form and substance to competing non-binding
indications of interests, and entered into exclusive negotiations leading to the
Agreement. The alternative non-binding indications of interests were deemed
inferior to that of UPC's as each of the alternative non-binding indications of
interest involved smaller, more illiquid banking organizations having
substantial control shareholders.
On February 24 and February 27, 1998, the Transflorida Board met to
consider the Agreement which contemplated a tax-free transaction utilizing all
common stock. The Agreement contemplated an exchange of
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shares of common stock based upon a fixed number of shares of UPC Common Stock
for each share of Transflorida Common Stock determined at the date of the
Agreement. The Exchange Ratio is subject to certain adjustments dependent upon
the bank stock market and UPC stock price movement in the period prior to the
closing of the transaction as described in this Proxy Statement. The Agreement
also made provision for Transflorida's termination of the Agreement under
various conditions, as more fully described elsewhere in this Proxy Statement.
The Transflorida Board also considered the then prevailing stock market values,
price to book value, price to tangible book value and price earnings multiples
of shares of UPC Common Stock, and the value of recent comparable bank mergers
and acquisitions. The Transflorida Board then authorized the execution of the
Agreement.
TRANSFLORIDA'S REASONS FOR THE MERGER. The terms of the Agreement,
including the consideration to be paid to Transflorida's shareholders, were the
result of arm's length negotiations between the authorized representatives of
UPC and Transflorida. The Transflorida Board considered the following factors
that it deemed material: (i) the consideration to be paid to Transflorida's
shareholders in relation to the market value, book value, earnings per share,
and dividend rates of Transflorida Common Stock; (ii) the financial condition,
results of operations, capital levels, asset quality and prospects for
Transflorida; (iii) industry and economic conditions; (iv) the impact of the
Merger on the depositors, employees, customers and communities served by
Transflorida; (v) the opinion of Transflorida's financial advisor as to the
fairness of the Exchange Ratio to be received in the Merger, from a financial
point of view, to the holders of Transflorida Common Stock; (vi) the general
structure of the transaction and the compatibility of the management and
business philosophies of both organizations, (vii) the likelihood of receiving
the required approvals in a timely manner; and (viii) the ability of the
combined enterprise to compete in relevant banking and non-banking markets. In
making its determination, the Transflorida Board did not find it practicable to,
and did not quantify or otherwise attempt to, assign relative weights to the
specific factors considered in reaching its determination.
In approving the Agreement, the Transflorida Board was aware that the
Agreement contains certain provisions prohibiting Transflorida from initiating,
soliciting, or negotiating other offers or agreements to acquire Transflorida.
However, the Transflorida Board was also aware that such terms were specifically
bargained for inducements for UPC to enter into the Agreement, and that the
obligation of the Transflorida Board under the Agreement to recommend approval
of the Agreement by its shareholders was explicitly made subject to, among other
conditions, the fiduciary obligations of the Transflorida Board under applicable
law. Accordingly, the Agreement permits the Transflorida Board, if required by
the exercise of its fiduciary duties under applicable law, to withdraw, modify,
or change such recommendation. See " -- Conduct of Business Pending the Merger."
For the reasons described above, the Transflorida Board has adopted and
approved the Agreement and the Plan of Merger, and believes that the Merger is
in the best interest of Transflorida and the Transflorida shareholders.
ACCORDINGLY, THE TRANSFLORIDA BOARD RECOMMENDS THAT THE TRANSFLORIDA
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE AGREEMENT AND THE PLAN OF MERGER. See
"-- Background of and Reasons for the Merger."
As of the date of this Proxy Statement, the closing price of
UPC Common Stock on the NYSE was $_________, which represents a value to
Transflorida shareholders based on the Exchange Ratio of .8489 of $______ per
share.
The actual market value of a share of UPC Common Stock at the Effective
Time and at the time certificates for those shares are delivered following
surrender and exchange of Certificates for shares of Transflorida Common Stock
may be more or less than the Average Closing Price. Transflorida shareholders
are urged to obtain current market quotations for UPC Common Stock. See
"Comparative Market Prices and Dividends."
UPC'S REASONS FOR THE MERGER. The terms of the Merger, including the
Exchange Ratio, are the result of arm's-length negotiations between
representatives of UPC and Transflorida. In reaching its decision to approve the
Agreement, the UPC Board consulted with its legal advisors regarding the terms
of the transaction, and with management of UPC, and, without assigning any
relative or specific weights, considered a number of factors, both
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from a short-term and long-term perspective, and the following: (i) the
information presented to the directors by the management of UPC concerning the
business, operations, earnings, asset quality, and financial condition of
Transflorida, including the composition of the earning assets portfolio of
Transflorida; (ii) the financial terms of the Merger, including the relationship
of the value of the consideration issuable in the Merger to the market value,
tangible book value, and earnings per share of Transflorida Common Stock; (iii)
the nonfinancial terms of the Merger, including the treatment of the Merger as a
tax-free exchange of Transflorida Common Stock for UPC Common Stock for federal
income tax purposes; (iv) the likelihood of the Merger being approved by
applicable regulatory authorities without undue conditions or delay; (v) the
opportunity for reducing the noninterest expense of the operations of
Transflorida and the ability of the operations of Transflorida after the
Effective Time to contribute to the earnings of UPC; (vi) the attractiveness of
the Transflorida franchise, the market position of Transflorida in each of the
markets in which it operates, and the compatibility of the franchise of
Transflorida with the operations of UPC; and (vii) the compatibility of the
community bank orientation of the operations of Transflorida to that of UPC.
The foregoing discussion is not intended to be exhaustive but includes
all of the material factors considered by the UPC Board in determining to
approve the Agreement and the Plan of Merger. The UPC Board did not quantify or
otherwise attempt to assign relative or specific weights to the factors
considered in reaching its determination that the Agreement, the Plan of Merger,
and the Merger are in the best interests of shareholders.
OPINION OF TRANSFLORIDA'S FINANCIAL ADVISOR
Transflorida retained ASC to provide its opinion of the fairness from a
financial viewpoint, of the Exchange Ratio (the "Merger Consideration") to be
received by Transflorida's shareholders in connection with the Merger. As part
of its investment banking business, ASC is regularly engaged in the valuation of
securities in connection with mergers and acquisitions, and valuations for
estate, corporate, and other purposes. The Transflorida Board retained ASC based
upon its experience as a financial advisor in mergers and acquisitions of
financial institutions, and its knowledge of financial institutions. On February
26, 1998, ASC rendered its oral opinion that, as of such date, the Merger
Consideration was fair, from a financial point of view, to the shareholders of
Transflorida's Common Stock. ASC reviewed UPC and Transflorida financial data as
of March 31, 1998 and bank stock market conditions since the signing of the
Agreement, and rendered its written Fairness Opinion Letter as of June 18, 1998.
The full text of ASC's opinion letter (the "Opinion") which sets forth,
among other things, assumptions made, procedures followed, matters considered,
and limitations on the review undertaken, is attached in the Appendix C to this
Proxy Statement. Transflorida's shareholders are urged to read the Opinion
carefully and in its entirety. The Opinion is addressed to the Transflorida
Board and does not constitute a recommendation to any shareholder of
Transflorida as to how such shareholder should vote at the Transflorida Special
Meeting.
In connection with the Opinion, ASC: (i) reviewed the Agreement; (ii)
reviewed certain publicly available financial statements and other information
concerning Transflorida and UPC, respectively; (iii) reviewed certain internal
financial statements and other financial and operating data of Transflorida
provided to it by Transflorida's management; (iv) analyzed certain publicly
available financial analyses and projections of UPC provided by independent
banking securities analysts; (v) reviewed the reported market prices and trading
activity for UPC Common Stock; (vi) discussed the past and current operations,
financial condition, and future prospects of Transflorida with its executive
management; (vii) compared Transflorida and UPC from a financial point of view
with certain other banking companies that it deemed to be relevant; (viii)
compared the financial performance of UPC and the market prices and trading
activity of UPC Common Stock with that of certain other comparable publicly
traded companies and their equity securities; (ix) reviewed the financial terms,
to the extent publicly available, of certain comparable merger transactions
nationally, in the Southeastern United States and in Florida, and (x) performed
such other analyses and reviews as we deemed appropriate.
In connection with its review, ASC relied upon and assumed the accuracy
and completeness of all of the foregoing information provided to it or made
publicly available, and ASC did not assume any responsibility for independent
verification of such information. With respect to internal confidential
financial projections provided
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by Transflorida, ASC assumed that such projections were reasonably prepared on
the basis reflecting the best currently available estimates and judgments of
the future financial performance of Transflorida and did not independently
verify the validity of such assumptions. ASC did not make any independent
evaluation or appraisal of the assets or liabilities of Transflorida, nor was
ASC furnished with any such appraisals. ASC did not examine any individual loan
files of Transflorida. ASC is not an expert in the evaluation of loan
portfolios for the purposes of assessing the adequacy of the allowance for
losses with respect thereto and has assumed that such allowances for each of
the companies are in the aggregate, adequate to cover such losses.
With respect to UPC, ASC relied solely upon publicly available data
regarding UPC's financial condition and performance. ASC did not meet with or
discuss this publicly available information with the UPC management. ASC did not
conduct any independent evaluation or appraisal of the assets, liabilities or
business prospects of UPC, was not furnished with any evaluations or appraisals,
and did not review any individual credit files of UPC.
The Opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to ASC as of
December 31, 1997 and March 31, 1998.
In connection with rendering the Opinion, ASC performed a variety of
financial analyses. The preparation of an opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances
and, therefore, such an Opinion is not readily susceptible to partial analysis
of summary description. Moreover, the evaluation of fairness, from a financial
point of view, of the consideration to be received by the Transflorida
shareholders is to some extent a subjective one based on the experience and
judgment of ASC and not merely, the result of mathematical analysis of financial
data. Accordingly, notwithstanding the separate factors summarized below, ASC
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
evaluation process underlying its opinion. The ranges of valuations resulting
from any particular analysis described below should not be taken to be ASC's
view of the actual value of Transflorida .
In performing its analyses, ASC made numerous assumptions with respect
to industry performance, business and economic conditions and other matters,
many of which are beyond the control of Transflorida. The analyses performed by
ASC are not necessarily indicative of actual values or future results, which may
be significantly more or less favorable than suggested by such analyses, nor are
they appraisals. In addition, ASC's analyses should not be viewed as
determinative of the Transflorida Board or Transflorida's management's opinion
with respect to the value of Transflorida.
The following is a summary of the analyses performed by ASC in
connection with its updated opinion dated as of June 18, 1998. The following
discussion contains financial information concerning Transflorida and UPC as of
March 31, 1998, and market information as of June 17, 1998:
ANALYSIS OF SELECTED TRANSACTIONS. ASC performed an analysis of
premiums paid in selected pending or recently completed acquisitions of banking
organizations in Florida and in the Southeastern United States, with comparable
characteristics to the Transflorida and UPC transaction. Two sets of comparable
transactions were analyzed to ensure a thorough comparison.
The first set of comparable transactions (the "State Transactions")
consisted of a group of comparable transactions based upon the geographical
market area of Transflorida. The State Transactions specifically consisted of 39
mergers and acquisitions of banks located in Florida which sold for common stock
between January 1, 1997 and June 17, 1998. The analysis yielded multiples of the
State Transactions' purchase price relative to: (i) book value ranging from 1.23
times to 4.28 times with an average of 2.64 times and a median of 2.47 times
(compared with the multiple implied in the Merger of 2.17 times March 31, 1998
book value); (ii) last 12 months earnings ranging from 10.2 times to 40.9 times
with an average of 22.2 times and a median of 19.1 times (compared with the
multiple implied in the Merger of 15.37 times last 12 months earnings as of
March 31, 1998); (iii) total assets ranging between 12.0% and 41.3% with an
average of 23.8% and a median of 21.9%
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(compared with the multiple implied in the Merger of 28.9% of March 31, 1998
total assets); and (iv) total deposits ranging from 13.4% to 50.8% with an
average of 27.7% and a median of 26.5% (compared with the multiple implied in
the Merger of 33.6% of deposits as of March 31, 1998).
The second set of comparable transactions (the "Southeastern
Transactions") consisted of a narrowly defined group of comparable transactions
based upon the profitability, asset size and geographical market area of
Transflorida. The Southeastern Transactions specifically consisted of 12 mergers
and acquisitions of banks in the Southeast with total assets between $200
million and $500 million, return on average equity between 12% and 18%, and
which sold for common stock between January 1, 1997 and June 17, 1998. The
analysis yielded multiples of the regional transactions' purchase price relative
to: (i) book value ranging from 2.16 times to 4.78 times with an average of 2.96
times and a median of 2.70 times (compared with the multiple implied in the
Merger of 2.17 times March 31, 1998 book value); (ii) last 12 months earnings
ranging from 14.6 times to 36.3 times with an average of 22.3 times and a median
of 20.1 times (compared with the multiple implied in the Merger of 15.4 times
last 12 months earnings as of March 31, 1998); (iii) total assets ranging
between 21.3% and 40.5% with an average of 27.7% and a median of 25.2% (compared
with the multiple implied in the Merger of 28.9% of March 31, 1998 total
assets); and (iv) total deposits ranging from 24.2% to 45.6% with an average of
31.9% and a median of 29.4% (compared with the multiple implied in the Merger of
33.6% of deposits as of March 31, 1998).
DISCOUNTED CASH FLOW ANALYSIS. Using discounted cash flow analysis, ASC
estimated the present value of the future stream of after-tax cash flow that
Transflorida could produce through the year 2002, under various circumstances,
assuming that Transflorida performed in accordance with the earnings/return
projections of Transflorida's management. ASC estimated the terminal value for
Transflorida at the end of the period by applying multiples of earnings ranging
from 15 times to 20 times and then discounting the cash flow streams, dividends
paid to the shareholders (assuming all earnings in excess of that required to
maintain a tangible equity to tangible asset percentage of 6.0% are paid out in
dividends) and terminal value using discount rates ranging from 12% to 14%
chosen to reflect different assumptions regarding the required rates of return
of Transflorida and the inherent risk surrounding the underlying projections.
This discounted cash flow analysis indicated a range of $48.00 per share to
$62.00 per share based on 1,950,144 fully diluted shares outstanding, compared
to the value of the Merger Consideration for Transflorida of $47.11 per share,
based on the closing price per share of UPC Common Stock at June 17, 1998.
ASC also performed a cash flow analysis using an estimated terminal
value for Transflorida at the end of the period by applying multiples of book
value ranging from 2.00 times to 4.50 times and then discounting the cash flow
streams, dividends paid to the shareholders (assuming all earnings in excess of
that required to maintain a tangible equity to tangible asset percentage of 6.0%
are paid out in dividends) and terminal value using discount rates ranging from
12% to 14% chosen to reflect different assumptions regarding the required rates
of return of Transflorida and the inherent risk surrounding the underlying
projections. This discounted cash flow analysis indicated a range of $33.00 per
share to $52.00 per share, compared to the value of the Merger Consideration for
Transflorida of $47.11 per share, based on the closing price per share of UPC'
Common Stock at June 17, 1998.
COMPARABLE COMPANY ANALYSIS. ASC compared selected balance sheet data,
asset quality, capitalization and profitability measures and market statistics
using financial data at March 31, 1998 and market data as of June 17, 1998 for
UPC to a group of selected Southeastern bank holding companies which ASC deemed
to be relevant. The following financials reflect UPC March 31, 1998 pro forma
financials with Magna.
The group of selected Southeastern bank holding companies (the
"Comparable Composite") included AmSouth Bancorp, BB&T Corporation, Compass
Bancshares, Inc., Crestar Financial Group, First American Corporation, First
Tennessee National Corporation, and SouthTrust Corporation. This comparison,
among other things, showed that: (i) UPC's equity to asset percentage was 9.18%,
compared to an average of 7.76% and a median of 7.67% for the Comparable
Composite; (ii) for the last twelve months ended March 31, 1998, UPC's return on
average equity was 11.8%, compared to an average of 17.0% and a median of 16.9%
for the Comparable Composite; (iii) for the last twelve months ended March 31,
1998, UPC' return on average assets was 1.09%, compared to an average of 1.32%
and a median of 1.31% for the Comparable Composite; (iv) as of March 31, 1998,
UPC's nonperforming loans to total loans ratio was 0.94%, compared to an average
of 0.50% and a median
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of 0.46% for the Comparable Composite; (v) as of June 17, 1998, UPC's price per
share to March 31, 1998 book value per share was 2.83 times, compared to an
average of 3.26 times and median of 3.01 times for the Comparable Composite; and
(vi) as of June 17, 1998, UPC's price per share to last twelve months earnings
per share as of March 31, 1998 was 28.1 times, compared to an average of 19.9
times and median of 19.2 times for the Comparable Composite.
ASC also compared selected stock market results of UPC to the publicly
available corresponding data of other composites which ASC deemed to be
relevant, including SNL Securities, L.P.'s ("SNL") index of all publicly traded
banks, the aforementioned Comparable Composite and the S&P 500. Results from
indexing the SNL's index of all publicly traded banks, the Comparable Composite
and UPC's stock from June 18, 1997 to June 18, 1998 revealed similar
relationships in price movements of UPC's stock to the price movements of the
Comparable Composite and the SNL's index of all publicly traded banks.
No company or transaction used in the comparable company and comparable
transaction analyses is identical to Transflorida or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of Transflorida and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis (such as determining the average or median) is not in itself a
meaningful method of using comparable transaction data or comparable company
data.
Pursuant to an engagement letter dated August 22, 1997, between
Transflorida and ASC, Transflorida agreed to pay ASC a retainer fee of $10,000
and a transaction fee equal to one half of one percent or 0.50% of the
consideration paid to Transflorida up to $80 million in transaction value or
0.75% of the consideration paid to Transflorida if the consideration is in
excess of $80 million. Transflorida also agreed to indemnify and hold harmless
ASC and its officers and employees against certain liabilities in connection
with its services under the engagement letter, except for liabilities resulting
from the negligence of ASC. Sheshunoff Management Services, an affiliate of ASC,
has provided UPC with management consulting services within the past eighteen
months and received management consulting fees of $986,663. ASC has also
represented CB&T Inc., McMinnville, Tennessee, in a transaction with UPC in
1998.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Time will occur on the date and at the time specified
in the Certificate of Merger reflecting the Merger issued by the OCC. Subject to
the terms and conditions of the Agreement, unless otherwise agreed upon in
writing by UPC and Transflorida, the Agreement provides that the parties will
use their reasonable efforts to cause the Effective Time to occur within 30 days
(as designated by UPC) following the last to occur of (i) the effective date
(including any applicable waiting period in respect thereof) of the last
required consent of any regulatory authority having authority over and approving
or exempting the Merger, (ii) the date on which the shareholders of Transflorida
approve the Agreement and the Plan of Merger, and (iii) the date on which all
other conditions precedent under the Agreement have been satisfied or waived..
No assurance can be provided that the necessary shareholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. Transflorida and UPC anticipate that all
conditions to consummation of the Merger will be satisfied so that the Merger
can be consummated on or about August 31, 1998. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Transflorida or UPC generally may
terminate the Agreement and the Plan of Merger if the Merger is not consummated
by December 31, 1998, unless the failure to consummate the transactions
contemplated by the Agreement on or before such date is caused by any breach of
the Agreement by the party seeking termination or certain other specific
conditions exist. See "-- Conditions to Consummation of the Merger" and "--
Waiver, Amendment, and Termination."
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DISTRIBUTION OF CONSIDERATION
Promptly after the Effective Time, UPC will cause the Exchange Agent to
mail to the former shareholders of Transflorida a letter of transmittal,
together with instructions for the exchange of the Certificates representing
shares of Transflorida Common Stock for certificates representing shares of UPC
Common Stock.
TRANSFLORIDA SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of Certificates for Transflorida
Common Stock, together with a properly completed letter of transmittal, there
will be issued and mailed to each holder of Transflorida Common Stock
surrendering such items a certificate or certificates representing the number of
shares of UPC Common Stock to which such holder is entitled and a check for the
amount to be paid in lieu of any fractional share (without interest), if any,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon), if any. UPC will not be obligated to deliver
the consideration to which any former holder of Transflorida Common Stock is
entitled as a result of the Merger until the holder surrenders such holder's
Certificates representing the shares of Transflorida Common Stock. Whenever a
dividend or other distribution is declared by UPC on UPC Common Stock, the
record date for which is at or after the Effective Time, the declaration will
include dividends or other distributions on all shares of UPC Common Stock
issuable pursuant to the Agreement, but beginning 30 days after the Effective
Time, no dividend or other distribution payable after the Effective Time with
respect to UPC Common Stock will be paid to the holder of any unsurrendered
Transflorida Common Stock Certificate until the holder duly surrenders such
Certificate. Upon surrender of such Transflorida Common Stock Certificate,
however, both the UPC Common Stock certificate, together with all undelivered
dividends or other distributions (without interest) and any undelivered cash
payment to be paid in lieu of a fractional share (without interest), will be
delivered and paid with respect to the shares represented by such Certificate.
In the event any Transflorida Common Stock Certificate has been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the Certificate to be lost, stolen, or destroyed and, if required by UPC, the
posting by such person of a bond in such amount as UPC may reasonably direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen, or
destroyed Certificate the consideration to which the former holder of
Transflorida Common Stock is entitled.
At the Effective Time, the stock transfer books of Transflorida will be
closed to holders of Transflorida Common Stock and no transfer of shares of
Transflorida Common Stock by any such holder will thereafter be made or
recognized. If Certificates representing shares of Transflorida Common Stock are
presented for transfer after the Effective Time, they will be canceled and
exchanged for the consideration to which such holder of Transflorida Common
Stock is entitled.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to various conditions, including
(i) approval of the Agreement and the Plan of Merger by the shareholders of
Transflorida, (ii) receipt of certain regulatory approvals required for
consummation of the Merger, (iii) receipt by UPC and Transflorida of a written
opinion of counsel from Alston & Bird LLP as to the tax-free nature of the
Merger (except to the extent of cash received), (iv) the approval by the
shareholders of UPC of an amendment of the UPC Charter authorizing such
additional shares of UPC Common Stock as necessary to consummate the Merger
(which amendment was approved at the 1998 annual meeting of UPC shareholders),
and approval of such shares of UPC Common Stock issuable pursuant to the Merger
for listing on the NYSE, subject to official notice of issuance, (v) the
Registration Statement being declared effective under the Securities Act, (vi)
the accuracy, as of the date of the Agreement and as of the Effective Time, of
the representations and warranties of Transflorida and UPC as set forth in the
Agreement, (vii) the performance of all agreements and the compliance with all
covenants of Transflorida and UPC as set forth in the Agreement, (viii) receipt
of all consents required for consummation of the Merger or for the preventing of
any default under any contract or permit which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a material adverse
effect on Transflorida or UPC, (ix) receipt by UPC, as of the Effective Time, of
a letter from Price Waterhouse LLP to the effect that the Merger will qualify
for pooling-of-interests accounting treatment,
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(x) the absence of any law or order or any action taken by any court,
governmental, or regulatory authority of competent jurisdiction prohibiting,
restricting, or making illegal the consummation of the transactions contemplated
by the Agreement, (xi) receipt by UPC of agreements from each person
Transflorida reasonably believes may be deemed an affiliate of Transflorida, and
(xii) satisfaction of certain other conditions, including the receipt of various
certificates from the officers of Transflorida and UPC. See "-- Regulatory
Approval" and "-- Waiver, Amendment, and Termination."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. Except in limited circumstances, in the event the Merger is
not effected on or before December 31, 1998, the Agreement may be terminated and
the Merger abandoned by the Board of Directors of either Transflorida or UPC.
See "-- Waiver, Amendment, and Termination."
REGULATORY APPROVAL
THE MERGER MAY NOT PROCEED IN THE ABSENCE OF RECEIPT OF THE REQUISITE
REGULATORY APPROVALS. THERE CAN BE NO ASSURANCE THAT SUCH REGULATORY APPROVALS
WILL BE OBTAINED OR AS TO THE TIMING OF SUCH APPROVALS. APPLICATIONS FOR THE
APPROVALS DESCRIBED BELOW HAVE BEEN SUBMITTED TO THE APPROPRIATE REGULATORY
AUTHORITIES.
It is a condition to the consummation of the Merger that UPC and
Transflorida shall have received all applicable regulatory approvals to
consummate the transactions contemplated by the Agreement. There can be no
assurance that such approvals will not contain terms, conditions or requirements
which cause such approvals to fail to satisfy such condition to the consummation
of the Merger.
Neither Transflorida nor UPC are aware of any material governmental
approvals or actions that are required for consummation of the Merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
The Merger is subject to the prior approval of the OCC. In evaluating
the Merger, the OCC must consider, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served. The relevant statutes
prohibit the OCC from approving the Merger if (i) it would result in a monopoly
or be in furtherance of any combination or conspiracy to monopolize or attempt
to monopolize the business of banking in any part of the United States or (ii)
its effect in any section of the country could be to substantially lessen
competition or to tend to create a monopoly, or if it would result in a
restraint of trade in any other manner, unless the OCC should find that any
anticompetitive effects are outweighed clearly by the public interest and the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served. The Merger may not be consummated until the 30th day
(which the OCC may reduce to 15 days) following the date of the OCC approval,
during which time the United States Department of Justice would be afforded the
opportunity to challenge the transaction on antitrust grounds. The commencement
of any antitrust action would stay the effectiveness of the approval of the
agencies, unless a court of competent jurisdiction should specifically order
otherwise.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the Agreement may be amended by a
subsequent writing signed by each of the parties upon the approval of the Board
of Directors of each of the parties, before or after approval of the Agreement
and the Plan of Merger by the Transflorida shareholders; provided, that after
such adoption by Transflorida shareholders no amendment may be made which
modifies in any material respect the consideration to be received by the holders
of Transflorida Common Stock without the further approval of such shareholders.
In addition, prior to or at the Effective Time, generally either Transflorida or
UPC, or both, acting through their respective Boards of Directors, chief
executive officers, or other authorized officers, may waive any default in the
performance of any term of the Agreement by the other party, may waive or extend
the time for the compliance or fulfillment by the other party of any and all of
its obligations under the Agreement, and may waive any of the conditions
precedent to the obligations of such party under the Agreement, except any
condition that, if not
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satisfied, would result in the violation of any applicable law or governmental
regulation. No such waiver will be effective unless written and unless executed
by a duly authorized officer of Transflorida or UPC, as the case may be.
The Agreement and the Plan of Merger may be terminated and the Merger
abandoned at any time prior to the Effective Time, notwithstanding the
provisions of the Agreement and the approval of the Agreement and the Plan of
Merger by the Transflorida shareholders, (i) by the mutual consent of the Boards
of Directors of Transflorida and UPC and (ii) by the Transflorida Board or the
UPC Board (a) in the event of any inaccuracy of any representation or warranty
of the other party contained in the Agreement which cannot be or has not been
cured within 30 days after giving written notice to the breaching party of such
inaccuracy and which inaccuracy would provide the terminating party the ability
to refuse to consummate the Merger under the applicable standards set forth in
the Agreement (provided that the terminating party is not then in breach of any
representation or warranty contained in the Agreement under the applicable
standards set forth in the Agreement or in material breach of any covenant or
other agreement contained in the Agreement), (b) in the event of a material
breach by the other party of any covenant or agreement contained in the
Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach (provided that the
terminating party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standards set forth in the
Agreement or in material breach of any covenant or other agreement contained in
the Agreement), (c) if (1) any consent of any regulatory authority required for
consummation of the Merger and the other transactions contemplated by the
Agreement has been denied by final nonappealable action, or if any action taken
by such authority is not appealed within the time limit for appeal or (2) the
shareholders of Transflorida fail to vote their approval of the matters
submitted for the approval of such shareholders at the Transflorida Special
Meeting, (d) if the Merger is not consummated by December 31, 1998, provided
that the failure to consummate is not caused by any breach of the Agreement by
the party electing to terminate, or (e) by the Transflorida Board pursuant to
the relevant provisions of the Agreement described in "-- Possible Adjustment of
Exchange Ratio."
If the Merger is terminated as described above, the Agreement and the
Plan of Merger will become void and have no effect, except that certain
provisions of the Agreement, including those relating to the obligations to
share certain expenses, maintain the confidentiality of certain information
obtained, and return all documents obtained from the other party under the
Agreement, will survive. See "-- Expenses and Fees."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Agreement, Transflorida has generally agreed that
except as otherwise expressly contemplated in the Agreement, Transflorida and
its subsidiaries will: (i) operate its business only in the usual, regular, and
ordinary course; (ii) preserve intact its business organization and assets and
maintain its rights and franchises; and (iii) take no action which would (a)
materially adversely affect the ability of any party to obtain any consents
required for the transactions contemplated by the Agreement without imposition
of or condition or restriction of the type referred to in the Agreement or (b)
adversely affect the ability of any party to perform its covenants and
agreements under the Agreement.
UPC has agreed that except as otherwise expressly contemplated in the
Agreement, UPC will (i) continue to conduct its business and the business of its
subsidiaries in a manner designed in its reasonable judgment enhance the
long-term value of the UPC Common Stock and the business prospects of UPC and
UPC's subsidiaries and (ii) take no action which would (a) materially adversely
affect the ability of any party to obtain any consents required for the
transactions contemplated under the Agreement including the Merger, from
qualifying for pooling-of interests accounting treatment and as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, (b)
materially adversely affect the ability of any party to perform its covenants
and agreements under the Agreement, or (c) result in UPC entering into an
agreement with respect to an acquisition proposal with a third party which could
be reasonably expected to result in the merger not being consummated; provided,
that the foregoing shall not prevent UPC or any UPC subsidiary from acquiring
any other assets or businesses or from discontinuing or disposing of any of its
assets or business if such action is in the reasonable
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judgment of UPC desirable in the conduct of the business of UPC and the UPC
subsidiaries and would not, in the reasonable judgment of UPC, likely delay the
Effective Time to a date subsequent to December 31, 1998.
In addition, Transflorida has agreed that until the earlier of the
Effective Time or termination of the Agreement, Transflorida will not, except
with the prior written consent of the chief executive officer, president or
chief financial officer of UPC (which consent shall not be unreasonably
withheld), agree or commit to do, or permit any of its subsidiaries to agree or
commit to do, any of the following: (i) amend the charter, bylaws, or other
governing instruments of Transflorida or any Transflorida subsidiary (each a
"Transflorida company" and together, the "Transflorida companies"); (ii) incur
any additional debt obligation for borrowed money (other than indebtedness of a
Transflorida company to another Transflorida company) in excess of an aggregate
of $500,000 (for the Transflorida companies on a consolidated basis) except in
the ordinary course of business consistent with past practices (u, which shall
include the creation of deposit liabilities, purchases of federal funds,
advances from the Federal Reserve Bank or the Federal Home Loan Bank, and entry
into repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any asset of any
Transflorida company of any lien or permit any such lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances, "treasury
tax and loan" accounts established in the ordinary course of business, the
satisfaction of legal requirements in the exercise of trust powers, and liens in
effect as of the date of the Agreement that were previously disclosed to UPC by
Transflorida); (iii) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
Transflorida stock of any Transflorida company, or declare or pay any dividend
or make any other distribution in respect of any Transflorida capital stock,
(iv) except for the Agreement, or pursuant to the exercise of rights outstanding
as of the date of the Agreement and the terms thereof in existence on the date
of the Agreement, issue, sell, pledge, encumber, authorize the issuance of,
enter into any contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares of
Transflorida Common Stock, or any other Transflorida stock of any Transflorida
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; (v) adjust, split, combine, or reclassify any Transflorida stock of
any Transflorida company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Transflorida Common
Stock, or sell, lease, mortgage, or otherwise dispose of or otherwise encumber
(a) any shares of stock of any subsidiary of Transflorida (unless any such
shares of stock are sold or otherwise transferred to another Transflorida
company) or (b) any asset having a book value in excess of $250,000 other than
in the ordinary course of business for reasonable and adequate consideration;
(vi) except as previously disclosed to UPC by Transflorida and for purchases of
certain investment securities described in the Agreement, purchase any
securities or make any material investment, either by purchase of stock or
securities, contributions to Transflorida, asset transfers, or purchase of any
assets, in any person other than a wholly-owned Transflorida subsidiary, or
otherwise acquire direct or indirect control over any person, with certain
exceptions; (vii) grant any increase in compensation or benefits to the
employees or officers of any Transflorida company, except in the ordinary course
of business consistent with past practices as previously disclosed to UPC by
Transflorida or as required by law, pay any severance or termination pay or any
bonus other than pursuant to written policies or written contracts in effect on
the date of the Agreement, enter into or amend any severance agreements with
officers of any Transflorida company, grant any material increase in fees or
other increases in compensation or other benefits to directors of any
Transflorida company, or voluntarily accelerate the vesting of any stock options
or other stock-based compensation or employee benefits; (viii) enter into or
amend any employment contract between any Transflorida company and any person
(unless such amendment is required by law or a pre-existing contractual
obligation) that the Transflorida 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; (ix) adopt any new
employee benefit plan of any Transflorida company or terminate or withdraw from,
or make any material change in or to, any existing employee benefit plans of any
Transflorida 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; (x) make any significant change in any tax or
accounting methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in tax laws or regulatory accounting
requirements or generally accepted accounting principles; (xi) commence any
litigation other than in accordance with past practices, or settle any
litigation involving any liability of any Transflorida company for material
money damages , or restrictions upon
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the operations of any Transflorida company; or (xii) 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.
Transflorida has also agreed, that, except with respect to the
Agreement, the Plan of Merger, and the transactions contemplated thereby, no
Transflorida company or any representative thereof will, directly or indirectly,
solicit or engage in negotiations concerning any acquisition proposal, or
provide any confidential information or assistance to, or have any discussions
with, any person with respect to an acquisition proposal; provided, that
Transflorida may, and may authorize and permit 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 the Agreement if the
Transflorida Board, after having consulted with, and based upon the advice of,
outside counsel, determines in good faith that the failure to take such actions
could constitute a breach of the fiduciary duties of the Transflorida Board
under applicable law, subject to the satisfaction of certain conditions.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Upon consummation of the Merger, the current directors of UPC will
continue to serve as directors of UPC. Similarly, the current officers of UPC
will continue to serve in their respective capacities on behalf of UPC.
Information concerning the management of UPC is included in the documents
incorporated herein by reference. See "Documents Incorporated by Reference." For
additional information regarding the interests of certain persons in the Merger,
see "-- Interests of Certain Persons in the Merger."
UPBNA will be the surviving bank resulting from the Merger and shall
continue to be governed by the laws of the United States, and operate in
accordance with its Charter and Bylaws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Agreement provides that UPC will, subject to the conditions set
forth therein, indemnify the present and former directors, officers, employees,
and agents of Transflorida and its subsidiaries against all Liabilities (as
defined in the Agreement) arising out of actions or omissions occurring at or
prior to the Effective Time (including the transactions contemplated by the
Agreement) to the full extent permitted under any of Florida law, the
Transflorida Charter, and the Transflorida Bylaws, and any indemnity agreements
previously entered into by Transflorida or any of its subsidiaries and any
director, officer, employee, or agent of Transflorida or any of its
subsidiaries. This provision of the Agreement is consistently included in UPC's
standard form merger agreement and is not intended to broaden in any manner the
scope of indemnification to which the present and former directors, officers,
employees, and agents of Transflorida and its subsidiaries are entitled, but
serves to ratify the legal obligations of Transflorida and its subsidiaries (to
be assumed by UPBNA upon consummation of the Merger) to provide indemnification
in accordance with Florida law, the Transflorida Charter, and the Transflorida
Bylaws, and any indemnification agreements to which Transflorida or its
subsidiaries is a party with an indemnified person. The indemnification provided
under the provisions of such instruments will be subject to the same standards
that are currently applicable for determining whether indemnified parties are
entitled to indemnification under such instruments.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A DISCUSSION OF THE ANTICIPATED MATERIAL FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO HOLDERS OF TRANSFLORIDA COMMON STOCK.
THE DISCUSSION MAY NOT APPLY TO SPECIAL SITUATIONS, SUCH AS TRANSFLORIDA
SHAREHOLDERS, IF ANY, WHO RECEIVED TRANSFLORIDA COMMON STOCK UPON THE EXERCISE
OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, THAT HOLD TRANSFLORIDA
COMMON STOCK OTHER THAN AS A CAPITAL ASSET, THAT HOLD TRANSFLORIDA COMMON STOCK
AS PART OF A "STRADDLE" OR "CONVERSION TRANSACTION," OR THAT ARE INSURANCE
COMPANIES, SECURITIES DEALERS, FINANCIAL INSTITUTIONS OR FOREIGN PERSONS, AND
DOES NOT DISCUSS ANY ASPECTS OF STATE, LOCAL, OR FOREIGN TAXATION. THIS
DISCUSSION IS BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS NOW IN EFFECT
AND ON PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE (POSSIBLY WITH
RETROACTIVE EFFECT) BY LEGISLATION, ADMINISTRATIVE ACTION, OR JUDICIAL DECISION.
NO RULING HAS BEEN OR WILL
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BE REQUESTED FROM THE INTERNAL REVENUE SERVICE ON ANY MATTER RELATING TO THE TAX
CONSEQUENCES OF THE MERGER.
As of the date of this Proxy Statement and based upon the assumption
that the Merger is consummated in accordance with the Agreement and in
conformity with certain factual representations made by Transflorida and UPC,
Alston & Bird LLP, counsel for UPC, has advised UPC and Transflorida that the
transaction will have the following federal income tax consequences:
(a) The Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code.
(b) No gain or loss will be recognized by Transflorida, UPC,
UPHC, or UPBNA as a result of the Merger.
(c) No gain or loss will be recognized to the shareholders of
Transflorida upon the receipt of UPC Common Stock solely in exchange
for all of their shares of Transflorida Common Stock (except with
respect to any cash received in lieu of a fractional share interest of
UPC Common Stock).
(d) The aggregate tax basis of the UPC Common Stock to be
received by the Transflorida shareholders who exchange all of their
Transflorida Common Stock solely for UPC Common Stock in the Merger
will be the same as the aggregate tax basis of the Transflorida Common
Stock surrendered in exchange therefor, less the basis of any
fractional share of UPC Common Stock settled by cash payment.
(e) The holding period of the UPC Common Stock to be received
by the Transflorida shareholders who exchange all of their Transflorida
Common Stock solely for UPC Common Stock in the Merger will include the
period during which the Transflorida Common Stock surrendered in the
exchange therefor was held, provided such Transflorida Common Stock is
held as a capital asset on the date of the exchange.
(f) The payment of cash in lieu of fractional share interests
of UPC Common Stock will be treated as if the fractional shares were
distributed as part of the exchange and then redeemed by UPC. These
cash payments will be treated as having been received as distributions
in exchange for the shares of UPC Common Stock redeemed subject to the
provisions and limitations of Section 302(a).
(g) Where cash is received by a shareholder of Transflorida
who exercises dissenters' rights, the cash will be treated as having
been received by such shareholder as a distribution in redemption of
such holder's Transflorida Common Stock subject to the provisions and
limitations of Section 302.
In addition, the obligation of each party to consummate the Merger is
conditioned, among other things, upon receipt by UPC and Transflorida of an
opinion of Alston & Bird LLP dated the date of the Effective Time, substantially
to the foregoing effect. The conditions relating to the receipt of the tax
opinion may be waived by both UPC and Transflorida. Neither UPC nor Transflorida
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 were materially
different from those summarized above, Transflorida would resolicit the approval
of its shareholders prior to its consummating the Merger. The tax opinion of
Alston & Bird LLP summarized above is or will be based, among other things, on
representations relating to certain facts and circumstances of, and the
intentions of the parties to, the Merger.
Because certain tax consequences of the Merger may vary depending upon
the particular circumstances of each holder of Transflorida Common Stock and
other factors, each such holder is urged to consult such holder's own tax
advisor to determine the particular tax consequences of the Merger to such
holder (including the application and effect of state and local income and other
tax laws).
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ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a
pooling-of-interests. Under the pooling-of-interests method of accounting, the
recorded amounts of the assets and liabilities of Transflorida will be carried
forward at their previously recorded amounts. Since the Merger is not considered
material to UPC from a financial statement presentation standpoint, the
operating results of Transflorida will be included in UPC's results from the
Effective Time of the Merger forward.
In order for the Merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding Transflorida
Common Stock must be exchanged for UPC Common Stock with substantially similar
terms. There are certain other criteria that must be satisfied in order for the
Merger to qualify as a pooling-of-interests, some of which criteria cannot be
satisfied until after the Effective Time. In addition, it is a condition to
closing that UPC receive, as of the Effective Time, a letter from Price
Waterhouse LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment. UPC will not consummate the Merger if
pooling-of-interests accounting treatment is not available.
For information concerning certain conditions to be imposed on the
exchange of Transflorida Common Stock for UPC Common Stock in the Merger by
affiliates of Transflorida and certain restrictions to be imposed on the
transferability of the UPC Common Stock received by those affiliates in the
Merger in order, among other things, to ensure the availability of
pooling-of-interests accounting treatment, see "--Resales of UPC Common Stock."
EXPENSES AND FEES
The Agreement provides that each of the parties will bear and pay its
own expenses in connection with the transactions contemplated by the Agreement,
including filing, negotiation, 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 to the Agreement shall
bear and pay the filing fees payable in connection with the Proxy Statement
based on the relative asset sizes of the parties at September 30, 1997.
RESALES OF UPC COMMON STOCK
UPC Common Stock to be issued to shareholders of Transflorida in
connection with the Merger will be registered under the Securities Act. All
shares of UPC Common Stock received by holders of Transflorida Common Stock and
all shares of UPC Common Stock issued and outstanding immediately prior to the
Effective Time will be freely transferable upon consummation of the Merger by
those shareholders of Transflorida not deemed to be "Affiliates" of Transflorida
or UPC. "Affiliates" generally are defined as persons or entities who control,
are controlled by, or are under common control with Transflorida or UPC at the
time of the Transflorida Special Meeting (generally, executive officers,
directors, and 10% or greater shareholders).
Rule 145 promulgated under the Securities Act restricts the sale of UPC
Common Stock received in the Merger by Affiliates and certain of their family
members and related interests. Under the rule, during the one-year period
following the Effective Time, Affiliates of Transflorida or UPC may resell
publicly the UPC Common Stock received by them in the Merger within certain
limitations as to the amount of UPC Common Stock sold in any three-month period
and as to the manner of sale. After the one-year period, such Affiliates of
Transflorida who are not Affiliates of UPC may resell their shares without
restriction. The ability of Affiliates to resell shares of UPC Common Stock
received in the Merger under Rule 145 will be subject to UPC having satisfied
its Exchange Act reporting requirements for specified periods prior to the time
of sale. Affiliates will receive additional information regarding the effect of
Rule 145 on their ability to resell UPC Common Stock received in the Merger.
Affiliates also would be permitted to resell UPC Common Stock received in the
Merger pursuant to an effective registration statement under the Securities Act
or an available exemption from the Securities Act registration requirements.
This Proxy Statement does not cover any resales of UPC Common Stock received by
persons who may be deemed to be Affiliates of Transflorida or UPC.
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Transflorida has agreed to use its reasonable efforts to cause each
person who may be deemed to be an Affiliate of Transflorida to execute and
deliver to UPC not later than 30 days prior to the Effective Time, an agreement
(each, an "Affiliate Agreement") providing that such Affiliate will not sell,
pledge, transfer, or otherwise dispose of any Transflorida Common Stock held by
such Affiliate except as contemplated by the Agreement or the Affiliate
Agreement, and will not sell, pledge, transfer or otherwise dispose of any UPC
Common Stock received by such Affiliate upon consummation of the Merger (i)
except in compliance with the Securities Act and the rules and regulations
thereunder and (ii) until such time as financial results covering 30 days of
combined operations of UPC and Transflorida have been published. Shares of UPC
Common Stock issued to such Affiliates of Transflorida in exchange for shares of
Transflorida Common Stock will not be transferable until such time as financial
results covering at least 30 days of combined operations of UPC and Transflorida
have been published, regardless of whether each such Affiliate has provided an
Affiliate Agreement (and UPC shall be entitled to place restrictive legends upon
certificates for shares of UPC Common Stock issued to Affiliates of
Transflorida). Certificates representing shares of Transflorida Common Stock
surrendered for exchange by any person who is an Affiliate of Transflorida for
purposes of Rule 145(c) under the Securities Act shall be exchanged for
certificates representing shares of UPC Common Stock as described under "--
Distribution of Consideration," with the certificates representing such shares
of UPC Common Stock containing a legend summarizing the foregoing restrictions.
Prior to publication of such results, UPC will not transfer on its books any
shares of UPC Common Stock received by an Affiliate pursuant to the Merger. See
"-- Conditions to Consummation of the Merger."
TERMINATION FEE AGREEMENT
As an inducement and a condition to UPC entering into the Agreement,
Transflorida and UPC entered into the Termination Fee Agreement pursuant to
which Transflorida has agreed under certain circumstances described below to pay
to UPC a $3.5 million fee if the Merger is not consummated. This description of
the Termination Fee Agreement does not purport to be complete and is qualified
in its entirety by reference to the Termination Fee Agreement, which is filed as
an exhibit to the Registration Statement and incorporated herein by reference.
Unless a Nullifying Event shall have occurred and be continuing at the
time the Agreement is terminated, in the event that (i) the Agreement shall have
been terminated, (ii) prior to or concurrently with or within 18 months after
such termination of the Agreement a First Trigger Event shall have occurred, and
(iii) prior to, concurrently with, or within 18 months after such termination an
Acquisition Event shall have occurred, Transflorida shall pay to UPC a cash fee
of $3.5 million.
"First Trigger Event" shall mean the occurrence of any of the following
events: (i) the Transflorida Board shall have failed to approve or recommend the
Agreement or the Merger, or shall have withdrawn or modified in a manner adverse
to UPC its approval or recommendation of the Agreement or the Merger, or shall
have resolved or publicly announced an intention to do either of the foregoing;
(ii) Transflorida or any Significant Subsidiary (as defined in the Termination
Fee Agreement), or the Transflorida Board shall have recommended that the
shareholders of Transflorida approve any Acquisition Proposal (as such term is
defined below) or shall have entered into an agreement with respect to,
authorized, approved, proposed or publicly announced its intention to enter
into, any Acquisition Proposal; (iii) the Agreement shall not have been approved
at a meeting of Transflorida shareholders which has been held for that purpose
prior to termination of the Agreement in accordance with its terms, if prior
thereto it shall have been publicly announced that any person (other than UPC or
any of its subsidiaries) shall have made, or disclosed an intention to make, an
Acquisition Proposal; (iv) any person (together with its affiliates and
associates) or group (as such terms are used for purposes of Section 13(d) of
the Exchange Act) (other than UPC and its subsidiaries) shall have acquired
beneficial ownership (as such term is used for purposes of Section 13(d) of the
Exchange Act) or the right to acquire beneficial ownership of 20% or more of the
then outstanding shares of the stock then entitled to vote generally in the
election of directors of Transflorida for a Significant Subsidiary; or (v)
following the making of an Acquisition Proposal, Transflorida shall have
breached any covenant or agreement contained in the Agreement such that UPC
would be entitled to terminate the Agreement under Section 10.1 thereof (without
regard to any grace period provided for therein) unless such breach is promptly
cured without jeopardizing consummation of the Merger pursuant to the terms of
the Agreement.
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"Acquisition Event" shall mean the consummation of any event described
in the definition of "Acquisition Proposal," except that the percentage
reference contained in clause (C) of such definition shall be 50% instead of
20%.
"Acquisition Proposal" shall mean any (i) publicly announced proposal,
(ii) regulatory application of or notice (whether in draft or final form) (iii)
agreement or understanding, (iv) disclosure of an intention to make a proposal,
or (v) amendment to any of the foregoing, made or filed on or after the date of
the Termination Fee Agreement, in each case with respect to any of the following
transactions with a counterparty other than parent of any of its subsidiaries:
(A) a merger or consolidation, or any similar transaction, involving
Transflorida or any Significant Subsidiary (other than mergers, consolidations
or similar transactions involving solely Transflorida and or one or more
wholly-owned subsidiaries of Transflorida and other than a merger or
consolidation as to which the common shareholders of Transflorida immediately
prior thereto in the aggregate own at least 70% of the common stock of the
publicly held surviving or successor corporation (or any publicly held parent
company thereof) immediately following consummation thereof); (B) a purchase,
lease or other acquisition of all or substantially all of the assets or deposits
of Transflorida or any Significant Subsidiary; or (C) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the voting power of
Transflorida or any significant subsidiary.
"Nullifying Event" shall mean any of the following events occurring and
continuing at a time when Transflorida is not in material breach of any of its
covenants or agreements contained in the Agreement: (i) UPC shall be in breach
of any of its covenants or agreements contained in the Agreement such that
Transflorida shall be entitled to terminate the Agreement pursuant to Section
10.1(c) thereof (without regard to any grace period provided for therein) or
(ii) the shareholders of UPC shall have voted and failed to approve the UPC
Charter Amendment (as defined in the Agreement) (which Charter Amendment was
approved at the 1998 annual meeting of UPC shareholders).
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
As a result of the Merger, holders of Transflorida Common Stock will be
exchanging their shares of a Florida state bank governed by the FBC, the FBCA,,
the Transflorida Charter and the Transflorida Bylaws, for shares of UPC, a
Tennessee corporation governed by the TBCA, the UPC Charter, and UPC Bylaws.
Certain significant differences exist between the rights of Transflorida
shareholders and those of UPC shareholders. In particular, the UPC Charter and
the UPC Bylaws contain several provisions that may be deemed to have an
anti-takeover effect in that they could impede or prevent an acquisition of UPC
unless the potential acquirer has obtained the approval of the UPC Board. THE
FOLLOWING DISCUSSION IS NECESSARILY GENERAL; IT IS NOT INTENDED TO BE A COMPLETE
STATEMENT OF ALL DIFFERENCES AFFECTING THE RIGHTS OF SHAREHOLDERS AND THEIR
RESPECTIVE ENTITIES, AND IT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FBC
AND THE FBCA AND THE TBCA AS WELL AS TO THE UPC CHARTER AND THE UPC BYLAWS AND
THE TRANSFLORIDA CHARTER AND TRANSFLORIDA BYLAWS.
ANTI-TAKEOVER PROVISIONS GENERALLY
The provisions of the UPC Charter and UPC Bylaws described below under
the headings, "-- Authorized Transflorida Stock," "-- Amendment of Charter and
Bylaws," "-- Classified Board of Directors and Absence of Cumulative Voting,"
"-- Director Removal and Vacancies," "-- Limitations on Director Liability," "--
Indemnification," "--Special Meetings of Shareholders," "-- Actions by
Shareholders Without a Meeting," "-- Shareholder Nominations and Proposals" and
"-- Business Combinations" are referred to herein as the "Protective
Provisions." In general, one purpose of the Protective Provisions is to assist
the UPC Board in playing a role if any group or person attempts to acquire
control of UPC, so that the UPC Board can further protect the interests of UPC
and its shareholders as appropriate under the circumstances, including, if the
UPC Board determines that a sale of control is in the best interests of UPC's
shareholders, by enhancing the UPC Board's ability to maximize the value to be
received by the shareholders upon such a sale.
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Although UPC's management believes the Protective Provisions are,
therefore, beneficial to UPC's shareholders, the Protective Provisions also may
tend to discourage some takeover bids. As a result, UPC's shareholders may be
deprived of opportunities to sell some or all of their shares at prices that
represent a premium over prevailing market prices. On the other hand, defeating
undesirable acquisition offers can be a very expensive and time-consuming
process. To the extent that the Protective Provisions discourage undesirable
proposals, UPC may be able to avoid those expenditures of time and money.
The Protective Provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of UPC Common
Stock temporarily, enabling shareholders to sell their shares at a price higher
than that which otherwise would prevail. In addition, the Protective Provisions
may decrease the market price of UPC Common Stock by making the stock less
attractive to persons who invest in securities in anticipation of price
increases from potential acquisition attempts. The Protective Provisions also
may make it more difficult and time consuming for a potential acquirer to obtain
control of UPC through replacing the Board of Directors and management.
Furthermore, the Protective Provisions may make it more difficult for UPC's
shareholders to replace the Board of Directors or management, even if a majority
of the shareholders believe such replacement is in the best interests of UPC. As
a result, the Protective Provisions may tend to perpetuate the incumbent Board
of Directors and management.
AUTHORIZED TRANSFLORIDA STOCK
UPC. The UPC Charter currently authorizes the issuance of up to (i)
300,000,000 shares of UPC Common Stock, of which 84,970,899 shares were
outstanding as of May 31, 1998, and (ii) 10,000,000 shares of no par value
preferred stock ("UPC Preferred Stock" and, together with the UPC Common Stock,
the "UPC Capital Stock"), of which no shares of UPC Series A Preferred Stock,
and 1,156,231 shares of UPC's 8% Cumulative, Convertible Preferred Stock, Series
E (the "Series E Preferred Stock") were issued and outstanding as of April 30,
1998. At the 1998 annual meeting of UPC, the UPC shareholders approved an
amendment to the UPC Charter to increase the number of authorized shares of UPC
Common Stock from 100,000,000 shares to 300,000,000 shares. Accordingly, UPC has
sufficient authorized shares of UPC Common Stock to consummate the Merger and
all Other Pending Acquisitions.
The UPC Board may authorize the issuance of additional authorized
shares of UPC Common Stock without further action by UPC's shareholders, unless
such action is required in a particular case by applicable laws or regulations
or by any stock exchange upon which UPC Common Stock may be listed.
With certain exceptions, the UPC Board may issue, without any further
action by the shareholders, shares of UPC Preferred Stock, in one or more
classes or series, with the voting, conversion, dividend, and liquidation rights
specified in the UPC Charter. In providing for the issuance of such shares, the
UPC Board may determine, among other things, the distinctive designation and
number of shares comprising a series of preferred stock, the dividend rate or
rates on the shares of such series and the relation of such dividends to the
dividends payable on other classes of stock, whether the shares of such series
shall be convertible into or exchangeable for shares of any other class or
series of UPC Transflorida Stock, the voting powers if any of such series, and
any other preferences, privileges, and powers of such series.
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets, or winding up of UPC, the holders of any series of UPC
Preferred Stock will have priority over holders of UPC Common Stock.
The authority to issue additional authorized shares of UPC Common Stock
or UPC Preferred Stock provides UPC with the flexibility necessary to meet its
future needs without the delay resulting from seeking shareholder approval. The
authorized but unissued shares of UPC Common Stock and UPC Preferred Stock will
be issuable from time to time for any corporate purpose, including, without
limitation, stock splits, stock dividends, employee benefit and compensation
plans, acquisitions, and public or private sales for cash as a means of raising
capital. Such shares could be used to dilute the stock ownership of persons
seeking to obtain control of UPC. In addition, the sale of a substantial number
of shares of UPC voting stock to persons who have an understanding
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with UPC concerning the voting of such shares, or the distribution or
declaration of a dividend of shares of UPC voting stock (or the right to receive
UPC voting stock) to UPC shareholders, may have the effect of discouraging or
increasing the cost of unsolicited attempts to acquire control of UPC.
In 1989, the UPC Board adopted a Share Purchase Rights Plan ("Preferred
Share Rights Plan") and distributed a dividend of one Preferred Share Unit
Purchase Right ("Preferred Share Right") for each outstanding share of UPC
Common Stock. In addition, under the Preferred Share Rights Plan, one Preferred
Share Right is to be automatically, and without further action by UPC,
distributed in respect to each share of UPC Common Stock issued after adoption
of the Preferred Share Rights Plan. The Preferred Share Rights are generally
designed to deter coercive takeover tactics and to encourage all persons
interested in potentially acquiring control of UPC to treat each shareholder on
a fair and equal basis. Each Preferred Share Right trades in tandem with the
share of UPC Common Stock to which it relates until the occurrence of certain
events indicating a potential change in control of UPC. Upon the occurrence of
such an event, the Preferred Share Rights would separate from UPC Common Stock
and each holder of a Preferred Share Right (other than the potential acquirer)
would be entitled to purchase certain equity securities of UPC at prices below
their market value. UPC has authorized 750,000 shares of Series A Preferred
Stock for issuance under the Preferred Share Rights Plan and no shares have been
issued as of the date of this Proxy Statement. Until a Preferred Share Right is
exercised, the holder thereof, as such, has no rights of a shareholder of UPC,
including the right to vote or receive dividends.
TRANSFLORIDA. The Transflorida Charter currently authorizes the
issuance of up to 2,017,800 shares of Transflorida Common Stock, of which
1,950,144 shares were outstanding as of the Transflorida Record Date. The
Transflorida Board does not have the authority to issue shares of Transflorida
Common Stock without the approval of the Transflorida shareholders.
PREEMPTIVE RIGHTS
UPC. The TBCA provides that, unless a Tennessee corporation's charter
expressly provides for preemptive rights, shareholders of a Tennessee
corporation do not have a preemptive right to acquire proportional amounts of
the corporation's unissued shares upon a decision of the board of directors to
issue shares. The UPC Charter does not provide for preemptive rights to its
shareholders.
TRANSFLORIDA. The FBCA provides that, unless a Florida corporation's
articles of incorporation expressly provide for preemptive rights, shareholders
of a Florida corporation do not have a preemptive right to acquire proportionate
amounts of the corporation's unissued shares upon a decision of the board of
directors to issue shares. The Transflorida Charter does not provide for
preemptive rights to its shareholders.
AMENDMENT OF CHARTER AND BYLAWS
UPC. The UPC Charter generally provides that amendments thereto may be
adopted in any manner permitted by the TBCA. The TBCA provides that a Tennessee
corporation's charter may be amended by a majority of votes entitled to be cast
on the amendment, subject to any condition the board of directors may place on
its submission of the amendment to the shareholders. The UPC Charter requires a
super-majority vote of the shares of Transflorida stock entitled to vote in an
election of directors to amend the articles of the UPC Charter governing
directors and to remove a director from office whether with or without cause. A
super-majority vote is also required to amend, alter, or repeal the article of
the UPC Charter relating to business combinations.
The UPC Board may adopt, amend or repeal the UPC Bylaws by a majority
vote of the entire Board of Directors. The UPC Bylaws may also be amended or
repealed by action of UPC's shareholders.
The UPC Charter provides that all corporate powers of UPC shall be
exercised by the UPC Board except as otherwise provided by law. The UPC Board
may designate an executive committee consisting of five or more directors and
may authorize such committee to exercise all of the authority of the UPC Board,
including the authority to adopt, amend and repeal the Bylaws, to submit any
action to the shareholders, to fill vacancies on the
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UPC Board or any committee, to declare dividends or other corporate
distributions, and to issue or reissue any Transflorida stock or any warrant,
right, or option to acquire Transflorida stock of the corporation.
TRANSFLORIDA. Amendments to the Transflorida Charter must be approved
by a majority of its Board of Directors and also by a majority of the
outstanding shares of Transflorida's voting stock The Transflorida Bylaws may be
amended by a majority vote of its Board of Directors.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
UPC. The UPC Charter provides that the UPC Board is divided into three
classes, with each class to be as nearly equal in number as possible. The
directors in each class serve three-year terms of office. The effect of UPC
having a classified Board of Directors is that only approximately one-third of
the members of the UPC Board are elected each year, which effectively requires
two annual meetings for UPC's shareholders to change a majority of the members
of the UPC Board. The purpose of dividing the UPC Board into classes is to
facilitate continuity and stability of leadership of UPC by ensuring that
experienced personnel familiar with UPC will be represented on the UPC Board at
all times, and to permit UPC's management to plan for the future for a
reasonable amount of time. However, by potentially delaying the time within
which an acquirer could obtain working control of the UPC Board, this provision
may discourage some potential mergers, tender offers, or takeover attempts.
Pursuant to the UPC Charter, each holder of UPC Common Stock is
entitled to one vote for each share of UPC Common Stock held in the election of
directors, and is not entitled to cumulative voting rights in the election of
directors. With cumulative voting, a shareholder has the right to cast a number
of votes equal to the total number of such holder's shares multiplied by the
number of directors to be elected. The shareholder has the right to distribute
all of his or her votes in any manner among any number of candidates or to
accumulate such shares in favor of one candidate. Directors are elected by a
plurality of the total votes cast by all shareholders. With cumulative voting,
it may be possible for minority shareholders to obtain representation on the UPC
Board. Without cumulative voting, the holders of more than 50% of the shares of
UPC Common Stock generally have the ability to elect 100% of the UPC Board. As a
result, the holders of the remaining UPC Common Stock effectively may not be
able to elect any person to the UPC Board. The absence of cumulative voting thus
could make it more difficult for a shareholder who acquires less than a majority
of the shares of UPC Common Stock to obtain representation on the UPC Board.
TRANSFLORIDA. The Transflorida Charter does not provide for a
classified Board of Directors. The directors serve for one year terms of office.
In addition, the Transflorida Charter provides that each holder of Transflorida
Common Stock is entitled to one vote for each share of Transflorida Common Stock
held in the election of directors, and that shareholders are not entitled to
cumulative voting rights in the election of directors.
DIRECTOR REMOVAL AND VACANCIES
UPC. The UPC Charter provides that a director may be removed by the UPC
shareholders only upon the affirmative vote of the holders of a super-majority
of the voting power of all shares of UPC Common Stock entitled to vote generally
in the election of directors. The purpose of this provision is to prevent a
majority shareholder from circumventing the classified board system by removing
directors and filling the vacancies with new individuals selected by that
shareholder. Accordingly, the provision may have the effect of impeding efforts
to gain control of the Board of Directors by anyone who obtains a controlling
interest in UPC Common Stock. Vacancies on the UPC Board may be filled by the
members of the UPC Board or by UPC shareholders, as provided under the UPC
Bylaws and the TBCA. The term of a director appointed to fill a vacancy expires
at the next meeting of shareholders at which directors are elected.
TRANSFLORIDA. The FBCA provides that, unless the corporation's articles
of incorporation provide otherwise, the shareholders of a corporation may remove
a director with or without cause.
The Transflorida Bylaws provide that vacancies on the Transflorida
Board, whether occurring by reason of an increase in the number of directors, by
resignation or otherwise, may be filled by the Transflorida Board
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<PAGE> 47
acting by a vote of a majority of directors then in office. The overall effect
of such a provision may be to prevent a person or entity from immediately
acquiring control of Transflorida through an increase in the number of
Transflorida directors followed by election of that person's or entity's
nominees to fill the newly created vacancies. Furthermore, the ability of the
Transflorida Board to fill vacancies resulting from newly created directorships
could allow the Transflorida Board to retain control of Transflorida by creating
new directorships and filling the vacancies created thereby. The term of a
director appointed to fill a vacancy expires at the annual meeting of
shareholders, and until such director's successor shall have been duly elected
and qualified.
LIMITATIONS ON DIRECTOR LIABILITY
UPC. The UPC Charter does not address the issue of director liability
to the corporation.
TRANSFLORIDA. Section 658.33 of the FBC provides that each director of
a Florida bank, upon assuming office, shall acknowledge that he is familiar with
his responsibilities as a director and that he will diligently and honestly
administer the affairs of such bank and will not knowingly violate, or willfully
permit to be violated, any of the provisions of the financial institutions
codes, or the pertinent rules of the Florida Department of Banking and Finance.
Section 658.30 of the FBC also provides that, when not in direct conflict with
or superseded by specific provisions of the financial institutions codes, the
provisions of the FBCA extend to Florida state banks. Section 607.0831 of the
FBCA provides that a director of a Florida corporation will not be personally
liable for monetary damages to that corporation or any other person for any
statement, vote, decision or failure to act, regarding corporate management or
policy, by a director unless: (a) the director breached or failed to perform his
duties as a director, and (b) the director's breach or failure to perform those
duties constitutes: (1) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful, (2) a transaction in which the director
derived an improper personal benefit, (3) a payment of certain unlawful
dividends and distributions, (4) in a proceeding by or in the right of such
corporation to procure judgment in its favor or by or in the right of a
shareholder, conscious disregard for the best interest of the corporation, or
willful misconduct, or (5) in a proceeding by or in the right of someone other
than the corporation, or a shareholder, recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety or property. Subject to the
provisions of the FBC, the foregoing would absolve directors of personal
liability for negligence in the performance of their duties, including gross
negligence. It would not permit a director to be exculpated, however, from
liability for actions involving conflicts of interest or breaches of the
traditional "duty of loyalty" to such corporation and its shareholders, and it
would not affect the availability of injunctive or other equitable relief as a
remedy.
INDEMNIFICATION
UPC. Under the TBCA, subject to certain exceptions, a Tennessee
corporation may indemnify an individual made a party to a proceeding, because he
or she is or was a director, against liability incurred in the proceeding if (i)
he or she conducted himself or herself in good faith, (ii) he or she reasonably
believed (a) in the case of conduct in his or her official capacity with the
corporation, that his or her conduct was in the best interests of the
corporation, and (b) in all other cases, that his or her conduct was at least
not opposed to the corporation's best interests, and (iii) in the case of any
criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful (the "Standard of Conduct"). Moreover, unless limited by
its charter of incorporation, a Tennessee corporation must indemnify a director
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he or she was a party because he or she is or was a director
of the corporation against reasonable expenses incurred by him or her in
connection with the proceeding. Expenses incurred by a director in defending a
proceeding may be paid by the corporation in advance of the final disposition of
such proceeding upon receipt of a written affirmation by the director of his or
her good faith belief that he or she has met the Standard of Conduct and a
written undertaking by or on behalf of a director to repay such amount if it
shall ultimately be determined that he or she is entitled to be indemnified by
the corporation against such expenses and a determination is made that the facts
known to those making the determination would preclude indemnification. Before
any such indemnification is made, it must be determined that such
indemnification would not be precluded by the TBCA.
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<PAGE> 48
A director of a Tennessee corporation may also apply for court-ordered
indemnification under certain circumstances. Unless a Tennessee corporation's
charter of incorporation provide otherwise, (i) an officer of a corporation is
entitled to mandatory indemnification and is entitled to apply for court-ordered
indemnification to the same extent as a director; (ii) the corporation may
indemnify and advance expenses to an officer, employee, or agent of the
corporation to the same extent as to a director; and (iii) a corporation may
also indemnify and advance expenses to an officer, employee, or agent who is not
a director to the extent, consistent with public policy, that may be provided by
its charter of incorporation, bylaws, general or specific action of its board of
directors, or contract.
The UPC Charter and UPC Bylaws provide for the indemnification of its
directors and officers to the fullest extent permitted by Tennessee law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling UPC pursuant
to the foregoing provisions, UPC has been informed that, in the opinion of the
SEC, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
TRANSFLORIDA. The Transflorida Bylaws provide that Transflorida may
indemnify or reimburse any person for reasonable expenses actually incurred in
connection with any action, cause of action, suit or proceeding to which he is
made a party by reason of being or having been a Director, officer or employee
of Transflorida. Provided, however, no person shall be so indemnified or
reimbursed on account of any action, suit or proceeding in which he shall be
finally adjudged to have been negligent in the performance of his duties, or to
have committed an act, or failed to perform a duty for which there is a common
law or statutory liability; provided further, that no person shall be
indemnified or reimbursed in relation to any act, cause of action, suit or
proceeding which has been made the subject of a compromise settlement except
with the approval of the holders of record of a majority of the outstanding
shares of Transflorida Common Stock.
SPECIAL MEETINGS OF SHAREHOLDERS
UPC. The UPC Bylaws provide that special meetings of UPC shareholders
may be called, unless otherwise prescribed by law, for any purpose or purposes
whatever at any time by the Chairman of the Board, the President, the Secretary,
or the holders of not less than one-tenth of the shares entitled to vote at such
meeting.
TRANSFLORIDA. The Transflorida Bylaws provide that special meetings of
the shareholders may be called at any time and for any purpose by the
Transflorida Board or by any five (5) shareholders owning in the aggregate, not
less than 25% of the outstanding stock of Transflorida.
ACTIONS BY SHAREHOLDERS WITHOUT A MEETING
UPC. The UPC Charter and UPC Bylaws provide that any action required or
permitted to be taken by UPC shareholders at a duly called meeting of UPC
shareholders may be effected by the unanimous written consent of the
shareholders entitled to vote on such action.
TRANSFLORIDA. The FBC permits any action required or permitted to be
taken at a shareholder's meeting to be taken by written consent signed by the
holders of the number of shares that would have been required to effect the
action at an actual meeting of shareholders. Generally, holders of a majority of
outstanding shares can effect such an action. The FBC also provides that a
corporation's certificate of incorporation may restrict or prohibit
shareholders' actions without a meeting. The Transflorida Charter does not
prohibit shareholders from taking action without a meeting.
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<PAGE> 49
SHAREHOLDER NOMINATIONS AND PROPOSALS
UPC. The UPC Charter and UPC Bylaws do not address whether a
shareholder may nominate members of the UPC Board.
TRANSFLORIDA. The Transflorida Bylaws specify that nominations for
membership to the Transflorida Board must be received by Transflorida at least
60 days in advance of the annual meeting.
BUSINESS COMBINATIONS
UPC. The UPC Charter requires the affirmative vote of the holders of a
super-majority or more of the outstanding shares of UPC Common Stock for
approval of a merger, consolidation, or a sale or lease of all or substantially
all of the assets of UPC if the other party to the sale or lease is a beneficial
owner of 10% or more of the outstanding shares of UPC Common Stock. The approval
of the UPC shareholders is not required for any merger or consolidation of UPC
with or into any corporation or entity of which a majority of the outstanding
shares of all classes of capital stock is owned by UPC or any UPC subsidiary.
The requirement of a super-majority vote of UPC's shareholders to
approve certain business transactions, as described above, may discourage a
change in control of UPC by allowing a minority of UPC's shareholders to prevent
a transaction favored by the majority of the shareholders. Also, in some
circumstances, the UPC Board could cause a super-majority vote to be required to
approve a transaction thereby enabling management to retain control over the
affairs of UPC and their positions with UPC. The primary purpose of the
super-majority vote requirement, however, is to encourage negotiations with
UPC's management by groups or corporations interested in acquiring control of
UPC and to reduce the danger of a forced merger or sale of assets.
As a Tennessee corporation, UPC is or could be subject to various
legislative acts set forth in Chapter 103 of Title 48 of the Tennessee Code,
which impose certain restrictions on business combinations, including, but not
limited to, combinations with interested shareholders similar to those described
above.
The TBCA generally prohibits a "business combination" (generally
defined to include mergers, share exchanges, sales and leases of assets,
issuances of securities, and similar transactions) by UPC or a subsidiary with
an "interested shareholder" (generally defined as any person or entity which
beneficially owns 10% or more of the voting power of any class or series of
UPC's stock then outstanding) within five years after the person or entity
becomes an interested shareholder, unless the business combination or the
transaction pursuant to which the interested shareholder became such was
approved by the UPC Board before the interested shareholder became such, and the
business combination satisfies any other applicable requirements imposed by law
or by the UPC Charter or Bylaws. The TBCA also severely limits the extent to
which UPC or any of its officers or directors could be held liable for resisting
any business combination.
The Tennessee Control Share Acquisition Act (the "Tennessee CSAA")
generally provides that any person or group of persons that acquires the power
to vote more than specified levels (one-fifth, one-third, or a majority) of the
shares of certain Tennessee corporations will not have the right to vote such
shares unless granted voting rights by the holders of a majority of the votes
entitled to be cast, excluding "interested shares." Interested shares are those
shares held by the acquiring person, officers of the corporation, and employees
of the corporation who are also directors of the corporation. If approval of
voting power for the shares is obtained at one of the specified levels,
additional shareholder approval is required when a shareholder seeks to acquire
the power to vote shares at the next level. In the absence of such approval, the
additional shares acquired by the shareholder may not be voted until they are
transferred to another person in a transaction other than a control share
acquisition. The Tennessee CSAA applies only to those Tennessee corporations
whose charters or bylaws contain an express declaration that control share
acquisitions in respect of the shares of such corporations are governed by and
subject to the provisions of such act. The UPC Charter and Bylaws do not
currently contain such an express declaration.
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<PAGE> 50
The Tennessee Greenmail Act (the "Tennessee GA") prohibits a Tennessee
corporation having a class of voting stock registered or traded on a national
securities exchange or registered with the SEC pursuant to Section 12(g) of the
Exchange Act from purchasing, directly or indirectly, any of its shares at a
price above the market value of such shares (defined as the average of the
highest and lowest closing market price of such shares during the 30 trading
days preceding the purchase or preceding the commencement or announcement of a
tender offer if the seller of such shares has commenced a tender offer or
announced an intention to seek control of the corporation) from any person who
holds more than 3% of the class of securities to be purchased if such person has
held such shares for less than two years, unless the purchase has been approved
by the affirmative vote of a majority of the outstanding shares of each class of
voting stock issued by such corporation or the corporation makes an offer, of at
least equal value per share, to all holders of shares of such class.
The TBCA provides that no Tennessee corporation having any class of
voting stock registered or traded on a national securities exchange or
registered with the SEC pursuant to Section 12(g) of the Exchange Act or any of
its officers or directors may be held liable at law or in equity for either
having failed to approve the acquisition of shares by an interested shareholder
on or before such interested shareholder's share acquisition date, or for
seeking to enforce or implement the provisions of the TBCA or the Tennessee
CSAA, or for failing to adopt or recommend any charter or bylaw amendment or
provision in respect of any one or more of these acts or the Tennessee GA, or
for opposing any merger, exchange, tender offer, or significant disposition of
the assets of the resident domestic corporation or any subsidiary of such
corporation because of a good faith belief that such merger, exchange, tender
offer, or significant disposition of assets would adversely affect the
corporation's employees, customers, suppliers, the communities in which the
corporation or its subsidiaries operate or are located or any other relevant
factor if such factors are permitted to be considered by the board of directors
under the corporation's charter in connection with the merger, exchange, tender
offer or significant disposition of assets.
The acts described above along with the provisions of the UPC Charter
regarding business combinations might be deemed to make UPC less attractive as a
candidate for acquisition by another company than would otherwise be the case in
the absence of such provisions. For example, if another company should seek to
acquire a controlling interest of less than 66-2/3% of the outstanding shares of
UPC Common Stock, the acquiror would not thereby obtain the ability to replace a
majority of the UPC Board until at least the second Transflorida special meeting
of shareholders following the acquisition, and furthermore the acquiror would
not obtain the ability immediately to effect a merger, consolidation, or other
similar business combination unless the described conditions were met.
As a result, UPC's shareholders may be deprived of opportunities to
sell some or all of their shares at prices that represent a premium over
prevailing market prices in a takeover context. The provisions described above
also may make it more difficult for UPC's shareholders to replace the UPC Board
or management, even if the holders of a majority of the UPC Common Stock should
believe that such replacement is in the interests of UPC. As a result, such
provisions may tend to perpetuate the incumbent UPC Board and management.
TRANSFLORIDA. Section 607.0901 of the FBCA provides that the approval
of the holders of two-thirds of the voting shares of a corporation, other than
the shares owned by an Interested Shareholder (as hereinafter defined), would be
required in order to effectuate certain transactions, including, among other , a
merger, sale of assets, sale of shares and reclassification of securities
involving the corporation and an Interested Shareholder (an "Affiliate
Transaction"). An "Interested Shareholder" is defined under the FBCA as the
beneficial owner of more than 10% of the voting shares outstanding.
The special voting requirement does not apply in any of the following
five circumstances: (i) the Affiliated Transaction is approved by a majority of
the corporation's disinterested directors; (ii) the corporation has not had more
than 300 shareholders of record at any time during the preceding three years;
(iii) the Interested Shareholder has beneficially owned 80% of the corporation's
voting shares for five years; (iv) the Interested Shareholder beneficially owns
90% of the corporation's voting shares; or (v) all of the following conditions
are met (A) the cash and fair value of other consideration to be paid per share
to all holders of the voting shares equals the highest per share price
calculated pursuant to various methods sets forth in Section 607.0901 of the
FBCA, (B) the consideration to be paid in the Affiliated Transaction is in the
same form as previously paid by the Interested
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Shareholder, and (C) during the portion of the three years preceding the
announcement date that the Interested Shareholder has been an Interested
Shareholder, except as approved by a majority of the disinterested directors,
there shall have been no failure to pay at the regular date therefor any full
periodic dividends, whether or not cumulative, on any outstanding shares of the
corporation, no increase in the voting shares owned by the Interested
Shareholder, and no benefit to the Interested Shareholder from loans, guarantees
or other financial assistance or tax advantages provided by the corporation.
A corporation may "opt-out" of the provisions of Section 607.0901 by
electing to do so in its articles of incorporation. Transflorida has not elected
to "opt out."
In addition, Section 607.0902 of the FBCA, provides that the voting
rights to be accorded Control Shares (as defined below) of a Florida corporation
that has (i) 100 or more shareholders, (ii) its principal place of business, its
principal office, or substantial assets in Florida, and (iii) either (A) more
than 10% of its shareholders residing in Florida, (B) more than 10% of its
shares owned by Florida residents, or (C) 1,000 shareholders residing in
Florida, must be approved by a majority of teach class of voting securities of
the corporation, excluding those shares held by interested persons, before the
Control Shares will be granted any voting rights.
"Control Shares" are defined in the FBCA to be shares acquired, either
directly or indirectly, that when added to all other shares of the issuing
corporation owned by such person, would entitle such person to exercise, either
directly or indirectly, voting power within any of the following ranges: (a) 20%
or more but less than 33% of all voting power of the corporation's voting
securities, (b) 33% or more but less than a majority of all voting power of the
corporation's voting securities, or (c) a majority or more of all of the voting
power of the corporation's voting securities. Such provisions do not apply to
shares acquired pursuant to, among other things, an agreement or plan of merger
or share exchange effected in compliance with the relevant provisions of the
FBCA and to which the corporation is a party.
In addition, unless otherwise provided in a corporation's articles of
incorporation or bylaws, in the event Control Shares acquired in a Control-Share
acquisition are accorded full voting rights and the acquiring person has
acquired Control Shares with a majority or more of all voting power, all
shareholders of the issuing public corporation shall have dissenters' rights.
LIMITATIONS ON ABILITY TO VOTE STOCK
UPC. The UPC Charter and UPC Bylaws do not contain any provision
restricting a shareholder's ability to vote shares of UPC voting stock.
TRANSFLORIDA. The Transflorida Charter and the Transflorida Bylaws do
not contain any provisions restricting a shareholder's ability to vote shares of
Transflorida in voting stock.
DISSENTERS' RIGHTS OF APPRAISAL
UPC. Under the TBCA, a shareholder of a Tennessee corporation is
generally entitled to dissent from certain corporate actions, and obtain payment
of the fair value of his or her shares in the event of: (i) consummation of a
plan of merger to which the corporation is a party, unless shareholder approval
is not required by the TBCA; (ii) consummation of a plan of share exchange to
which the corporation is a party as the corporation whose shares will be
acquired if the shareholder is entitled to vote on the plan; (iii) consummation
of a sale or exchange of substantially all of the corporation's property other
than in the usual and regular course of business, if the shareholder is entitled
to vote on the sale or exchange, including a sale in dissolution, but not
including a sale pursuant to court order or to a plan by which substantially all
of the net proceeds of the sale will be distributed in cash to the shareholders
within one year after the date of sale; (iv) an amendment of the charter that
materially and adversely affects rights in respect of a dissenter's shares
because it (a) alters or abolishes a preferential right of the shares, (b)
creates, alters, or abolishes a right in respect of redemption of the shares,
including a provision respecting a sinking fund for the redemption or repurchase
of the shares, (c) alters or
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abolishes a preemptive right of the holder of the shares to acquire shares or
other securities, (d) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights, or (e)
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under the TBCA; or
(v) any corporate action taken pursuant to a shareholder vote, to the extent the
charter, bylaws, or a resolution of the board of directors provide that voting
or nonvoting shareholders are entitled to dissent and obtain payment for their
shares. The UPC Charter and Bylaws do not provide for any such additional
dissenters' rights. Because the transactions contemplated by the Agreement and
the Plan of Merger do not need to be approved by the shareholders of UPC, such
shareholders do not have dissenters' rights with respect to the merger.
TRANSFLORIDA. Holders of Transflorida Common Stock as of the Record
Date are entitled to dissenters' rights of appraisal under Florida law. For a
description of such appraisal rights, see "Meeting of Shareholders --
Dissenters' Rights."
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
UPC. The TBCA provides that a shareholder of a Tennessee corporation
may inspect and copy books and records of the corporation during regular
business hours, if he or she gives the corporation written notice of his or her
demand at least five business days before the date of the inspection. In order
to inspect certain records, written demand must also be made in good faith and
for a proper purpose and must describe with reasonable particularity the purpose
of the request and the records the shareholder desires to inspect.
TRANSFLORIDA. The FBCA similarly provides that a shareholder generally
may inspect books and records of the corporation during normal business hours
upon written demand at least five business days prior to the date inspection is
sought stating the purpose of the inspection, if such purpose is made in good
faith and is reasonably related to such person's interest as a shareholder.
DIVIDENDS
UPC. UPC's ability to pay dividends on UPC Capital Stock is governed by
Tennessee corporate law. Under Tennessee corporate law, dividends may be paid so
long as the corporation would be able to pay its debts as they become due in the
ordinary course of business and the corporation's total assets would not be less
than the sum of its total liabilities plus the amount that would be needed, if
the corporation were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution to shareholders whose preferential
rights are superior to those receiving the distribution.
There are various statutory limitations on the ability of the UPC
Banking Subsidiaries to pay dividends to UPC. See "Certain Regulatory
Considerations -- Payment of Dividends."
TRANSFLORIDA. The FBCA provides that subject to any restrictions in the
corporation's articles of incorporation, dividends may be declared so long as
after the distribution (i) the corporation will be able to pay its debts as they
become due in the usual course of business and (ii) the corporation's total
assets will exceed its liabilities plus (unless the corporations articles of
incorporation provide otherwise,) the amount that would be needed, if the
corporation were to be disclosed at the time of the distribution, to satisfy the
preferential right upon dissolution of any shareholder whose preferential rights
are superior to those receiving the distribution. The FBC provides for certain
additional restrictions as to dividends.
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<PAGE> 53
MARKET PRICES AND DIVIDENDS
UPC Common Stock is traded on the NYSE under the symbol "UPC."
Transflorida Common Stock is not traded in any established exchange, and
Transflorida has not paid any cash dividends during the periods presented. The
following table sets forth, for the indicated periods, the high and low closing
sale prices for the UPC Common Stock as reported by the NYSE , and the cash
dividends declared per share of UPC Common Stock and Transflorida Common Stock
for the indicated periods. The stock prices do not include retail mark-ups,
mark-downs or commissions.
<TABLE>
<CAPTION>
UPC
----------------------------------------
Cash
Dividends
Price Range Declared
------------------------- Per
High Low Share
------------ ----------- ----------
<S> <C> <C> <C>
1998
First Quarter .............. $ 67.31 $ 58.38 $ .50
Second Quarter (through
June 18, 1998) ...... 62.56 54.75 .50
---------
Total ...................... $ 1.00
=========
1997
First Quarter .............. $ 47.75 $ 38.38 $ .320
Second Quarter ............. 52.13 41.25 .375
Third Quarter .............. 56.50 49.25 .400
Fourth Quarter ............. 67.88 57.00 .400
---------
Total ...................... $ 1.495
=========
1996
First Quarter .............. $ 31.75 $ 29.00 $ .27
Second Quarter ............. 31.25 29.63 .27
Third Quarter .............. 36.25 28.63 .27
Fourth Quarter ............. 41.38 34.63 .27
---------
Total ...................... $ 1.08
=========
</TABLE>
On June 29, 1998, the last sale price of UPC Common Stock as reported
on the NYSE was $_____ per share. On March 3, 1998, the last business day prior
to public announcement of the Merger, the last sale price of UPC Common Stock as
reported by the NYSE was $61.25 per share, respectively.
The holders of UPC Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Although UPC currently intends to continue to pay quarterly cash
dividends on the UPC Common Stock, there can be no assurance that UPC's dividend
policy will remain unchanged after completion of the Merger. The declaration and
payment of dividends thereafter will depend upon business conditions, operating
results, capital and reserve requirements, and the UPC Board's consideration of
other relevant factors. The Agreement provides that Transflorida may not declare
and pay cash dividends.
UPC and Transflorida are each legal entities separate and distinct from
their subsidiaries and their revenues depend in significant part on the payment
of dividends and management fees from their respective subsidiary depository
institutions. UPC's and Transflorida's subsidiary depository institutions are
subject to certain legal restrictions on the amount of dividends they are
permitted to pay. See "Certain Regulatory Considerations -- Payment of
Dividends."
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BUSINESS OF TRANSFLORIDA
GENERAL
Transflorida was incorporated under the laws of the State of Florida in
August 1974 as the American Bank of Hallandale. Transflorida was one of two
independent banks with common ownership and the two were affiliated through an
interlocking directorate. In 1980, investors of the two banks realigned their
equity interest and the present ownership group took control of the American
Bank of Hallandale, with its three branch offices, and gave up their interests
in the other bank. The bank was renamed "Transamerica Bank" and the new
directors installed new management. Later the name was changed to Transflorida
Bank, further solidifying the relationship and involvement with the community
and business of south Florida. In 1986, the ownership group obtained a charter
for a new bank in Palm Beach County to better serve the expanding south Florida
marketplace. In 1991, Transflorida consolidated all of its Palm Beach and
Broward County branches into one bank. Transflorida's corporate headquarters and
operations center were moved in 1994, from Cooper City to the new Transflorida
Bank Centre in Boca Raton. Transflorida currently has 13 offices; seven in
Broward County and 4 in Palm Beach County, on the southeast coast of Florida,
and one office in each of Collier and Lee Counties on the southwest coast of
Florida.
BUSINESS AND PROPERTIES
Transflorida's primary mission has been to serve the banking needs of
the south Florida community, particularly Broward, Palm Beach, Lee and Collier
Counties. Broward and Palm Beach Counties serve the upper two-third of the "Gold
Coast" in the southeast part of Florida. In contrast, Lee and Collier Counties
serve the southwestern coastal areas of Florida. These locations represent some
of the fastest growing areas in the country. Transflorida's branches are
primarily in the newer suburban areas of the counties where they are located.
Transflorida has built a reputation for conservative lending and fiscal
soundness that has served it well. Through the years Transflorida has reaped the
benefits of quality leadership, and this has helped the bank become a high
performance bank with 23 consecutive yearly increases in profits, assets and
equity growth.
Transflorida has 13 branch locations. There are rental properties
located at Plantation and Lauderhill in Broward County and Royal Palm Beach in
Palm Beach County. Ten are owned sites, with five branch sites in Broward County
(Cooper City, Dania, North Plantation, Sunrise and Deerfield Beach), three in
Palm Beach County (Boca Raton, Boynton Beach and Lake Worth) and one in Lee
County (Bonita Springs) and another in Collier County (Naples). The bank's
headquarters, operations center and Boca Raton branch office are in 20,000
square feet of space located on one floor of a three story office building in
Boca Raton. The owned branch sites are typically 2,500 to 3,000 square feet of
space.
COMPETITION
Transflorida encounters vigorous competition in its market areas from a
number of sources, including bank holding companies and commercial banks, thrift
institutions, other financial institutions and financial intermediaries.
Regional interstate banking laws and other recent federal and state laws have
resulted in increased competition from both conventional banking institutions
and other business offering financial services and products. Transflorida also
competes for interest bearing funds with a number of other financial
intermediaries and investment alternatives, including brokerage firms, "money
market" funds, government and financial institutions. Many of Transflorida's
competitors have significantly greater financial resources than Transflorida.
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<PAGE> 55
LEGAL PROCEEDINGS
Transflorida is a party from time to time to various legal proceedings
routine to its business. Management, however, does not believe that an adverse
decision in any of such pending litigation matters will have a material adverse
impact on the financial condition of Transflorida.
MANAGEMENT
The following table presents information about the directors and
executive officers of Transflorida Bank.
<TABLE>
<CAPTION>
Number of Shares of Transflorida
Common Stock Beneficially
Owned at December 31, 1997
-----------------------------------
Present Occupation Director or
and Principal Executive
Occupation for Last Position and Office Officer % of
Name Age Five Years Held with Transflorida Since Directly Indirectly Class
---- --- ------------------- ---------------------- ----------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Dr. Murray Zedeck 61 Chairman, Chairman, Vice 1974 658,481 2,065 33.87%
Transflorida Bank President, Director
Leonard E. Zedeck, Esq. 53 Attorney/Consultant Bank Attorney, 1978 619,093 -- 31.75
Transflorida Bank Director
Carl F. Griswold 72 President and CEO President, CEO, 1984 900 -- 0.05
Transflorida Bank Director
Terry E. Best 50 Sr. Vice President Sr. Vice President, 1995 600 -- 0.03
and CFO CFO, Director
Transflorida Bank
William E. Himes 41 Sr. Vice President- Sr. Vice President- 1990 350 -- 0.02
Loans Loans
Transflorida Bank Director
Stanley S. Lane 79 Real Estate Director 1988 30,000 -- 1.54
Developer
Fred Lippman 63 Pharmacist, Educator, Director 1980 28,470 -- 1.46
Florida State
Representative
Harry M. Rosen, Esq. 62 Attorney Director 1983 60,786 -- 3.11
Mayor, City of Weston
Seymour Roth 69 Vice President, Inv. Director 1988 27,996 -- 1.44
Prudential Securities
Austin Tupler 67 President Director 1986 57,331 5,111 3.20
Tupler Trucking Co.
ALL DIRECTORS AS A GROUP 1,484,007 7,176 76.47%
</TABLE>
EMPLOYEE BENEFIT PLANS
Employees are provided normal benefits such as medical, 401(k) plan,
paid vacations, sick leave and legal holidays. The following is a brief
description of some of the benefits provided by Transflorida to its employees.
MEDICAL AND DENTAL COVERAGE. All regular full-time employees are
eligible to participate in Transflorida's major medical plan which is provided
by Blue Cross & Blue Shield. The employees have the option of a HMO or a POS
plan. Dental Insurance is provided through Guardian Dental Insurance. Employees
pay a portion of the cost of both medical and dental plans. Additional coverage
for dependents is available on both
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<PAGE> 56
medical and dental plans, but employees must pay the full cost of dependent
coverage. Transflorida pays a greater percentage of the medical and dental
premiums for Officers of Transflorida.
GROUP LIFE INSURANCE. As part of the benefits package, Transflorida
provides regular full-time employees with life and accidental death and
dismemberment insurance coverage. The total premium is paid by Transflorida.
Each regular full-time employee receives insurance equal to their annual salary,
rounded to the next higher $1,000, to a maximum of $75,000. Additional life
insurance is available at the employee's cost.
LONG TERM DISABILITY. All regular full-time employees are eligible for
long term disability insurance. The premium is paid entirely by Transflorida.
Under the policy, eligible employees will be entitled to salary continuation in
the event of long term disability of 60% of their monthly salary with a maximum
monthly benefit of $5,000. The benefit will begin 90 days after the disability
occurs.
SHORT TERM DISABILITY. All regular full-time employees are eligible for
short term disability. Plan benefits are provided by Transflorida. Eligible
employees will be covered as of the day following the completion of a waiting
period of thirty days. The plan covers 60% of the basic weekly earnings up to a
maximum benefit of $450. Weekly income benefits will begin on the thirty-first
consecutive day of total disability due to illness or injury. The maximum
benefit period, for one disability, will be up to thirteen weeks, but in no case
beyond the period where the employee becomes eligible for long-term benefits.
401(k) RETIREMENT SAVINGS PLAN. Transflorida offers a 401(k) Retirement
Savings Plan to all full-time employees and part-time employees with six months
of service. Transflorida allows eligible employees to defer between 1% and 15%
of their annual salary. Transflorida offers matching contributions of 50% of the
first 4% of the employee's contribution.
VACATIONS. All regular full-time and part-time employees are eligible
for the vacation program. An employee must complete one year of service to
receive regular vacation benefits. Regular full time employees get two weeks of
vacation per year. Part-time employees will be paid pro rata benefits based on
his or her regularly scheduled work hours.
SICK LEAVE. Full-time employees absent due to illness will be paid for
sick leave in increments of two hours, up to their maximum accrued hours. Sick
leave is accrued at the rate of 4 hours per month. Unused sick leave days are
carried forward from year to year with a maximum of 30 days.
TRANSACTIONS WITH MANAGEMENT
In the ordinary course of business, Transflorida has loans, deposits
and other transactions with its executive officers, directors, and organizations
with which such persons are associated. Such transactions are on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with others and did not involve more than a
normal risk of collectibility or present other unfavorable features. The
aggregate amount of loans to the aforementioned person and company(s) in which
they have a 10% or more ownership interest as of December 31, 1997. were
approximately $691,592.
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<PAGE> 57
TRANSFLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
QUARTERS ENDED MARCH 31, 1998 AND 1997
GENERAL. Transflorida reported consolidated net income of $1,357,623
for the quarter ended March 31, 1998 and $1,191,574 for the same period in 1997.
The improvement in net income is primarily attributable to continued growth in
the loan portfolio, particularly related to real estate loans.
NET INTEREST INCOME. Net interest income is the primary source of
Transflorida's earning stream, and represents the difference between interest
income generated from earning assets and the interest expense paid on deposits.
Transflorida reported net interest income of $3,327,088 for the first quarter of
1998 and $3,115,219 for the same quarter in 1997. For the following table and
analysis, interest income is adjusted for loan points, which represents prepaid
interest. In addition, non-taxable interest income on certain tax-exempt
securities is adjusted to a taxable-equivalent basis. Net interest margin is
calculated after making these adjustments. The net interest margin is net
interest income as a percentage of total interest-earning assets. The difference
between the yield on interest-earning assets and the rate paid on
interest-bearing liabilities is the net interest spread. For the first quarter
of each year, Transflorida reported net interest margins of 5.01% for 1998, and
4.83% for 1997, and net interest spreads of 4.04% for 1998, and 4.20% for 1997.
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<PAGE> 58
The following table represents the average balances of earning assets
and interest-bearing liabilities of Transflorida with their associated yields or
rates for the quarters ended March 31, 1998 and 1997.
TRANSFLORIDA YIELD ANALYSIS DATA QUARTERLY BASIS
<TABLE>
<CAPTION>
Three Months Ending March 31, 1998 Three Months Ending March 31, 1997
---------------------------------------- -----------------------------------------
Average Average
Balance Interest Yield Balance Interest Yield
------------ ---------- ----- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Commercial Loans .................. $ 3,091,973 $ 70,389 9.23% $ 2,632,514 $ 59,564 9.18%
Real Estate Loans ................. 201,466,328 4,937,678 9.80 183,799,548 4,473,314 9.74
Installment Loans ................. 464,800 10,506 9.17 429,900 9,317 8.79
------------ ---------- ------------ ------------
Total Loans ....................... 205,023,101 5,018,573 9.79 186,861,962 4,542,195 9.73
Taxable Securities ................ 20,480,277 342,273 6.68 30,475,993 526,904 6.92
Non-taxable Securities ............ 15,500,897 251,169 8.85 16,148,190 264,823 8.95
------------ ---------- ------------ ------------
Total Securities .................. 35,981,174 593,442 7.62 46,624,183 791,727 7.62
Time Deposits in Other Banks ...... 0 0 196,000 3,057 6.33
Fed Funds Sold .................... 59,692,213 811,000 5.51 39,798,311 519,556 5.29
------------ ---------- ------------ ------------
Total Other Investments ........... 59,692,213 811,000 5.51 39,994,311 522,613 5.30
Total Earning Assets .............. $300,696,488 $6,423,015 8.68% $273,480,456 $ 5,856,535 8.72%
NOW Accounts ...................... 24,522,108 129,102 2.14 21,896,657 114,827 2.13
Savings Accounts .................. 6,871,730 34,716 2.05 6,043,023 30,057 2.02
Money Market Accounts ............. 23,312,322 247,664 4.31 11,459,026 84,726 3.00
CD's .............................. 192,934,424 2,740,628 5.76 185,806,282 2,559,798 5.59
------------ ---------- ------------ ------------
Total Paying Liabilities .......... $247,640,584 $3,152,110 5.16% $225,204,988 $ 2,789,408 5.02%
Cost of Funds ..................... 4.64% 4.52%
==== ====
Interest Spread ................... 4.04% 4.20%
==== ====
Net Interest Margin ............... 5.01% 4.83%
==== ====
</TABLE>
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<PAGE> 59
The following table analyzes the changes in income and expense of the
various components of Transflorida's earning assets and paying liabilities. The
differences in income and expense compared to the same quarter in the prior year
are attributed to changes in average volume and the differences in yield and
rate.
TRANSFLORIDA YIELD ANALYSIS DATA
QUARTERLY BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1ST QTR 1998 V. 1ST QTR 1997
-----------------------------------------
Interest Due to Due to
Differential Volume Rate
------------ --------- ---------
<S> <C> <C> <C>
Commercial loans .................. $ 10,825 $ 10,428 $ 397
Real estate loans ................. 464,364 431,482 32,882
Installment loans ................. 1,189 773 416
--------- --------- ---------
Total loans ....................... 476,378 442,682 33,696
Taxable securities ................ (184,631) (169,935) (14,696)
Non-taxable securities ............ (13,654) (10,552) (3,102)
--------- --------- ---------
Total securities .................. (198,285) (180,486) (17,799)
Time deposits in other banks ...... (3,057) (3,057) --
Fed funds sold .................... 291,444 264,998 26,446
--------- --------- ---------
Total other investments ........... 288,387 261,941 26,446
Total earning assets .............. $ 566,480 $ 524,137 $ 42,343
NOW accounts ...................... 14,275 13,795 480
Savings accounts .................. 4,659 4,154 505
Money market accounts ............. 162,938 106,784 56,154
CD's .............................. 180,830 99,729 81,101
--------- --------- ---------
Total paying liabilities .......... $ 362,702 $ 224,462 $ 138,240
</TABLE>
NON-INTEREST INTEREST INCOME AND NON-INTEREST EXPENSE. Income from
sources other than interest-earning assets is derived primarily from service
charges and other fees on customer deposits and transactions and from mortgage
fees. Non-interest income was $163,531 for the first quarter of 1998, compared
to $282,082 for the same 1997 quarter.
Non-interest expense was $1,553,996 for the initial quarter of 1998,
compared to $1,630,227 for the same period in 1997. The largest component of
this category in each of these quarters relates to employee expenses, which were
$860,795 in 1998 and $895,097 in 1997. In spite of the opening of new branch
offices and the higher costs associated with a larger bank, strict cost control
procedures have kept Transflorida's non-interest expenses relatively constant.
INCOME TAXES. Transflorida's effective tax rates for each of the
quarters was 32.3% for 1998 and 32.0% for 1997. The effective rate is less than
the statutory rate primarily due to the effect of tax-free income from state and
municipal bonds.
FINANCIAL CONDITION. Transflorida's balance sheet reflects the
continued growth of assets, deposits and capital. At March 31, 1998,
Transflorida's assets were $318,181,933, or approximately 8% higher than the
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<PAGE> 60
$294,561,994 on the same date of 1997. Transflorida's equity was $42,262,615 at
March 31, 1998 and $36,309,914 at the end of 1997's first quarter.
LOANS. Transflorida's loan portfolio consists primarily of real estate
related loans as well as commercial and installment loans. Net loans are defined
as gross loans minus the allowance for loan losses and unearned income or fees.
Net loans as of March 31, 1998 were $198,656,711 compared to $186,285,736 at
March 31, 1997. Real estate related loans for these periods were $197,417,291 at
the end of the 1998 quarter, and $185,661,509 at the end of 1997 quarter.
MATURITY DISTRIBUTION OF LOANS The following table presents an analysis
of the maturity distribution of Transflorida's loan portfolio at March 31, 1998.
The majority of Transflorida's loans are involved with real estate, of which
most of its fixed rate loans have maturities of more than five years. The volume
of $140,919,000 of floating rate loans at March 31, 1998 is more than twice that
of fixed rate loans of $60.3 million. Of the floating rate loans, more than 98%
of the loans can reprice within one year.
TRANSFLORIDA
LOAN MATURITY/REPRICING SCHEDULE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------
<S> <C>
Fixed rate loan maturities:
3 months or less ......... $ 435
3 through 12 months ...... 2,522
1 through 5 years ........ 5,358
Over 5 years ............. 51,964
--------
Total Fixed Rate .................. $ 60,278
Floating rate loan repricing:
3 months or less ......... $ 42,659
3 through 12 months ...... 96,792
1 through 5 years ........ 1,468
Over 5 years ............. --
--------
Total Floating Rate ............... $140,918
Total Loans ....................... $201,198
</TABLE>
NON-PERFORMING ASSETS. A "past due" loan is an accruing loan that is
contractually past due 90 days or more as to principal or interest payments.
Transflorida management classifies a loan as non-accrual when it becomes
apparent that the principal and/or interest is doubtful or when the loan becomes
90 days past due and is secured by collateral with sufficient realizable value
to recover at least the principal. When a loan is placed on non-accrual status,
interest is no longer accrued or included in interest income and previously
accrued income is reversed. A loan is restored to accrual status when all
interest and principal payments are current and the borrower has demonstrated
the ability to make payments of principal and interest as scheduled.
Restructured loans, if any, include those for which there has been a reduction
in the stated interest rate, extension of maturity, reduction in face amounts of
debt, or reduction in accrued interest. Real estate acquired by Transflorida as
a result of foreclosure is classified as Other Real Estate Owned until such time
as it is sold.
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<PAGE> 61
The following is an analysis of non-accrual loans, past due loans, and
Other Real Estate Owned of Transflorida at the dates indicated (dollars in
thousands):
<TABLE>
<CAPTION>
March 31,
-----------------
1998 1997
------ ------
<S> <C> <C>
Non-accrual loans:
Real estate .................. $ 750 $ 386
Installment .................. -- 23
Accruing loans which are past
due 90 days or more and not
on non-accrual:
Real estate .................. 1,721 3,124
Installment .................. 1
Other real estate owned:
(related to foreclosures) .... 6,473 4,885
------ ------
Total Nonperforming Assets ........ $8,945 $8,418
</TABLE>
ALLOWANCE FOR LOAN LOSSES. The balance of the allowance for loan losses
at March 31, 1998 was $2,014,915, compared to the March 31, 1997 balance of
$1,908,613.
Inherent in Transflorida's lending activities is the risk that loan
losses will be experienced and that the risk of loss will vary with the type of
loan being made, the value of the underlying collateral, and the
creditworthiness of the borrower over the term of the loan. To reflect the
currently perceived risk of loss associated with Transflorida's loan portfolio,
provisions are made to the allowance for loan losses. The amount of the
allowance for loan losses and the provisions for loan losses is evaluated
monthly, based upon management's estimate of risk in the overall loan portfolio
and the estimated exposure on individual loans. In evaluating the adequacy of
the allowance and the amount of the provision, consideration is given to such
factors as: management's evaluation of specific loans; the level and composition
of classified loans; historical loss experience, results of examination by
regulatory agencies and an internal asset review process; expectations of future
national and local economic conditions and their impact on particular industries
and the individual borrowers; the market value of collateral and strength of
available guaranties; concentrations of credit; and other judgmental factors.
In the first quarter of 1997, Transflorida made provisions totaling
$15,000 to increase the allowance for loan losses. In the initial quarter of
1998, Transflorida reclassified a portion of the allowance for loan losses into
the allowance for possible losses from the sale of Other Real Estate Owned. The
allowance for loan losses at March 31, 1998 and 1997 was 1.00% and 1.01%,
respectively, of gross loans outstanding at the end of each of those periods.
Transflorida's management considers the allowance to be adequate based on its
assessment of the loan portfolio.
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<PAGE> 62
The following table presents an analysis of the allowance for loan
losses for the periods indicated:
ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31,
-------------------
1998 1997
------- ------
<S> <C> <C>
Balance at beginning of year ...... $ 2,095 $1,894
Recoveries ........................ -- --
Less: charge-offs ................ 10 --
Provision for loan losses ......... (70) 15
------- ------
Balance at end of year ............ $ 2,015 $1,909
Charge-offs:
Real estate .................. $ 10 $ --
Installment .................. -- --
------- ------
Total ............................. $ 10 $ --
Recoveries:
Real estate .................. $ -- $ --
Installment .................. -- --
------- ------
Total ............................. $ -- $ --
</TABLE>
INVESTMENT SECURITIES. Transflorida has established uniform investment
and funds management procedures to satisfy its liquidity requirements while
attempting to maximize earnings and asset quality. Transflorida management
assesses the short- and long-term needs of Transflorida through consideration of
loan demand, interest rate factors, and prevailing market conditions on a
regular basis. This assessment leads to recommendations for purchases and other
transactions that are made considering safety, liquidity, and maximization of
return to Transflorida. Transflorida management's strategy for securities is to
maintain a high quality portfolio through investing primarily in agency-issued
callable securities, longer term non-callable, tax-free municipal bonds, and
medium-to-short term non-callable agency-issued securities. Transflorida does
not engage in the trading of investment securities.
The investment security portfolio at March 31, 1998 was $33,714,554,
compared to $48,061,996 at March 31, 1997. This decrease was due to called and
maturing securities.
DEPOSITS As of March 31, 1998, deposits totaled $273,179,373, an
increase of $18,175,306 from the March 31, 1997 balance of $255,004,067. The
increase was due to several factors, including the opening of new branches and
increased marketing efforts.
LIQUIDITY. Liquidity for Transflorida is the ability to raise funds at
a reasonable cost, fund asset growth, meet deposit withdrawals and customers'
borrowing needs, satisfy maturities of short-term borrowing and maintain reserve
requirements.
Transflorida monitors its liquidity position periodically in relation
to changes in long- and short-term interest rates. The maturity distributions
and interest sensitivity of assets and liabilities are adjusted in response to
those changes.
At March 31, 1998 and 1997, Transflorida's loan-to-deposit ratio was
72.69% and 73.05%, respectively. At March 31, 1998 and 1997, Transflorida's
liquidity ratio was 37.49%, and 36.90%, respectively. Transflorida has not had a
problem meeting its liquidity needs.
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<PAGE> 63
INTEREST RATE SENSITIVITY MANAGEMENT. The primary objective of
monitoring Transflorida's interest rate sensitivity, or inherent rate risk, is
to provide management the tools necessary to manage the balance sheet to
minimize adverse changes in net interest income as a result of changes in the
direction and level of interest rates. Federal Reserve monetary control efforts
and legislative changes have been significant factors affecting the management
of interest rate sensitivity positions in recent years.
Repricing characteristics are the time frames at which interest-earning
assets and interest-bearing liabilities are subject to changes in interest
rates, either at replacement or maturity. Sensitivity is measured as the
difference between the volume of assets and liabilities in Transflorida's
current portfolio that are subject to repricing sensitivity gaps and are usually
calculated separately for various segments of time and on a cumulative basis.
Any excess of assets or liabilities results in an interest rate
sensitivity gap. A positive gap denotes asset sensitivity and a negative gap
represents liability sensitivity. The following table shows interest sensitivity
for three different intervals as of March 31, 1998.
TRANSFLORIDA INTEREST RATE SENSITIVITY ANALYSIS
AS OF MARCH 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
0 - 90 90 - 365 OVER
DAYS DAYS 1 YEAR TOTAL
--------- -------- ------- --------
<S> <C> <C> <C> <C>
Earning assets:
Loans ........................... $ 43,094 $ 99,314 $58,790 $201,198
Securities ...................... 250 5,224 28,240 33,714
Fed funds sold .................. 62,480 -- -- 62,480
--------- -------- ------- --------
Total earning assets ................. 105,824 104,538 87,030 297,392
Interest bearing liabilities:
Now accounts .................... 24,960 -- -- 24,960
MMDA accounts ................... 24,479 -- -- 24,479
Regular savings ................. 6,736 -- -- 6,736
Certificates of deposit ......... 53,427 86,035 49,485 188,947
--------- -------- ------- --------
Total rate sensitivity liabilities.... 109,602 86,035 49,485 245,122
Interest sensitivity gap ............. (3,778) 18,503 37,545 52,270
--------- -------- ------- ========
Cumulative gap ....................... $ (3,778) $ 14,725 $52,270
========= ======== =======
</TABLE>
Transflorida has a positive one-year cumulative gap of $14,725,000 as
of March 31, 1998. A positive gap implies that net interest income would
decrease in a falling rate environment and increase in a rising rate
environment. Since interest rates have been relatively low for a period of time,
the assumption that rates will increase from present levels is likely. The
affect of rising rates is difficult to predict since each of the different
components of interest earning assets and interest-bearing liabilities react
differently to changes in interest rates. The degree of interest rate
sensitivity is not equal for all types of assets and liabilities. Transflorida's
experience has indicated that the repricing of interest-bearing demand, savings,
and money market accounts does not move with the same magnitude as general
market rates. Additionally, Transflorida considers these deposits to be "core"
deposits along with non-interest bearing deposits. This stability would indicate
a much longer implicit maturity than their contractual maturity. The combination
of these factors, in conjunction with Transflorida's gap position, confirms
management's feeling that an increase or decrease in market interest rates is
unlikely to produce unacceptable volatility in net interest income.
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<PAGE> 64
CAPITAL RESOURCES. At March 31, 1998, Transflorida's shareholders'
equity was $42,262,615, or $5,952,701 higher than the $36,309,914 recorded at
March 31, 1997. Changes to stockholders' equity are primarily due to the
earnings of Transflorida. Other changes, which are not material, are due to
changes in the value of unrealized holding gains on securities available for
sale, net of income taxes. Transflorida has not paid any dividends to its
shareholders.
At March 31, 1998, Transflorida had a Tier 1 and a total capital ratio
of 19.59% and 20.52%, respectively. At March 31, 1997, Transflorida had a Tier 1
and a total capital ratio of 18.37% and 19.34%, respectively.
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
GENERAL. Transflorida's results of operations are primarily influenced
by the components of its net interest income. Net interest income is defined as
interest income and fees earned from loans and investments, less interest
expense on deposits. Interest from loans and investments is a function of
average rates earned, while the cost of funds is a function of the average rates
paid on deposits. Other non-interest related income factors include gains or
losses from the sale of other real estate owned, service fees, rental income,
and other income items. Other non-interest related expense factors include
employee related expenses, occupancy and equipment expenses, and other expense
items.
RESULTS OF OPERATIONS. Transflorida reported consolidated net income of
$5,812,490 in 1997, $5,142,853 in 1996, and $5,354,474 in 1995. During 1996,
Transflorida implemented a divestiture plan (the "Plan") to move Transflorida's
real estate development activities outside of Transflorida and its subsidiaries.
The Plan, which was a tax-free distribution on October 31, 1996, included a
reduction of equity of Transflorida and a distribution to Transflorida's
shareholders of a like amount of stock in Orangewood Homes, Inc. ("Orangewood"),
the new holder of the real estate activities. Transflorida accounted for the
financial results of Orangewood prior to the spin-off as a discontinued
operation. The results of these discontinued real estate activities, net of
income taxes, were income of $781,065 in 1995, and a net after tax loss of
$43,211 in 1996. Net income from continuing operations for the three years was
$5,812,490 in 1997, $5,186,064 in 1996, and $4,573,409 in 1995. The improvement
in net income each year was primarily attributable to continued growth in the
loan portfolio, particularly related to real estate loans.
Return on average assets was 1.93% and return on average stockholders'
equity was 15.43% in 1997, compared to 1.89% and 14.05%, respectively, for 1996,
and 2.10% and 16.53%, respectively, for 1995.
NET INTEREST INCOME. Net interest income is the primary source of
Transflorida's earning stream, and represents the difference between interest
income generated from earning assets and the interest expense paid on deposits.
Transflorida reported net interest income of $13,638,792 for 1997, $12,618,211
for 1996, and $10,973,054 for 1995. For the following table and analysis,
interest income is adjusted for loan points, which represents prepaid interest.
In addition, non-taxable interest income on certain tax-exempt securities is
adjusted to a taxable-equivalent basis. Net interest margin is calculated after
making these adjustments. The net interest margin is net interest income as a
percentage of total interest-earning assets. The difference between the yield on
interest-earning assets and the rate paid on interest-bearing liabilities is the
net interest spread. Transflorida reported net interest margins of 5.07% for
1997, 4.97% for 1996, and 5.03% for 1995, and net interest spreads of 4.42% for
1997, and 4.55% for both 1996 and 1995.
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<PAGE> 65
The following table represents the average balances of earning assets
and interest-bearing liabilities of Transflorida with their associated yields or
rates for the years ended December 31, 1997, 1996, and 1995.
TRANSFLORIDA YIELD ANALYSIS DATA YEAR TO DATE BASIS
<TABLE>
<CAPTION>
Twelve Months Ended December 1997 Twelve Months Ended December 1996
--------------------------------------- ----------------------------------------
Average Average
Balance Interest Yield Balance Interest Yield
------------ ----------- ----- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Commercial Loans ........ $ 2,458,657 $ 248,687 10.11% $ 2,399,275 $ 222,921 9.27%
Real Estate Loans ....... 193,956,292 19,605,386 10.11 170,541,775 17,122,558 10.04
Installment Loans ....... 439,842 39,157 8.90 412,166 37,027 8.96
------------ ----------- ------------ ------------
Total Loans ............. 196,854,791 19,893,230 10.11 173,353,216 17,382,506 10.03
Taxable Securities ...... 29,821,921 2,071,896 6.95 30,002,526 2,047,732 6.83
Non-taxable Securities .. 15,961,132 1,045,410 8.94 16,256,650 1,065,307 8.94
------------ ----------- ------------ ------------
Total Securities ........ 45,783,053 3,117,306 7.64 46,259,176 3,113,039 7.57
Time Deposits in
Other Banks .......... 107,934 6,626 6.14 254,191 17,355 6.81
Fed Funds Sold .......... 42,625,892 2,334,946 5.48 32,040,167 1,698,321 5.29
------------ ----------- ------------ ------------
Total Other
Investments .......... 42,733,826 2,341,572 5.48 32,294,358 1,715,676 5.30
Total Earning
Assets ............... $285,371,670 $25,352,108 9.01% $251,906,750 $ 22,211,221 8.96%
NOW Accounts ............ 22,686,131 482,932 2.13 19,845,102 420,935 2.12
Savings Accounts ........ 6,231,259 125,617 2.02 5,949,362 121,254 2.03
Money Market
Accounts ............. 15,268,782 565,410 3.70 11,974,948 346,653 2.89
CD's .................... 189,362,832 10,774,354 5.69 171,112,374 9,455,956 5.51
------------ ----------- ------------ ------------
Total Paying
Liabilities .......... $233,549,004 $11,948,313 5.12% $208,881,786 $ 10,344,98 4.94%
Cost of Funds ........... 4.59% 4.42%
==== ====
Interest Spread ......... 4.42% 4.55%
==== ====
Net Interest Margin ..... 5.07% 4.97%
==== ====
<CAPTION>
Twelve Months Ended December 1995
-----------------------------------------
Average
Balance Interest Yield
-------------- ------------ -----
<S> <C> <C> <C>
Commercial Loans ........ $ 2,488,029 $ 246,435 9.90%
Real Estate Loans ....... 156,714,935 15,618,573 9.97
Installment Loans ....... 369,936 34,453 9.31
-------------- ------------
Total Loans ............. 159,572,900 15,899,461 9.96
Taxable Securities ...... 32,402,094 2,216,678 6.84
Non-taxable Securities .. 15,902,059 1,059,290 9.09
-------------- ------------
Total Securities ........ 48,304,153 3,275,968 7.58
Time Deposits in
Other Banks .......... 394,000 28,693 7.28
Fed Funds Sold .......... 23,638,046 1,380,017 5.84
-------------- ------------
Total Other
Investments .......... 24,032,046 1,408,710 5.86
Total Earning
Assets ............... $ 231,909,099 $ 20,584,139 9.04
NOW Accounts ............ 19,258,660 451,510 2.34
Savings Accounts ........ 6,236,680 135,284 2.17
Money Market
Accounts ............. 13,355,124 389,215 2.91
CD's .................... 156,474,601 8,797,534 5.62%
-------------- ------------
Total Paying
Liabilities .......... $ 195,325,065 $ 9,773,543 5.00%
Cost of Funds ........... 4.48%
====
Interest Spread ......... 4.55%
====
Net Interest Margin ..... 5.03%
====
</TABLE>
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<PAGE> 66
The following table analyzes the changes in income and expense of the
various components of Transflorida's earning assets and paying liabilities. The
differences in income and expense from the prior year are attributed to changes
in average volume, differences in yield and rate, and the effect of the change
in the amount of days in the year due to 1996 being a leap year.
TRANSFLORIDA YIELD ANALYSIS DATA
YEAR TO DATE BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YTD DECEMBER 1997 V. YTD DECEMBER 1996
----------------------------------------------------------
Interest Due to Due to Due to
Differential Volume Rate Days
------------ ----------- --------- --------
<S> <C> <C> <C> <C>
Commercial loans .................. $ 25,766 $ 5,754 $ 20,621 $ (609)
Real estate loans ................. 2,482,828 2,358,807 124,021 (0)
Installment loans ................. 2,130 2,472 (241) (101)
----------- ----------- --------- --------
Total loans ....................... 2,510,724 2,367,033 144,401 (710)
Taxable securities ................ 24,164 (12,437) 36,601 (0)
Non-taxable securities ............ (19,897) (19,361) (536) (0)
----------- ----------- --------- --------
Total securities .................. 4,267 (31,798) 36,065 (0)
Time deposits in other banks ...... (10,729) (9,469) (1,213) (47)
Fed funds sold .................... 636,625 569,717 71,548 (4,640)
----------- ----------- --------- --------
Total other investments ........... 625,896 560,248 70,335 (4,687)
Total earning assets .............. $ 3,140,887 $ 2,895,483 $ 250,801 $ (5,397)
NOW accounts ...................... 61,997 60,288 2,860 (1,151)
Savings accounts .................. 4,363 5,706 (1,012) (331)
Money market accounts ............. 218,757 108,531 111,173 (947)
CD's .............................. 1,318,398 1,022,104 322,130 (25,836)
----------- ----------- --------- --------
Total paying liabilities .......... $ 1,603,515 $ 1,196,629 $ 435,151 $(28,265)
</TABLE>
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<PAGE> 67
TRANSFLORIDA YIELD ANALYSIS DATA
YEAR TO DATE BASIS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YTD DECEMBER 1996 V. YTD DECEMBER 1995
----------------------------------------------------------
Interest Due to Due to Due to
Differential Volume Rate Days
------------ ----------- --------- --------
<S> <C> <C> <C> <C>
Commercial loans .................. $ (23,514) $ (8,531) $ (15,659) $ 676
Real estate loans ................. 1,503,985 1,383,121 120,864 0
Installment loans ................. 2,574 3,869 (1,389) 94
----------- ----------- --------- --------
Total loans ....................... 1,483,045 1,378,459 103,816 (770)
Taxable securities ................ (168,946) (163,967) (4,979) 0
Non-taxable securities ............ 6,017 23,429 (17,412) 0
----------- ----------- --------- --------
Total securities .................. (162,929) (140,538) (22,391) 0
Time deposits in other banks ...... (11,338) (9,877) (1,539) 78
Fed funds sold .................... 318,304 468,616 (154,093) 3,781
----------- ----------- --------- --------
Total other investments ........... 306,966 458,740 (155,632) 3,858
Total earning assets .............. $ 1,627,082 $ 1,696,661 $ (74,207) $ 4,628
NOW accounts ...................... (30,575) 13,113 (44,925) 1,237
Savings accounts .................. (14,030) (6,053) (8,348) 371
Money market accounts ............. (42,562) (40,143) (3,485) 1,066
CD's .............................. 658,422 817,074 (182,755) 24,103
----------- ----------- --------- --------
Total paying liabilities .......... $ 571,255 $ 783,991 $(239,513) $ 26,777
</TABLE>
NON-INTEREST INTEREST INCOME AND NON-INTEREST EXPENSE. Income from
sources other than interest-earning assets is derived primarily from service
charges and other fees on customer deposits and transactions and from mortgage
fees. Non-interest income was $1,501,875 for 1997, compared to $1,486,489 and
$1,751,745 for 1996 and 1995, respectively. During this three-year period,
Transflorida has increased its earnings from the sale of property acquired
through foreclosures. During 1995, Transflorida's income from the sale of
investment securities was higher than for any of the subsequent two years.
Non-interest expense was $6,366,677 for 1997, compared to $6,254,636
for 1996 and $6,582,264 for 1995. The largest component of this category for
each of these years relates to employee expenses, which were $3,482,475 in 1997,
$3,388,065 in 1996, and $3,158,374 in 1995. In spite of the opening of new
branch offices and the higher costs associated with a larger bank, strict cost
control procedures have kept Transflorida's non-interest expenses relatively
constant during the past three years.
INCOME TAXES. Transflorida's effective tax rate was 32.3% for 1997,
32.9% for 1996, and 29.7% for 1995. The effective rate is less than the
statutory rate, primarily due to the effect of tax-free income from state and
municipal bonds.
FINANCIAL CONDITION. Transflorida's balance sheet reflects the
continued growth of assets, deposits and capital. At the end of 1997,
Transflorida's assets were $315,979,211, or more than 11% higher than the
$283,246,989 at the end of 1996. The 1996 balance was more than 7% higher than
the 1995 year end balance of $263,678,443. In 1996, there was a reduction of $5
million due to the previously discussed spin-off of a real estate development
company. Transflorida's equity at December 31, 1997 was $40,912,856. After the
$5 million spin-off
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<PAGE> 68
of real estate development related activities in 1996, Transflorida's equity at
the end of that year was $35,138,224. Stockholders' equity was $35,081,615 at
the end of 1995.
LOANS. Transflorida's loan portfolio consists primarily of real estate
related loans as well as commercial and installment loans. Net loans are defined
as gross loans minus the allowance for loan losses and unearned income or fees.
Net loans as of December 31, 1997 were $206,566,575 compared to $181,931,402 and
$164,518,326 at December 31, 1996 and 1995, respectively. Real estate related
loans for these periods were $202,811,814 at the end of 1997, $180,550,685 at
the end of 1996, and $163,582,478 at the end of 1995.
MATURITY DISTRIBUTION OF LOANS. The following table presents an
analysis of the maturity distribution of Transflorida's loan portfolio at
December 31, 1997. The majority of Transflorida's loans are involved with real
estate, and most of its loans that have fixed rates have maturities of more than
five years. The volume of floating rate loans of approximately $149.4 million at
December 31, 1997 is more than twice that of fixed rate loans of $59.9 million.
Of the floating rate loans, more than 99% of the loans can reprice within one
year.
TRANSFLORIDA
LOAN MATURITY/REPRICING SCHEDULE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
<S> <C>
Fixed rate loan maturities:
3 months or less .................. $ 319
3 through 12 months ............... 3,481
1 through 5 years ................. 4,903
Over 5 years ...................... 51,207
--------
Total Fixed Rate ........................... 59,910
Floating rate loan repricing:
3 months or less .................. 49,033
3 through 12 months ............... 99,220
1 through 5 years ................. 1,174
Over 5 years ...................... --
--------
Total Floating Rate ........................ 149,427
Total Loans ................................ $209,337
========
</TABLE>
NON-PERFORMING ASSETS. A "past due" loan is an accruing loan that is
contractually past due 90 days or more as to principal or interest payments.
Transflorida's management classifies a loan as non-accrual when it becomes
apparent that the principal and/or interest is doubtful or when the loan becomes
90 days past due and is secured by collateral with sufficient realizable value
to recover at least the principal. When a loan is placed on non-accrual status,
interest is no longer accrued or included in interest income and previously
accrued income is reversed. A loan is restored to accrual status when all
interest and principal payments are current and the borrower has demonstrated
the ability to make payments of principal and interest as scheduled.
Restructured loans, if any, include those for which there has been a reduction
in the stated interest rate, extension of maturity, reduction in face amounts of
debt, or reduction in accrued interest. Real estate acquired by Transflorida as
a result of foreclosure is classified as Other Real Estate Owned until such time
as it is sold.
-59-
<PAGE> 69
The following is an analysis of non-accrual loans, past due loans, and
Other Real Estate Owned of Transflorida at the dates indicated (dollars in
thousands):
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Non-accrual loans:
Real estate .................. $2,189 $ 564 $ 729
Installment .................. -- -- 7
Accruing loans which are past
due 90 days or more and not
on non-accrual:
Real estate .................. 3,737 2,300 2,421
Installment .................. 22 2 --
Commercial ................... -- 200 --
Other real estate owned:
(related to foreclosures) .... 4,005 3,922 4,083
------ ------ ------
Total Nonperforming Assets ........ $9,953 $6,988 $7,240
</TABLE>
ALLOWANCE FOR LOAN LOSSES. The balance of the allowance for loan losses
at December 31, 1997 was $2,094,893, compared to the December 31, 1996 balance
of $1,893,598, and the December 31, 1995 balance of $1,698,195.
Inherent in Transflorida's lending activities is the risk that loan
losses will be experienced and that the risk of loss will vary with the type of
loan being made, the value of the underlying collateral, and the
creditworthiness of the borrower over the term of the loan. To reflect the
currently perceived risk of loss associated with Transflorida's loan portfolio,
provisions are made to the allowance for loan losses. The amount of the
allowance for loan losses and the provisions for loan losses is evaluated
monthly, based upon management's estimate of risk in the overall loan portfolio
and the estimated exposure on individual loans. In evaluating the adequacy of
the allowance and the amount of the provision, consideration is given to such
factors as: management's evaluation of specific loans; the level and composition
of classified loans; historical loss experience, results of examination by
regulatory agencies and an internal asset review process; expectations of future
national and local economic conditions and their impact on particular industries
and the individual borrowers; the market value of collateral and strength of
available guaranties; concentrations of credit; and other judgmental factors.
In 1997, Transflorida made provisions totaling $190,000 to increase the
allowance for loan losses, while in 1996 and 1995 the provision was $120,000 and
$145,947, respectively. The allowance for loan losses at December 31, 1997,
1996, and 1995 was 1.00%, 1.03%, and 1.02%, respectively, of gross loans
outstanding at the end of each of those periods. Transflorida's management
considers the allowance to be adequate based on its assessment of the loan
portfolio.
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<PAGE> 70
The following table presents an analysis of the allowance for loan
losses for the periods indicated:
ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
--------------------------------
1997 1996 1995
------- ------ ------
<S> <C> <C> <C>
Balance at beginning of year ....... $ 1,894 $1,698 $1,717
Recoveries ......................... 11 93 12
Less: charge-offs ................. -- 17 177
Provision for loan losses .......... 190 120 146
------- ------ ------
Balance at end of year ............. $ 2,095 $1,894 $1,698
Charge-offs:
Real estate ................... $ -- $ 11 $ 164
Installment ................... -- 6 13
------- ------ ------
Total .............................. $ -- $ 17 $ 177
Recoveries:
Real estate ................... $ 10 $ 92 $ --
Installment ................... 1 1 12
------- ------ ------
Total .............................. $ 11 $ 93 $ 12
Net charge-offs to average loans ... (0.01%) 0.04% 0.10%
</TABLE>
INVESTMENT SECURITIES. Transflorida has established uniform investment
and funds management procedures to satisfy its liquidity requirements while
attempting to maximize earnings and asset quality. Transflorida's management
assesses the short- and long-term needs of Transflorida through consideration of
loan demand, interest rate factors, and prevailing market conditions on a
regular basis. This assessment leads to recommendations for purchases and other
transactions that are made considering safety, liquidity, and maximization of
return to Transflorida. Transflorida's management's strategy for securities is
to maintain a high quality portfolio through investing primarily in
agency-issued callable securities, longer term non-callable, tax-free municipal
bonds, and medium-to-short term non-callable agency-issued securities.
Transflorida does not engage in the trading of investment securities.
The investment security portfolio at December 31, 1997 was $38,932,399,
compared to $44,494,116 and $47,521,838 at December 31, 1996 and 1995,
respectively.
DEPOSITS. As of December 31, 1997, deposits totaled $272,798,632, an
increase of $27,627,839 from the December 31, 1996 balance of $245,170,793. At
December 31, 1995, deposits totaled $225,257,111. The increases were due to
several factors, including the opening of new branches and increased marketing
efforts.
LIQUIDITY. Liquidity for Transflorida is the ability to raise funds at
a reasonable cost, fund asset growth, meet deposit withdrawals and customers'
borrowing needs, satisfy maturities of short-term borrowing and maintain reserve
requirements.
Transflorida monitors its liquidity position periodically in relation
to changes in long- and short-term interest rates. The maturity distributions
and interest sensitivity of assets and liabilities are adjusted in response to
those changes.
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<PAGE> 71
At December 31, 1997, 1996, and 1995, Transflorida's loan-to-deposit
ratio was 75.72%, 74.21%, and 73.65%, respectively. At December 31, 1997, 1996,
and 1995, Transflorida's liquidity ratio was 34.93%, 36.12%, and 33.80%,
respectively. Transflorida has not had a problem meeting its liquidity needs.
INTEREST RATE SENSITIVITY MANAGEMENT. The primary objective of
monitoring Transflorida's interest rate sensitivity, or inherent rate risk, is
to provide management the tools necessary to manage the balance sheet to
minimize adverse changes in net interest income as a result of changes in the
direction and level of interest rates. Federal Reserve monetary control efforts
and legislative changes have been significant factors affecting the management
of interest rate sensitivity positions in recent years.
Repricing characteristics are the time frames at which interest-earning
assets and interest-bearing liabilities are subject to changes in interest
rates, either at replacement or maturity. Sensitivity is measured as the
difference between the volume of assets and liabilities in Transflorida's
current portfolio that are subject to repricing sensitivity gaps and are usually
calculated separately for various segments of time and on a cumulative basis.
Any excess of assets or liabilities results in an interest rate
sensitivity gap. A positive gap denotes asset sensitivity and a negative gap
represents liability sensitivity. The following table shows interest sensitivity
for three different intervals as of December 31, 1997.
TRANSFLORIDA INTEREST RATE SENSITIVITY ANALYSIS
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
0 - 90 90 - 365 OVER
DAYS DAYS 1 YEAR TOTAL
--------- --------- ------- --------
<S> <C> <C> <C> <C>
Earning assets:
Loans ............................. $ 49,352 $ 102,701 $59,284 $209,337
Securities ........................ 1,699 4,733 32,500 38,932
Fed Funds Sold .................... 50,604 -- -- 50,604
--------- --------- ------- --------
Total earning assets ................... 101,655 107,434 89,784 298,873
Interest bearing liabilities:
Now accounts ...................... 24,325 -- -- 24,325
MMDA accounts ..................... 21,935 -- -- 21,935
Regular savings ................... 6,605 -- -- 6,605
Certificates of deposit ........... 70,772 98,278 24,792 193,842
--------- --------- ------- --------
Total rate sensitivity liabilities ..... 123,637 98,278 24,792 246,707
Interest sensitivity gap ............... (21,982) 9,156 64,992 52,166
--------- --------- ------- ========
Cumulative gap ......................... $ (21,982) $ (12,826) $52,166
========= ========= =======
</TABLE>
Transflorida has a negative one-year cumulative gap of $12,826,000 as
of December 31, 1997. A negative gap implies that net interest income would
increase in a falling rate environment and decrease in a rising rate
environment. This measurement of the effects of this assumption would be more
reliable if each of the different components of interest earning assets and
interest-bearing liabilities would react to changes in interest rates in the
same manner. However, the degree of interest rate sensitivity is not equal for
all types of assets and liabilities. Transflorida's experience has indicated
that the repricing of interest-bearing demand, savings, and money market
accounts does not move with the same magnitude as general market rates.
Additionally, Transflorida considers these deposits to be "core" deposits along
with non-interest bearing deposits. This stability would indicate a much longer
implicit maturity than their contractual maturity. By factoring in these
considerations, Transflorida feels
-62-
<PAGE> 72
that an increase or decrease in market interest rates is unlikely to produce
unacceptable volatility in net interest income.
CAPITAL RESOURCES. At December 31, 1997, Transflorida's shareholders'
equity was $40,912,856, or $5,774,632 higher than at December 31, 1996.
Shareholders' equity at December 31, 1996 and 1995 was $35,138,224 and
$35,081,615, respectively. During 1996, shareholders' equity was reduced by $5
million due to the spin-off of real estate development activities. Changes to
stockholders' equity are primarily due to the earnings of Transflorida. Other
changes, which are not material, are due to changes in the value of unrealized
holding gains on securities available for sale, net of income taxes.
Transflorida has not paid any dividends to its shareholders.
At December 31, 1997, Transflorida had a Tier 1 and a total capital
ratio of 18.73% and 19.69%, respectively. At December 31, 1996, Transflorida had
a Tier 1 and a total capital ratio of 19.32% and 13.92%, respectively. At
December 31, 1995, Transflorida had a Tier 1 and a total capital ratio of 19.28%
and 20.22%, respectively.
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<PAGE> 73
BUSINESS OF UPC
GENERAL
UPC, a Tennessee corporation, is a bank holding company registered with
the Federal Reserve under the BHC Act. As of March 31, 1998, UPC had total
consolidated assets of approximately $18.6 billion, total consolidated loans of
approximately $12.7 billion, total consolidated deposits of approximately $13.6
billion, and total consolidated shareholders' equity of approximately $1.8
billion.
UPC conducts its business activities through its principal bank
subsidiary, the $15.7 billion asset UPBNA, founded in 1869, headquartered in
Memphis, Tennessee, with branches in Alabama, Arkansas, Kentucky, Louisiana,
Mississippi, Missouri, and Tennessee. UPC also had, as of March 31, 1998, six
other financial institution subsidiaries, the largest of which being Union
Planters Bank of Florida, Miami, Florida, which had total consolidated assets as
of March 31, 1998 of approximately $2.2 billion. UPC undertook a corporate
reorganization plan in the fourth quarter of 1997, the primary purpose of which
was to consolidate substantially all of its bank subsidiaries into UPBNA. It is
likely that UPC will continue to consolidate its various bank subsidiaries into
UPBNA in the future, to the extent allowed by law. Through the UPC Banking
Subsidiaries, UPC provides a diversified range of financial services in the
communities in which it operates and maintains approximately 518 banking offices
and 676 ATMs. UPC's total deposits at March 31, 1998, 1998 are allocable by
state to its banking offices (before consolidating adjustments) approximately as
follows: $6.7 billion in Tennessee; $2.9 billion in Mississippi; $1.3 billion in
Florida; $1.2 billion in Missouri; $596 million in Arkansas; $598 million in
Louisiana; $412 million in Alabama; and $103 million in Kentucky.
Acquisitions have been, and are expected to continue to be, an
important part of the expansion of UPC's business. UPC completed three
acquisitions in 1995, seven in 1996, seven in 1997, and two in 1998, adding
approximately $1.3 billion in total assets in 1995, $4.2 billion in 1996, $3.6
billion in 1997, and $520 million in 1998. As of June 1, 1998, UPC was a party
to definitive agreements to acquire ten financial institutions, not including
Transflorida, and to the agreement relating to the CalFed Bank Purchase, all of
which had aggregate total assets of approximately $12.8 billion at March 31,
1998. For information with respect to these acquisitions see "-- Recent
Developments."
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions and other entities engaged in lines of
business permissible for banks and bank holding companies. Future acquisitions
may entail the payment by UPC of consideration in excess of the book value of
the underlying net assets acquired, may result in the issuance of additional
shares of UPC Transflorida stock or the incurring of additional indebtedness by
UPC, and could have a dilutive effect on the earnings or book value per share of
UPC Common Stock. Moreover, significant charges against earnings are sometimes
required incidental to acquisitions. For a discussion of UPC's acquisition
program, including a discussion of the significant charges UPC has incurred over
the past three fiscal years incidental to acquisitions, see the caption
"Acquisitions" (on page 10) in UPC's Annual Report to Shareholders and Note 2 to
UPC's audited consolidated financial statements for the years ended December 31,
1997, 1996, and 1995 (on pages 49 and 50) contained in such Annual Report to
Shareholders. UPC's Annual Report to Shareholders is included as Exhibit 13 to
the UPC 1997 Form 10-K and Exhibit 13 is incorporated by reference herein to the
extent indicated herein.
The principal executive offices of UPC are located at 7130 Goodlett
Farms Parkway, Memphis, Tennessee 38018, and its telephone number at such
address is (901) 580-6000. Additional information with respect to UPC and its
subsidiaries is included in documents incorporated by reference in this Proxy
Statement. See "Available Information" and "Documents Incorporated by
Reference."
-64-
<PAGE> 74
RECENT DEVELOPMENTS
RECENTLY COMPLETED ACQUISITIONS. Since December 31, 1997, UPC has
completed the acquisitions of two institutions (the "Recently Completed
Acquisitions").
<TABLE>
<CAPTION>
Asset Size
Institution (In millions) Type of Consideration
- ------------------------------------------------- ------------- ---------------------
<S> <C> <C>
Sho-Me Financial Corp, Mt. Vernon, Missouri, $ 374 1,153,459 shares
and its subsidiary, 1st Savings Bank, f.s.b., of UPC Common Stock
Mt. Vernon, Missouri.
Security Bancshares, Inc., Des Arc, Arkansas and 146 490,858 shares
its subsidiaries, Farmers & Merchants Bank, of UPC Common Stock
Des Arc, Arkansas and Merchants & Farmers
Bank, West Helena, Arkansas.
---------
TOTAL $ 520
=========
</TABLE>
OTHER PENDING ACQUISITIONS. UPC has entered into definitive agreements
to acquire the following financial institutions in addition to Transflorida
(collectively, the "Other Pending Acquisitions" and, together with the Recently
Completed Acquisitions, the "Other Acquisitions") which UPC's management
considers probable of consummation and which are expected to close in 1998. The
largest of the Other Pending Acquisitions is UPC's proposed acquisition of
Magna. Magna acquired Charter Financial, Inc., and its subsidiary, Charter Bank,
S.B. on May 1, 1998 (referred to as the "Charter Acquisition") . Charter is
located in Sparta, Illinois and at the time of the Charter Acquisition had total
assets of approximately $406 million. For purposes of this Proxy Statement,
including the pro forma financial information included herein, the term "Other
Pending Acquisitions" includes the Charter Acquisition.
<TABLE>
<CAPTION>
Asset Size Projected
Institution (In millions)(1) Type of Consideration(2) Closing Date
- -------------------------------------- ---------------- ------------------------ ------------
<S> <C> <C> <C>
Magna Group, Inc., St. Louis, Missouri $7,657 Approximately 36,716,861 Third Quarter
and its subsidiary, including Magna shares of UPC Common Stock 1998
Bank, National Association.(3) and $39,620 in cash
Peoples First Corporation, Paducah, 1,493 Approximately 6,338,000 Third Quarter
Kentucky and its subsidiaries, including shares of UPC Common Stock 1998
Peoples First National Bank, Paducah,
Kentucky.
Purchase of 24 branches and assumption 1,465 $110 million deposit premium Third Quarter
of $1.5 billion of deposit liabilities in case 1998
$20,000 of California Federal Bank in
Florida ("CalFed Branch Purchase").
AMBANC Corp., Vincennes, Indiana, N.A., 734 Approximately 3,398,000 Fourth Quarter
and its subsidiaries, AmBank Illinois, shares of UPC Common Stock 1998
N.A., AmBank Indiana, N.A. and American
National Realty Corp.
Merchants Bancshares, Inc., Houston, 552 Approximately 2,000,000 Third Quarter
Texas, and its subsidiary, Merchants shares of UPC Common Stock 1998
Bank, Houston, Texas.
Capital Savings Bancorp, Inc. 232 Approximately 801,000 shares Third Quarter
Jefferson City, Missouri, and its of UPC Common Stock 1998
subsidiary, Capital Savings Bank, FSB,
Jefferson City, Missouri .
CB & T, Inc., McMinnville, Tennessee, 271 Approximately 1,450,000 Third Quarter
and its subsidiary, City Bank & Trust shares of UPC Common Stock 1998
Company, McMinnville, Tennessee.
First National Bancshares of Wetumpka, 217 Approximately 836,000 shares Third Quarter
Inc., Wetumpka, Alabama, and its of UPC Common Stock 1998
subsidiary, First National Bank,
Wetumpka, Alabama.
Alvin Bancshares, Inc., Alvin, Texas, 121 Approximately 425,000 shares Third Quarter
and its subsidiary, Alvin State Bank, of UPC Common Stock 1998
Alvin, Texas.
First Community Bancshares, Inc., 41 Approximately 129,000 shares Third Quarter
Middleton, TN, and its subsidiary, Bank of UPC Common Stock 1998
of Middleton, Middleton, Tennessee.
Duck Hill Bank, Duck Hill, Mississippi. 20 Approximately 42,000 shares Third Quarter
of UPC Common Stock 1998
-------
TOTAL $12,803
=======
</TABLE>
-65-
<PAGE> 75
- ------------------------------------
(1) Approximate total assets at March 31, 1998.
(2) Assumes no adjustment to shares pursuant to exchange ratio adjustment
mechanisms.
(3) Includes the pro-forma impact of the Charter Acquisition.
EARNINGS CONSIDERATIONS RELATED TO THE MERGER AND THE OTHER PENDING
ACQUISITIONS. It is expected that either UPC or the institutions to be acquired
in connection with the Merger and the Other Pending acquisitions will incur
charges arising from such acquisitions and from the assimilation of those
institutions into the UPC organization. Most of the charges are expected to
relate to the Magna and Peoples Acquisitions. Anticipated charges would normally
arise from matters such as, but not limited to: (i) legal, accounting, financial
advisory, and consulting fees; (ii) payment of contractual benefits triggered by
a change of control, early retirement and involuntary separation and related
benefit; (iii) costs associated with elimination of duplicate facilities and
branch consolidations; (iv) data processing charges; (v) cancellation of vendor
contract; and (vi) other contingencies and similar costs which normally arise
from the consolidation of operational activities.
For a discussion of the significant charges UPC has incurred over the
past three years incidental to its acquisition program, see the caption
"Acquisitions" (on page 10) in UPC's Annual Report to Shareholders. UPC's Annual
Report to Shareholders is included as Exhibit 13 to UPC's 1997 Form 10-K and
Exhibit 13 is incorporated by reference herein to the extent indicated herein.
See "Documents Incorporated By Reference."
The Merger and the Other Pending Acquisitions (with the exception of
the Charter Acquisition which was, and the Duck Hill Bank Acquisition and the
CalFed Branch Purchase which are expected to be, accounted for as a purchase)
are expected to be accounted for as pooling of interests. UPC currently
estimates incurring aggregate charges in the range of $100 million to $115
million (approximately $91 million related to Magna) before taxes in connection
with the consummation of the Merger and the Other Pending Acquisitions. On an
after tax basis, these charges are estimated in the range of $75 million to $85
million (approximately $61 million related to Magna). To the extent that UPC's
recognition of these acquisition-related charges is contingent upon consummation
of a particular transaction, those charges would be recognized in the period in
which such transaction closes.
The range 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. The charges are reflected in the pro forma
consolidated balance sheet. Moreover, this range has been based on the due
diligence that has been performed to date in connection with the Merger and the
Other Pending Acquisitions and the range may be subject to change and the
actual charges
-66-
<PAGE> 76
incurred may be higher or lower than what is currently contemplated, once those
institutions are assimilated from an operational perspective and various
contingencies are either satisfied or eliminated. Furthermore, the range of
anticipated charges will change if additional entities are acquired. UPC
regularly evaluates the potential acquisition of, and holds discussions with,
various potential acquisition candidates. As a general rule, UPC will publicly
announce such acquisitions only after a definitive agreement has been reached,
and only then if UPC considers the acquisition to be of such a size as to be a
significant acquisition. Since the range of anticipated acquisition related
charges is likely to change with additional acquisitions, and since UPC
regularly engages in acquisitions, such range could change, and Transflorida's
shareholders should view such information accordingly.
For information with respect to the pro forma effect of the Other
Acquisition on the historical financial statements of UPC, see "Pro Forma
Condensed Consolidated Financial Information."
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following tables contain unaudited pro forma condensed consolidated
financial statements including a balance sheet as of March 31, 1998, and
statements of earnings for the three months ended March 31, 1998 and the years
ended December 31, 1997, 1996, and 1995. These statements present on a pro forma
basis historical results for (i) UPC for all periods, (ii) UPC and Magna for all
periods, (iii) UPC, Transflorida, and the Other Acquisitions as of and for the
three months ended March 31, 1998 and the year ended December 31, 1997, and (iv)
UPC, Magna, Peoples, AMBANC, and Merchants for the years ended December 31, 1996
and 1995 (see "Business of UPC -- Recent Developments -- Other Pending
Acquisitions").
The Merger and all but four of the Other Acquisitions are expected to
be accounted for using the pooling-of-interests method of accounting. The pro
forma information as of March 31, 1998 and for the three months ended March 31,
1998, and the year ended December 31, 1997, reflect the acquisition of
Transflorida, Magna, and the Other Acquisitions as of January 1, 1997. The pro
forma information for the years ended December 31, 1996 and 1995, reflect only
the acquisition of Magna, Peoples, AMBANC, and Merchants, because Transflorida
and the Other Acquisitions (other than Magna, Peoples, AMBANC, and Merchants)
are not individually or in the aggregate, considered material to UPC from a
financial statement presentation standpoint. Furthermore, the pro forma impact
of the CalFed Branch Purchase on the pro forma statement of earnings for the
periods presented has been excluded due to the lack of information available for
operation of the branches on a historical basis. Pro forma financial information
are presented for information purposes only and are not necessarily indicative
of the results of operations or combined financial position that would have
resulted had the Merger or the Other Acquisitions been consummated at the dates
or during the periods indicated, nor are they necessarily indicative of future
results of operations or combined financial position. The pro forma balance
sheet reflects preliminary estimates by UPC of acquisition-related charges to be
incurred in connection with consummation of the Merger and Other Acquisitions;
however, the statement of earnings does not reflect these changes. For
additional information with respect to the estimated charges UPC anticipates it
would incur in connection with the Merger and the Other Acquisitions, see
"Business of UPC -- Recent Developments." For a discussion of UPC's acquisition
program, including a discussion of the significant charges UPC has incurred
incidental to acquisitions over the past three fiscal years, see the caption
"Acquisitions" (on page 10) in UPC's 1997 Annual Report to Shareholders and Note
2 to UPC's audited consolidated financial statements for the years ended
December 31, 1997, 1996, and 1995 (on pages 49 and 50) contained in such UPC
1997 Annual Report to Shareholders. UPC's 1997 Annual Report to Shareholders is
included as Exhibit 13 to UPC's 1997 Form 10-K, and Exhibit 13 is incorporated
by reference herein to the extent indicated herein. See "Documents Incorporated
By Reference."
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the consolidated historical financial
statements of UPC and Transflorida which are incorporated by reference or
included herein. Pro forma results are not necessarily indicative of future
operating results. See "Documents Incorporated by Reference" and "Index to
Consolidated Financial Statements."
-67-
<PAGE> 77
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
UPC, MAGNA,
UPC TRANSFLORIDA,
PRO FORMA AND AND OTHER
UPC MAGNA ADJUSTMENTS MAGNA ACQUISITIONS
------------ ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks ................................... $ 660,528 $ 220,317 $ 880,845 $ 1,008,839
Interest-bearing deposits at financial institutions ....... 20,425 -- 20,425 49,640
Federal funds sold and securities purchased under
agreements to resell ................................... 309,415 95,126 404,541 545,801
Trading account assets .................................... 163,698 -- 163,698 163,698
Loans held for resale ..................................... 253,021 -- 253,021 259,017
Investment securities, at fair value ...................... 3,287,664 2,239,113 5,526,777 7,812,071
Loans ..................................................... 12,754,653 4,379,021 17,133,674 20,272,013
Less: Unearned income ................................. (26,994) (93) (27,087) (34,152)
Allowance for losses on loans ................... (223,837) (59,928) (283,765) (320,107)
------------ ----------- ---------- ------------ ------------
Net loans ............................................. 12,503,822 4,319,000 16,822,822 19,917,754
Premises and equipment .................................... 338,799 117,253 456,052 534,387
Accrued interest receivable ............................... 196,595 46,523 243,118 279,665
FHA/VA claims receivable .................................. 138,626 138,626 138,626
Mortgage servicing rights ................................. 98,089 1,237 99,326 99,832
Goodwill and other intangibles ............................ 78,927 120,951 199,878 375,339
Other assets .............................................. 364,005 91,098 $ 29,060 (b) 484,163 519,252
------------ ----------- ---------- ------------ ------------
Total assets .......................................... $ 18,413,614 $ 7,250,618 $ 29,060 $ 25,693,292 $ 31,703,921
============ =========== ========== ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing .................................... $ 2,290,776 $ 641,300 $ 2,932,076 $ 3,781,318
Certificates of deposit of $100,000 and over ........... 1,417,728 932,141 2,349,869 2,854,920
Other interest-bearing ................................. 9,872,723 3,973,247 13,845,970 17,696,215
------------ ----------- ---------- ------------ ------------
Total deposits .................................... 13,581,227 5,546,688 -- 19,127,915 24,332,453
Short-term borrowings ..................................... 442,051 891,706 1,333,757 1,365,605
Short and Medium-term bank notes .......................... 135,000 135,000 139,743
Federal Home Loan Bank advances ........................... 846,291 106,370 952,661 1,215,073
Other long-term debt ...................................... 1,022,644 9,513 1,032,157 1,037,766
Accrued interest, expenses and taxes ...................... 182,422 76,604 $ 90,511 (b) 349,537 406,185
Other liabilities ......................................... 394,537 8,759 403,296 410,918
------------ ----------- ---------- ------------ ------------
Total liabilities ................................. 16,604,172 6,639,640 $ 90,511 23,334,323 28,907,743
------------ ----------- ---------- ------------ ------------
Shareholders' equity
Convertible preferred stock ............................ 36,972 40 37,012 37,012
Common stock ........................................... 419,326 68,075 89,631 (a) 577,032 662,544
Additional paid-in capital.............................. 272,157 343,601 (150,257)(a) 457,905 580,938
(7,596)(b)
Retained earnings ...................................... 1,060,029 267,982 (61,451)(b) 1,266,560 1,489,763
Treasury stock ......................................... -- (60,626) 60,626 (a) -- --
Unearned compensation .................................. (9,550) (7,596) 7,596 (b) (9,550) (10,021)
Net unrealized gain on available for sale securities ... 30,508 (498) 30,010 35,942
------------ ----------- ---------- ------------ ------------
Total shareholder' equity ............................... 1,809,442 610,978 (61,451) 2,358,969 2,796,178
------------ ----------- ---------- ------------ ------------
Total liabilities and shareholders' equity ........ $ 18,413,614 $ 7,250,618 $ 29,060 $ 25,693,292 $ 31,703,921
============ =========== ========== ============ ============
</TABLE>
- ------------
(a) Issuance of shares to acquire Magna (32,563,752 Magna shares
outstanding times the exchange ratio of .9686 equals 31,541,250 shares
of UPC Common Stock to be issued).
(b) Acquisition related charges, see "Business of UPC -- Recent
Developments" and "-- Earnings Considerations Related to the Merger and
the Other Pending Acquisitions."
-68-
<PAGE> 78
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
UPC, MAGNA,
UPC TRANSFLORIDA,
AND AND OTHER
UPC MAGNA ACQUISITIONS
-------- -------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ......................... $292,160 $388,325 $465,341
Interest on investment securities
Taxable ......................................... 41,475 69,870 83,000
Tax-exempt ...................................... 7,066 10,836 13,777
Interest on deposits at financial institutions ..... 424 470 735
Interest on federal funds sold and securities
purchased under agreements to resell ............ 2,710 4,837 6,387
Interest on trading account assets ................. 3,020 3,020 3,020
Interest on loans held for resale .................. 2,280 2,280 2,383
-------- -------- --------
Total interest income .......................... 349,135 479,638 574,643
-------- -------- --------
INTEREST EXPENSE
Interest on deposits ............................... 124,085 179,549 221,207
Interest on short-term borrowings .................. 6,016 17,237 21,987
Interest on long-term debt ......................... 28,327 29,936 30,779
-------- -------- --------
Total interest expense .......................... 158,428 226,722 273,973
-------- -------- --------
Net interest income ............................. 190,707 252,916 300,670
Provision for losses on loans ......................... 17,909 21,459 24,775
-------- -------- --------
Net interest income after provision for
losses on loans ............................. 172,798 231,457 275,895
NONINTEREST INCOME
Service charges on deposit accounts ................ 25,746 32,074 36,435
Mortgage servicing income .......................... 16,191 16,453 16,890
Bank card income ................................... 7,498 9,426 9,641
Factoring commissions .............................. 7,304 7,304 7,304
Trust service income ............................... 2,407 5,723 6,381
Profits and commissions from trading activities .... 1,847 1,848 1,848
Investment securities gains ........................ 5,215 5,811 6,552
Other income ....................................... 29,510 41,058 43,559
-------- -------- --------
Total noninterest income ...................... 95,718 119,697 128,610
-------- -------- --------
NONINTEREST EXPENSE
Salaries and employee benefits ..................... 73,230 96,595 113,940
Net occupancy expense .............................. 10,644 15,473 18,137
Equipment expense .................................. 10,997 13,694 16,052
Other expense ...................................... 58,753 77,892 90,669
-------- -------- --------
Total noninterest expense ....................... 153,624 203,654 238,798
-------- -------- --------
Earnings before income taxes .................... 114,892 147,500 165,707
Applicable income taxes ............................... 40,320 52,417 59,139
-------- -------- --------
Net earnings .................................... $ 74,572 95,083 106,568
======== ====== =======
EARNINGS PER COMMON SHARE
Basic .............................................. $ 0.89 $ 0.82 $ 0.80
Diluted ............................................ 0.86 0.79 0.78
Weighted average shares outstanding (in thousands)
Basic .............................................. 83,379 114,868 131,931
Diluted ............................................ 86,974 120,157 137,409
</TABLE>
-69-
<PAGE> 79
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
UPC, MAGNA,
UPC TRANSFLORIDA,
AND AND OTHER
UPC MAGNA ACQUISITIONS
---------- ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ........................................ $1,165,925 $1,536,829 $1,839,742
Interest on investment securities
Taxable ........................................................ 187,221 290,351 343,598
Tax-exempt ..................................................... 29,032 40,516 52,133
Interest on deposits at financial institutions .................... 2,627 2,627 3,179
Interest on federal funds sold and securities purchased under
agreements to resell .......................................... 9,114 13,760 18,554
Interest on trading account assets ................................ 14,956 14,956 14,956
Interest on loans held for resale ................................. 7,819 7,819 7,982
---------- ---------- ----------
Total interest income ......................................... 1,416,694 1,906,858 2,280,144
---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits .............................................. 494,517 698,778 860,526
Interest on short-term borrowings ................................. 41,280 81,980 104,620
Interest on long-term debt ........................................ 110,512 116,687 120,184
---------- ---------- ----------
Total interest expense ......................................... 646,309 897,445 1,085,330
---------- ---------- ----------
Net interest income ............................................ 770,385 1,009,413 1,194,814
Provision for losses on loans ........................................ 113,633 142,580 154,163
---------- ---------- ----------
Net interest income after provision for losses on loans ........ 656,752 866,833 1,040,651
NONINTEREST INCOME
Service charges on deposit accounts ............................... 107,248 133,352 151,454
Mortgage servicing income ......................................... 57,265 57,265 58,051
Bank card income .................................................. 31,317 38,544 39,239
Factoring commissions ............................................. 30,140 30,140 30,140
Trust service income .............................................. 9,020 21,663 24,355
Profits and commissions from trading activities ................... 7,295 7,295 7,295
Investment securities gains ....................................... 2,104 4,688 5,481
Other income ...................................................... 117,221 139,945 153,075
---------- ---------- ----------
Total noninterest income ..................................... 361,610 432,892 469,090
---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits .................................... 284,648 372,959 440,212
Net occupancy expense ............................................. 44,813 64,140 73,676
Equipment expense ................................................. 43,812 53,579 62,466
Other expense ..................................................... 324,431 379,663 430,225
---------- ---------- ----------
Total noninterest expense ...................................... 697,704 870,341 1,006,579
---------- ---------- ----------
Earnings before income taxes ................................... 320,658 429,384 503,162
Applicable income taxes .............................................. 111,897 147,948 173,787
---------- ---------- ----------
Net earnings ................................................... $ 208,761 $ 281,436 $ 329,375
========== ========== ==========
EARNINGS PER COMMON SHARE
Basic ............................................................. $ 2.54 $ 2.48 $ 2.52
Diluted ........................................................... 2.45 2.40 2.45
Weighted average shares outstanding (in thousands)
Basic ............................................................. 80,336 111,418 128,555
Diluted ........................................................... 85,195 117,884 135,180
</TABLE>
-70-
<PAGE> 80
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
UPC, MAGNA,
UPC PEOPLES, AMBANC,
AND AND
UPC MAGNA MERCHANTS
---------- ---------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ........................................ $1,095,148 $1,380,299 $1,535,342
Interest on investment securities
Taxable ........................................................ 247,716 340,745 372,233
Tax-exempt ..................................................... 30,839 37,980 45,560
Interest on deposits at financial institutions .................... 1,593 1,593 1,910
Interest on federal funds sold and securities purchased under
agreements to resell .......................................... 16,948 19,462 21,664
Interest on trading account assets ................................ 13,895 13,895 13,895
Interest on loans held for resale ................................. 6,852 6,852 7,241
---------- ---------- ----------
Total interest income ......................................... 1,412,991 1,800,826 1,997,845
---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits .............................................. 512,668 670,856 755,680
Interest on short-term borrowings ................................. 64,689 93,501 100,543
Interest on long-term debt ........................................ 90,782 97,530 97,680
---------- ---------- ----------
Total interest expense ......................................... 668,139 861,887 953,903
---------- ---------- ----------
Net interest income ............................................ 744,852 938,939 1,043,942
Provision for losses on loans ........................................ 68,948 79,228 84,198
---------- ---------- ----------
Net interest income after provision for losses on loans ........ 675,904 859,711 959,744
NONINTEREST INCOME
Service charges on deposit accounts ............................... 107,535 130,978 141,119
Mortgage servicing income ......................................... 63,003 63,003 63,003
Bank card income .................................................. 24,975 30,988 31,636
Factoring commissions ............................................. 26,066 26,066 26,066
Trust service income .............................................. 10,130 19,512 21,496
Profits and commissions from trading activities ................... 5,765 5,765 5,765
Investment securities gains ....................................... 4,099 4,916 4,942
Other income ...................................................... 78,929 89,632 94,739
---------- ---------- ----------
Total noninterest income ..................................... 320,502 370,860 388,766
---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits .................................... 282,726 351,868 388,972
Net occupancy expense ............................................. 47,215 65,195 70,142
Equipment expense ................................................. 44,418 53,149 60,704
Other expense ..................................................... 357,458 399,991 422,915
---------- ---------- ----------
Total noninterest expense ...................................... 731,817 870,203 942,733
---------- ---------- ----------
Earnings before income taxes ................................... 264,589 360,368 405,777
Applicable income taxes .............................................. 93,115 125,755 139,649
---------- ---------- ----------
Net earnings ................................................... $ 171,474 $ 234,613 $ 266,128
========== ========== ==========
EARNINGS PER COMMON SHARE
Basic ............................................................. $ 2.13 $ 2.18 $ 2.24
Diluted ........................................................... 2.05 2.11 2.17
Weighted average shares outstanding (in thousands)
Basic ............................................................. 77,240 104,539 115,726
Diluted ........................................................... 83,542 112,425 123,714
</TABLE>
-71-
<PAGE> 81
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
UPC, MAGNA,
UPC PEOPLES,
AND AMBANC, AND
UPC MAGNA MERCHANTS
---------- ---------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ........................................ $ 986,230 $1,252,376 $1,388,252
Interest on investment securities
Taxable ........................................................ 202,890 274,743 304,771
Tax-exempt ..................................................... 32,400 39,666 47,200
Interest on deposits at financial institutions .................... 5,284 5,284 6,153
Interest on federal funds sold and securities purchased under
agreements to resell .......................................... 19,965 21,868 24,547
Interest on trading account assets ................................ 14,191 14,191 14,191
Interest on loans held for resale ................................. 4,858 4,858 5,184
---------- ---------- ----------
Total interest income ......................................... 1,265,818 1,612,986 1,790,298
---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits .............................................. 478,641 616,666 695,224
Interest on short-term borrowings ................................. 44,492 64,725 70,706
Interest on long-term debt ........................................ 73,234 79,293 79,674
---------- ---------- ----------
Total interest expense ......................................... 596,367 760,684 845,604
---------- ---------- ----------
Net interest income ............................................ 669,451 852,302 944,694
Provision for losses on loans ........................................ 33,917 43,909 47,393
---------- ---------- ----------
Net interest income after provision for losses on loans ........ 635,534 808,393 897,301
NONINTEREST INCOME
Service charges on deposit accounts ............................... 102,932 125,419 134,243
Mortgage servicing income ......................................... 55,903 55,903 55,903
Bank card income .................................................. 20,758 26,559 27,124
Factoring commissions ............................................. 19,519 19,519 19,519
Trust service income .............................................. 8,326 16,964 18,786
Profits and commissions from trading activities ................... 12,362 12,362 12,362
Investment securities gains ....................................... 1,433 1,789 2,008
Other income ...................................................... 72,477 83,058 87,381
---------- ---------- ----------
Total noninterest income ..................................... 293,710 341,573 357,326
---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits .................................... 264,663 337,656 371,136
Net occupancy expense ............................................. 44,061 61,738 66,224
Equipment expense ................................................. 42,251 51,218 57,289
Other expense ..................................................... 256,214 302,794 324,295
---------- ---------- ----------
Total noninterest expense ...................................... 607,189 753,406 818,944
---------- ---------- ----------
Earnings before income taxes ................................... 322,055 396,560 435,683
Applicable income taxes .............................................. 110,799 134,082 145,486
---------- ---------- ----------
Net earnings ................................................... $ 211,256 $ 262,478 $ 290,197
========== ========== ==========
EARNINGS PER COMMON SHARE
Basic ............................................................. $ 2.79 $ 2.56 $ 2.56
Diluted ........................................................... 2.66 2.46 2.46
Weighted average shares outstanding (in thousands)
Basic ............................................................. 72,512 99,346 110,196
Diluted ........................................................... 78,798 106,632 117,604
</TABLE>
-72-
<PAGE> 82
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material elements of
the regulatory framework applicable to banks and bank holding companies and
provides certain specific information related to UPC. A more complete discussion
is included in the UPC 1997 Form 10-K. Information relating to Transflorida is
included in the financial statements of Transflorida attached hereto. See
"Available Information," "Documents Incorporated by Reference," and "Index to
Consolidated Financial Statements."
GENERAL
UPC is a bank holding company registered with the Federal Reserve under
the BHC Act. As such, UPC and its non-bank subsidiaries are subject to the
supervision, examination, and reporting requirements of the BHC Act and the
regulations of the Federal Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on
Transflorida adequacy which is discussed below, and consideration of convenience
and needs issues includes the parties' performance under the Community
Reinvestment Act of 1977.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Interstate
Banking Act"), which became effective in September 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that UPC and any other bank holding company located in Tennessee
may now acquire a bank located in any other state, and any bank holding company
located outside Tennessee may lawfully acquire any Tennessee-based bank,
regardless of state law to the contrary, in either case subject to certain
deposit-percentage limitations, aging requirements, and other restrictions. The
Interstate Banking Act also generally provides that, after June 1, 1997,
national and state-chartered banks may branch interstate through acquisitions of
banks in other states. By adopting legislation prior to that date, a state has
the ability either to "opt in" and accelerate the date after which interstate
branching is permissible or "opt out" and prohibit interstate branching
altogether. None of the states in which the banking subsidiaries of UPC are
currently located or intends to be located through an Other Pending Acquisition
(other than Texas, which elected to opt-out pursuant to legislation that expires
September 2, 1999), has either moved up the date after which interstate
branching will be permissible or "opted out." UPC utilized the provisions of the
Interstate Banking Act at the end of 1997 to merge substantially all of UPC's
Banking Subsidiaries with and into UPBNA. As a result of such consolidation,
UPBNA is now a multi-state national bank with branches in Alabama, Arkansas,
Kentucky, Louisiana, Mississippi, Missouri, and Tennessee.
The BHC Act generally prohibits UPC from engaging in activities other
than banking or managing or controlling banks or other permissible subsidiaries
and from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. In determining whether a particular activity is
permissible, the Federal Reserve must consider whether the performance of such
an activity reasonably can be expected to produce benefits to the public, such
as greater convenience, increased competition, or
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gains in efficiency, that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of
interest, or unsound banking practices. For example, factoring accounts
receivable, acquiring or servicing loans, leasing personal property, conducting
discount securities brokerage activities, performing certain data processing
services, acting as agent or broker in selling credit life insurance and certain
other types of insurance in connection with credit transactions, and performing
certain insurance underwriting activities all have been determined by the
Federal Reserve to be permissible activities of bank holding companies. The BHC
Act does not place territorial limitations on permissible nonbanking activities
of bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a holding company or its subsidiaries to terminate any activity
or to terminate its ownership or control of any subsidiary when it has
reasonable cause to believe that continuation of such activity or such ownership
or control constitutes a serious risk to the financial safety, soundness, or
stability of any bank subsidiary of that bank holding company.
Each of the UPC Banking Subsidiaries is a member of the Federal Deposit
Insurance Corporation ("FDIC"), and as such, its deposits are insured by the
FDIC to the extent provided by law. Each such subsidiary is also subject to
numerous state and federal statutes and regulations that affect is business,
activities, and operations, and each is supervised and examined by one or more
state or federal bank regulatory agencies.
The regulatory agencies having supervisory jurisdiction over the
respective subsidiary institutions of UPC and Transflorida (the FDIC and the
applicable state authority in the case of state-chartered nonmember banks, the
OTS in the case of federally chartered thrift institutions, the Federal Reserve
in the case of state-chartered member banks, and the Office of the Comptroller
of the Currency ("OCC") in the case of national banks) regularly examine the
operations of such institutions and have authority to approve or disapprove
mergers, consolidations, the establishment of branches, and similar corporate
actions. The federal and state banking regulators also have the power to prevent
the continuance or development of unsafe or unsound banking practices or other
violations of law.
PAYMENT OF DIVIDENDS
UPC is a legal entity separate and distinct from its banking and other
subsidiaries. The principal sources of cash flow of UPC, including cash flow to
pay dividends to its shareholders, are dividends from its subsidiary depository
institutions. There are statutory and regulatory limitations on the payment of
dividends by these subsidiary depository institutions to UPC and Transflorida,
as well as by UPC and Transflorida to their shareholders.
As to the payment of dividends, each of UPC's state-chartered banking
subsidiaries is subject to the respective laws and regulations of the state in
which such bank is located, and to the regulations of the bank's primary federal
regulator. UPBNA is subject to the regulations of the OCC.
If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's Transflorida base to an inadequate level
would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-- Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
At March 31, 1998, under dividend restrictions imposed under federal
and state laws, the UPC Banking Subsidiaries, without obtaining governmental
approvals, could declare aggregate dividends to UPC of approximately $172.4
million.
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The payment of dividends by UPC and the UPC Banking Subsidiaries may
also be affected or limited by other factors, such as the requirement to
maintain adequate Transflorida above regulatory guidelines.
CAPITAL ADEQUACY
UPC and the UPC Banking Subsidiaries are required to comply with the
capital adequacy standards established by the Federal Reserve in the case of
UPC, and the appropriate federal banking regulator in the case of each of the
UPC Banking Subsidiaries. There are two basic measures of capital adequacy for
bank holding companies and their subsidiary depository institutions that have
been promulgated by the Federal Reserve and each of the federal bank regulatory
agencies: a risk-based measure and a leverage measure. All applicable capital
standards must be satisfied for a bank holding company to be considered in
compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among
depository institutions and bank holding companies, to account for
off-balance-sheet exposure, and to minimize disincentives for holding liquid
assets. Assets and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio ("Total Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At March 31, 1998, UPC's consolidated Total Capital Ratio and its Tier 1 Capital
Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 20.71%
and 15.66%, respectively.
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 Transflorida to average assets, less
goodwill and certain other intangible assets, of 3.0% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points. UPC's Leverage Ratio at March 31, 1998, was 10.72%. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong Capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Each of the UPC Banking Subsidiaries is subject to risk-based and
leverage capital requirements adopted by its federal banking regulatory which
are substantially similar to those adopted by the Federal Reserve for bank
holding companies. Each of the UPC Banking Subsidiaries was in compliance with
applicable minimum capital requirements as of March 31 , 1998. Neither UPC nor
any of the UPC Banking Subsidiaries has been advised by any federal banking
agency of any specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
"-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the FDIC, and the OCC have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
that would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and
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would require banks with excessive interest rate risk exposure to hold
additional amounts of capital against such exposures. The OTS has already
included an interest-rate risk component in its risk-based capital guidelines
for savings associations that it regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, UPC is expected to act as a source of
financial strength for, and to commit resources to support, each of the UPC
Banking Subsidiaries. This support may be required at times when, absent such
Federal Reserve policy, UPC may not be inclined to provide it. In addition, any
capital loans by a bank holding company to any of its banking subsidiaries are
subordinate in right of payment to deposits and to certain other indebtedness of
such banks. In the event of a bank holding company's bankruptcy, any commitment
by the bank holding company to a federal bank regulatory agency to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
Under the Federal Deposit Insurance Act (the "FDIA"), a depository
institution insured by the FDIC can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default." "Default"
is defined generally as the appointment of a conservator or receiver, and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. The FDIC's claim for damages is superior to claims of shareholders
of the insured depository institution or its holding company, but is subordinate
to claims of depositors, secured creditors, and holders of subordinated debt
(other than affiliates) of the commonly controlled insured depository
institution. The UPC Banking Subsidiaries are subject to these cross-guarantee
provisions. As a result, any loss suffered by the FDIC in respect of any of
these subsidiaries would likely result in assertion of the cross-guarantee
provisions, the assessment of such estimated losses against the depository
institution's banking or thrift affiliates, and a potential loss of UPC's
respective investments in such other subsidiary depository institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital in which the institution is placed. Generally, subject to a narrow
exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant Transflorida level
for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital Ratio of 10% or greater,
a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be well capitalized. An institution with a
Total Capital Ratio of 8.0% or greater, a Tier 1 Capital Ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be adequately
Capitalized. A depository institution that has a Total Capital Ratio of less
than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a Leverage Ratio of less
than 4.0% is considered to be undercapitalized. A depository institution that
has a Total Capital Ratio of less than 6.0%, a Tier 1 Capital Ratio of less than
3.0%, or a Leverage Ratio of less than 3.0% is considered to be significantly
undercapitalized, and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be critically
undercapitalized. For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A
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<PAGE> 86
depository institution may be deemed to be in a capitalization category that is
lower than is indicated by its actual capital position if it receives an
unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meet its capital restoration plan, subject to certain limitations.
The obligation of a controlling bank holding company under FDICIA to fund a
capital restoration plan is limited to the lesser of 5.0% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved Transflorida restoration plan, the
appropriate federal banking agency must require the institution to take one or
more of the following actions: (i) sell enough shares, including voting shares,
to become adequately capitalized; (ii) merge with (or be sold to) another
institution (or holding company), but only if grounds exist for appointing a
conservator or receiver; (iii) restrict certain transactions with banking
affiliates as if the "sister bank" exception to the requirements of Section 23A
of the Federal Reserve Act did not exist; (iv) otherwise restrict transactions
with bank or non-bank affiliates; (v) restrict interest rates that the
institution pays on deposits to "prevailing rates" in the institution's
"region;" (vi) restrict asset growth or reduce total assets; (vii) alter,
reduce, or terminate activities; (viii) hold a new election of directors; (ix)
dismiss any director or senior executive officer who held office for more than
180 days immediately before the institution became undercapitalized, provided
that in requiring dismissal of a director or senior officer, the agency must
comply with certain procedural requirements, including the opportunity for an
appeal in which the director or officer will have the burden of proving his or
her value to the institution; (x) employ "qualified" senior executive officers;
(xi) cease accepting deposits from correspondent depository institutions; (xii)
divest certain nondepository affiliates which pose a danger to the institution;
or (xiii) be divested by a parent holding company. In addition, without the
prior approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer.
At April 30, 1998, all of the UPC Banking Subsidiaries had the
requisite capital levels to qualify as well capitalized. An institution's
Transflorida category is determined solely for the purposes of applying the
prompt corrective action law and it may not constitute an accurate
representation of an institution's overall financial condition or prospects.
DESCRIPTION OF UPC CAPITAL STOCK
UPC's Charter currently authorizes the issuance of 300,000,000 shares
of UPC Common Stock and 10,000,000 shares of UPC Preferred Stock. As of May 31,
1998, 84,970,899 shares of UPC Common Stock were outstanding and approximately
7,792,332 shares were earmarked for issuance with currently outstanding UPC
options, UPC's dividend reinvestment plan, and with respect to conversion rights
of currently outstanding UPC Series E Preferred stock (defined below). In
addition, as of May 31, 1998, 1,156,231 shares of the Series E Preferred Stock
were outstanding. As of May 31, 1998, none of UPC's 750,000 authorized shares of
Series A Preferred Stock were issued and outstanding nor is management aware of
the existence of circumstances from which it may be inferred that such issuance
is imminent. THE CAPITAL STOCK OF UPC DOES NOT REPRESENT OR CONSTITUTE A DEPOSIT
ACCOUNT AND IS NOT INSURED BY THE FDIC, THE BANK INSURANCE FUND, THE SAVINGS
ASSOCIATION INSURANCE FUND, OR ANY GOVERNMENTAL AGENCY.
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<PAGE> 87
UPC COMMON STOCK
GENERAL. Shares of UPC Common Stock may be issued at such time or times
and for such consideration (not less than the par value thereof) as the UPC
Board may deem advisable, subject to such limitations as may be set forth in the
laws of the State of Tennessee, the UPC Charter or Bylaws, or the rules of the
NYSE.
DIVIDENDS. Subject to the preferential dividend rights applicable to
outstanding shares of the UPC Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for purchase,
retirement, or sinking funds, if any, for all outstanding UPC Preferred Stock,
the holders of the UPC Common Stock are entitled to receive, to the extent
permitted by law, only such dividends as may be declared from time to time by
the UPC Board.
UPC has the right to, and may from time to time, enter into borrowing
arrangements or issue other debt instruments, the provisions of which may
contain restrictions on payment of dividends and other distributions on UPC
Common Stock and UPC Preferred Stock. In December, 1996, UPC caused to be issued
$200,000,000 in aggregate liquidation amount of 8.20% Capital Trust Pass-through
Securities ("UPC Capital Securities") through a Delaware trust subsidiary.
Pursuant to the terms of the governing instruments, UPC would be prohibited from
paying dividends on any Capital Stock if all quarterly payments on the UPC
Transflorida Securities had not been paid in full. The UPC Capital Securities
mature in 2026 and may be redeemed under certain circumstances prior to
maturity.
LIQUIDATION RIGHTS. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets, or winding-up of UPC, after
distribution in full of the preferential amounts required to be distributed to
the holders of UPC Preferred Stock, holders of UPC Common Stock will be entitled
to receive all of the remaining assets of UPC, of whatever kind, available for
distribution to shareholders ratably in proportion to the number of shares of
UPC Common Stock held. The UPC Board may distribute in kind to the holders of
UPC Common Stock such remaining assets of UPC or may sell, transfer, or
otherwise dispose of all or any part of such remaining assets to any other
person or entity and receive payment therefor in cash, stock, or obligations of
such other person or entity, and may sell all or any part of the consideration
so received and distribute any balance thereof in kind to holders of UPC Common
Stock. Neither the merger or consolidation of UPC into or with any other
corporation, nor the merger of any other corporation into UPC, nor any purchase
or redemption of shares of stock of UPC of any class, shall be deemed to be a
dissolution, liquidation, or winding-up of UPC for purposes of this paragraph.
Because UPC is a holding company, its right and the rights of its
creditors and shareholders, including the holders of UPC Preferred Stock and UPC
Common Stock, to participate in the distribution of assets of a subsidiary on
its liquidation or recapitalization may be subject to prior claims of such
subsidiary's creditors except to the extent that UPC itself may be a creditor
having recognized claims against such subsidiary.
For a further description of UPC Common Stock, see "Effect of the
Merger on Rights of Shareholders."
UPC PREFERRED STOCK
SERIES A PREFERRED STOCK. The UPC Charter provides for the issuance of
up to 750,000 shares (subject to adjustment by action of the UPC Board) of
Series A Preferred Stock under certain circumstances involving a potential
change in control of UPC. None of such shares are outstanding and management is
aware of no facts suggesting that issuance of such shares may be imminent. The
Series A Preferred Stock is described in more detail in UPC's Registration
Statement on Form 8-A, dated January 19, 1989, and filed February 1, 1989 (SEC
File No. 0-6919) which is incorporated by reference herein.
SERIES E PREFERRED STOCK. As of May 31, 1998, 1,156,231 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
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rate of 1.25 shares of UPC Common Stock for each share of Series E Preferred
Stock. The Series E Preferred Stock is not subject to any sinking fund
provisions and has no preemptive rights. Such shares have a liquidation
preference of $25.00 per share plus unpaid dividends accrued thereon and, at
UPC's option and with the prior approval of the Federal Reserve, are subject to
redemption by UPC at any time at a redemption price of $25.00 per share plus any
unpaid dividends accrued thereon. Holders of Series E Preferred Stock have no
voting rights except as required by law and in certain other limited
circumstances. See "Certain Regulatory Considerations -- Payment of Dividends."
SHAREHOLDER PROPOSALS
UPC expects to hold its next annual meeting of shareholders after the
Merger in April 1999. Under SEC rules, proposals of UPC shareholders intended to
be presented at that meeting must be received by UPC at its principal executive
offices no later than the date specified in UPC's 1998 Annual Meeting proxy
statement.
EXPERTS
The consolidated financial statements of UPC and subsidiaries
incorporated in this Proxy Statement by reference to the UPC Annual Report on
Form 10-K for the year ended December 31, 1997, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Transflorida and subsidiaries
as of and for the years ended December 31, 1997 and 1996 and December 31, 1996
and 1995 included in this Proxy Statement have been audited by Coopers & Lybrand
LLP, independent accountants, as stated in their reports, which are included
herein, and have been so included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
OPINIONS
The legality of the shares of UPC Common Stock to be issued in the
Merger will be passed upon by E. James House, Jr., Secretary and Manager of the
Legal Department of UPC. E. James House, Jr. is an officer of, and receives
compensation from UPC.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird llp, Washington, D.C.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TRANSFLORIDA BANK AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Balance Sheets as of March 31, 1998 and 1997 (Unaudited) ................................... F-2
Consolidated Statements of Income as of and for the Three Months Ended
March 31, 1998 and 1997 (Unaudited) ................................................................. F-3
Report of Independent Accountants ....................................................................... F-4
Consolidated Balance Sheets as of December 31, 1997 and 1996 ............................................ F-5
Consolidated Statements of Income for the Years Ended December 31, 1997 and 1996 ........................ F-6
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1997 and 1996 .......... F-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997 and 1996 .................... F-8
Notes to Consolidated Financial Statements .............................................................. F-9
Report of Independent Accountants ....................................................................... F-23
Consolidated Balance Sheets as of December 31, 1996 and 1995 ............................................ F-24
Consolidated Statements of Income for the Years Ended December 31, 1996 and 1995 ........................ F-25
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1996 and 1995 .......... F-26
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996 and 1995 .................... F-27
Notes to Consolidated Financial Statements .............................................................. F-28
</TABLE>
F-1
<PAGE> 90
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31,
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
ASSETS:
Cash and due from banks ....................................... $ 7,091,779 $ 6,572,751
Federal funds sold ............................................ 62,480,189 40,387,981
------------ ------------
Total cash and cash equivalent ............................ 69,571,968 46,960,732
Interest bearing deposits with banks .......................... -- 196,000
Securities, available for sale, at estimated
fair value..................................................... 1,527,390 2,814,259
Securities, held to maturity, at amortized cost ............... 32,187,164 45,051,737
Loans, net .................................................... 198,656,711 186,285,736
Other real estate owned ....................................... 6,473,025 4,885,155
Land held for development ..................................... -- --
Land held for construction .................................... -- --
Premises and equipment ........................................ 6,794,563 5,415,054
Accrued interest receivable ................................... 2,378,608 2,361,883
Other assets .................................................. 592,504 591,438
------------ ------------
Total assets ......................................... $318,181,933 $294,561,994
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Deposits
Demand ............................................... $ 28,057,372 $ 26,081,691
Money market and NOW accounts ........................ 49,438,516 34,984,429
Savings .............................................. 6,735,803 6,172,246
Time $100,000 and over ............................... 31,652,404 25,159,415
Other time ........................................... 157,295,278 162,606,286
------------ ------------
Total deposits .............................. 273,179,373 255,004,067
Accrued interest on deposits .................................. 1,025,126 1,428,954
Accounts payable and accrued liabilities ...................... 1,714,819 1,819,059
------------ ------------
Total liabilities ........................... 275,919,318 258,252,080
Commitments and contingencies ................................. -- --
Stockholders' equity
Capital stock, par value $1 per share;
2,017,800 shares authorized .................
1,950,144 issue and outstanding ............. 1,950,144 1,950,144
Capital surplus ...................................... 3,816,943 3,816,943
Retained earnings .................................... 36,458,986 30,480,447
Unrealized gain (loss), net of taxes, on
securities available for sale................ 36,542 62,380
------------ ------------
Total stockholder's equity .................. 42,262,615 36,309,914
------------ ------------
Total liabilities and stockholder's equity .. $318,181,933 $294,561,994
============ ============
</TABLE>
F-2
<PAGE> 91
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Interest income:
Interest and fees on loans ............................. $ 5,074,756 $ 4,590,287
Investment securities .................................. 593,442 791,727
Federal funds sold ..................................... 811,000 519,556
Deposits in banks ...................................... 0 3,057
----------- -----------
Total interest income ................ 6,479,198 5,904,627
Interest expense on deposits .................................... 3,152,110 2,789,408
----------- -----------
Net interest income .................. 3,327,088 3,115,219
----------- -----------
Provision for loan losses ....................................... (70,000) 15,000
Net interest income after ............ 3,397,088 3,100,219
provision for loan losses
Non-interest income
Service fees ........................................... 175,559 159,229
Net securities gains ................................... (16) 1,712
Gain (loss) on sale of real estate ..................... (132,601) 566
Rental income .......................................... 96,083 85,837
Other income ........................................... 24,506 34,738
----------- -----------
Total non-interest income ............ 163,531 282,082
----------- -----------
Non-interest expenses
Salaries, wages and employee benefits .................. 860,795 895,097
Occupancy and equipment ................................ 278,073 267,734
Other .................................................. 415,128 467,396
----------- -----------
Total non-interest expense ........... 1,553,996 1,630,227
----------- -----------
Income from continuing operations
before income taxes .............. 2,006,623 1,752,074
Provision for income taxes ...................................... 649,000 560,500
----------- -----------
Net Income ........................... $ 1,357,623 $ 1,191,574
=========== ===========
</TABLE>
F-3
<PAGE> 92
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Transflorida Bank
Boca Raton, Florida
We have audited the consolidated balance sheets of Transflorida Bank and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, stockholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Bank's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Transflorida Bank
and subsidiaries as of December 31, 1997 and 1996, and the results of their
operation s and their cash flows for the years ended in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Miami, Florida
January 30, 1998
F-4
<PAGE> 93
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
Cash and cash equivalents:
Cash and due from banks ........................................ $ 6,726,526 $ 5,599,748
Federal funds sold ............................................. 50,603,714 39,198,504
------------ ------------
Total cash and cash equivalents ..................... 57,330,240 44,798,252
Interest-bearing deposits in banks ................................. 0 196,000
Investment securities available for sale, at fair
value (cost of ..................................................... 1,934,279 4,995,224
$1,863,082 in 1997 and $4,863,327 in 1996)
Investment securities held to maturity, at cost
(fair value of ..................................................... 36,998,120 39,498,892
$38,080,788 in 1997 and $40,571,265 in 1996)
Loans Net .......................................................... 206,566,575 181,931,402
Other real estate owned ............................................ 4,004,779 3,921,634
Premises and equipment, net ........................................ 5,919,781 4,864,293
Accrued interest receivable ........................................ 2,653,958 2,514,539
Other assets ....................................................... 571,479 526,753
------------ ------------
Total Assets ........................................ $315,979,211 $283,246,989
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand deposits ............................................... $ 26,091,765 $ 22,125,507
Money market and NOW accounts ................................. 46,260,244 33,730,839
Savings accounts .............................................. 6,605,309 6,118,515
Time deposits of $100,000 and over ............................ 29,860,420 24,390,533
Other time deposits ........................................... 163,980,894 158,805,399
------------ ------------
Total deposits ...................................... 272,798,632 245,170,793
Accrued interest on deposits ....................................... 1,192,487 1,511,264
Accounts payable and other liabilities ............................. 1,075,236 1,426,708
------------ ------------
Total liabilities ................................... 275,066,355 248,108,765
------------ ------------
Commitments and contingencies (Notes 7 and 8)
Stockholders' equity:
Common stock - $1 par value; 2,017,800 shares authorized;
1,950,144 shares issued and outstanding in 1997 and 1996 ... 1,950,144 1,950,144
Capital surplus ............................................... 3,816,943 3,816,943
Retained earnings ............................................. 35,101,363 29,288,873
Unrealized holding gain on securities available for sale,
net of income taxes ...................................... 44,406 82,264
------------ ------------
Total stockholders' equity ............................. 40,912,856 35,138,224
------------ ------------
Total liabilities and stockholders' equity ............. $315,979,211 $283,246,989
============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-5
<PAGE> 94
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Interest income:
Interest and fees on loans ................................... $ 20,128,227 $ 18,134,294
Investment securities ........................................ 3,117,306 3,113,039
Federal funds sold ........................................... 2,334,946 1,698,321
Deposits in banks ............................................ 6,626 17,355
------------ ------------
Total interest income ................................... 25,587,105 22,963,009
Interest expense on deposits ...................................... 11,948,313 10,344,798
------------ ------------
Net interest income ..................................... 13,638,792 12,618,211
Provision for loan losses ......................................... 190,000 120,000
------------ ------------
Net interest income after provision for loan losses ..... 13,448,792 12,498,211
------------ ------------
Non-interest income:
Service fees ................................................ 674,480 721,812
Net securities gains ......................................... 8,835 15,300
Gain on sale of premises and equipment and
other real estate owned ................................. 411,913 376,980
Rental income ................................................ 305,642 345,898
Other income ................................................. 101,005 26,499
------------ ------------
Total non-interest income ................................ 1,501,875 1,486,489
------------ ------------
Non-interest expenses:
Salaries, wages and employee benefits ........................ 3,482,475 3,388,065
Occupancy and equipment ...................................... 1,146,147 1,186,615
Other ........................................................ 1,738,055 1,679,956
------------ ------------
Total non-interest expense .............................. 6,366,677 6,254,636
------------ ------------
Income from continuing operations before income taxes ... 8,583,990 7,730,064
Provision for income taxes ........................................ 2,771,500 2,544,000
------------ ------------
Income from continuing operations ....................... 5,812,490 5,186,064
Discontinued operations:
Income (loss) from discontinued real estate activities,
net of income taxes ..................................... 0 (43,211)
------------ ------------
Net Income ........................................................ $ 5,812,490 $ 5,142,853
============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-6
<PAGE> 95
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Unrealized
Holding Gain
on
Common Stock Securities
--------------------------- Available
Par Capital Retained for Sale
Shares Value Surplus Earnings Net of Taxes Total
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 .......... 1,950,144 $ 1,950,144 $ 3,816,943 $ 29,146,020 $ 168,508 $ 35,081,615
Change in unrealized holding
gain on securities available ... 0 0 0 0 (86,244) (86,244)
for sale, net
Distribution of common stock of
Orangewood Homes, Inc.,
at book value .................. 0 0 0 (5,000,000) 0 (5,000,000)
Net income .......................... 0 0 0 5,142,853 0 5,142,853
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1996 .......... 1,950,144 1,950,144 3,816,943 29,288,873 82,264 35,138,224
Change in unrealized holding
gain on securities available ... 0 0 0 0 (37,858) (37,858)
for sale, net
Net income .......................... 0 0 0 5,812,490 0 5,812,490
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1997 .......... 1,950,144 $ 1,950,144 $ 3,816,943 $ 35,101,363 $ 44,406 $ 40,912,856
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-7
<PAGE> 96
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................................... $ 5,812,490 $ 5,142,853
------------ ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation ......................................................................... 405,207 468,661
Provision for loan losses ............................................................ 190,000 120,000
Accretion of discount on investment securities, net of amortization of premium ..... (39,037) (18,995)
Net securities gain .................................................................. (8,835) (15,300)
Gain on sale of premises and equipment and other real estate owned ................... (411,913) (376,980)
Change in operating assets and liabilities, net of effects of divestiture:
Real estate held for development and sale ....................................... 0 (734,257)
Interest receivable ............................................................. (139,419) 41,073
Other assets .................................................................... (44,726) 358,314
Interest payable ................................................................ (318,777) (118,762)
Accounts payable and other liabilities .......................................... (318,133) 151,869
------------ ------------
Total adjustments ................................................................ (685,633) (124,377)
------------ ------------
Net cash provided by operating activities ....................................... 5,126,857 5,018,476
------------ ------------
Cash flows from investing activities:
Decrease in interest bearing deposits with other banks ............................... 196,000 198,000
Purchases of investment securities:
Securities held to maturity ...................................................... (18,359,777) (15,857,782)
Proceeds from sales or redemptions of investment securities:
Securities available for sale .................................................... 2,989,748 6,934,062
Securities held to maturity ...................................................... 20,908,421 11,858,125
Net increase in loans ................................................................ (24,924,209) (14,714,654)
Net capital expenditures ............................................................. (1,176,187) (263,944)
Decrease in other real estate owned .................................................. 143,296 251,532
------------ ------------
Net cash used in investing activities ........................................... (20,222,708) (11,594,661)
------------ ------------
Cash flows from financing activities:
Net increase in demand, savings, money market, and NOW accounts ...................... 16,982,457 2,826,028
Net increase in time deposits ........................................................ 10,645,382 17,087,654
------------ ------------
Net cash provided by financing activities ........................................ 27,627,839 19,913,682
------------ ------------
Net increase in cash and cash equivalents ................................................. 12,531,988 13,337,497
Cash and cash equivalents at beginning of year ............................................ 44,798,252 31,460,755
------------ ------------
Cash and cash equivalents at end of year .................................................. $ 57,330,240 $ 44,798,252
============ ============
Supplemental disclosures:
Cash paid for:
Interest ............................................................................. $ 12,267,090 $ 10,463,562
Income taxes ......................................................................... 2,828,200 2,354,492
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-8
<PAGE> 97
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Transflorida Bank (the "Bank") is a commercial bank organized under the
banking laws of the State of Florida. The Bank is a state-chartered
commercial bank with seven locations in Broward County, Florida, four
locations in Palm Beach County, Florida and one location in Lee County,
Florida. The Bank principally extends credit for commercial and
residential mortgage loans, substantially all of which are located in
south Florida. The Bank's subsidiaries, which are wholly-owned, are
primarily engaged in the business of originating, servicing, and
holding mortgages related to real estate. Prior to October 31, 1996,
certain subsidiaries were also engaged in the business of purchasing,
developing, and selling commercial and residential real estate.
During 1996, the Federal Deposit Insurance Corporation ("FDIC") denied
the Bank's application to continue real estate development activities
through its subsidiaries and required that a plan be adopted, and a
divestiture implemented, by December 31, 1996. On May 21, 1996, the
Bank's board of directors approved the divestiture plan which included
a reduction of equity in the Bank and a subsequent distribution to
shareholders of a like amount of stock in Orangewood Homes, Inc.
("OHI"), the holder of all impermissible real estate activities. In a
letter dated August 19, 1996, the FDIC approved the Bank's divestiture
plan. The tax-free distribution was made as of the close of business on
October 31, 1996. The Bank has accounted for the financial results of
OHI prior to the spin-off as a discontinued operation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Bank's accounting policies and reporting practices conform with
generally accepted accounting principles and with predominant practices
in the banking industry. The following paragraphs address descriptions
of significant accounting policies.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Bank
and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. See "Loans and Allowance for Loan
Losses", appearing further in this note, for estimates made by
management in the determination of the allowance.
CASH AND CASH EQUIVALENT
Cash and cash equivalents consists of cash on hand, non-interest
bearing amounts due from banks, and federal funds sold. The Bank sells
federal funds and places deposits with other financial institutions
which may exceed federally insured limits.
INVESTMENT SECURITIES HELD-TO-MATURITY
Investment securities that management has the positive intent and
ability at the time of purchase to hold until maturity are classified
as "Held-to-Maturity." Securities in this category are carried at
amortized cost adjusted for accretion of discounts and amortization of
premiums using the effective interest method over the estimated life of
the securities. If a security has a decline in fair value below its
amortized cost that is other
F-9
<PAGE> 98
than temporary, then the security will be written down to its new cost
basis by recording a loss in the consolidated statement of income.
INVESTMENT SECURITIES AVAILABLE FOR SALE
Investment securities to be held for indefinite periods of time, and
may or may not be held to maturity, are classified as "Available for
Sale." Assets included in this category are those assets that
management intends to use as part of its asset/liability management
strategy and that may be sold in response to changes in interest rates,
resultant prepayment risk and other factors related to interest rate
and resultant prepayment risk changes. Securities available for sale
are recorded at fair value. Both unrealized holding gains and losses on
securities available for sale, net of taxes, are included as a separate
component of stockholders' equity in the consolidated balance sheet
until these gains or losses are realized. The cost of investment
securities sold is determined by the specific identification method. If
a security has a decline in fair value that is other than temporary,
then the security will be written down to its fair value by recording a
loss in the consolidated statement of income.
LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans are stated at the amount of unpaid principal, reduced by unearned
loan origination fees and discounts, and an allowance for loan losses.
Unearned discounts on installment loans are recognized as income over
the terms of the loans, based upon a method which approximates the
interest method. Nonrefundable fees and certain costs associated with
lending activities are deferred and amortized as an adjustment to the
yield of the loans over the term of the loans. The allowance for loan
losses is established through a provision for loan losses charged to
operations. Loans are charged against the allowance for loan losses
when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be
adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of impaired
loans and prior loan loss experience. The evaluations take into
consideration such factors as changes in the nature and volume of the
loan portfolio, overall portfolio quality, review of specific problem
loans, and current economic conditions that may affect the borrower's
ability to pay.
Accrual of interest is discontinued on a loan when management believes,
after considering economic and business conditions and collection
efforts, that the borrower's financial condition is such that
collection of interest is unlikely. A loan is considered impaired,
based on current information and events, if it is probable that the
Bank will be unable to collect the scheduled payments of principal or
interest when due according to the contractual terms of the loan
agreement. This measurement of impaired loans is generally based on the
present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan
is collateral dependent.
REAL ESTATE
Real estate properties acquired through, or in lieu of, loan
foreclosure are to be sold and are initially recorded at the lesser of
fair value at the date of foreclosure, less estimated selling costs or
the unpaid loan balance. Upon classification as other real estate, the
excess of the unpaid balance of the loans over the fair value of the
collateral, less estimated selling costs, is charged to the allowance
for loan losses. Costs incurred to refurbish the properties and other
holding costs incurred during the refurbishment period are capitalized
and added to the basis of the properties. Net expenses of maintaining
properties, subsequent write-downs due to changes in market conditions,
and gains or losses on disposition are charged or credited to income,
as appropriate.
Prior to October 31, 1996, certain subsidiaries held real estate for
development, sale and investment. As discussed in Note 1, these
subsidiaries were divested. Real estate held for development and sale
is stated at the lower of cost or fair value, less estimated selling
costs. Financing costs (which include interest on land and development
loans, construction loan service fees and interest on construction
loans) and property taxes
F-10
<PAGE> 99
are capitalized during the construction period and are expensed
thereafter. The amount of interest capitalized during 1996 was
$202,642. Real estate held for investment is carried at the lower of
cost, including cost of improvements and amenities incurred subsequent
to acquisition, or fair value. Costs relating to development and
improvement of property are capitalized, whereas costs relating to the
holding of property are expensed.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation is provided principally on
the straight-line basis over the estimated useful life of each type of
asset. Leasehold improvements are amortized over the term of the
respective leases or the estimated useful life of the asset, whichever
is shorter. Gains or losses are credited or charged to income upon
disposition. Maintenance and repairs are charged to expense as incurred
while improvements and betterments are capitalized.
INCOME TAXES
Deferred income taxes are recognized for the tax consequences in future
years for differences between the tax basis of assets and liabilities
and their financial reporting amounts at each year-end. The
determination of the deferred t ax amounts are based on enacted tax
laws and statutory tax rates applicable to the time periods in which
the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.
F-11
<PAGE> 100
3. INVESTMENT SECURITIES:
The amortized cost and fair value of investment securities at December
31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gain Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available-for-Sale:
Obligations of states and
political subdivisions ...... $ 1,863,082 $ 71,197 $ 0 $ 1,934,279
------------ ------------ ------------ ------------
Total investment securities ... $ 1,863,082 $ 71,197 $ 0 $ 1,934,279
============ ============ ============ ============
Held-to-Maturity:
U.S. Treasuries and
obligations of U.S.
government corporations
and agencies ................ $ 23,217,123 $ 133,170 (76,914) $ 23,273,379
Obligations of states and
political subdivisions ...... 13,630,997 1,025,172 (50) 14,656,119
Foreign government bonds ...... 150,000 1,295 (5) 151,290
------------ ------------ ------------ ------------
$ 36,998,120 $ 1,159,637 $ (76,969) $ 38,080,788
============ ============ ============ ============
</TABLE>
F-12
<PAGE> 101
3. INVESTMENT SECURITIES, CONTINUED:
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gain Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available-for-Sale:
U.S. Treasuries and
obligations of U.S.
government corporations
and agencies .............. $ 2,150,000 $ 4,463 $ 0 $ 2,154,463
Obligations of states and
political subdivisions .... 2,513,327 127,434 0 2,640,761
Equity securities .............. 200,000 0 0 200,000
------------ ------------ ------------ ------------
Total investment securities .... $ 4,863,327 $ 131,897 $ 0 $ 4,995,224
============ ============ ============ ============
Held-to-maturity:
U.S. Treasuries and
obligations of U.S.
government corporations
and agencies .............. $ 25,781,024 $ 189,293 $ (198,853) $ 25,771,464
Obligations of states and
political subdivisions .... 13,567,868 1,096,768 (8,509) 14,656,127
Foreign government bonds ....... 150,000 1,174 (7,500) 143,674
------------ ------------ ------------ ------------
$ 39,498,892 $ 1,287,235 $ (214,862) $ 40,571,265
============ ============ ============ ============
</TABLE>
The amortized cost and fair value of investment securities at December 31, 1997
by contractual maturities, are shown below. Expected maturities will differ from
contractual maturities as borrowers often have the right to call or prepay
obligations with, or without, call or prepayment penalties.
<TABLE>
<CAPTION>
Available-for-Sale Held-to-Maturity
------------------------ -------------------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or less ........... $ 5,000 $ 5,046 $ 5,549,873 $ 5,546,870
Due after one year through
five years....................... 206,107 210,442 7,160,689 7,172,588
Due after five years through
ten years........................ 862,875 892,616 11,614,033 11,828,501
Due after ten years ............... 789,100 826,175 12,673,525 13,532,829
---------- ----------- ----------- -----------
$1,863,082 $ 1,934,279 $36,998,120 $38,080,788
========== =========== =========== ===========
</TABLE>
F-13
<PAGE> 102
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. INVESTMENT SECURITIES, CONTINUED:
During 1997 and 1996, gross gains of approximately $9,000 and $15,000,
respectively, were realized on redemption of securities classified as held to
maturity and available for sale.
Securities with aggregate book and market values of approximately
$1,442,000 and $1,477,000 in 1997, respectively, and $1,442,000 and $1,470,000,
respectively, in 1996, were pledged as collateral for public deposits and for
other purposes required or permitted by law.
4. LOANS AND ALLOWANCE FOR LOAN LOSSES:
Major classification of loans are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Real Estate .................................. $205,000,687 $181,114,434
Commercial ................................... 3,831,734 2,945,050
Installment and other ........................ 567,923 616,664
------------- -------------
209,400,344 184,676,148
Unearned loan origination fees ............... (738,876) (851,148)
------------- -------------
208,661,468 183,825,000
Allowance for loan losses .................... (2,094,893) (1,893,598)
------------- -------------
Loans, net ............... $206,566,575 $181,931,402
============= =============
</TABLE>
Loans on which the accrual of interest has been discontinued amounted to
approximately $2,189,000 and $564,000 at December 31, 1997 and 1996,
respectively. If the Bank recognized the interest on these loans, interest
income on loans would have increased by approximately $113,500 and $18,500 in
1997 and 1996, respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Balance, beginning of year ......................... $1,893,598 $1,698,195
Provision changed to operations .................... 190,000 120,000
Loans charged off .................................. 0 (17,623)
Recoveries ......................................... 11,295 93,026
----------- -----------
Balance, end of year ............................... $2,094,893 $1,893,598
=========== ===========
</TABLE>
F-14
<PAGE> 103
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED:
5. PREMISES AND EQUIPMENT:
The major classification of premises and equipment are as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Land ........................................... $1,412,944 $ 801,720
Buildings ...................................... 5,372,827 4,698,654
Leasehold improvements ......................... 503,699 501,699
Furniture and equipment ........................ 2,877,263 2,725,220
Vehicles ....................................... 203,842 196,855
------------ ------------
10,370,575 8,924,148
Accumulated depreciation and amortization ...... (4,450,794) (4,059,855)
------------ ------------
Premises and equipment, net .................... $5,919,781 $4,864,293
============ ============
</TABLE>
6. INCOME TAXES:
The provision for income taxes from continuing operations consists of
the following:
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Current
Federal ................................. $1,984,722 $2,268,720
State ................................... 731,151 351,484
----------- -----------
2,715,873 2,620,204
----------- -----------
Deferred:
Federal ................................. 48,778 (66,936)
State ................................... 6,849 (9,268)
----------- -----------
55,627 (76,204)
----------- -----------
$2,771,500 $2,544,000
=========== ===========
</TABLE>
Income tax expense differs from the amounts computed by applying the U.S.
federal statutory tax rates to income before taxes due principally to interest
income exempt from Federal income taxes.
F-15
<PAGE> 104
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. INCOME TAXES CONTINUED:
At December 31, 1997 and 1996, the Bank had a net deferred tax asset of
$40,000 and $95,000, respectively. This deferred tax asset results
principally from the differences in the accounting for the provision
for loan losses, depreciation on bank premises and equipment, other
real estate owned, and differences in revenue recognition methods on
real estate sales for financial statement purposes. In addition, the
deferred taxes relating to unrealized holding gains on securities
available for sale amounting to approximately $27,000 and $50,000 in
1997 and 1996, respectively, are netted against the respective caption
in the Consolidated Statement of Stockholders' Equity.
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
The Bank is party to financial instruments with off-balance-sheet risk
in the normal course of business in order to meet the financing needs
of its customers. These financial instruments include commitments to
extend credit, standby letters of credit and financial guarantees.
Those instruments involve elements of credit risk in excess of the
amount recognized in the consolidated balance sheets.
The Bank's exposure to credit losses in the event of nonperformance by
the other party to the financial instrument for commitments to extend
credit, standby letters of credit and financial guarantees written is
represented by the contractual amount of those instruments.
The approximate amount of exposure of financial instruments whose
contract amounts represent off-balance-sheet credit risk is as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Unfunded loan commitments .......................... $26,309,000 $12,348,000
Commitments to extend credit under standby letters
of credit ................................ 1,518,000 1,204,000
----------- -----------
Total .............................................. $27,827,000 $13,552,000
=========== ===========
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
lines of credit expire without being fully drawn upon, the total
commitment amount does not necessarily represent future cash
requirements. The Bank uses the same credit policies in making lines of
credit as it does for on-balance sheet instruments. The amount of
collateral obtained, if deemed necessary by the Bank upon extension of
credit, is based on the Bank's credit evaluation. Collateral varies,
but generally consists of real estate.
F-16
<PAGE> 105
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
8. OTHER COMMITMENTS AND CONTINGENT LIABILITIES:
LEASES
The Bank leases certain of its banking facilities and equipment under
operating leases, which expire on various dates through 2000. Many of
these lease agreements contain options for renewal and annual rent
increases. Rental expense under these leases for the years ended
December 31, 1997 and 1996, was approximately $125,000 and $130,000,
respectively. Based upon the existing leases, the minimum future
noncancelable rental payments are as follows:
<TABLE>
<CAPTION>
For the Year Ending
December 31,
-------------------
<S> <C>
1998 ....................... $130,000
1999 ....................... 106,000
2000 ....................... 63,000
2001 ....................... 52,000
2002 ....................... 43,000
--------
$394,000
========
</TABLE>
LITIGATION
The Bank is a defendant in various claims and actions arising out of
the normal course of its business. In the opinion of the management of
the Bank based upon a review with its counsel, none of these matters
would have a material adverse effect on the Bank's financial position
if it were unable to resolve them successfully.
9. RELATED PARTY TRANSACTIONS:
Loans - At December 31, 1997 and 1996, certain officers and directors,
and their related entities were indebted to the Bank in the aggregate
approximate amount of $692,000 and $906,000, respectively. At December
31, 1997 and 1996, OHI and subsidiaries were indebted to the Bank in
the aggregate approximate amount of $3,868,000 and $2,419,000,
respectively.
Profit Participation Agreement - Other liabilities include
approximately $427,000 and $442,000 as of December 31, 1997 and 1996,
respectively, for amounts due to a stockholder and member of the Board
of Directors, from a profit participation agreement associated with
certain real estate projects.
Consulting Fees - A director and stockholder of the Bank provides
consulting services to the Bank regarding the operations of its
subsidiaries. Consulting fees paid were $100,000 in 1997 and 1996.
F-17
<PAGE> 106
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. RELATED PARTY TRANSACTIONS, CONTINUED:
Sales Commissions - Two of the Bank's directors and principal
shareholders are also principals in a real estate brokerage company
employed by the Bank to act as a sales agent for the Bank's and the
subsidiaries' real estate. Fees for these services are paid by the
seller at the time of closing and substantially less than prevailing
market rates. Commission fees paid were approximately $17,000 and
$163,000 in 1997 and 1996, respectively.
10. REGULATORY CAPITAL:
The Bank is subject to various regulatory capital requirements
administered by federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier I
capital (as defined) to average assets (as defined). Management
believes, as of December 31, 1997, that the Bank meets all capital
adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well as capitalized,
the Bank must maintain minimum Total risk-based, Tier I risk-based, and
Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes
have changed the Bank's category.
F-18
<PAGE> 107
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
10. REGULATORY CAPITAL CONTINUED:
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
---------------------------- ------------------------- ----------------------------
Amount Ratio Amount Ratio Amount Ratio
-------------- ---------- -------------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997
Total Capital
(to Risk Weighted
Assets) $42,963,343 19.7% >=$17,454,311 >=8.0% >=$21,817,889 >=10.0%
Tier I Capital
(to Risk Weighted
Assets) $40,868,450 18.7% >=$8,727,155 >=4.0% >=$13,090,733 >=6.0%
Tier I Capital
(to Average Assets) $40,868,450 12.9% >=9,491,739 >=3.0% >=$15,819,566 >=5.0%
As of December 31, 1996:
Total Capital
(to Risk Weighted
Assets) $36,949,558 19.3% >=$15,300,764 >=8.0% >=$19,125,954 >=10.0%
Tier I Capital
(to Risk Weighted
Assets) $35,055,960 18.3% >=$7,650,382 >=4.0% >=$11,475,573 >=6.0%
Tier I Capital
(to Average Assets) $35,055,960 12.5% >=$8,399,040 >=3.0% >=13,998,400 >=5.0%
</TABLE>
The Bank is also subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval. At December 31, 1997,
approximately $16,310,000 of retained earnings were available for dividend
declaration without prior regulatory approval.
F-19
<PAGE> 108
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
11. EMPLOYEE BENEFIT PLAN:
In 1995, the Bank adopted a defined contribution plan which covers
substantially all eligible employees. The Bank's contribution to the
plan was approximately $21,000 in 1997 and $32,000 in 1996.
12. SUPPLEMENTAL CASH FLOW INFORMATION:
Significant non-cash investing and financing activities are as follows:
1. Loans transferred to other real estate owned during 1997 and
1996 amounted to $2,020,595 and $2,363,513, respectively. Bank
financing provided for sales of premises and equipment, and
other real estate owned amounted to $1,921,559 and $2,744,856
for 1997 and 1996, respectively.
2. The unrealized gain on available-for-sale securities, net of
income taxes, decreased by $37,858 and $86,244, in 1997 and
1996, respectively.
3. On October 31, 1996, the Bank distributed the common stock of
OHI, as part of a mandated divestiture plan. The distribution
was recorded at book value of $5,000,000 and consisted of the
following:
<TABLE>
<S> <C>
Real estate held for development and sale $ 6,846,231
Real estate held for investment ......... 572,893
Other real estate owned ................. 162,035
Other assets ............................ 249,404
Loans payable to Bank ................... (2,437,079)
Accounts payable and other liabilities .. (393,484)
-----------
$ 5,000,000
===========
</TABLE>
F-20
<PAGE> 109
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
13. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument for which an estimate is
practical.
CASH AND DUE FROM BANKS, FEDERAL FUNDS SOLD AND INTEREST BEARING
DEPOSITS IN BANKS -
For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.
INVESTMENT SECURITIES - The fair value of investment securities equals
quoted market prices, if available. If a quoted market price is not
available, fair value is estimated using quoted market prices for
similar securities. Note 3 to the Consolidated Financial Statements
provides information on estimated fair values at December 31, 1997 and
1996.
LOANS - The fair value of loans is estimated based on present values
using applicable discount factors based on the current rates of
interest charged by the Bank for similar transactions. At December 31,
1997 and 1996, the fair value of loans receivable approximated
$210,000,000 and $185,000,000, respectively.
DEPOSIT LIABILITIES - The fair value of demand deposits, savings, and
NOW accounts, and money market deposits is the amount payable on demand
(carrying amount). The fair value of fixed-maturity certificates of
deposit is estimated using the rates currently offered for deposits of
similar maturities. At December 31, 1997 and 1996, the fair value of
time deposits approximated $197,000,000 and $187,000,000, respectively.
Management has not assessed the value of its core deposit base.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT - The fair
value of commitments is estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms
of the agreements and the present creditworthiness of the
counterparties. Commitments to extend credit and unissued letters of
credit generally bear interest at variable market rates. Accordingly,
the carrying amounts of such financial instruments approximate the fair
values.
F-21
<PAGE> 110
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
14. DISCONTINUED OPERATIONS:
On October 31, 1996, the Bank's 100% investment in OHI was spun off in
a tax free distribution to the Bank's shareholders. The Bank's
shareholders of record as of September 30, 1996 received one share of
OHI for each Bank common share owned. This transaction resulted in a
noncash distribution to the Bank's shareholders totaling $5,000,000,
the book value of OHI's underlying net assets.
The operating results of the discontinued operation are summarized
as follows:
<TABLE>
<CAPTION>
Year ended
December 31,
1996
-----------
<S> <C>
Sales of real estate .......................................... $ 6,696,932
Cost of real estate sold ...................................... (6,537,215)
Other expenses ................................................ (229,928)
-----------
Loss from operations before taxes ............................. (70,211)
Income tax benefit ............................................ 27,000
-----------
Loss from discontinued operations ............................. $ (43,211)
===========
</TABLE>
Results of operations of OHI are included in the Bank's 1996 Consolidated
Financial Statements as a component of discontinued operations.
Profit from retail land sales and sales of residential units prior to
divestiture in 1996 was recognized when title passed, minimum down payment
requirements were met, and collectibility of the sales price was reasonably
assured. When a sale did not meet these requirements, profit was deferred until
the requirements were met. Subsequent to the divestiture, these operations are
recorded by OHI, and are no longer part of the Bank's financial statements.
F-22
<PAGE> 111
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Transflorida Bank
Boca Raton, Florida
We have audited the consolidated balance sheets of Transflorida Bank and
Subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Bank's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Transflorida Bank
and Subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for the years ended in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
Miami, Florida
January 31, 1997
F-23
<PAGE> 112
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
------------ ------------
<S> <C> <C>
Cash and cash equivalents:
Cash and due from banks ......................................................... $ 5,599,748 $ 5,938,983
Federal funds sold .............................................................. 39,198,504 25,521,772
------------ ------------
Total cash and cash equivalents ........................................ 44,798,252 31,460,755
Interest-bearing deposits in banks ....................................................... 196,000 394,000
Investment securities available for sale, at fair value (cost of
$4,863,327 in 1996 and $11,797,389 in 1995) ..................................... 4,995,224 12,056,898
Investment securities held to maturity, at cost (fair value of
$40,571,265 in 1996 and $37,258,397 in 1995) .................................... 39,498,892 35,464,940
Loans, net ............................................................................... 181,931,402 164,518,326
Real estate held for development and sale ................................................ 0 6,111,974
Real estate held for investment .......................................................... 0 715,133
Other real estate owned .................................................................. 3,921,634 4,072,074
Premises and equipment, net .............................................................. 4,864,293 5,336,500
Accrued interest receivable .............................................................. 2,514,539 2,555,612
Other assets ............................................................................. 526,753 992,231
------------ ------------
Total assets ................................................................... $283,246,989 $263,678,443
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand deposits ................................................................. $ 22,125,507 $ 20,730,075
Money market and NOW accounts ................................................... 33,730,839 32,462,769
Savings accounts ................................................................ 6,118,515 5,955,989
Time deposits of $100,000 and over .............................................. 24,390,533 20,163,108
Other time deposits ............................................................. 158,805,399 145,945,170
------------ ------------
Total deposits ......................................................... 245,170,793 225,257,111
Accrued interest payable on deposits ..................................................... 1,511,264 1,630,026
Accounts payable and other liabilities ................................................... 1,426,708 1,709,691
------------ ------------
Total liabilities ...................................................... 248,108,765 228,596,828
------------ ------------
Commitments and contingencies (Notes 7 and 8)
Shareholders' equity:
Common stock - $1 par value; 2,017,800 shares authorized; 1,950,144 shares
issued and outstanding in 1996 and 1995 ................................... 1,950,144 1,950,144
Capital surplus ................................................................. 3,816,943 3,816,943
Retained earnings ............................................................... 29,288,873 29,146,020
Unrealized holding gain on securities available for sale, net of income taxes ... 82,264 168,508
------------ ------------
Total shareholders' equity ............................................. 35,138,224 35,081,615
------------ ------------
Total liabilities and shareholders' equity ............................. $283,246,989 $263,678,443
============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-24
<PAGE> 113
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Interest income:
Interest and fees on loans ....................................... $ 18,134,294 $ 16,574,740
Investment securities ............................................ 3,113,039 3,275,968
Federal funds sold ............................................... 1,698,321 1,380,017
Deposits in banks ................................................ 17,355 28,693
------------ ------------
Total interest income ............................................ 22,963,009 21,259,418
Interest expense on deposits .............................................. 10,344,798 9,773,543
------------ ------------
Net interest income .............................................. 12,618,211 11,485,875
Provision for loan losses ................................................. 120,000 145,947
------------ ------------
Net interest income after provision for loan losses .............. 12,498,211 11,339,928
------------ ------------
Non-interest income:
Service fees ..................................................... 721,812 688,101
Net securities gains ............................................. 15,300 142,957
Gain on sale of premises and equipment and other real
estate owned ............................................ 376,980 368,139
Rental income .................................................... 345,898 374,080
Other income ..................................................... 26,499 178,468
------------ ------------
Total non-interest income ........................................ 1,486,489 1,751,745
------------ ------------
Non-interest expense:
Salaries, wages and employee benefits ..................................... 3,388,065 3,158,374
Occupancy and equipment ................................................... 1,186,615 1,226,211
Other ..................................................................... 1,679,956 2,197,679
------------ ------------
Total non-interest expense ....................................... 6,254,636 6,582,264
------------ ------------
Income from continuing operations before income taxes
7,730,064 6,509,409
Provision for income taxes ................................................ 2,544,000 1,936,000
------------ ------------
Income from continuing operations ................................ 5,186,064 4,573,409
Discontinued operations:
Income (loss) from discontinued real estate activities, net of
income taxes .................................................. (43,211) 781,065
------------ ------------
Net Income ....................................................... $ 5,142,853 $ 5,354,474
============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-25
<PAGE> 114
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
UNREALIZED
HOLDING GAIN
ON SECURITIES
COMMON STOCK AVAILABLE
PAR CAPITAL RETAINED FOR SALE,
SHARES VALUE SURPLUS EARNINGS NET OF TAXES TOTAL
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 672,600 $ 1,681,500 $ 5,169,436 $ 23,791,546 $ 0 $ 30,642,482
Change in unrealized
holding gain on securities
available for sale,
net of taxes 0 0 0 0 168,508 168,508
Repurchase and retirement of
common shares outstanding (22,552) (56,380) (1,027,469) 0 0 (1,083,849)
Change in par value 0 (975,072) 975,072 0 0 0
Shares issued upon three-for-one
stock split 1,300,096 1,300,096 (1,300,096) 0 0 0
Net income 0 0 0 5,354,474 0 5,354,474
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1995 1,950,144 1,950,144 3,816,943 29,146,020 168,508 35,081,615
Change in unrealized
holding gain on
securities available for
sale, net of taxes 0 0 0 0 (86,244) (86,244)
Distribution of common stock of
Orangewood Homes, Inc. at
book value 0 0 0 (5,000,000) 0 (5,000,000)
------------ ------------ ------------ ------------ ------------ ------------
Net income 0 0 0 5,142,853 0 5,142,853
Balance, December 31, 1996 1,950,144 $ 1,950,144 $ 3,816,943 $ 29,288,873 $ 82,264 $ 35,138,224
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-26
<PAGE> 115
TRANSFLORIDA BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,142,853 $ 5,354,474
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 468,661 566,781
Provision for loan losses 120,000 145,947
Accretion of discount on investment securities, net of amortization of
premium (18,995) (79,281)
Net securities gains (15,300) (142,957)
Gain on sale of premises and equipment and other real estate owned (376,980) (368,139)
Change in operating assets and liabilities, net of effects of
divestiture:
Real estate held for development and sale (734,257) (1,756,355)
Interest receivable 41,073 (562,100)
Other assets 358,314 (238,222)
Interest payable (118,762) 412,492
Accounts payable and other liabilities 151,869 (255,877)
------------ ------------
Total adjustments (124,377) (2,277,711)
------------ ------------
Net cash provided by operating activities 5,018,476 3,076,763
------------ ------------
Cash flows from investing activities:
Decrease in interest bearing deposits with other banks 198,000 0
Purchases of investment securities:
Securities held to maturity (15,857,782) (16,674,528)
Proceeds from sales or redemptions of investment securities:
Securities available for sale 6,934,062 729,600
Securities held to maturity 11,858,125 9,899,382
Net increase in loans (14,714,654) (15,246,836)
Decrease of real estate held for investment, net 0 2,499,012
Net capital expenditures (263,944) (243,050)
Decrease in other real estate owned 251,532 1,448,119
------------ ------------
Net cash used in investing activities (11,594,661) (17,588,301)
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in demand, savings, money market and NOW
accounts 2,826,028 (238,425)
Net increase in time deposits 17,087,654 19,307,566
Principal reduction of notes payable 0 (1,940,042)
Repurchase of common shares 0 (1,083,849)
------------ ------------
Net cash provided by financing activities 19,913,682 16,045,250
------------ ------------
Net increase in cash and cash equivalents 13,337,497 1,533,712
Cash and cash equivalents at beginning of year 31,460,755 29,927,043
------------ ------------
Cash and cash equivalents at end of year $ 44,798,252 $ 31,460,755
============ ============
Supplemental disclosures:
Cash paid for:
Interest $ 10,463,562 $ 9,361,049
Income taxes 2,354,492 2,378,756
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
F-27
<PAGE> 116
TRANSFLORIDA BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Transflorida Bank (the "Bank") is a commercial bank organized under the
banking laws of the State of Florida. The Bank is a state-chartered
commercial bank with seven locations in Broward County, Florida and
four locations in Palm Beach County, Florida. The Bank principally
extends credit for commercial and residential mortgage loans,
substantially all of which are located in South Florida. The Bank's
subsidiaries, which are all wholly-owned, are primarily engaged in the
business of originating, servicing, and holding mortgages related to
real estate. Prior to October 31, 1996, certain subsidiaries were also
engaged in the business of purchasing, developing and selling
commercial and residential real estate.
During 1996, the Federal Deposit Insurance Corporation ("FDIC") denied
the Bank's application to continue real estate development activities
through its subsidiaries and required that a plan be adopted and a
divestiture be implemented by December 31, 1996. On May 21, 1996, the
Bank's board of directors approved a divestiture plan which included a
reduction of equity in the Bank and a subsequent distribution to
shareholders of a like amount of stock in Orangewood Homes, Inc.
("OHI"), the holder of all impermissible real estate activities. In a
letter dated August 19, 1996, the FDIC approved the Bank's divestiture
plan. The tax-free distribution was made as of the close of business on
October 31, 1996. The Bank has accounted for the financial results of
OHI prior to the spin-off as a discontinued operation.
Previously reported financial statements for the prior year and certain
amounts in the accompanying financial statements and notes thereto have
been restated to conform to the current year presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Bank's accounting policies and reporting practices conform with
generally accepted accounting principles and with predominant practices
in the banking industry. The following is a description of significant
accounting policies.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Bank
and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. See allowance for loan losses for
estimates made by management in the determination of the amount.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consists of cash on hand, non-interest
bearing amounts due from banks, and federal funds sold. The Bank sells
federal funds and places deposits with other financial institutions
which may exceed federally insured limits.
F-28
<PAGE> 117
INVESTMENT SECURITIES HELD-TO-MATURITY
Investment securities that management has the positive intent and
ability at the time of purchase to hold until maturity are classified
as held-to-maturity. Securities in this category are carried at
amortized cost adjusted for accretion of discounts and amortization of
premiums using the effective interest method over the estimated life of
the securities. If a security has a decline in fair value below its
amortized cost that is other than temporary, then the security will be
written down to its new cost basis by recording a loss in the
consolidated statement of income.
INVESTMENT SECURITIES AVAILABLE FOR SALE
Investment securities to be held for indefinite periods of time, and
may or may not be held to maturity, are classified as available for
sale. Assets included in this category are those assets that management
intends to use as part of its asset/liability management strategy and
that may be sold in response to changes in interest rates, resultant
prepayment risk and other factors related to interest rate and
resultant prepayment risk changes. Securities available for sale are
recorded at fair value. Both unrealized holding gains and losses on
securities available for sale, net of taxes, are included as a separate
component of shareholders' equity in the consolidated balance sheet
until these gains or losses are realized. The cost of investment
securities sold is determined by the specific identification method. If
a security has a decline in fair value that is other than temporary,
then the security will be written down to its fair value by recording a
loss in the consolidated statement of income.
During December 1995, the Bank reclassified $12,229,614 from the
held-to-maturity portfolio to the available-for-sale category. This
reclassification was executed in conformity with the Financial
Accounting Standards Board's Special Report regarding investment
securities.
LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans are stated at the amount of unpaid principal, reduced by unearned
loan origination fees and discounts and an allowance for loan losses.
Unearned discounts on installment loans are recognized as income over
the terms of the loans, based upon a method which approximates the
interest method. Nonrefundable fees and certain costs associated with
lending activities are deferred and amortized as an adjustment to the
yield of the loans over the term of the loans. The allowance for loan
losses is established through a provision for loan losses charged to
operations. Loans are charged against the allowance for loan losses
when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be
adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of impaired
loans and prior loan loss experience. The evaluations take into
consideration such factors as changes in the nature and volume of the
loan portfolio, overall portfolio quality, review of specific problem
loans, and current economic conditions that may affect the borrowers'
ability to pay.
Accrual of interest is discontinued on a loan when management believes,
after considering economic and business conditions and collection
efforts, that the borrower's financial condition is such that
collection of interest is unlikely. A loan is considered impaired,
based on current information and events, if it is probable that the
Bank will be unable to collect the scheduled payments of principal or
interest when due according to the contractual terms of the loan
agreement. This measurement of impaired loans is generally based on the
present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan
is collateral dependent.
REAL ESTATE
Real estate properties acquired through, or in lieu of, loan
foreclosure are to be sold and are initially recorded at the lesser of
fair value at the date of foreclosure, less estimated selling costs or
the unpaid loan
F-29
<PAGE> 118
balance. Upon classification as other real estate, the excess of the
unpaid balance of the loans over the fair value of the collateral, less
estimated selling costs, is charged to the allowance for loan losses.
Costs incurred to refurbish the properties and other holding costs
incurred during the refurbishment period are capitalized and added to
the basis of the properties. Net expenses of maintaining properties,
subsequent write-downs due to changes in market conditions and gains or
losses on disposition are charged or credited to income, as
appropriate.
Prior to October 31, 1996, certain subsidiaries held real estate for
development, sale and investment. As discussed in Note 1, these
subsidiaries were divested. Real estate held for development and sale
is stated at the lower of cost or fair value, less estimated selling
costs. Financing costs (which include interest on land and development
loans, construction loan service fees and interest on construction
loans) and property taxes are capitalized during the construction
period and are expensed thereafter. The amount of interest capitalized
during 1996 and 1995 was $202,642 and $151,399, respectively. Real
estate held for investment is carried at the lower of cost, including
cost of improvements and amenities incurred subsequent to acquisition,
or fair value. Costs relating to development and improvement of
property are capitalized, whereas costs relating to the holding of
property are expensed.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation is provided principally on
the straight-line basis over the estimated useful life of each type of
asset. Leasehold improvements are amortized over the term of the
respective leases or the estimated useful life of the asset, whichever
is shorter. Gains or losses are credited or charged to income upon
disposition. Maintenance and repairs are charged to expense as
incurred; improvements and betterments are capitalized.
INCOME TAXES
Deferred income taxes are recognized for the tax consequences in future
years for differences between the tax basis of assets and liabilities
and their financial reporting amounts at each year-end based on enacted
tax laws and statutory tax rates applicable to the time periods in
which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.
F-30
<PAGE> 119
3. INVESTMENT SECURITIES:
The amortized cost and fair value of investment securities at December
31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available-for-Sale:
U.S. Treasuries and obligations of U.S.
government corporations and agencies $ 2,150,000 $ 4,463 $ 0 $ 2,154,463
Obligations of states and political
subdivisions 2,513,327 127,434 0 2,640,761
Equity securities 200,000 0 0 200,000
------------ ------------ ------------ ------------
Total investment securities $ 4,863,327 $ 131,897 $ 0 $ 4,995,224
============ ============ ============ ============
Held-to-Maturity:
U.S. Treasuries and obligations of U.S.
government corporations and agencies $ 25,781,024 $ 189,293 $ (198,853) $ 25,771,464
Obligations of states and political
subdivisions 13,567,868 1,096,768 (8,509) 14,656,127
Foreign government bonds 150,000 1,174 (7,500) 143,674
------------ ------------ ------------ ------------
$ 39,498,892 $ 1,287,235 $ (214,862) $ 40,571,265
============ ============ ============ ============
</TABLE>
F-31
<PAGE> 120
3. INVESTMENT SECURITIES, CONTINUED:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available-for-Sale:
U.S. Treasuries and obligations of U.S.
government corporations and agencies $ 8,449,646 $ 70,096 $ (5,990) $ 8,513,752
Obligations of states and political
subdivisions 3,147,743 195,403 0 3,343,146
Equity securities 200,000 0 0 200,000
------------ ------------ ------------ ------------
Total investment securities $ 11,797,389 $ 265,499 $ (5,990) $ 12,056,898
============ ============ ============ ============
Held-to-Maturity:
U.S. Treasuries and obligations of U.S.
government corporations and agencies $ 22,594,682 $ 500,130 $ (50,989) $ 23,043,823
Obligations of states and political
subdivisions 12,745,258 1,342,139 (2,113) 14,085,284
Foreign government bonds 125,000 4,290 0 129,290
------------ ------------ ------------ ------------
$ 35,464,940 $ 1,846,559 $ (53,102) $ 37,258,397
============ ============ ============ ============
</TABLE>
The amortized cost and fair value of investment securities (other than
equity securities) at December 31, 1996 by contractual maturities, are
shown below. Expected maturities will differ from contractual
maturities as borrowers often have the right to call or prepay
obligations with, or without, call or prepayment penalties.
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
------------------------- -------------------------
ESTIMATED ESTIMATED
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or less $ 2,802,104 $ 2,822,740 $ 0 $ 0
Due after one year through five years 1,861,223 1,972,484 16,101,279 16,261,150
Due after five years through ten years 0 0 11,690,048 11,821,688
Due after ten years 0 0 11,707,565 12,488,427
----------- ----------- ----------- -----------
$ 4,663,327 $ 4,795,224 $39,498,892 $40,571,265
=========== =========== =========== ===========
</TABLE>
During 1995, gross gains of approximately $138,000 were realized on
sales of securities classified as available for sale. During 1996 and
1995, gross gains of approximately $15,000 and $4,000, respectively,
were realized on calls of securities classified as held to maturity.
Securities with aggregate book and market values of approximately
$1,442,000 and $1,470,000 respectively, in 1996, and $1,385,000 and
$1,432,000, respectively, in 1995, were pledged as collateral for
public deposits and for other purposes required or permitted by law.
F-32
<PAGE> 121
4. LOANS AND ALLOWANCE FOR LOAN LOSSES:
Major classifications of loans are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Real estate $ 181,114,434 $ 164,311,687
Commercial 2,945,050 2,295,084
Installment and other 616,664 405,880
------------- -------------
184,676,148 167,012,651
Unearned loan origination fees (851,148) (796,130)
------------- -------------
183,825,000 166,216,521
Allowance for loan losses (1,893,598) (1,698,195)
------------- -------------
Loans, net $ 181,931,402 $ 164,518,326
============= =============
</TABLE>
Loans on which the accrual of interest has been discontinued amounted to
approximately $564,000 and $735,000 at December 31, 1996 and 1995,
respectively. Had the Bank included in income, interest on loans not accruing
interest, interest income on loans would have increased by approximately
$18,500 and $47,800 in 1996 and 1995, respectively.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Balance, beginning of year $ 1,698,195 $ 1,716,615
Provision charged to operations 120,000 145,947
Loans charged off (17,623) (176,383)
Recoveries 93,026 12,016
----------- -----------
Balance, end of year $ 1,893,598 $ 1,698,195
=========== ===========
</TABLE>
F-33
<PAGE> 122
5. PREMISES AND EQUIPMENT:
The major classifications of premises and equipment are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Land $ 801,720 $ 885,306
Buildings 4,698,654 4,936,133
Leasehold improvements 501,699 501,699
Furniture and equipment 2,725,220 2,644,335
Vehicles 196,855 148,233
----------- -----------
8,924,148 9,115,706
Accumulated depreciation and amortization (4,059,855) (3,779,206)
----------- -----------
Premises and equipment, net $ 4,864,293 $ 5,336,500
=========== ===========
</TABLE>
6. INCOME TAXES:
The provision for income taxes from continuing operations consists of
the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Current:
Federal $ 2,268,720 $ 1,148,653
State 351,484 201,546
----------- -----------
2,620,204 1,350,199
----------- -----------
Deferred
Federal (66,936) 515,347
State (9,268) 70,454
----------- -----------
(76,204) 585,801
----------- -----------
$ 2,544,000 $ 1,936,000
=========== ===========
</TABLE>
Income tax expense differs from the amounts computed by applying the
U.S. federal statutory tax rates to income before income taxes due
principally to interest income exempt from Federal income taxes.
At December 31, 1996 and 1995, the Bank had a net deferred tax asset
(liability) of $95,000 and ($60,000), respectively. The deferred tax
asset results principally from the differences in the accounting for
the provision for loan losses, depreciation on bank premises and
equipment, other real estate owned, and differences in revenue
recognition methods on real estate sales for financial statement
purposes.
F-34
<PAGE> 123
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
The Bank is party to financial instruments with off-balance-sheet risk
in the normal course of business in order to meet the financing needs
of its customers. These financial instruments include commitments to
extend credit, standby letters of credit and financial guarantees.
Those instruments involve elements of credit risk in excess of the
amount recognized in the consolidated balance sheets.
The Bank's exposure to credit losses in the event of nonperformance by
the other party to the financial instrument for commitments to extend
credit, standby letters of credit and financial guarantees written is
represented by the contractual amount of those instruments.
The approximate amount of exposure of financial instruments whose
contract amounts represent off-balance-sheet credit risk is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Unfunded loan commitments $12,348,000 $10,076,000
Commitments to extend credit under standby
letters of credit 1,204,000 692,000
----------- -----------
Total $13,552,000 $10,768,000
=========== ===========
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
lines of credit expire without being fully drawn upon, the total
commitment amount does not necessarily represent future cash
requirements. The Bank uses the same credit policies in making lines of
credit as it does for on-balance sheet instruments. The amount of
collateral obtained, if deemed necessary by the Bank upon extension of
credit, is based on the Bank's credit evaluation. Collateral varies,
but generally consists of real estate.
8. OTHER COMMITMENTS AND CONTINGENT LIABILITIES:
LEASES
The Bank leases certain of its banking facilities and equipment under
operating leases, which expire on various dates through 2000. Many of
these lease agreements contain options for renewal and annual rent
increases. Rental expense under these leases for the years ended
December 31, 1996 and 1995, was approximately $130,000 and $115,000,
respectively. Based upon the existing leases, the minimum future
noncancelable rental payments are as follows:
F-35
<PAGE> 124
<TABLE>
<CAPTION>
FOR THE YEAR ENDING
DECEMBER 31,
-------------------
<S> <C> <C>
1997 $116,000
1998 66,000
1999 54,000
2000 27,000
2001 15,000
--------
$278,000
========
</TABLE>
LITIGATION
The Bank is a defendant in various claims and actions arising out of
the normal course of its business. In the opinion of the management of
the Bank, based upon a review with its counsel, none of these matters
would have a material adverse effect on the Bank's financial position
if it were unable to resolve them successfully.
F-36
<PAGE> 125
9. RELATED PARTY TRANSACTIONS:
Loans - At December 31, 1996 and 1995, certain officers and directors,
and their related entitles were indebted to the Bank in the aggregate
approximate amount of $906,000 and $2,191,000, respectively. At
December 31, 1996, OHI and subsidiaries were indebted to the Bank in
the approximate aggregate of $2,295,000.
Profit Participation Agreement - Other liabilities include
approximately $442,000 and $588,000 as of December 31, 1996 and 1995,
respectively, for amounts due to a shareholder and member of the Board
of Directors, from a profit participation agreement associated with
certain real estate projects.
Consulting Fees - A director and shareholder of the Bank provides
consulting services to the Bank regarding the operations of its
subsidiaries. Consulting fees paid were $100,000 in 1996 and 1995.
Sales Commissions - Two of the Bank's directors and principal
shareholders are also principals in a real estate brokerage company
employed by the Bank to act as a sales agent for the Bank's and the
subsidiaries' real estate. Fees for these services are paid by the
seller at the time of closing and are substantially less than
prevailing market rates. Commission fees paid were approximately
$163,000 and $175,000 in 1996 and 1995, respectively.
10. REGULATORY MATTERS:
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier I
capital (as defined) to average assets (as defined). Management
believes, as of December 31, 1996, that the Bank meets all capital
adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the FDIC
categorized the Bank as well capitalized under regulatory guidelines.
To be categorized as well capitalized the Bank must maintain minimum
total risk-based, Tier I risk-based, and Tier I leverage ratios as set
forth in the table. There are no conditions or events since that
notification that management believes have changed the Bank's category.
F-37
<PAGE> 126
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
---------------------- --------------------------- -----------------------------
Amount Ratio Amount Ratio Amount Ratio
----------- -------- -------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996:
Total Capital
(to Risk Weighted Assets) $36,949,558 19.3% >=$15,300,764 >=8.0% >=$19,125,954 >=10.0%
Tier I Capital
(to Risk Weighted Assets) $35,055,960 18.3% >=$7,650,382 >=4.0% >=$11,475,573 >=6.0%
Tier I Capital
(to Average Assets) $35,055,960 12.5% >=$8,399,040 >=3.0% >=$13,998,400 >=5.0%
AS OF DECEMBER 31, 1995:
Total Capital
(to Risk Weighted Assets) $36,611,301 20.2% >=$14,487,616 >=8.0% >=$18,109,520 >=10.0%
Tier I Capital
(to Risk Weighted Assets) $34,913,106 19.3% >=$7,243,808 >=4.0% >=$10,865,712 >=6.0%
Tier I Capital
(to Average Assets) $34,913,106 13.3% >=$7,867,260 >=3.0% >=$13,112,100 >=5.0%
</TABLE>
The Bank is also subject to certain restrictions on the amount of
dividends that it may declare without prior regulatory approval. At
December 31, 1996, approximately $15,555,000 of retained earnings were
available for dividend declaration without prior regulatory approval.
11. COMMON STOCK TRANSACTIONS:
In June 1995, the Bank repurchased and subsequently retired 22,552
shares of its common stock from former shareholders for an aggregate
purchase price of approximately $1.1 million. The difference between
the par value and the repurchase price of the shares was treated as a
reduction of capital surplus.
In June 1995, the Bank's shareholders approved an amendment to the
Bank's Articles of Incorporation to increase the number of authorized
shares of common stock from 672,600 shares to 2,017,800 shares and to
decrease the par value per share of common stock from $2.50 to $1.00.
Accordingly, $975,072 was reclassified from common stock to capital
surplus. In June 1995, the Bank effected a three-for-one split of its
common stock. A total of 1,300,096 shares of common stock were issued
in connection with the split.
12. EMPLOYEE BENEFIT PLAN:
Effective June 1, 1995, the Bank adopted a defined contribution plan
covering substantially all eligible employees. The Bank's contribution
to the plan was approximately $32,000 in 1996 and $15,000 in 1995.
F-38
<PAGE> 127
13. SUPPLEMENTAL CASH FLOW INFORMATION:
Significant non-cash investing and financing activities are as follows:
1. Loans transferred to other real estate owned during 1996 and
1995 amounted to $2,363,513 and $1,330,276, respectively. Bank
financing provided for sales of premises and equipment other
real estate owned amounted to $2,744,856 for 1996.
2. During 1995, a building and land with a carrying value of
$581,775 was transferred from real estate held for investment
to premises and equipment.
3. As of December 31, 1995, available-for-sale securities had a
net unrealized gain of $168,508, net of income taxes, as a
separate component of shareholders' equity. The unrealized
gain recognized as of December 31, 1995, approximated the
unrealized gain recorded at the date of transfer of the
securities from held to maturity to available for sale. For
1996, the unrealized gain, net of income taxes, decreased by
$86,244.
4. On October 31, 1996, the Bank distributed the common stock of
OHI, as part of a mandated divestiture plan. The distribution
was recorded at book value of $5,000,000 and consisted of the
following:
<TABLE>
<S> <C>
Real estate held for development and sale $ 6,846,231
Real estate held for investment 572,893
Other real estate owned 162,035
Other assets 249,404
Loans payable to Bank (2,437,079)
Accounts payable and other liabilities (393,484)
-----------
$ 5,000,000
===========
</TABLE>
14. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument for which it is practicable
to estimate that value.
CASH AND DUE FROM BANKS, FEDERAL FUNDS SOLD AND INTEREST BEARING
DEPOSITS IN BANK -
For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.
INVESTMENT SECURITIES - The fair value of investment securities equals
quoted market price, if available. If a quoted market price is not
available, fair value is estimated using quoted market prices for
similar securities. Note 2 to the consolidated financial statements
provides information on estimated fair values at December 31, 1996 and
1995.
LOANS - The fair value of loans is estimated based on present values
using applicable discount factors based on the current rates of
interest charged by the Bank for similar transactions. At December 31,
1996 and 1995, the fair value of loans receivable approximated
$185,000,000 and $171,000,000, respectively.
F-39
<PAGE> 128
DEPOSIT LIABILITIES - The fair value of demand deposits, savings and
NOW accounts, and money market deposits is the amount payable on demand
(carrying amount). The fair value of fixed-maturity certificates of
deposit is estimated using the rates currently offered for deposits of
similar maturities. At December 31, 1996 and 1995, the fair value of
time deposits approximated $187,000,000 and $168,000,000, respectively.
Management has not assessed the value of its core deposit base.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT - The fair
value of commitments is estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms
of the agreements and the present creditworthiness of the
counterparties. Commitments to extend credit and unissued letters of
credit generally bear interest at variable market rates. Accordingly,
the carrying amounts of such financial instruments approximate their
fair values.
15. DISCONTINUED OPERATIONS:
On October 31, 1996, the Bank's 100% investment in OHI was spun off in
a tax free distribution to the Bank's shareholders. The Bank's
shareholders of record as of September 30, 1996 received one share of
OHI for each Bank common share owned. This transaction resulted in a
noncash distribution to the Bank's shareholders totaling $5,000,000,
the book value of OHI's underlying net assets.
The operating results of the discontinued operation are summarized as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Sales of real estate $ 6,696,932 $ 8,993,680
Cost of real estate sold (6,537,215) (8,577,293)
Other income (expense (229,928) 836,678
----------- -----------
Income (loss) from operations before taxes (70,211) 1,253,065
Income taxes (benefit) (27,000) 472,000
----------- -----------
Income (loss) from discontinued operations $ (43,211) $ 781,065
=========== ===========
</TABLE>
For financial reporting purposes, results of operations of OHI are
included in the Bank's consolidated financial statements as a component
of discontinued operations.
Profit from retail land sales and sales of residential units is
recognized when title has passed, minimum down payment requirement have
been met, and collectibility of the sales price is reasonably assured.
When a sale does not meet these requirements, profit is deferred until
the requirements are met.
F-40
<PAGE> 129
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
AS AMENDED
BY AND BETWEEN
TRANSFLORIDA BANK
AND
UNION PLANTERS CORPORATION
DATED AS OF FEBRUARY 26, 1998
A-1
<PAGE> 130
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties................................................................... A-6
PREAMBLE.................................................................. A-6
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER.............................. A-7
1.1 Merger........................................................... A-7
1.2 Time and Place of Closing........................................ A-7
1.3 Effective Time................................................... A-7
1.4 Execution of Related Agreements.................................. A-7
1.5 Restructure of Transaction....................................... A-7
ARTICLE 2 - TERMS OF MERGER............................................... A-8
2.1 Articles of Association.......................................... A-8
2.2 By-Laws.......................................................... A-8
2.3 Directors and Officers........................................... A-8
ARTICLE 3 - MANNER OF CONVERTING SHARES................................... A-8
3.1 Conversion of Shares............................................. A-8
3.2 Anti-Dilution Provisions......................................... A-8
3.3 Shares held by Transflorida or UPC............................... A-8
3.4 Fractional Shares................................................ A-8
3.5 Dissenting Shareholders.......................................... A-9
ARTICLE 4 - EXCHANGE OF SHARES............................................ A-9
4.1 Exchange Procedures.............................................. A-9
4.2 Rights of Former Transflorida Shareholders....................... A-9
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF TRANSFLORIDA................ A-10
5.1 Organization, Standing, and Power................................ A-10
5.2 Authority, No Breach by Agreement................................ A-10
5.3 Capital Stock.................................................... A-11
5.4 Transflorida Subsidiaries........................................ A-11
5.5 Financial Statements............................................. A-12
5.6 Absence of Undisclosed Liabilities............................... A-12
5.7 Absence of Certain Changes or Events............................. A-12
5.8 Tax Matters...................................................... A-12
5.9 Assets........................................................... A-12
5.10 Intellectual Property............................................ A-13
5.11 Environmental Matters............................................ A-13
5.12 Compliance With Laws............................................. A-15
5.13 Labor Relations.................................................. A-15
5.14 Employee Benefit Plans........................................... A-15
5.15 Material Contracts............................................... A-17
5.16 Legal Proceedings................................................ A-17
5.17 Reports.......................................................... A-17
5.18 Statements True and Correct...................................... A-17
5.19 Accounting, Tax and Regulatory Matters........................... A-18
5.20 State Takeover Laws.............................................. A-18
5.21 Articles Provisions.............................................. A-18
5.22 Derivatives...................................................... A-18
5.23 Year 2000........................................................ A-18
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF UPC......................... A-19
6.1 Organization, Standing and Power................................. A-19
6.2 Authority; No Breach by Agreement................................ A-19
6.3 Capital Stock.................................................... A-20
6.4 UPC Subsidiaries................................................. A-20
6.5 Financial Statements............................................. A-20
</TABLE>
A-2
<PAGE> 131
<TABLE>
<S> <C>
6.6 Absence of Undisclosed Liabilities............................... A-20
6.7 Absence of Certain Changes or Events............................. A-21
6.8 Tax Matters...................................................... A-21
6.9 Environmental Matters............................................ A-21
6.10 Compliance With Laws............................................. A-22
6.11 Labor Relations.................................................. A-22
6.12 Legal Proceedings................................................ A-22
6.13 Reports.......................................................... A-22
6.14 Statements True and Correct...................................... A-23
6.15 Accounting, Tax, and Regulatory Matters.......................... A-23
6.16 Matters Relating to UPBNA........................................ A-23
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION...................... A-23
7.1 Affirmative Covenants of Transflorida............................ A-23
7.2 Negative Covenants of Transflorida............................... A-24
7.3 Covenants of UPC................................................. A-25
7.4 Adverse Changes in Condition..................................... A-25
7.5 Reports.......................................................... A-26
ARTICLE 8 - ADDITIONAL AGREEMENTS......................................... A-26
8.1 Registration Statement; Proxy Statement; Shareholder Approval.... A-26
8.2 Authorization of Shares; Exchange Listing........................ A-26
8.3 Applications..................................................... A-26
8.4 Filings With State Offices....................................... A-27
8.5 Agreement as to Efforts to Consummate............................ A-27
8.6 Investigation and Confidentiality................................ A-27
8.7 Press Releases................................................... A-27
8.8 Certain Actions.................................................. A-27
8.9 Accounting and Tax Treatment..................................... A-28
8.10 Agreement of Affiliates.......................................... A-28
8.11 Employee Benefits and Contracts.................................. A-28
8.12 Indemnification.................................................. A-28
8.13 State Takeover Laws.............................................. A-29
8.14 UPBNA Shareholder Approval....................................... A-29
8.15 Assumption of Agreement by Acquiror.............................. A-29
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............. A-30
9.1 Conditions to Obligations of Each Party........................... A-30
9.2 Conditions to Obligations of UPC.................................. A-31
9.3 Conditions to Obligations of Transflorida......................... A-31
ARTICLE 10 - TERMINATION.................................................. A-32
10.1 Termination....................................................... A-32
10.2 Effect of Termination............................................. A-34
10.3 Non-Survival of Representations and Covenants..................... A-35
ARTICLE 11 - MISCELLANEOUS................................................ A-35
11.1 Definitions....................................................... A-35
11.2 Expenses.......................................................... A-41
11.3 Brokers and Finders............................................... A-41
11.4 Entire Agreement.................................................. A-41
11.5 Amendments........................................................ A-42
11.6 Waivers........................................................... A-42
11.7 Assignment........................................................ A-42
11.8 Notices........................................................... A-42
11.9 Governing Law..................................................... A-43
11.10 Counterparts...................................................... A-43
11.11 Captions.......................................................... A-43
11.12 Interpretations................................................... A-43
</TABLE>
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<TABLE>
<S> <C>
11.13 Enforcement of Agreement.......................................... A-44
11.14 Severability...................................................... A-44
Signatures................................................................ A-45
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
1. Form of Plan of Merger.
2. Form of Termination Fee Agreement.
3. Form of Support Agreement.
4. Form of Affiliate Agreement.
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
AS AMENDED
THIS AGREEMENT AND PLAN OF REORGANIZATION, AS AMENDED (this
"Agreement") is made and entered into as of February 26, 1998, by and between
TRANSFLORIDA BANK, a Florida state bank having its principal offices located in
Boca Raton, Florida ("Transflorida"), and UNION PLANTERS CORPORATION, a
Tennessee corporation having its principal offices located in Memphis, Tennessee
("UPC"). This Agreement is joined in by Union Planters Holding Corporation, a
Tennessee corporation and a wholly-owned subsidiary of UPC ("UPHC"), and Union
Planters Bank, National Association, a national banking association and
wholly-owned subsidiary of UPHC ("UPBNA").
PREAMBLE
The Boards of Directors of Transflorida, UPC, UPHC, and UPBNA
are of the opinion that it is advisable for the welfare and best interests of
the parties to this Agreement and their respective shareholders that UPHC
acquire all of the assets and liabilities of Transflorida in exchange for UPC
Common Stock and that UPHC transfer to UPBNA all of the assets and liabilities
of Transflorida acquired by UPHC, all on the terms and conditions set forth in
this Agreement.
For federal income tax purposes, the parties to this asset acquisition
agreement and plan of reorganization intend that the acquisition by UPHC, a
wholly-owned subsidiary of UPC, of substantially all of the assets of
Transflorida in exchange solely for shares of voting common stock of UPC and the
assumption by UPHC of all of the liabilities of Transflorida, as contemplated
herein, will constitute a reorganization within the meaning of Section
368(a)(1)(C) of the Internal Revenue Code, and further intend, that, pursuant to
Section 368(a)(2)(C) of the Internal Revenue Code, the acquisition by UPHC of
substantially all of the assets of Transflorida will not be disqualified under
Internal Revenue Code 368(a)(1)(C) by reason of the fact that the assets and
liabilities of Transflorida which are acquired by UPHC are transferred by UPHC
to UPBNA, a wholly-owned subsidiary of UPHC. Solely as a convenience to UPHC,
Transflorida is directed to transfer all of its assets and liabilities directly
to UPBNA by means of a statutory merger of Transflorida with and into UPBNA, as
set forth in this Agreement. The transactions described in this Agreement are
subject to the approvals of the shareholders of Transflorida, the Office of the
Comptroller of the Currency, and other applicable federal and state regulatory
authorities, and the satisfaction of certain other conditions described in this
Agreement. It is the intention of the parties to this Agreement that (i) for
federal income tax purposes the Merger shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code and (ii) for
accounting purposes the Merger shall qualify for treatment as a pooling of
interests transaction.
Immediately after the execution and delivery of this
Agreement, as a condition and inducement to UPC's willingness to enter into this
Agreement, (i) Transflorida and UPC are entering into a termination fee
agreement pursuant to which Transflorida is agreeing to pay to UPC a termination
fee under certain circumstances and (ii) each of the directors of Transflorida
is entering into a support agreement with UPC.
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:
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ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement and the Plan of Merger, at the Effective Time, Transflorida shall be
merged into and with UPBNA in accordance with the provisions of and with the
effect provided in Title 12, United States Code, Section 215a (the "Merger").
UPBNA shall be the Surviving Bank resulting from the Merger and shall continue
to be governed by the Laws of the United States. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the respective Boards of Directors of Transflorida and UPC, and will, prior to
the Effective Time, be approved by the respective Boards of Directors of UPHC
and UPBNA, and the Plan of Merger, in substantially the form of Exhibit 1,
which, prior to the Effective Time, will be approved and adopted by the Boards
of Directors of Transflorida and UPBNA.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at
9:00 A.M. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M.), or at such other
time as the Parties may determine. The Closing shall be held at such place as
determined by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time specified in the Certificate of Merger reflecting the Merger issued by the
OCC (the "Effective Time"). Subject to the terms and conditions hereof, unless
otherwise mutually agreed upon in writing by the chief executive officers or
chief financial officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on such date as may be designated
by UPC within 30 days following the last to occur of (i) the effective date of
the last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger (including the expiration of any requisite
waiting period in respect thereof), (ii) the date on which the shareholders of
Transflorida approve this Agreement and the Plan of Merger and (iii) the date on
which all other conditions precedent (other than those conditions which relate
to actions to be taken at the Closing) to each Party's obligations hereunder
shall have been satisfied or waived (to the extent waivable by such Party).
1.4 EXECUTION OF RELATED AGREEMENTS. Simultaneously with the
execution of this Agreement by the Parties and as a condition hereto, (i)
Transflorida is executing and delivering to UPC a termination fee agreement (the
"Termination Fee Agreement"), in substantially the form of Exhibit 2, pursuant
to which Transflorida is agreeing to pay to UPC a termination fee under certain
circumstances and (ii) each of the directors of Transflorida is executing and
delivering to UPC support agreement (each a "Support Agreement") in
substantially the form of Exhibit 3.
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 Transflorida and,
if required by applicable Law, the holders of the Transflorida Common Stock, to
make any revision to the structure of the Merger which: (i) changes the amount
of the consideration which the holders of shares of Transflorida 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, Transflorida, or the holders of shares of Transflorida Common Stock or
changes the intended pooling-of-interests accounting treatment; (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 Transflorida or
adverse to the holders of shares of Transflorida Common Stock; (v) would
materially impede or delay consummation of the Merger; or (vi) would require a
vote of UPC's shareholders under relevant state Law. UPC may exercise this right
of revision by giving written notice to Transflorida 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 Agreement and Plan of Reorganization.
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ARTICLE 2
TERMS OF MERGER
2.1 ARTICLES OF ASSOCIATION. The Articles of Association
(the "Articles") of UPBNA in effect immediately prior to the Effective Time
shall be the Articles of the Surviving Bank until otherwise amended or repealed.
2.2 BY-LAWS. The By-laws of UPBNA (the "By-Laws") in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Bank until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of UPBNA in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving Bank
from and after the Effective Time in accordance with the By-laws of the
Surviving Bank. The officers of UPBNA in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Bank from the Effective
Time in accordance with the By-laws of the Surviving Bank.
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, Transflorida, UPBNA, or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of UPC Capital Stock, including any
associated UPC Rights, issued and outstanding immediately prior to the Effective
Time shall remain issued and outstanding from and after the Effective Time.
(b) Each share of UPBNA 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 Transflorida Common Stock (excluding
shares held by Transflorida, any Transflorida Subsidiary, UPC or any UPC
Subsidiary, in each case other than in a fiduciary capacity or as a result of
debts previously contracted) issued and outstanding at the Effective Time shall
cease to be outstanding and shall be converted into and exchanged for the right
to receive .8489 of a share of UPC Common Stock (as subject to possible
adjustment as set forth in Section 10.1(f) of this Agreement, the "Exchange
Ratio"). Pursuant to the UPC Rights Agreement, each share of UPC Common Stock
issued in connection with the Merger upon conversion of Transflorida Common
Stock shall be accompanied by a UPC Right.
3.2 ANTI-DILUTION PROVISIONS. In the event UPC changes the
number of shares of UPC Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
occurs prior to the Effective Time, the Exchange Ratio shall each be
proportionately adjusted.
3.3 SHARES HELD BY TRANSFLORIDA OR UPC. Each of the shares of
Transflorida Common Stock held by Transflorida, any Transflorida Subsidiary, UPC
or any UPC Subsidiary, in each case other than in fiduciary capacity or as a
result of debts previously contracted, shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement or the Plan of Merger, each holder of shares of Transflorida
Common Stock exchanged pursuant to the Merger who would
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otherwise have been entitled to receive a fractional 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 share of UPC Common Stock multiplied by the closing price of such
common stock on the NYSE-Composite Transactions List (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source
selected by UPC) on the last trading day preceding the Effective Time. No such
holder will be entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.
3.5 DISSENTING SHAREHOLDERS. Any holder of shares of
Transflorida Common Stock who perfects such holder's dissenters' rights of
appraisal in accordance with and as contemplated by Section 658.44 of the
Florida Banking Code shall be entitled to receive the value of such shares in
cash as determined pursuant to such provision of Law; provided, however, that no
such payment shall be made to any dissenting shareholder unless and until such
dissenting shareholder has complied with the applicable provisions of the
Florida Banking Code and surrendered to Transflorida the certificate or
certificates representing the shares for which payment is being made. In the
event that after the Effective Time a dissenting shareholder of Transflorida
fails to perfect, or effectively withdraws or loses, such holder's right to
appraisal and of payment for such holder's shares, UPC shall issue and deliver
the consideration to which such holder of shares of Transflorida Common Stock is
entitled under this Article 3 (without interest) upon surrender by such holder
of the certificate or certificates representing shares of Transflorida Common
Stock held by such holder. Prior to the Effective Time, Transflorida will
establish an escrow account with an amount sufficient to satisfy the maximum
aggregate payment that may be required to be paid to dissenting shareholders.
Upon satisfaction of all claims of dissenting shareholders, the remaining
escrowed amount, reduced by payment of the fees and expenses of the escrow
agent, will be retained by the Surviving Bank.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time,
UPC shall cause the exchange agent selected by UPC (the "Exchange Agent") to
mail to the former shareholders of Transflorida appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Transflorida
Common Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent). Transflorida shall have the right to review the transmittal
materials. After the Effective Time, each holder of shares of Transflorida
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which dissenters' rights have been perfected as provided in
Section 3.5 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
Transflorida 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
Transflorida Common Stock is entitled as a result of the Merger until such
holder surrenders his certificate or certificates representing the shares of
Transflorida Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of Transflorida Common Stock so surrendered shall be
duly endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither UPC, Transflorida, nor the Exchange Agent
shall be liable to a holder of Transflorida 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 TRANSFLORIDA SHAREHOLDERS. At the
Effective Time, the stock transfer books of Transflorida shall be closed as to
holders of Transflorida Common Stock immediately prior to the Effective Time and
no transfer of Transflorida Common Stock by any such holder shall thereafter be
made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 4.1 of this Agreement,
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each certificate theretofore representing shares of Transflorida Common Stock
(other than shares to be canceled pursuant to Section 3.3 or Section 3.5 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 Bank'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
Transflorida in respect of such shares of Transflorida Common Stock and in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time. To the extent permitted by Law, former shareholders of record of
Transflorida shall be entitled to vote after the Effective Time at any meeting
of UPC shareholders the number of whole shares of UPC Common Stock into which
their shares of Transflorida Common Stock are converted, regardless of whether
such holders have exchanged their certificates representing Transflorida 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 Transflorida 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 Transflorida
Common Stock certificate, both the UPC Common Stock certificate (together with
all such undelivered dividends or other distributions without interest) and any
undelivered 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. In the event any Transflorida Common Stock certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such certificate to be lost, stolen or destroyed
and, if required by UPC, the posting by such person of a bond in such amount as
UPC may reasonably direct as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificate the shares of UPC Common
Stock and cash in lieu of fractional shares deliverable in respect thereof
pursuant to this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TRANSFLORIDA
Except as disclosed in the Transflorida Disclosure Memorandum,
Transflorida hereby represents and warrants to UPC as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Transflorida is a state
bank duly organized, validly existing, and in good standing under the Laws of
the State of Florida, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its material Assets.
Transflorida is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Transflorida. Transflorida 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 the Savings
Association Insurance Fund.
5.2 AUTHORITY, NO BREACH BY AGREEMENT.
(a) Subject to the approval of this Agreement and the Plan
of Merger by the holders of the outstanding shares of Transflorida Common Stock,
Transflorida has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and the Plan of Merger
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery, and performance of this Agreement, and the consummation of
the transactions contemplated herein and therein, including the Merger, have
been duly and validly authorized by all necessary corporate action (including
valid authorization and
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adoption of this Agreement by Transflorida's duly constituted Board of
Directors) in respect thereof on the part of Transflorida, subject to the
approval of this Agreement and the Plan of Merger by the holders of the
outstanding shares of Transflorida Common Stock, which is the only shareholder
vote required for approval of this Agreement and the Plan of Merger and
consummation of the Merger by Transflorida. Subject to such requisite
shareholder approval and assuming due authorization, execution and delivery of
this Agreement and the Plan of Merger, this Agreement and the Plan of Merger
(which, for purposes of this sentence, shall not include the Termination Fee
Agreement) represent legal, valid, and binding obligations of Transflorida,
enforceable against Transflorida 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 (which, for purposes of clause (iii) of this sentence,
shall not include the Termination Fee Agreement) by Transflorida nor the
consummation by Transflorida of the transactions contemplated hereby or thereby,
nor compliance by Transflorida with any of the provisions hereof or thereof,
will (i) conflict with or result in a breach of any provision of Transflorida's
Articles of Incorporation or By-laws, or (ii) constitute or result in a Default
under, or require any Consent (excluding Consents required by Law or Order)
pursuant to, or result in the creation of any Lien on any material Asset of
Transflorida or any Transflorida Subsidiary under, any Contract or Permit of
Transflorida or any Transflorida Subsidiary, except for such Defaults, Liens and
Consents, which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Transflorida, 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 Transflorida, its
Subsidiaries or any of their respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Transflorida, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by Transflorida of the Merger and the consummation of the
other transactions contemplated in this Agreement and the Plan of Merger.
5.3 CAPITAL STOCK. The authorized capital stock of
Transflorida consists of 2,017,800 shares of Transflorida Common Stock, of which
1,950,144 shares are issued and outstanding as of the date of this Agreement and
not more than 1,950,144 shares will be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of capital stock of Transflorida
are duly and validly issued and outstanding and are fully paid and nonassessable
under the Florida Banking Code. None of the outstanding shares of capital stock
of Transflorida has been issued in violation of any preemptive rights of the
current or past shareholders of Transflorida. Transflorida has reserved no
shares of Transflorida Common Stock for issuance under the Transflorida Stock
Plans, pursuant to which options to purchase no shares of Transflorida Common
Stock are outstanding. There are no shares of capital stock or other equity
securities of Transflorida outstanding and no outstanding Rights relating to the
capital stock of Transflorida.
5.4 TRANSFLORIDA SUBSIDIARIES. Transflorida has disclosed in
Section 5.4 of the Transflorida Disclosure Memorandum all of the Transflorida
Subsidiaries that are corporations (identifying their jurisdiction of
incorporation) and all of the Transflorida Subsidiaries that are general or
limited partnerships or other non-corporate entities (identifying the Law under
which such entity is organized, and the amount and nature of the ownership
interest therein of Transflorida Subsidiaries). Transflorida or one of its
wholly-owned Subsidiaries owns all of the issued and outstanding shares of
capital stock (or other equity interests) of each of the Transflorida
Subsidiaries. No capital stock (or other equity interest) of any Transflorida
Subsidiary is or may become required to be issued (other than to another
Transflorida Subsidiary) by reason of any rights, and there are
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no Contracts by which Transflorida or any of the Transflorida Subsidiaries is
bound to issue (other than to Transflorida or another of the Transflorida
Subsidiaries) additional shares of its capital stock (or other equity interests)
or Rights or by which Transflorida or any of the Transflorida Subsidiaries is or
may be bound to transfer any shares of the capital stock (or other equity
interests) of any of Transflorida or any of the Transflorida Subsidiaries (other
than to Transflorida or any of the Transflorida Subsidiaries). There are no
Contracts relating to the rights of Transflorida or any Transflorida Subsidiary
to vote or to dispose of any shares of the capital stock (or other equity
interests) of Transflorida or any Transflorida Subsidiary. All of the shares of
capital stock (or other equity interests) of each Transflorida Subsidiary held
by Transflorida or any Transflorida Subsidiary are fully paid and nonassessable
under the applicable corporation or similar Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by Transflorida or a
Transflorida Subsidiary free and clear of any Liens. Each Transflorida
Subsidiary is either a bank, partnership, limited liability corporation, or a
corporation, and each such Subsidiary is duly organized, validly existing, and
(as to corporations) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each Transflorida Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Transflorida. The minute book and other
organizational documents (and all amendments thereto) for Transflorida and each
Transflorida Subsidiary that is a "Significant Subsidiary" (as such term is
defined in Regulation S-X promulgated under the 1934 Act) have been or will be
made available to UPC for its review, and are true and complete as in effect as
of the date of this Agreement.
5.5 FINANCIAL STATEMENTS. Transflorida has disclosed in
Section 5.5 of the Transflorida Disclosure Memorandum, and has delivered to UPC
copies of, all Transflorida Financial Statements prepared for periods ended
prior to the date hereof and will deliver to UPC copies of all Transflorida
Financial Statements prepared subsequent to the date hereof. The Transflorida
Financial Statements (as of the dates thereof and for the periods covered
thereby) (i) are or, if dated after the date of this Agreement, will be in
accordance with the books and records of Transflorida or the Transflorida
Subsidiaries, as the case may be, which are or will be, as the case may be,
complete and correct in all material respects and which have been or will have
been, as the case may be, maintained in accordance with good business practices
and (ii) present or will present, as the case may be, fairly the consolidated
financial position of Transflorida and the Transflorida Subsidiaries as of the
dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows of the Transflorida Companies for the
periods indicated, in accordance with GAAP (subject to any exceptions as to
consistency specified therein or as may be indicated in the notes thereto or, in
the case of interim financial statements, to normal recurring year-end
adjustments which were not or are not expected to be Material in amount or
effect).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Transflorida
nor any of the Transflorida Subsidiaries has any Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Transflorida, except Liabilities which are accrued or reserved against in the
consolidated balance sheets of Transflorida as of September 30, 1997, included
in the Transflorida Financial Statements made available prior to the date of
this Agreement or reflected in the notes thereto. Except as disclosed in Section
5.6 of the Transflorida Disclosure Memorandum, neither Transflorida nor any of
the Transflorida Subsidiaries has incurred or paid any Liability since September
30, 1997, except for such Liabilities incurred or paid (i) in the ordinary
course of business consistent with past business practice or which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Transflorida or (ii) in connection with the transactions contemplated
by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1997, 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 Transflorida.
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5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of Transflorida or any of the Transflorida Subsidiaries have been timely filed
or requests for extensions have been timely filed, granted, and have not expired
for periods ended on or before December 31, 1996, and on or before the date of
the most recent fiscal year end immediately preceding the Effective Time, and
all such Tax Returns filed are complete and accurate in all material respects.
All Taxes shown on filed Tax Returns have been paid. There is no audit
examination or refund Litigation with respect to any material Taxes, except as
reserved against in the Transflorida Financial Statements made available prior
to the date of this Agreement. All material Taxes and other material Liabilities
due with respect to completed and settled examinations or concluded Litigation
have been paid. There are no material Liens with respect to Taxes upon any of
the Assets of Transflorida or any of the Transflorida Subsidiaries.
(b) Neither Transflorida nor any of the Transflorida
Subsidiaries has executed an extension or waiver of any statute of limitations
on the assessment or collection of any Tax due (excluding such statutes that
relate to years currently under examination by the Internal Revenue Service or
other applicable taxing authorities) that is currently in effect.
(c) Adequate provision for any material Taxes due or to
become due for Transflorida or the Transflorida Subsidiaries for the period or
periods through and including the date of the respective Transflorida Financial
Statements has been made and is reflected on such Transflorida Financial
Statements.
(d) Material deferred Taxes of Transflorida and the
Transflorida Subsidiaries have been provided for in accordance with GAAP.
(e) Transflorida and the Transflorida Subsidiaries are in
material compliance with, and their records contain all information and
documents (including properly completed IRS Forms W-9) necessary to comply in
all material respects with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.
(f) Neither Transflorida nor any of the Transflorida
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any Contract that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of Transflorida or any of the Transflorida
Subsidiaries that occurred during or after any Taxable Period in which
Transflorida or any of the Transflorida Subsidiaries incurred a net operating
loss that carries over to any Taxable Period ending after December 31, 1996,
except in connection with the transactions contemplated pursuant to this
Agreement.
(h) Neither Transflorida nor any of the Transflorida
Subsidiaries is a party to any tax allocation or sharing agreement (except with
one another) and neither Transflorida nor any of the Transflorida Subsidiaries
has been a member of an affiliated group filing a consolidated federal income
tax return (other than a group the common parent of which was Transflorida) or
has any material Liability for taxes of any Person (other than Transflorida and
the Transflorida Subsidiaries) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign law) as a transferee or
successor or by Contract or otherwise.
5.9 ASSETS. Except as disclosed or reserved against in the
Transflorida Financial Statements made available prior to the date of this
Agreement, Transflorida and the Transflorida Subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. Substantially, all tangible properties used in the businesses of
Transflorida and its Subsidiaries are in good condition, reasonable wear and
tear excepted, and are usable in the ordinary course of business of Transflorida
and its Subsidiaries. All Assets which
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are material to Transflorida's business on a consolidated basis, held under
leases or subleases by the Transflorida or any of the Transflorida Subsidiaries,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws 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. Transflorida and the Transflorida
Subsidiaries currently maintain insurance in amounts, scope, and coverage which,
in the reasonable opinion of management of Transflorida, are adequate for the
operations of Transflorida and the Transflorida Subsidiaries. Neither
Transflorida nor any of the Transflorida Subsidiaries has received notice from
any insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no claims pending under any such policies of insurance and no notices have been
given by Transflorida or any of the Transflorida Subsidiaries under such
policies, except for claims in the ordinary course of business.
5.10 INTELLECTUAL PROPERTY. All of the Intellectual Property
rights of Transflorida and the Transflorida Subsidiaries are in full force and
effect and, if applicable, constitute legal, valid, and binding obligations of
the respective parties thereto, and there have not been, and, to the Knowledge
of Transflorida, there currently are not, any Defaults thereunder by
Transflorida or a Transflorida Subsidiary. Transflorida or a Transflorida
Subsidiary owns or is the valid licensee of all such Intellectual Property
rights free and clear of all Liens or claims of infringement. Neither
Transflorida nor any of the Transflorida Subsidiaries nor, to the Knowledge of
Transflorida, their respective predecessors has infringed the Intellectual
Property rights of others and, to the Knowledge of Transflorida, none of the
Intellectual Property rights as used in the business conducted by Transflorida
or the Transflorida Subsidiaries infringes upon or otherwise violates the rights
of any Person, nor has any Person asserted a claim of such infringement. Neither
Transflorida nor the Transflorida Subsidiaries is obligated to pay any royalties
to any Person with respect to any such Intellectual Property. Transflorida or a
Transflorida Subsidiary owns or has the valid right to use all of the
Intellectual Property rights which it is presently using, or in connection with
performance of any material Contract to which it is a party. No officer,
director, or employee of Transflorida or the Transflorida Subsidiaries is party
to any Contract which requires such officer, director, or employee to assign any
interest in any Intellectual Property or keep confidential any trade secrets,
proprietary data, customer information, or other business information or, which
restricts or prohibits such officer, director, or employee from engaging in
activities competitive with any Person, including Transflorida or any of the
Transflorida Subsidiaries.
5.11 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Transflorida, each of
Transflorida and the Transflorida Subsidiaries, its Participation Facilities,
and its Operating Properties are, and have been, in material compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
Transflorida.
(b) To the Knowledge of Transflorida, there is no
Litigation pending or threatened before any court or governmental agency in
which Transflorida, any of the Transflorida Subsidiaries or any of their
respective Operating Properties or Participation Facilities (or Transflorida in
respect of such Operating Property or Participation Facility) has been or, with
respect to threatened Litigation, may be named reasonably as a defendant (i) for
alleged noncompliance with any Environmental Law or (ii) relating to the release
into the environment of any Hazardous Material in violation of Environmental
Laws, whether or not occurring at, on, under, adjacent to, or affecting a site
owned, leased, or operated by Transflorida or any of the Transflorida
Subsidiaries or any of their respective Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Transflorida, nor, to the Knowledge of Transflorida, is there any
reasonable basis for any Litigation of a type described in this sentence.
(c) During the period of (i) Transflorida's or any of the
Transflorida Subsidiaries' ownership or operation of any of their respective
currently owned real properties, (ii) Transflorida's or any of the
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Transflorida Subsidiaries' participation in the management of any Participation
Facility, or (iii) Transflorida's or any of the Transflorida Subsidiaries'
holding of a security interest in an Operating Property, to the Knowledge of
Transflorida, there have been no releases of Hazardous Material in violation of
Environmental Laws in, on, under, adjacent to, or affecting such properties,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Transflorida. Prior to the period of (i)
Transflorida's or any of the Transflorida Subsidiaries' ownership or operation
of any of their respective current properties, (ii) Transflorida's or any of the
Transflorida Subsidiaries' participation in the management of any Participation
Facility, or (iii) Transflorida's or any of the Transflorida Subsidiaries'
holding of a security interest in an Operating Property, to the Knowledge of
Transflorida, there were no releases of Hazardous Material in, on, under, or
affecting any such property, Participation Facility or Operating Property,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Transflorida.
5.12 COMPLIANCE WITH LAWS. Each of Transflorida and the
Transflorida Subsidiaries has in effect all Permits necessary for it to own,
lease, or operate its material Assets and to carry on its business as now
conducted, except where the failure to hold such Permits would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Transflorida. Neither Transflorida nor any of the Transflorida Subsidiaries:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for such
violations which would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Transflorida; or
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that Transflorida or any
of the Transflorida Subsidiaries is not in compliance with any of the Laws or
Orders which such governmental authority or Regulatory Authority enforces,
except for such non-compliance which would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Transflorida,
(ii) threatening to revoke any Permits, or (iii) requiring Transflorida or any
of the Transflorida Subsidiaries to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment, or memorandum
of understanding, or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
5.13 LABOR RELATIONS. Neither Transflorida nor any of the
Transflorida Subsidiaries is the subject of any Litigation asserting that
Transflorida or any of the Transflorida Subsidiaries has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel Transflorida or any of the
Transflorida Subsidiaries to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving Transflorida or any of the Transflorida Subsidiaries, pending or
threatened, or to the Knowledge of Transflorida, is there any activity involving
Transflorida's or any of the Transflorida Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in any other organization
activity.
5.14 EMPLOYEE BENEFIT PLANS.
(a) Transflorida has disclosed in Section 5.14 of the
Transflorida Disclosure Memorandum, and has delivered or made available to UPC
prior to the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by Transflorida or the
Transflorida Subsidiaries or ERISA Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries of Transflorida or any Transflorida Subsidiary and under
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which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries of Transflorida or any Transflorida
Subsidiary are eligible to participate (collectively, the "Transflorida Benefit
Plans"). Any of the Transflorida Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Transflorida ERISA Plan." Each Transflorida ERISA Plan which is
also a "defined benefit plan" (as defined in Section 414(j) of the Internal
Revenue Code) is referred to herein as a "Transflorida Pension Plan." No
Transflorida Pension Plan is or has been a multiemployer plan within the meaning
of Section 3(37) of ERISA.
(b) All Transflorida Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws except to the extent that any failure to comply is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Transflorida. Each Transflorida ERISA Plan that is intended to be
qualified under Section 401(a) of the Internal Revenue Code has either received
a favorable determination letter from the Internal Revenue Service (and
Transflorida is not aware of any circumstances likely to result in revocation of
any such favorable determination letter) or timely application has been made
therefor. To the knowledge of Transflorida, neither Transflorida nor any of the
Transflorida Subsidiaries has engaged in a transaction with respect to any
Transflorida Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject Transflorida or any Transflorida
Subsidiary to a material Tax imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA.
(c) No Transflorida Pension Plan has any "underfunded
current liability" as that term is defined in Section 302(d)(8)(A) of ERISA and
the fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any Transflorida Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Transflorida Pension Plan, and (iii)
no increase in benefits under any Transflorida Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Transflorida or
materially adversely affect the funding status of any such plan. Neither any
Transflorida Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by Transflorida
or any of the Transflorida Subsidiaries, or the single-employer plan of any
entity which is considered one employer with Transflorida under Section 4001 of
ERISA or Section 414 of the Internal Revenue Code or Section 302 of ERISA
(whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA. Neither Transflorida nor any of the Transflorida
Subsidiaries has provided, or, to Transflorida's knowledge, is required to
provide, security to a Transflorida Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the Internal Revenue
Code.
(d) Within the six-year period preceding the Effective
Time, no material Liability under Subtitle C or D of Title IV of ERISA has been
incurred by Transflorida or any of the Transflorida Subsidiaries with respect to
any current, frozen, or terminated single-employer plan or the single-employer
plan of any ERISA Affiliate. Neither Transflorida nor any of the Transflorida
Subsidiaries has incurred any material withdrawal Liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA (regardless of whether
based on contributions of an ERISA Affiliate). No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Transflorida Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(e) Neither Transflorida nor any of the Transflorida
Subsidiaries has any material Liability for retiree health and life benefits
under any of the Transflorida Benefit Plans.
(f) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation or golden parachute)
becoming due to any director or any employee of Transflorida or any of the
Transflorida Subsidiaries from Transflorida or any of the Transflorida
Subsidiaries under any Transflorida Benefit
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Plan, (ii) materially increase any benefits otherwise payable under any
Transflorida Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Transflorida Subsidiary and their respective
beneficiaries, other than entitlements accrued pursuant to funded retirement
plans subject to the provisions of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, have been fully reflected on the Transflorida Financial
Statements to the extent required by and in accordance with GAAP.
5.15 MATERIAL CONTRACTS. Except as disclosed in Section 5.15
of the Transflorida Disclosure Memorandum, neither Transflorida, the
Transflorida Subsidiaries, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $75,000, (ii) any Contract relating to the borrowing of money by
Transflorida or any of the Transflorida Subsidiaries or the guarantee by
Transflorida or any of the Transflorida Subsidiaries of any such obligation
(other than Contracts evidencing deposit liabilities, purchases of federal
funds, fully-secured repurchase agreements, trade payables, and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any Contracts which prohibit or restrict Transflorida or any of the
Transflorida Subsidiaries from engaging in any business activities in any
geographic area, line of business, or otherwise in competition with any other
Person, (iv) any other Contract or amendment thereto that would be required to
be filed as an exhibit to a Form 10-K filed by Transflorida with the Securities
and Exchange Commission (the "SEC") as of the date of this Agreement if
Transflorida were required to file a Form 10-K with the SEC (together with all
Contracts referred to in Section 5.9 and 5.14(a) of this Agreement, the
"Transflorida Contracts"). With respect to each Transflorida Contract: (i) the
Contract is in full force and effect; (ii) neither Transflorida nor any
Transflorida Subsidiary is in material Default thereunder; (iii) neither
Transflorida nor its Subsidiaries has repudiated or waived any material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of Transflorida, in material Default in any respect or has
repudiated or waived any material provision thereunder.
5.16 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Transflorida, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Transflorida or any of
the Transflorida Subsidiaries, or against any Asset, employee benefit plan,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Transflorida, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against Transflorida or any of the
Transflorida Subsidiaries. Section 5.16 of the Transflorida Disclosure
Memorandum includes a summary report of all material Litigation as of the date
of this Agreement to which Transflorida or any Transflorida Subsidiary is a
party and which names Transflorida or a Transflorida Subsidiary as a defendant
or cross-defendant.
5.17 REPORTS. Since January 1, 1994, or the applicable date of
organization if later, Transflorida and each Transflorida Subsidiary has timely
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with Regulatory
Authorities, and any applicable state securities or banking authorities, except
failures to file which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Transflorida. As of its respective date
(or, if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing), each of such reports and documents, including
the financial statements, exhibits, and schedules thereto, complied in all
material respects with all applicable Laws. None of the Transflorida Companies
is required to file any SEC Documents.
5.18 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by Transflorida for inclusion in the Registration
Statement to be filed by UPC with the SEC will, when the Registration Statement
becomes effective, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by Transflorida
for inclusion in the Proxy Statement to be mailed to Transflorida's shareholders
in
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connection with the Shareholders' Meeting, and any other documents to be filed
by Transflorida with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy Statement, when first mailed
to the shareholders of Transflorida, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
Transflorida or the Transflorida Subsidiaries are responsible for filing with
any Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.19 ACCOUNTING, TAX, AND REGULATORY MATTERS. Neither
Transflorida nor any of the Transflorida Subsidiaries has taken any action or
has any Knowledge of any fact or circumstance relating to Transflorida that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying for pooling-of-interests accounting treatment or as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement.
5.20 STATE TAKEOVER LAWS. Transflorida has taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover laws (collectively, "Takeover Laws"), including Sections
607.0901 and 607.0902 of the FBCA.
5.21 ARTICLES PROVISIONS. Transflorida 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 Articles, By-laws or other governing instruments
of Transflorida or any Transflorida Subsidiary or restrict or impair the ability
of UPC or any of the UPC Subsidiaries to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of Transflorida or any
Transflorida Subsidiary.
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 Transflorida's own account, or
for the account of one or more the Transflorida 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. Transflorida has disclosed to UPC a complete
and accurate copy of Transflorida's plan, including an estimate of the
anticipated associated costs, for implementing modifications to Transflorida'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, Transflorida shall endeavor to continue its
efforts to implement such plan.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UPC
UPC hereby represents and warrants to Transflorida as follows:
6.1 ORGANIZATION, STANDING AND POWER. UPC is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Tennessee, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets. UPC
is duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions where
the character of its Assets or the nature or conduct of its business requires it
to be so qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Subject to the approval of the UPC Charter Amendment
by the holders of the outstanding shares of UPC Common Stock, 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 (subject to the amendment of UPC's Restated
Charter of Incorporation to increase the number of authorized shares of UPC
Common Stock sufficient to consummate the Merger) by all necessary corporate
action (including valid authorization and adoption of this Agreement by UPC's
duly constituted Board of Directors) in respect thereof on the part of UPC,
subject to the approval of the UPC Charter Amendment by the holders of the
outstanding shares of UPC Common Stock. Assuming due authorization, execution
and delivery of this Agreement by Transflorida, this Agreement (which, for
purposes of this sentence, shall not include the Termination Fee Agreement)
represents a legal, valid, and binding obligation of UPC, enforceable against
UPC in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
(which, for purposes of clause (iii) of this sentence, shall not include the
Termination Fee Agreement) by UPC, nor the compliance by UPC with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of UPC's Restated Charter of Incorporation or By-laws (subject to the amendment
of the UPC's Restated Charter of Incorporation to increase the number of
authorized shares of UPC Common Stock), or (ii) constitute or result in a
Default under, or require any Consent (excluding Consents required by Law or
Order) pursuant to, or result in the creation of any Lien on any material Asset
of UPC or any UPC Subsidiary under, any Contract or Permit of UPC or any UPC
Subsidiary, except for such Defaults, Liens and Consents, which, if not obtained
or made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC, or (iii) subject to receipt of the requisite
approvals referred to in Section 9.1(b) of this Agreement, violate any Law or
Order applicable to UPC or any UPC Subsidiary or any of their respective
material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NYSE, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on 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.
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6.3 CAPITAL STOCK. The authorized capital stock of UPC
consists of (i) 100,000,000 shares of UPC Common Stock, of which 81,650,946
shares are issued and outstanding as of December 31, 1997 and (ii) 10,000,000
shares of UPC Preferred Stock, of which 2,188,358 shares of UPC Series E
Preferred Stock are issued and outstanding. All of the issued and outstanding
shares of UPC Capital Stock are, and (subject to the amendment of UPC's Restated
Charter of Incorporation pursuant to the UPC Charter Amendment) all of the
shares of UPC Common Stock to be issued in exchange for shares of Transflorida
Common Stock upon consummation of the Merger in exchange for shares of
Transflorida 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 Transflorida Common Stock
upon consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of UPC.
6.4 UPC SUBSIDIARIES. Except with respect to Capital Factors,
Inc., UPC or one of its wholly-owned Subsidiaries owns all of the issued and
outstanding shares of capital stock (or other equity interests) of each of the
UPC Subsidiaries. No capital stock (or other equity interest) of any UPC
Subsidiary is or may become required to be issued (other than to another UPC
Subsidiary) by reason of any rights, and there are no Contracts by which the UPC
or any of the UPC Subsidiaries are bound to issue (other than to UPC or any of
the UPC Subsidiaries) additional shares of its capital stock (or other equity
interests) or Rights or by which UPC or any of the UPC Subsidiaries are or may
be bound to transfer any shares of the capital stock (or other equity interests)
of any of UPC or any of the UPC Subsidiaries (other than to UPC or any of the
UPC Subsidiaries). There are no Contracts relating to the rights of UPC or any
UPC Subsidiary to vote or to dispose of any shares of the capital stock (or
other equity interests) of UPC or any of the UPC Subsidiaries. All of the shares
of capital stock (or other equity interests) of each UPC Subsidiary held by UPC
or any UPC Subsidiary are fully paid and nonassessable (except pursuant to 12
U.S.C. Section 55 in the case of national banks and comparable, applicable state
Law, if any, in the case of state depository institutions) under the applicable
corporation or similar Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by UPC or a UPC Subsidiary free and
clear of any Liens. Each UPC Subsidiary is either a bank, a savings association,
partnership, limited liability corporation, or a corporation, and each such
Subsidiary is duly organized, validly existing, and (as to corporations) in good
standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each UPC Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC. The minute book and other organizational documents (and all
amendments thereto) for each of UPC and each UPC Subsidiary that is a
Significant Subsidiary have been made available to Transflorida for its review,
and are true and complete as in effect as of the date of this Agreement.
6.5 FINANCIAL STATEMENTS. Each of the 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 prepared, or will be prepared, in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of unaudited interim
statements, as permitted by Form 10-Q of the SEC), and fairly presented, or will
fairly present, in all material respects the consolidated financial position of
UPC and the UPC Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount or effect.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. Neither UPC nor any of
the UPC Subsidiaries 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
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September 30, 1997, included in the UPC Financial Statements made available
prior to the date of this Agreement or reflected in the notes thereto. Neither
UPC nor any of the UPC Subsidiaries has incurred or paid any Liability since
September 30, 1997, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice or which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC or (ii) in connection with the transaction contemplated by
this Agreement.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1997, except as disclosed in the UPC SEC Reports made available prior to the
date of this Agreement or in Section 6.7 of the UPC Disclosure Memorandum, 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.
6.8 TAX MATTERS.
(a) All material Tax Returns required to be filed by or on
behalf of UPC or any of the UPC Subsidiaries have been timely filed or requests
for extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1996, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, and all such
Tax Returns filed are complete and accurate in all material respects. All Taxes
shown on filed Tax Returns have been paid. There is no audit examination, or
refund Litigation with respect to any material Taxes, except as reserved against
the UPC Financial Statements delivered prior to the date of this Agreement. All
material Taxes and other material Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid. There are no
material Liens with respect to Taxes upon any of the Assets of UPC or any of the
UPC Subsidiaries.
(b) Adequate provision for any material Taxes due or to
become due for UPC or any of the UPC Subsidiaries for the period or periods
through and including the date of the respective UPC Financial Statements has
been made and is reflected on such UPC Financial Statements.
(c) Material deferred Taxes of UPC and the UPC
Subsidiaries have been provided for in accordance with GAAP.
6.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of UPC, each of UPC and the UPC
Subsidiaries, its Participation Facilities, and its Operating Properties are,
and have been, in compliance with all Environmental Laws, except for violations
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC.
(b) To the Knowledge of UPC, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which UPC or any of the UPC Subsidiaries or any of their
respective Operating Properties or Participation Facilities (or UPC in respect
of such Operating Property or Participation Facility) has been or, with respect
to threatened Litigation, may be named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, adjacent to, or affecting (or potentially
affecting) a site owned, leased, or operated by UPC or any of the UPC
Subsidiaries or any of their respective Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC, nor, to the knowledge of UPC, is there any reasonable basis for
any Litigation of a type described in this sentence.
(c) During the period of (i) UPC's or any of the UPC
Subsidiaries' ownership or operation of any of their respective current
properties, (ii) any UPC's or any of the UPC Subsidiaries' participation in the
management of any Participation Facility, or (iii) UPC's or any of the UPC
Subsidiaries' holding of a security interest in an Operating Property, to the
Knowledge of UPC, there have been no releases of Hazardous Material in, on,
under, adjacent to, or affecting (or potentially affecting) such properties,
except such as are not reasonably
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likely to have, individually or in the aggregate, a Material Adverse Effect on
UPC. Prior to the period of (i) UPC's or any of UPC Subsidiaries' ownership or
operation of any of their respective current properties, (ii) UPC's or any of
UPC Subsidiaries' participation in the management of any Participation Facility,
or (iii) UPC or any of UPC Subsidiaries' holding of a security interest in an
Operating Property, to the Knowledge of UPC, there were no releases of Hazardous
Material in, on, under, or affecting any such property, Participation Facility
or Operating Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC.
6.10 COMPLIANCE WITH LAWS. UPC is duly registered as a bank
holding company under the BHC Act. Each of UPC and the UPC Subsidiaries has in
effect all Permits necessary for it to own, lease, or operate its material
Assets and to carry on its business as now conducted, except where the failure
to hold such permits would not be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC. Neither UPC nor any of the UPC
Subsidiaries:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for such
violations which would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC; or
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that UPC or any UPC
Subsidiary is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, except for such
non-compliance which would not be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC, (ii) threatening to revoke any
Permits, or (iii) requiring UPC or any UPC Subsidiary to enter into or consent
to the issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum of understanding, or to adopt any Board resolution or
similar undertaking, which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
6.11 LABOR RELATIONS. Neither UPC nor any of the UPC
Subsidiaries is the subject of any Litigation asserting that UPC or any of the
UPC Subsidiaries has committed an unfair labor practice (within the meaning of
the National Labor Relations Act or comparable state law) or seeking to compel
UPC or any of the UPC Subsidiaries to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other labor
dispute involving UPC or any of the UPC Subsidiaries, pending or threatened, or
to the Knowledge of UPC, is there any activity involving UPC's or any of the UPC
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.12 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of UPC, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against UPC or any UPC Subsidiary, 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 UPC or any
UPC Subsidiary.
6.13 REPORTS. Since January 1, 1994, or the applicable date of
organization if later, UPC and each UPC Subsidiary has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements (the "UPC
SEC Reports"), (ii) other Regulatory Authorities, and (iii) any applicable state
securities or banking authorities, except failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC. As of its respective date (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing),
each of such reports and documents, including, the financial statements,
exhibits, and schedules thereto complied in all material respects with all
applicable Laws. As of its respective date, each UPC SEC Report did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
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statements made therein, in light of the circumstances under which they were
made, not misleading. Except for UPC Subsidiaries that are registered as a
broker, dealer, or investment advisor, no UPC Subsidiary is required to file any
SEC Documents.
6.14 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by 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 omit to
state any material fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by UPC for inclusion in the
Proxy Statement to be mailed to Transflorida's shareholders in connection with
the Shareholders' Meeting, and any other documents to be filed by UPC or any UPC
Subsidiary with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of Transflorida, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
UPC or any UPC Subsidiary is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form in all material respects with the provisions of applicable Law.
6.15 ACCOUNTING, TAX, AND REGULATORY MATTERS. Neither UPC or
any UPC Subsidiary has taken any action or has any Knowledge of any fact or
circumstance relating to UPC or Transflorida, nor has UPC or any UPC Subsidiary
been advised by UPC's independent accountants of any fact or circumstance
relating to UPC, that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement.
6.16 MATTERS RELATING TO UPBNA. UPBNA is a national banking
association duly organized under the Laws of the United States, and has the
corporate power and authority to carry on its business as contemplated by this
Agreement and the Plan of Merger and to own, lease, and operate its Material
Assets. UPBNA has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and the Plan of Merger
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery, and performance of the Plan of Merger and the consummation
of the transactions contemplated therein, including the Merger, will be duly and
validly authorized by all necessary corporate action in respect thereof on the
part of UPBNA, subject to the approval of the Plan of Merger by UPHC as the sole
shareholder of UPBNA, which is the only shareholder vote required for approval
of the Plan of Merger, and the consummation of the Merger by UPBNA.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF TRANSFLORIDA. Unless the prior
written consent of UPC shall have been obtained, and except as otherwise
expressly contemplated herein, Transflorida shall and shall cause each of the
Transflorida Subsidiaries to (i) operate its business only in the usual,
regular, and ordinary course, (ii) use reasonable efforts to preserve intact its
business organization and Assets and maintain its rights and franchises, and
(iii) take no action which would (a) materially adversely affect the ability of
any Party to obtain any Consents required for the transactions contemplated
hereby or prevent the transactions contemplated hereby, including the Merger,
from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement and the Plan of Merger.
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7.2 NEGATIVE COVENANTS OF TRANSFLORIDA. Except as specifically
permitted by this Agreement, from the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement, Transflorida
covenants and agrees that Transflorida will not do or agree or commit to do, or
permit any of the Transflorida Subsidiaries to do or agree or commit to do, any
of the following without the prior written consent of the chief executive
officer, president, or chief financial officer of UPC, which consent shall not
be unreasonably withheld:
(a) amend the Articles, By-laws, or other governing
instruments of Transflorida or any Transflorida Subsidiary; or
(b) incur any additional debt obligation for borrowed
money (other than indebtedness of Transflorida or the Transflorida Subsidiaries
to each other) in excess of an aggregate of $500,000 (for Transflorida and the
Transflorida Subsidiaries on a consolidated basis) except in the ordinary course
of the business of the Transflorida Subsidiaries consistent with past practices
(which shall include, for the Transflorida Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal funds,
advances from the Federal Reserve Bank or Federal Home Loan Bank, and entry into
repurchase agreements fully secured by U.S. government or agency securities), or
impose, or suffer the imposition, on any material Asset of Transflorida or any
of the Transflorida Subsidiaries of any Lien or permit any such Lien to exist
(other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business, the satisfaction of legal requirements in the exercise of
trust-powers, and Liens in effect as of the date hereof that are disclosed in
the Transflorida Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans and
other then as a result of the exercise of dissenters' rights of appraisal by
shareholders of Transflorida), directly or indirectly, any shares, or any
securities convertible into any shares, of the capital stock of Transflorida or
any of the Transflorida Subsidiaries, or declare or pay any dividend or make any
other distribution in respect of Transflorida's capital stock; or
(d) except for 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 its common stock or any other capital
stock, or any stock appreciation rights, or any option, warrant, conversion, or
other right to acquire any such stock, or any security convertible into any such
stock; or
(e) adjust, split, combine or reclassify any capital stock
of Transflorida or any of the Transflorida Subsidiaries or issue or authorize
the issuance of any other securities in respect of or in substitution for shares
of Transflorida Common Stock, or sell, lease, mortgage or otherwise dispose of
or otherwise encumber any shares of capital stock of any Transflorida Subsidiary
(unless any such shares of stock are sold or otherwise transferred to another
Transflorida Subsidiary) or any Asset having a book value in excess of $250,000
other than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of investment securities acquired
in the ordinary course of business consistent with past practice, purchase any
securities or make any material investment, either by purchase of stock or
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly-owned Subsidiary of Transflorida, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, (ii)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity, or (iii) the creation of new wholly-owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of Transflorida or the Transflorida Subsidiaries, except
in the ordinary course of business consistent with past practice and disclosed
in Section 7.2(g) of the Transflorida Disclosure Memorandum or as required by
Law; pay
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any severance or termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this Agreement and
disclosed in Section 7.2(g) of the Transflorida Disclosure Memorandum; enter
into or amend any severance agreements with officers of Transflorida or the
Transflorida Subsidiaries; grant any material increase in fees or other
increases in compensation or other benefits to directors of Transflorida or the
Transflorida Subsidiaries; or voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits (other than the
acceleration of vesting which occurs under a benefit plan upon a change of
control of Transflorida); or
(h) enter into or amend any employment Contract between
Transflorida or the Transflorida Subsidiaries and any Person (unless such
amendment is required by Law) that Transflorida 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 Transflorida or
the Transflorida Subsidiaries or terminate or withdraw from, or make any
material change in or to, any existing employee benefit plans of Transflorida or
the Transflorida Subsidiaries other than any such change that is required by Law
or that, in the opinion of counsel, is necessary or advisable to maintain the
tax qualified status of any such plan, or make any distributions from such
employee benefit plans, except as required by Law, the terms of such plans or
consistent with past practices; or
(j) make any material change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of Transflorida or
the Transflorida Subsidiaries for material money damages or restrictions upon
the operations of Transflorida or the Transflorida Subsidiaries; or
(l) except in the ordinary course consistent with past
practice, enter into, modify, amend, or terminate any material Contract
(excluding any loan Contract) or waive, release, compromise, or assign any
material rights or claims.
7.3 COVENANTS OF UPC. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, UPC
covenants and agrees that it shall (i) continue to conduct its business and the
business of the UPC Subsidiaries in a manner designed in its reasonable judgment
to enhance the long-term value of the UPC Common Stock and the business
prospects of UPC and the UPC Subsidiaries and (ii) take no action which would
(a) materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby or prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment and as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, (b) materially adversely
affect the ability of any Party to perform its covenants and agreements under
this Agreement, or (c) result in UPC entering into an agreement with respect to
an Acquisition Proposal with a third party which could be reasonably expected to
result in the Merger not being consummated; provided, that the foregoing shall
not prevent UPC or any UPC Subsidiary from acquiring any other Assets or
businesses or from discontinuing or disposing of any of its Assets or business
if such action is, in the reasonable judgment of UPC, desirable in the conduct
of the business of UPC and the UPC Subsidiaries and would not, in the reasonable
judgment of UPC, likely delay the Effective Time to a date subsequent to the
date set forth in Section 10.1(e) of this Agreement.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations,
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warranties, or covenants contained herein, and to use its reasonable efforts to
prevent or promptly to remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and, to the extent permitted by Law,
shall deliver to the other Party copies of all such reports promptly after the
same are filed. If financial statements are contained in any such reports filed
with the SEC, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows for the periods then ended in accordance with GAAP
(subject in the case of interim financial statements to normal recurring
year-end adjustments that are not material). As of their respective dates, such
reports filed with the SEC will comply in all material respects with the
Securities Laws and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER
APPROVAL. UPC shall prepare and file the Registration Statement, of which the
Proxy Statement shall form a part, with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and UPC shall take any action required to be taken under the applicable
state Blue Sky or securities Laws in connection with the issuance of the shares
of UPC Common Stock upon consummation of the Merger. Each of UPC and
Transflorida shall furnish all information concerning it and the holders of its
capital stock as the other Party may reasonably request in connection with such
action. Transflorida shall call a Shareholders' Meeting, to be held as soon as
practicable after the Registration Statement is declared effective by the SEC,
for the purpose of voting upon approval of this Agreement, the Plan of Merger,
and such other related matters as it deems appropriate. In connection with the
Shareholders' Meeting, (i) the Board of Directors of Transflorida shall
recommend (subject to compliance with its fiduciary duties as advised by
counsel) to its shareholders the approval of the Merger, this Agreement and the
Plan of Merger, and (ii) the Board of Directors (subject to compliance with its
fiduciary duties as advised by counsel) and officers of Transflorida shall use
their reasonable efforts to obtain shareholder approval.
8.2 AUTHORIZATION OF SHARES; EXCHANGE LISTING. UPC shall
submit to its shareholders, at the 1998 Annual Meeting of Shareholders of UPC, a
proposal to approve the UPC Charter Amendment, use its reasonable efforts to
obtain approval of the UPC Charter Amendment by the shareholders of UPC, and,
subject to the approval of the UPC Charter Amendment by the shareholders of UPC,
shall cause such amendment to become effective and reserve for issuance a
sufficient number of shares of UPC Common Stock for the purpose of issuing
shares of UPC Common Stock in accordance with the provisions of this Agreement
and the Plan of Merger. 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 Transflorida Common
Stock pursuant to the Merger, and UPC shall give all notices and make all
filings with the NYSE required in connection with the transactions contemplated
herein.
8.3 APPLICATIONS. UPC shall prepare and file, and Transflorida
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement and the Plan of Merger seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement and the Plan of Merger; provided, however, that no Party shall be
required to seek any Consents for the exercise of any rights or performance of
any obligations under the Termination Fee Agreement except as set forth in such
agreement. The Parties shall deliver to each other copies of all filings,
correspondence and orders to and from all Regulatory Authorities in connection
with the
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transactions contemplated hereby as soon as practicable upon their becoming
available. In the case of filings, such filing shall be provided to the other
Party at least five business days before filing.
8.4 FILINGS WITH THE OCC. Upon the terms and subject to the
conditions of this Agreement, UPC shall cause UPBNA to execute and file and
Transflorida to execute and file the Plan of Merger with the OCC and any other
documents required by the OCC to be filed with the OCC in connection with the
Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the
terms and conditions of this Agreement, each Party agrees to use, and to cause
its Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement and the Plan of Merger, including using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, however, that no party
shall be required to seek any Consents or take any other actions for the
exercise of any rights or performance of any obligations under the Termination
Fee Agreement except as set forth in such agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement and the Plan of Merger; provided, however, that
no party shall be required to seek any Consents or take any other actions for
the exercise of any rights or performance of any obligations under the
Termination Fee Agreement except as set forth in such agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. Neither Party shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of such Party's customers, jeopardize any
attorney-client privilege or contravene any Law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The Parties will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. No investigation by a Party shall affect the representations and
warranties of the other Party.
(b) Each Party agrees to keep or hold all information
gathered pursuant to this Agreement in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality agreement entered into
between UPC and Transflorida prior to the date of this Agreement (the
"Confidentiality Agreement").
8.7 PRESS RELEASES. Prior to the Effective Time, Transflorida
and UPC shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, that nothing in this Section
8.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and
the Plan of Merger and the transactions contemplated hereby and thereby, after
the date of this Agreement, neither Transflorida, the Transflorida Subsidiaries
nor any Representatives thereof retained by Transflorida or the Transflorida
Subsidiaries shall directly or indirectly solicit any Acquisition Proposal by
any Person. Except to the extent necessary to comply with the fiduciary duties
of Transflorida's Board of Directors as advised by counsel, Transflorida, the
Transflorida Subsidiaries, or Representatives thereof shall not furnish any
non-public information that it is not legally obligated
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to furnish, negotiate with respect to, or enter into any Contract with respect
to, any Acquisition Proposal, but Transflorida may communicate information about
such an Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. Transflorida shall promptly notify UPC orally and in writing in the
event that it receives any Acquisition Proposal or inquiry related thereto.
Transflorida shall (i) immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any Persons conducted heretofore
with respect to any of the foregoing and (ii) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties
undertakes and agrees to use its reasonable efforts to cause the Merger, and to
take no action which would cause the Merger not, to qualify for
pooling-of-interests accounting treatment and treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code for federal
income tax purposes.
8.10 AGREEMENT OF AFFILIATES. Transflorida has disclosed in
Section 8.10 of the Transflorida Disclosure Memorandum each Person whom it
reasonably believes is an "affiliate" of Transflorida as of the date of this
Agreement for purposes of Rule 145 under the 1933 Act. Transflorida shall use
its reasonable efforts to cause each such Person to deliver to UPC not later
than 40 days prior to the Effective Time, a written agreement, substantially in
the form of Exhibit 4, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of Transflorida Common Stock held
by such Person except as contemplated by such agreement or by this Agreement and
will not sell, pledge, transfer, or otherwise dispose of the shares of UPC
Common Stock to be received by such Person upon consummation of the Merger
except in compliance with applicable provisions of the 1933 Act and the rules
and regulations thereunder and until such time as financial results covering at
least 30 days of combined operations of UPC and Transflorida have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies. If the Merger will qualify for pooling-of-interests
accounting treatment, shares of UPC Common Stock issued to such affiliates of
Transflorida in exchange for shares of Transflorida Common Stock shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of UPC and Transflorida have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section 8.10 (and UPC shall be entitled to place
restrictive legends upon certificates for shares of UPC Common Stock issued to
affiliates of Transflorida pursuant to this Agreement to enforce the provisions
of this Section 8.10). 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.
8.11 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Following the Effective Time, UPC shall provide to
officers and employees of the Transflorida and any Transflorida Subsidiary,
employee benefits under employee benefit and welfare plans of UPC or the UPC
Subsidiaries on terms and conditions which when taken as a whole are
substantially similar to those currently provided by UPC or a UPC Subsidiary to
their similarly situated officers and employees. For purposes of participation,
vesting, and (except in the case of retirement plans) benefit accrual under such
employee benefit plans, the service of the employees of the Transflorida and any
Transflorida Subsidiary prior to the Effective Time shall be treated as service
with UPC or a UPC Subsidiary participating in such employee benefit plans.
(b) Except as set forth in the Supplemental Letter, UPC
shall, and shall cause the UPC Subsidiaries to, honor in accordance with their
terms the Transflorida Benefit Plans, each as amended to the date hereof, and
other contracts, arrangements, commitments or understandings disclosed in
Section 8.11 of the Transflorida Disclosure Memorandum.
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8.12 INDEMNIFICATION.
(a) After the Effective Time, UPC shall indemnify, defend
and hold harmless the present and former directors, officers, employees, and
agents of Transflorida or any of Transflorida's Subsidiaries (each, a
"Transflorida 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 Termination Fee Agreement) to the full extent permitted under
Florida Law and by Transflorida's Articles and By-laws, as in effect on the date
hereof, including provisions relating to advances of expenses incurred in the
defense of any Litigation. Without limiting the foregoing, in any case in which
approval by UPC is required to effectuate any indemnification, UPC shall direct,
at the election of the Transflorida Indemnified Party, that the determination of
any such approval shall be made by independent counsel mutually agreed upon
between UPC and the Transflorida Indemnified Party.
(b) Any Transflorida Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.12, upon learning of any
such Liability or Litigation, shall promptly notify UPC thereof, provided that
the failure so to notify shall not affect the obligations of UPC under this
Section 8.12 unless and to the extent such failure materially increases UPC's
liability under this Section 8.12. In the event of any such Litigation (whether
arising before or after the Effective Time), (i) UPC or the Surviving Bank shall
have the right to assume the defense thereof and UPC shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if UPC or the Surviving Bank 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 Bank and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and UPC or the Surviving Bank shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, that UPC shall be
obligated pursuant to this paragraph (b) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will
cooperate in the defense of any such Litigation, and (iii) UPC shall not be
liable for any settlement effected without its prior written consent; and
provided further that the Surviving Bank shall not have any obligation hereunder
to any Transflorida Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Transflorida Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
(c) The Surviving Bank 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 Bank 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 Bank shall assume the
obligations set forth in this Section 8.12.
(e) UPC shall pay all reasonable costs, including
attorneys' fees, that may be incurred by any Transflorida Indemnified Party in
enforcing the indemnity and other obligations provided for in this Section 8.12.
(f) The provisions of this Section 8.12 are intended to
be for the benefit of, and shall be enforceable by, each Transflorida
Indemnified Party and his or her heirs or representatives.
8.13 STATE TAKEOVER LAWS. Transflorida shall use, its
reasonable efforts to take all necessary steps to exempt the transactions
contemplated by this Agreement from the Takeover Laws.
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8.14 UPBNA SHAREHOLDER APPROVAL. This Agreement and the
Plan of Merger shall have been approved by the affirmative vote of the holders
of all of the shares of the capital stock of UPBNA entitled to vote thereon.
8.15 ASSUMPTION OF AGREEMENT BY ACQUIROR. UPC agrees that it
will be a condition precedent to UPC entering into any agreement whereby UPC
shall (i) consolidate with or merge into any other entity and shall not be the
continuing or surviving Person of such consolidation or merger or (ii) transfer
all or substantially all of its Assets to any entity, proper provision shall be
made so that the successor and assigns of UPC shall specifically agree to assume
UPC's obligations under this Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and 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 both Parties
pursuant to Section 11.6 of this Agreement:
(a) Shareholder Approval. The shareholders of Transflorida
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, or by the provisions of any governing
instruments. The shareholders of UPC shall have approved the UPC Charter
Amendment or, in the event the UPC shareholders fail to approve the UPC Charter
Amendment, UPC shall have delivered to Transflorida within 90 days after the
date on which UPC shareholders fail to approve the UPC Charter Amendment,
evidence that UPC will have a sufficient number of unissued shares of UPC Common
Stock to satisfy, at the Effective Time, UPC's obligations under Section 3.1 of
this Agreement.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (other than matters relating to the raising of additional
capital or the disposition of Assets or deposit Liabilities and associated
branches) which in the reasonable judgment of the Board of Directors of UPC
would so materially adversely impact the financial or economic benefits of the
transactions contemplated by this Agreement and the Plan of Merger that, had
such condition or requirement been known, UPC would not, in its reasonable
judgment, have entered into this Agreement and the Plan of Merger.
(c) Consents and Approvals. Each Party shall have obtained
any and all Consents required for consummation of the Merge (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of any
Default under any Contract or Permit of such Party which, if not obtained or
made, is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on such Party.
(d) Legal Proceedings. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered by Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits, restricts,
or makes illegal consummation of the transactions contemplated by this Agreement
and the Plan of Merger.
(e) Registration Statement. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no action,
suit, proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to
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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. UPC and Transflorida shall have received
a written opinion of counsel from Alston & Bird LLP, in form and substance
reasonably satisfactory to UPC, dated as 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 the shareholders of Transflorida who exchange all of their
Transflorida Common Stock solely for UPC Common Stock pursuant to the Merger
(except with respect to cash received in lieu of a fractional share interest in
UPC Common Stock or upon the exercise of dissenters' rights of appraisal), (iii)
the tax basis of the UPC Common Stock received by shareholders of Transflorida
who exchange Transflorida Common Stock solely for UPC Common Stock in the Merger
will be the same as the tax basis of the Transflorida Common Stock surrendered
in exchange therefor, (iv) the holding period of the UPC Common Stock received
by shareholders of Transflorida in the Merger will include the period during
which the shares of Transflorida Common Stock surrendered in exchange therefor
were held, provided such Transflorida Common Stock was held as a capital asset
by the holder of such Transflorida Common Stock at the Effective Time, and (v)
neither Transflorida nor UPC will recognize gain or loss as a consequence of the
Merger. In rendering such Tax Opinion, such counsel shall require and be
entitled to rely upon representations and covenants of officers of UPC,
Transflorida, and others 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 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 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
Transflorida set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specific date shall speak only as of such date). The representations and
warranties of Transflorida set forth in Sections 5.1, 5.2, 5.3, 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
Transflorida set forth in this Agreement (including the representations and
warranties set forth in Sections 5.1, 5.2, 5.3, 5.19, 5.20, and 5.21) such that
the aggregate effect of such inaccuracies has, or is reasonably likely to have,
a Material Adverse Effect on Transflorida, provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or "Knowledge" shall be
deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all
of the agreements and covenants of Transflorida 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. Transflorida shall have delivered to UPC
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.2(a) and 9.2(b) of
this Agreement have been satisfied, and (ii) certified copies of resolutions
duly adopted by Transflorida's Board of Directors and shareholders evidencing
the taking of all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement and the Plan of Merger, and the
consummation of the transactions contemplated hereby and thereby, all in such
reasonable detail as UPC shall request.
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(d) UPC Pooling Letter. UPC shall have received a copy of
a letter, dated as of the Effective Time, addressed to it and in a form
reasonably acceptable to it, from Price Waterhouse LLP to the effect that the
Merger will qualify for pooling of interests accounting treatment.
(e) Affiliate Agreements. UPC shall have received from
each affiliate of Transflorida the affiliate agreement referred to in Section
8.10 of this Agreement.
9.3 CONDITIONS TO OBLIGATIONS OF TRANSFLORIDA. The obligations
of Transflorida 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 Transflorida pursuant
to Section 12.1(b) of this Agreement.
(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of UPC set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of UPC set forth
in Sections 6.1, 6.2, 6.3 and 6.15 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 6.1, 6.2, 6.3 and 6.15)
such that the aggregate effect of such inaccuracies has, or is reasonably likely
to have, a Material Adverse Effect on UPC; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or "Knowledge" shall be
deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all
of the agreements and covenants of 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 Transflorida
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.3(a) and 9.3(b) of
this Agreement have been satisfied and (ii) certified copies of resolutions duly
adopted by 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 Transflorida shall request.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, the Plan of Merger, and notwithstanding the approval of this
Agreement by the shareholders of Transflorida, this Agreement and the Plan of
Merger may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) By mutual consent of the Board of Directors of UPC and
the Board of Directors of Transflorida; 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 Transflorida and Section 9.3(a)
in the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of an inaccuracy of any representation
or warranty of the other Party contained in this Agreement which cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching Party of such inaccuracy and which
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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 Transflorida 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 Transflorida and Section 9.3(a)
in the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot be
or has not been cured within 30 days after the giving of written notice to the
breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event
(i) any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of Transflorida fail to vote their approval of this Agreement and
the transactions contemplated hereby as required by the Florida Banking Code and
this Agreement at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by December 31, 1998, if the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any willful breach of this Agreement by the Party electing
to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of Transflorida upon written
notice to UPC at any time during the ten-day period commencing two days after
the Determination Date, if either (x) both of the following conditions are
satisfied:
(1) the Average Closing Price shall be less than the
product of (i) 0.85 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the Average
Closing Price by the Starting Price (such number being referred to
herein as the "UPC Ratio") shall be less than (ii) the quotient
obtained by dividing the Index Price on the Determination Date by the
Index Price on the Starting Date and subtracting 0.15 from the quotient
in this clause (2)(ii) (such number being referred to herein as the
"Index Ratio");
or (y) the Average Closing Price shall be less than the product of 0.80 and the
Starting Price;
subject, however, to the following four sentences. If Transflorida
refuses to consummate the Merger pursuant to this Section 10.1(f), it
shall give prompt written notice thereof to UPC which notice shall
specify which of clauses (x) or (y) is applicable (or if both would be
applicable, which clause is being invoked); provided, that such notice
of election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, UPC shall have the option, in the case
of a failure to satisfy the condition in clause (x), to elect to
increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of 0.85, the Starting Price, and
the Exchange Ratio (as then in effect) by (2) the Average Closing
Price, and (ii) the quotient obtained by dividing (1) the product of
the Index Ratio and the Exchange Ratio (as then in effect) by (2) the
UPC Ratio. During such five-day period, UPC shall have the option, in
the case of a failure to satisfy the condition in clause (y), to elect
to increase the Exchange Ratio to equal a number equal to a quotient,
the numerator of which is the product of 0.80, the Starting Price and
the Exchange Ratio (as then in effect) and the denominator of which is
the Average Closing Price. If UPC makes an election contemplated by the
preceding sentence, within such five-day period, it shall give prompt
written notice to Transflorida of such election and the revised
Exchange Ratio, whereupon no termination shall
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have occurred pursuant to this Section 10.1(f) and this Agreement shall
remain in effect in accordance with its terms (except as the Exchange
Ratio shall have been so modified), and any references in this
Agreement or the Plan of Merger to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 10.1(f).
For purposes of this Section 10.1(f), the following
terms shall have the meanings indicated:
"Average Closing Price" shall mean the average of the
daily last sales prices of UPC Common Stock as reported on the NYSE (as reported
by The Wall Street Journal or, if not reported thereby, another authoritative
source as chosen by UPC) for the 20 consecutive full trading days in which such
shares are traded on the NYSE ending at the close of trading on the
Determination Date.
"Determination Date" shall mean the later of the date
(i) of the Shareholders' Meeting, and (ii) on which the Consent of the OCC shall
be received (without regard to any requisite waiting period thereof).
"Index Group" shall mean the 14 bank holding companies
listed below, the common stocks of all of which shall be publicly traded and as
to which there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market capitalization
as of the Starting Date. In the event that any such company or companies are
removed from the Index Group as a result of any of the events described in the
preceding sentence, the weights (which shall be determined based upon the number
of outstanding shares of common stock) shall be redistributed proportionately
for purposes of determining the Index Price. The 14 bank holding companies and
the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
---------------------- ---------
<S> <C>
AmSouth Bancorporation 5.34%
BB&T Corporation 8.88
Crestar Financial Corporation 7.31
Fifth Third Bancorp 10.27
First Security Corporation 7.68
First Tennessee National Corporation 4.25
Firstar Corporation 9.60
Huntington Bancshares, Inc. 12.68
Marshall & Ilsley Corporation 6.72
Mercantile Bancorporation, Inc. 8.64
National Commerce Bancorp 3.24
Old Kent Financial Corporation 3.12
SouthTrust Corporation 6.62
Star Banc Corporation 5.66
------
Total 100.00%
======
</TABLE>
"Index Price" on a given date shall mean the weighted
average (weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Starting Date" shall mean the fourth full trading day
after the announcement by press release of the Merger.
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"Starting Price" shall mean the closing price per
share of UPC Common Stock as reported on the NYSE (as reported by The Wall
Street Journal or, if not reported thereby, another authoritative source as
chosen by UPC) on the Starting Date.
If UPC or any company belonging to the Index Group
declares or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares, or similar transaction between the
date of this Agreement and the Determination Date, the prices for the common
stock of such company or UPC shall be appropriately adjusted for the purposes of
applying this Section 10.1(f).
10.2 EFFECT OF TERMINATION. In the event of the termination
and abandonment of this Agreement and the Plan of Merger pursuant to Section
10.1 of this Agreement, this Agreement and the Plan of Merger shall become void
and have no effect, except that (i) the provisions of this Section 10.2 and
Sections 11.2 and 11.3 of this Agreement shall survive any such termination and
abandonment and (ii) a termination pursuant to the terms of this Agreement shall
not relieve the breaching Party from Liability for an uncured willful breach of
a representation, warranty, covenant, or agreement. The Termination Fee
Agreement and the Confidentiality Agreements shall be governed by their own
terms as to their termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The
respective representations, warranties, obligations, covenants, and agreements
of the Parties shall not survive the Effective Time, except this Section 10.3
and Articles 2, 3, 4, and 11 and Sections 8.10 and 8.12 of this Agreement.
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, including the
Termination Fee Agreement and the Exhibits delivered pursuant hereto
and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets,
properties, businesses, and rights of such Person of every kind,
nature, character and description, whether real, personal or mixed,
tangible or intangible, accrued or contingent, or otherwise relating to
or utilized in such Person's business, directly or indirectly, in whole
or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act
of 1956, as amended.
"Certificate of Merger" shall mean the Certificate of
Merger to be issued by the OCC relating to the Merger as contemplated
by Section 1.1 of this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
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"Consent" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or similar affirmation by
any Person pursuant to any Contract, Law, Order or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or
default under any Contract, Order, or Permit, (ii) any occurrence of
any event that with the passage of time or the giving of notice or both
would constitute a breach or violation of or default under any
Contract, Order, or Permit, or (iii) any occurrence of any event that
with or without the passage of time or the giving of notice would give
rise to a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase or impose any Liability under,
any Contract, Order or Permit.
"Environmental Laws" shall mean all Laws relating to
pollution or protection of 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.
"ERISA Affiliate" shall mean any trade or business,
whether or not incorporated, that together with Transflorida would be
deemed a "single employer" within the meaning of section 4001(b) of
ERISA.
"Exhibits" shall mean the Exhibits so marked, copies of
which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto.
"FBCA" shall mean the Florida Business Corporation Act,
as amended.
"Florida Banking Code" shall mean the Florida Banking
Code, as amended.
"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, 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).
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"HSR Act" shall mean Section 7A of the Clayton Act, as
added by Title II of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software (including
any source or object codes therefor or documentation relating thereto),
trade secrets, franchises, know-how, inventions, and other intellectual
property rights.
"Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated
thereunder.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean those facts that are known by the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer, or
General Counsel of such Person.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including those
promulgated, interpreted, or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, deficiency, guaranty, or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default
of title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention, or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current Taxes upon the assets or
properties of a Party or its Subsidiaries which are not yet due and
payable and (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary
course of the banking business.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information relating
to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement, but
shall not include regular, periodic examinations of depository
institutions and their Affiliates by Regulatory Authorities.
"Material Adverse Effect" on a Party shall mean an event,
change, or occurrence which, individually or together with any other
event, change, or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of such Party
and its Subsidiaries, taken as a whole, or (ii) the ability of such
Party to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement in
accordance with applicable Law, provided that "Material Adverse Effect"
and "material adverse impact" shall not be deemed to include the impact
of (a) changes in banking and other 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
written consent of the other Party, (d) changes in economic conditions
or interest rates generally affecting financial institutions, or (e)
the direct effects of compliance with this Agreement and the Plan of
Merger (including the expense associated with the vesting of benefits
under
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<PAGE> 166
the employment agreements and various employee benefit plans of
Transflorida as a result of the Merger constituting a change of
control) on the operating performance of the Parties, including
expenses incurred by the Parties in consummating the transactions
contemplated by the Agreement and the Plan of Merger.
"Merger" shall mean the merger of Transflorida Bank with
and into UPBNA referred to in Section 1.1 of this Agreement.
"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.
"OCC" shall mean the Office of the Comptroller of the
Currency.
"Operating Property" shall mean any property owned by the
Party in question or by any of its Subsidiaries or in which such Party
or Subsidiary holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with
respect to such property.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local, or foreign or other
court, arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority.
"Participation Facility" shall mean any facility or
property in which the Party in question or any of its Subsidiaries
participates in the management and, where required by the context, said
term means the owner or operator of such facility or property, but only
with respect to such facility or property.
"Party" shall mean either Transflorida or UPC, and
"Parties" shall mean both Transflorida and UPC.
"Permit" shall mean any federal, state, local, and
foreign governmental approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right to which any
Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its securities, Assets or business.
"Person" shall mean a natural person or any legal,
commercial, or governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture, limited partnership,
limited liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"Plan of Merger" shall mean the plan of merger providing
for the Merger, in substantially the form of Exhibit 1.
"Proxy Statement" shall mean the proxy statement used by
Transflorida to solicit the approval of its shareholders of the
transactions contemplated by this Agreement and the Plan of Merger,
which shall include the prospectus of UPC relating to the issuance of
the UPC Common Stock to holders of Transflorida Common Stock.
"Registration Statement" shall mean the Registration
Statement on Form S-4, or other appropriate form (so that all shares of
UPC Common Stock to be issued in the Merger will be registered under
the 1933 Act at the Effective Time), 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
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<PAGE> 167
Common Stock to be issued to the shareholders of Transflorida 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 Department of Banking and Finance of the State of Florida, all
state regulatory agencies having jurisdiction over the Parties and
their respective Subsidiaries, the NYSE, the NASD, and the SEC.
"Representative" shall mean any investment banker,
financial advisor, attorney, accountant, consultant, or other
representative of a Person.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, warrants, or other
binding obligations of any character whatsoever by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights, or securities or rights convertible into or exchangeable for,
shares of the capital stock of a Person.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Law.
"Securities Laws" shall mean the 1933 Act, the 1934 Act,
the Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Shareholders' Meeting" shall mean the meeting of the
shareholders of Transflorida 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 10% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
10% or more of the outstanding equity securities is owned directly or
indirectly by its UPC; provided, there shall not be included any such
entity acquired through foreclosure or any such equity the equity
securities of which are owned or controlled in a fiduciary capacity.
"Supplemental Letter" shall mean the supplemental letter
of even date herewith relating to certain understandings and agreements
in addition to those included in this Agreement in substantially the
form of Exhibit 5.
"Surviving Bank" shall mean Transflorida as the surviving
bank resulting from the Merger.
"Tax" or "Taxes" shall mean all taxes, charges, fees,
levies or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes,
customs duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or
foreign).
"TBCA" shall mean the Tennessee Business Corporation Act.
"Termination Fee Agreement" shall mean the Termination
Fee Agreement of even date herewith entered into by UPC and
Transflorida, substantially in the form of Exhibit 2.
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<PAGE> 168
"Transflorida Common Stock" shall mean the $1.00 par
value common stock of Transflorida.
"Transflorida Disclosure Memorandum" shall mean the
written information entitled "Transflorida Disclosure Memorandum"
delivered prior to the date of this Agreement to UPC describing in
reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made.
"Transflorida Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of Transflorida as of September 30, 1997, and as of December 31,
1996 and 1995, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) for the nine months ended September 30, 1997, and
for each of the fiscal years ended December 31, 1996, 1995, and 1994,
included in the Transflorida Disclosure Memorandum and (ii) the
consolidated balance sheets of Transflorida (including related notes
and schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) with respect to periods ended subsequent to
September 30, 1997.
"Transflorida Stock Plans" shall mean the existing stock
option and other stock-based compensation plans of Transflorida.
"Transflorida Subsidiaries" shall mean the Subsidiaries
of Transflorida, which shall include Transflorida Subsidiaries
described in Section 5.4 of this Agreement and any corporation, bank,
or other organization acquired as a Subsidiary of Transflorida in the
future and owned by Transflorida at the Effective Time.
"UPBNA Common Stock" shall mean the $10.00 par value
common stock of UPBNA.
"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 Charter Amendment" shall mean the proposal to amend
UPC's Restated Charter of Incorporation to increase the number of
authorized shares of UPC Common Stock by up to 100,000,000.
"UPC Common Stock" shall mean the $5.00 par value common
stock of UPC.
"UPC Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of UPC as of September 30, 1997, and as of December 31, 1996 and
1995, and the related statements of earnings, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
for the nine months ended September 30, 1997 and for each of the three
years ended December 31, 1996, 1995 and 1994, as filed by UPC in SEC
Documents and (ii) the consolidated balance sheets of UPC (including
related notes and schedules, if any) and related statements of
earnings, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to September 30, 1997.
"UPC Preferred Stock" shall mean the no par value
preferred stock of UPC and shall include the (i) Series A Preferred
Stock and (ii) Series E 8% Cumulative, Convertible Preferred Stock, of
UPC ("UPC Series E Preferred Stock").
"UPC Rights" shall mean the preferred stock purchase
rights issued pursuant to the UPC Rights Agreement.
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<PAGE> 169
"UPC Rights Agreement" shall mean that certain Rights
Agreement, dated January 19, 1989, between UPC and UPBNA, 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.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
<TABLE>
<S> <C>
Average Closing Price....................... Section 10.1(f)
Confidentiality Agreements.................. Section 8.6
Closing..................................... Section 1.2
Determination Date.......................... Section 10.1(f)
Effective Time.............................. Section 1.3
ERISA Affiliate............................. Section 5.14(c)
Exchange Agent.............................. Section 4.1
Exchange Ratio.............................. Section 3.1(c)
Index Group................................. Section 10.1(f)
Index Price................................. Section 10.1(f)
Index Ratio................................. Section 10.1(f)
Merger...................................... Section 1.1
Starting Date............................... Section 10.1(f)
Starting Price.............................. Section 10.1(f)
Takeover Laws............................... Section 5.20
Tax Opinion................................. Section 9.1(g)
Transflorida Benefit Plans.................. Section 5.14(a)
Transflorida Contracts...................... Section 5.15
Transflorida ERISA Plan..................... Section 5.14(a)
Transflorida Indemnified Party.............. Section 8.12(a)
Transflorida Options........................ Section 3.4(a)
Transflorida Pension Plan................... Section 5.14(a)
Transflorida SEC Reports.................... Section 5.17
UPC Ratio................................... Section 10.1(f)
UPC SEC Reports............................. Section 6.13
</TABLE>
(c) Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay the
filing fees payable in connection with the Registration Statement and the Proxy
Statement and printing costs incurred in connection with the printing of the
Registration Statement and the Proxy Statement based on the relative Asset sizes
of the Parties at September 30, 1997.
(b) In the event that the Merger is not consummated and
the Agreement is terminated due solely to the fact that the UPC Charter
Amendment is not approved by the shareholders of UPC at the 1998 Annual Meeting
of Shareholders of UPC and UPC fails to satisfy the provisions of the second
sentence of Section 9.1(a) of this Agreement, UPC shall within five business
days after the date of termination of this Agreement, pay to Transflorida, by
check, an amount equal to $3.5 million and upon receipt of such payment, UPC
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shall have no further Liability to Transflorida. Except as provided in the
preceding sentence, 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 Alex Sheshunoff & Co. as
to Transflorida, each of the Parties represents and warrants that neither it nor
any of its officers, directors, employees, or Affiliates has employed any broker
or finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by Transflorida or UPC other than
those disclosed in the previous sentence, each of Transflorida and UPC, as the
case may be, agrees to indemnify and hold the other Party harmless of and from
any Liability incurred by such party in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the other documents and instruments referred
to herein) and the Confidentiality Agreement constitute the entire agreement
between the Parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Nothing in this Agreement expressed or implied is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Section 8.12 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by each of the Parties
and Shareholders upon the approval of the Boards of Directors of each of the
Parties, whether before or after shareholder approval of this Agreement has been
obtained; provided, that after any such approval by the holders of Transflorida
Common Stock, except as contemplated herein, there shall be made no amendment
that has any of the effects set forth in Section 607.1103 of the FBCA without
the further approval of such shareholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, UPC, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Transflorida, to waive or extend the time for the
compliance or fulfillment by Transflorida 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, Transflorida,
acting through its Board of Directors, chief executive officer, or other
authorized officer, shall have the right to waive any Default in the performance
of any term of this Agreement by UPC, to waive or extend the time for the
compliance or fulfillment by UPC of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to its
obligations of Transflorida 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 Transflorida.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach of a waiver of any
other condition or of the breach of any other term of this Agreement.
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11.7 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by any Party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
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 (provided that a copy of any such notice
shall be delivered by overnight courier), by registered or certified mail,
postage pre-paid, or by courier or overnight carrier, to the person at the
addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
Transflorida: Transflorida Bank
1489 West Palmetto Park Road
Suite 300
Boca Raton, Florida 33486
Telecopy Number: (561) 347-2020
Attention: Carl F. Griswold
President and Chief Executive Officer
Copy to Counsel: Zedeck & Zedeck
1820 Northeast 163rd Street
North Miami Beach, Florida 33162
Telecopy Number: (305) 944-4653
Attention: Leonard E. Zedeck, Esq.
UPC: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2939
Attention: Jackson W. Moore
President and Chief Operating Officer
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2939
Attention: E. James House, Jr.
Manager, Legal Division
and
Alston & Bird LLP
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Telecopy Number: (202) 508-3333
Attention: Frank M. Conner III
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Tennessee, without regard
to any applicable conflicts of Laws except insofar as the Merger is governed by
the Laws of the State of Florida or the United States.
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11.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are
for reference purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The Parties acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all Parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
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: TRANSFLORIDA BANK
By: /s/ James B. Stoner, Jr. By: /s/ Carl F. Griswold
------------------------------ -------------------------------------
James B. Stoner, Jr. Carl F. Griswold
Cashier President and Chief Executive Officer
[BANK SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
------------------------------ -------------------------------------
E. James House, Jr. Jackson W. Moore
Secretary President and Chief Operating Officer
[CORPORATE SEAL]
The Parties below have joined in this Agreement:
ATTEST: UNION PLANTERS HOLDING CORPORATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
------------------------------ -------------------------------------
E. James House, Jr. Jackson W. Moore
Secretary President and Chief Operating Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS BANK,
NATIONAL ASSOCIATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
------------------------------ -------------------------------------
E. James House, Jr. Jackson W. Moore
Secretary President and Chief Operating Officer
[ASSOCIATION SEAL]
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APPENDIX B
PLAN OF MERGER
OF
TRANSFLORIDA BANK
WITH AND INTO
UNION PLANTERS BANK, NATIONAL ASSOCIATION
Pursuant to this Plan of Merger ("Plan of Merger"), dated as of the
____ day of _______,1998, TRANSFLORIDA BANK ("Transflorida"), a state bank
organized and existing under the Laws of the State of Florida, shall be merged
with and into UNION PLANTERS BANK, NATIONAL ASSOCIATION ("UPBNA"), a national
banking association organized and existing under the Laws of the United States,
a wholly-owned subsidiary of Union Planters Holding Corporation, a corporation
organized and existing under the Laws of the State of Tennessee, which is in
turn a wholly-owned subsidiary of Union Planters Corporation, a corporation
organized and existing under the Laws of the State of Tennessee
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
1.1 "CERTIFICATE OF MERGER" shall mean the Certificate of
Merger to be issued by the OCC relating to the Merger as contemplated by Section
2.1 of this Plan of Merger.
1.2 "EFFECTIVE TIME" shall mean the date and time on which the
Merger becomes effective pursuant to the Laws of the United States as defined in
Section 2.3 of this Plan of Merger.
1.3 "LAW" shall have the meaning set forth in the Merger
Agreement.
1.4 "MERGER" shall mean the merger of Transflorida Bank with
and into UPBNA as provided in Section 2.1 of this Plan of Merger.
1.5 "MERGER AGREEMENT" shall mean the Agreement and Plan of
Reorganization, as amended, dated as of February 26, 1998, by and between UPC
and Transflorida.
1.6 "NASD" shall mean the National Association of Securities
Dealers, Inc.
1.7 "NYSE" shall mean New York Stock Exchange, Inc.
1.8 "OCC" shall mean the Office of the Comptroller of the
Currency.
1.9 "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 Department of
Banking and Finance
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of the State of Florida, all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, the NYSE, the NASD, and the SEC.
1.10 "SEC" shall mean the Securities and Exchange Commission.
1.11 "SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or controls
10% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 10% or more of the outstanding
equity securities is owned directly or indirectly by its parent; provided, there
shall not be included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a fiduciary
capacity.
1.12 "SURVIVING BANK" shall refer to UPBNA as the surviving
bank resulting from the Merger.
1.13 "TRANSFLORIDA COMMON STOCK" shall mean the $1.00 par
value common stock of Transflorida.
1.14 "TRANSFLORIDA SUBSIDIARIES" shall mean the Subsidiaries
of Transflorida, which shall include such Subsidiaries described in Section 5.4
of the Merger Agreement and any corporation, bank, or other organization
acquired as a Subsidiary of Transflorida in the future and owned by Transflorida
at the Effective Time.
1.15 "UPBNA COMMON STOCK" shall mean the $10.00 par value
common stock of UPBNA.
1.16 "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.
1.17 "UPC COMMON STOCK" shall mean the $5.00 par value common
stock of UPC.
1.18 "UPC INTERIM BANK COMMON STOCK" shall mean the $1.00 par
value common stock of UPC Interim Bank.
1.19 "UPC PREFERRED STOCK" shall mean the no par value
preferred stock of UPC and shall include the (i) Series A Preferred Stock and
(ii) Series E, 8% Cumulative, Convertible Preferred Stock, of UPC.
1.20 "UPC RIGHTS" shall mean the preferred stock purchase
rights issued pursuant to the UPC Rights Agreement.
1.21 "UPC RIGHTS AGREEMENT" shall mean that certain Rights
Agreement, dated January 19, 1989, between UPC and UPBNA, a wholly-owned
Subsidiary of UPC, as Rights Agent.
1.22 "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.
ARTICLE 2
TERMS OF MERGER
2.1 MERGER. Subject to the terms and conditions set forth in
the Merger Agreement and this Plan of Merger, at the Effective Time,
Transflorida shall be merged with and into UPBNA in accordance with the
provisions of and with the effect provided in Title 12, United States Code,
Section 215a. UPBNA shall be the Surviving Bank and the receiving association
resulting from the Merger, shall continue to conduct its business
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under the name "Union Planters Bank, National Association," and shall continue
to be governed by the Laws of the United States.
2.2 TIME AND PLACE OF CLOSING. The Closing will take place at
9:00 A.M. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M.), or at such other
time as the UPC and Transflorida may determine. The Closing shall be held at a
place as determined by UPC and Transflorida.
2.3 EFFECTIVE TIME. The Merger and the other transactions
contemplated by this Plan of Merger shall become effective on the date and at
the time specified in the Certificate of Merger reflecting the Merger issued by
the OCC. Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon in writing by the chief executive officers or chief financial
officers of each Party, the Parties shall use their reasonable efforts to cause
the Effective Time to occur on such date as may be designated by UPC within 30
days following the last to occur of (i) the effective date of the last required
consent of any Regulatory Authority having authority over and approving or
exempting the Merger (including expiration of any applicable waiting period in
respect thereof), (ii) the date on which the shareholders of Transflorida
approve the Merger Agreement and this Plan of Merger and (iii) the date on which
all other conditions precedent (other than those conditions which relate to
actions to be taken at the Closing) to each of UPC's and Transflorida's
obligations under the Merger Agreement shall have been satisfied or waived (to
the extent waivable by UPC and Transflorida).
2.4 ARTICLES OF ASSOCIATION. The Articles of Association (the
"Articles of Association") of Transflorida in effect immediately prior to the
Effective Time shall be the Articles of Association of the Surviving Bank until
otherwise amended or repealed. A complete set of the Articles of Association are
attached hereto as Exhibit A.
2.5 BYLAWS. The Bylaws (the "Bylaws") of UPBNA in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Bank until otherwise amended or repealed. A complete set of the Bylaws are
attached hereto as Exhibit B.
2.6 DIRECTORS AND OFFICERS. The directors of UPBNA in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving Bank
from and after the Effective Time in accordance with the Bylaws of the Surviving
Bank. The Board of Directors of UPBNA immediately following the Merger shall be
comprised of the individuals named on Exhibit C, each of whom shall serve until
his respective successor is elected and qualified or until a new Board of
Directors is elected as provided in the Articles of Association or Bylaws of
UPBNA or as provided by Law. The officers of UPBNA in office immediately prior
to the Effective Time, together with such additional persons as may thereafter
be elected, shall serve as the officers of the Surviving Bank from and after the
Effective Time in accordance with the Bylaws of the Surviving Bank.
2.7 CAPITAL STOCK. The capital stock of UPBNA upon completion
of the Merger shall be $18,047,010, consisting of 1,804,701 issued and
outstanding shares of common stock, par value $10.00 per share. In addition,
UPBNA shall have a surplus of approximately $841,454,000 and undivided profits,
including capital reserves, of approximately $543,684,000, adjusted for earnings
and expenses between March 31, 1998 and the Effective Time. The capital
structures of UPBNA and Transflorida are set forth on Exhibit D.
2.8 OFFICES AND BRANCHES. Attached hereto as Exhibit E is a
list of the addresses of the main offices and all branches, existing and
proposed, of the constituent banks. The main office of Transflorida will remain
the main office of the Surviving Bank and no additional branches of the
Surviving Bank are anticipated to be opened.
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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, Transflorida, UPBNA, or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of UPC Capital Stock, including any
associated UPC Rights, issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the
Effective Time.
(b) Each share of UPBNA Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one share of Transflorida Common Stock Effective
Time.
(c) Each share of Transflorida Common Stock (excluding
shares held by Transflorida, any Transflorida Subsidiary, UPC, or any
UPC Subsidiary, in each case other than in a fiduciary capacity or as a
result of debts previously contracted) issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive .8489 of a share of UPC
Common Stock (as subject to possible adjustment as set forth in Section
10.1(f) of the Merger Agreement, the "Exchange Ratio"). Pursuant to the
UPC Rights Agreement, each share of UPC Common Stock issued in
connection with the Merger upon conversion of Transflorida Common Stock
shall be accompanied by a UPC Right.
3.2 ANTI-DILUTION PROVISIONS. In the event UPC changes the
number of shares of UPC Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
occurs prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.3 SHARES HELD BY TRANSFLORIDA OR UPC. Each of the shares of
Transflorida Common Stock held by Transflorida, any Transflorida Subsidiary, UPC
or any UPC Subsidiary, 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 Transflorida Common Stock
exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fractional 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 share of UPC Common
Stock multiplied by the closing price of such common stock on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by UPC) on the last trading day
preceding the Effective Time. No such holder will be entitled to dividends,
voting rights, or any other rights as a shareholder in respect of any fractional
shares.
3.5 DISSENTING SHAREHOLDERS. Any holder of shares of
Transflorida Common Stock who perfects such holder's dissenters' rights of
appraisal in accordance with and as contemplated by Section 658.44 of the
Florida Banking Code shall be entitled to receive the value of such shares in
cash as determined pursuant to such provision of Law; provided, however, that no
such payment shall be made to any dissenting shareholder unless and until such
dissenting shareholder has complied with the applicable provisions of Section
658.44 of the Florida Banking Code and surrendered to Transflorida the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of
Transflorida fails to perfect, or effectively withdraws or loses, such holder's
right to appraisal and of payment for such holder's shares, UPC shall issue and
deliver the consideration to which such holder of shares of Transflorida Common
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Stock is entitled under this Article 3 (without interest) upon surrender by such
holder of the certificate or certificates representing shares of Transflorida
Common Stock held by such holder. Prior to the Effective Time, Transflorida will
establish an escrow account with an amount sufficient to satisfy the maximum
aggregate payment that may be required to be paid to dissenting shareholders.
Upon satisfaction of all claims of dissenting shareholders, the remaining
escrowed amount, reduced by payment of the fees and expenses of the escrow
agent, will be retained by the Surviving Bank.
ARTICLE 4
DELIVERY OF CONSIDERATION
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time,
UPC shall cause the exchange agent selected by UPC (the "Exchange Agent") to
mail to the former shareholders of Transflorida appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Transflorida
Common Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent). Transflorida shall have the right to review the transmittal
materials. After the Effective Time, each holder of shares of Transflorida
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Plan of Merger or as to which dissenters' rights have been perfected as provided
in Section 3.5 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 Transflorida 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 Transflorida Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's certificate or certificates
representing the shares of Transflorida Common Stock for exchange as provided in
this Section 4.1. The certificate or certificates of Transflorida Common Stock
so surrendered shall be duly endorsed as the Exchange Agent may require. Any
other provision of this Plan of Merger notwithstanding, neither UPC,
Transflorida, nor the Exchange Agent shall be liable to a holder of Transflorida
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 TRANSFLORIDA SHAREHOLDERS. At the
Effective Time, the stock transfer books of Transflorida shall be closed as to
holders of Transflorida Common Stock immediately prior to the Effective Time and
no transfer of Transflorida 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 Transflorida Common Stock (other than shares to be
canceled pursuant to Section 3.3 or 3.5 of this Plan of Merger) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.4 of this Plan of Merger in
exchange therefor, subject, however, to the Surviving Bank'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 Transflorida in respect of
such shares of Transflorida Common Stock and in accordance with the terms of
this Plan of Merger and which remain unpaid at the Effective Time. To the extent
permitted by Law, former shareholders of record of Transflorida shall be
entitled to vote after the Effective Time at any meeting of UPC shareholders the
number of whole shares of UPC Common Stock into which their respective shares of
Transflorida Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing Transflorida Common Stock for
certificates representing UPC Common Stock in accordance with the provisions of
this Plan of Merger. Whenever a dividend or other distribution is declared by
UPC on the UPC Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Plan of Merger, but beginning 30 days
after the Effective Time, no dividend or other distribution payable to the
holders of record of UPC Common Stock as of any time subsequent to the Effective
Time shall be delivered to the holder of any certificate representing shares of
Transflorida Common Stock issued
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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 Transflorida 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.
In the event any Transflorida Common Stock certificate shall have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen, or destroyed and, if required by
UPC, the posting by such person of a bond in such amount as UPC may reasonably
direct as indemnity against any claim that may be made against it with respect
to such certificate, the Exchange Agent shall issue in exchange for such lost,
stolen, or destroyed certificate the shares of UPC Common Stock and cash in lieu
of fractional shares deliverable in respect thereof pursuant to this Plan of
Merger.
ARTICLE 5
MISCELLANEOUS
5.1 CONDITIONS PRECEDENT. Consummation of the Merger by UPBNA
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 Transflorida shall be conditioned on
the satisfaction of, or waiver by Transflorida of, the conditions precedent to
the Merger set forth in Sections 9.1 and 9.3 of the Merger Agreement. Such
conditions include the approval of the Merger Agreement and this Plan of Merger
by the sole shareholder of UPBNA and the OCC.
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 Agreement 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.
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In Witness Whereof, the parties have caused their duly
authorized officers to execute this Agreement as of the date first above
written.
ATTEST: TRANSFLORIDA BANK
By: By:
----------------------------- ----------------------------------
James B. Stoner, Jr. Carl F. Griswold
Cashier President and Chief Executive Officer
MAJORITY OF THE BOARD OF DIRECTORS OF
TRANSFLORIDA BANK
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
ATTEST: UNION PLANTERS BANK,
NATIONAL ASSOCIATION
By: By:
---------------------------------------- -----------------------
E. James House, Jr. Jackson W. Moore
Secretary President and Chief
Operating Officer
MAJORITY OF THE BOARD OF DIRECTORS OF
UNION PLANTERS BANK, NATIONAL ASSOCIATION
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
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APPENDIX C
June 18, 1998
Board of Directors
Transflorida Bank
1489 West Palmetto Park Road., Suite 300
Boca Raton, FL 33486
Members of the Board:
We understand Transflorida Bank, Boca Raton, Florida, ("Transflorida") and Union
Planters Corporation, Memphis, Tennessee ("UPC") entered into an Agreement and
Plan of Reorganization (the "Agreement"), which provides, among other things,
for the acquisition of all of the capital stock of Transflorida by means of the
merger of Transflorida (the "Merger") with and into Union Planters Bank,
National Association. Pursuant to the Agreement at the Effective Time, each
share of Transflorida Common Stock, issued and outstanding prior to the
Effective Time, excluding Dissenting Shares, shall, by virtue of the Merger and
without any action by the holder thereof, be exchanged for 0.8489 shares of UPC
Common Stock (the "Exchange Ratio"). The Exchange Ratio shall be fixed and no
adjustment shall be made unless the Average Closing Price of UPC Common Stock,
defined in the Agreement as the average of the daily last sales prices of UPC
Common Stock as reported on the NYSE for the twenty consecutive full trading
days in which such shares are traded on the NYSE ending at the close of trading
on the later of the date (i.) of the Shareholders' Meeting, and (ii.) on which
the Consent of the Board of Governors of the Federal Reserve System shall be
received, if either:
(x.) both of the following conditions are satisfied: (1.) the Average
Closing Price shall be less than the product of (i.) 0.85 and (ii.) the
Starting Price, and (2.) (i.) the quotient obtained by dividing the
Average Closing Price by the Starting Price (the "UPC Ratio") shall be
less than (ii.) the quotient obtained by dividing the Index Price on
the Determination Date by the Index Price on the Starting Date and
subtracting 0.15 from the quotient in this clause (the "Index Ratio");
or
(y.) the Average Closing Price shall be less than the product of 0.80
and the Starting Price.
However, if Transflorida decides to terminate the transaction, UPC shall have
the option in clause (x.) to increase the Exchange Ratio to equal the lesser of
(i.) the quotient obtained by dividing (1.) the product of 0.85, the Starting
Price, and the Exchange Ratio (as then in effect) by (2.) the Average Closing
Price, and (ii.) the quotient obtained by dividing (1.) the product of the Index
Ratio and the Exchange Ratio by (2.) the UPC Ratio. UPC shall have the option,
in the case of a failure to satisfy the condition in clause (y.) to increase the
Exchange Ratio to equal a number equal to a quotient, the numerator of which is
the product of 0.80, the Starting Price and the Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price.
You have requested our opinion, as to whether the Exchange Ratio to be received
by the holders of shares of Transflorida Common Stock pursuant to the Agreement
is fair from a financial point of view to such holders of Transflorida's Common
Stock.
In connection with our opinion, we have: (i.) reviewed a copy of the Agreement;
(ii.) reviewed certain publicly available financial statements and other
information of Transflorida and UPC, respectively; (iii.) reviewed the Proxy
Statement/Prospectus; (iv.) discussed with management the results of regulatory
examinations of Transflorida; (v.) reviewed certain estimates of cost savings
prepared by management arising from the transaction; (vi.) reviewed certain
internal financial statements and other financial and operating data concerning
Transflorida; (vii.) analyzed certain budget and financial projections of
Transflorida prepared by the management of
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Transflorida; (viii.) analyzed the pro forma impact of the Merger on the
combined company's earnings, book value and tangible book value per share,
respectively, and consolidated capitalization, market valuation and financial
ratios; (ix.) reviewed the reported prices and trading activity for UPC; (x.)
discussed the past and current operations and financial condition, and the
prospects of Transflorida with executive management; (xi.) reviewed UPC's recent
S-4 filing with the SEC relating to its acquisition of Magna Group, Inc.; (xii.)
compared Transflorida and UPC from a financial point of view with certain other
companies which we deemed to be relevant; (xiii.) reviewed the financial terms,
to the extent publicly available, of certain comparable merger transactions, and
(xiv.) performed such other analyses and examinations as we have deemed
appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information supplied or otherwise made available to us
by Transflorida and UPC for the purposes of this opinion. We have not made an
independent evaluation of the assets or liabilities of Transflorida, nor have we
been furnished with any such appraisals. With respect to budgets and financial
forecasts, we have assumed that they have been reasonably prepared and reflect
the best currently available estimates and judgments of management of
Transflorida, as to the future financial performance of Transflorida, and we
have assumed such forecasts and projections will be realized in the amounts and
at the times contemplated thereby. We have assumed that obtaining any necessary
regulatory approvals and third party consents for the merger or otherwise will
not have an adverse effect on Transflorida, UPC or the combined company pursuant
to the Agreement. We are not experts in the evaluation of loan portfolios for
the purpose of assessing the adequacy of the allowance for losses with respect
thereto and have assumed that such allowances for each of the companies are in
the aggregate, adequate to cover such losses. In addition, we have not reviewed
any individual credit files or made an independent evaluation, appraisal or
physical inspection of the assets or individual properties of Transflorida or
UPC, nor have we been furnished with any such evaluations or appraisals. With
respect to UPC, we relied solely upon publicly available data regarding UPC's
financial condition and performance. We did not meet with or discuss this
publicly available information with the UPC management. We did not conduct any
independent evaluation or appraisal of the assets, liabilities or business
prospects of UPC, were not furnished with any evaluations or appraisals, and did
not review any individual credit files of UPC.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us, as of the date hereof.
Events occurring after the date hereof could materially affect the assumptions
used in preparing this opinion. We have also assumed that there are no material
changes in Transflorida's or UPC's assets, financial condition, results of
operations, business or prospects since the respective dates of their last
financial statements and S-4 filing relating to the Magna transaction reviewed
by us, and that off-balance sheet activities of Transflorida and UPC will not
materially and adversely impact the future financial position or results of
operation of Transflorida and UPC. We have also assumed the Merger will be
completed as set forth in the Agreement and that no material changes will be
made or restrictions imposed by regulatory or other parties on the terms of the
Agreement.
Our opinion is limited to the fairness, from a financial point of view, to the
holders of Transflorida's Common Stock of the Exchange Ratio and does not
address Transflorida's underlying business decision to undertake the Merger.
Moreover, this letter, and the opinion expressed herein, does not constitute a
recommendation to any stockholder as to any approval of the Merger or the
Agreement. It is understood that this letter is for the information of the Board
of Directors of Transflorida and may not be used for any other purpose without
our prior written consent, except that this opinion may be included in its
entirety in any filing made by Transflorida or UPC with the Securities and
Exchange Commission with respect to the Merger.
Based upon and subject to the foregoing, we are of the opinion that, as of the
date hereof, the Exchange Ratio to be received by Transflorida's Common
stockholders is fair from a financial point of view to the holders of such
shares.
Very truly yours,
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
C-2
<PAGE> 183
APPENDIX D
FLORIDA BANKING CODE, AS AMENDED
SECTION 658.44
Section 658.44. Approval by Stockholders; Rights of Dissenters'; Preemptive
Rights
(1) The department shall not issue a certificate of merger in a
resulting state bank or trust company unless the plan of merger and merger
agreement, as adopted by a majority of the entire board of directors of each
constituent bank or trust company, and as approved by each appropriate federal
regulatory agency and by the department, has been approved:
(a) By the stockholders of each constituent national bank as
provided by, and in accordance with the procedures required by, the laws of the
United States applicable thereto, and
(b) After notice as hereinafter provided, by the affirmative vote
or written consent of the holders of at least a majority of the shares entitled
to vote thereon of each constituent state bank or state trust company, unless
any class of shares of any constituent state bank or state trust company is
entitled to vote thereon as a class, in which event as to such constituent state
bank or state trust company the plan of merger and merger agreement shall be
approved by the stockholders upon receiving the affirmative vote or written
consent of the holders of a majority of the shares of each class of shares
entitled to vote thereon as a class and of the total shares entitled to vote
thereon. Such vote of stockholders of a constituent state bank or state trust
company shall be at an annual or special meeting of stockholders or by written
consent of the stockholders without a meeting as provided in s. 607.0704.
Approval by the stockholders of a constituent bank or trust company of a plan of
merger and merger agreement shall constitute the adoption by the stockholders of
the articles of incorporation of the resulting state bank or state trust company
as set forth in the plan of merger and merger agreements.
(2) Written notice of the meeting of, or proposed written consent
action by, the stockholders of each constituent state bank or state trust
company shall be given to each stockholder of record, whether or not entitled to
vote, and whether the meeting is an annual or a special meeting or whether the
vote is to be by written consent pursuant to s. 607.0704, and the notice shall
state that the purpose or one of the purposes of the meeting, or of the proposed
action by the stockholders without a meeting, is to consider the proposed plan
of merger and merger agreement. Except to the extent provided otherwise with
respect to stockholders of a resulting bank or trust company pursuant to
subsection (7), the notice shall also state that dissenting stockholders will be
entitled to payment in cash of the value of only those shares held by the
stockholders:
(a) Which at a meeting of the stockholders are voted against the
approval of the plan of merger and merger agreement;
(b) As to which, if the proposed action is to be by written consent
of stockholders pursuant to s. 607.0704, such written consent is not given by
the holder thereof; or
(c) With respect to which the holder thereof has given written
notice to the constituent state bank or trust company, at or prior to the
meeting of the stockholders or on or prior to the date specified for action by
the stockholders without a meeting pursuant to s. 607.0704 in the notice of such
proposed action, that the stockholder dissents from the plan of merger and
merger agreement.
Hereinafter in this section, the term "dissenting shares" means and includes
only those shares, which may be all or less than all the shares of any class
owned by a stockholder, described in paragraphs (a), (b), and (c).
(3) On or promptly after the effective date of the merger, the
resulting state bank or trust company, or a bank holding company which, as set
out in the plan of merger or merger agreement, is offering shares rights,
D-1
<PAGE> 184
obligations, or other securities or property in exchange for shares of the
constituent banks or trust companies, may fix an amount which it considers to be
not more than the fair market value of the shares of a constituent bank or trust
company and which it will pay to the holders of dissenting shares of that
constituent bank or trust company and, if it fixes such amount, shall offer to
pay such amount to the holders of all dissenting shares of that constituent bank
or trust company. The amount payable pursuant to any such offer which is
accepted by the holders of dissenting shares, and the amount payable to the
holders of dissenting shares pursuant to an appraisal, shall constitute a debt
of the resulting state bank or state trust company.
(4) The owners of dissenting shares who have accepted an offer made
pursuant to subsection (3) shall be entitled to receive the amount so offered
for such shares in cash upon surrendering the stock certificates representing
such shares at any time within 30 days after the effective date of the merger,
and the owners of dissenting shares, the value of which is to be determined by
appraisal, shall be entitled to receive the value of such shares in cash upon
surrender of the stock certificates representing such shares at any time within
30 days after the value of such shares has been determined by appraisal made on
or after the effective date of the merger.
(5) The value of dissenting shares of each constituent state bank or
state trust company, the owners of which have not accepted an offer for such
shares made pursuant to subsection (3), shall be determined as of the effective
date of the merger by three appraisers, one to be selected by the owners of at
least two-thirds of such dissenting shares, one to be selected by the board of
directors of the resulting state bank, and the third to be selected by the two
so chosen. The value agreed upon by any two of the appraisers shall control and
be final and binding on all parties. If, within 90 days from the effective date
of the merger, for any reason one or more of the appraisers is not selected as
herein provided, or the appraisers fail to determine the value of such
dissenting shares, the department shall cause an appraisal of such dissenting
shares to be made which will be final and binding on all parties. The expenses
of appraisal shall be paid by the resulting state bank or trust company.
(6) Upon the effective date of the merger, all the shares of stock of
every class of each constituent bank or trust company, whether or not
surrendered by the holders thereof, shall be void and deemed to be canceled, and
no voting or other rights of any kind shall pertain thereto or to the holders
thereof except only such rights as may be expressly provided in the plan of
merger and merger agreement or expressly provided by law.
(7) The provisions of subsection (6) and, unless agreed by all the
constituent banks and trust companies and expressly provided in the plan of
merger and merger agreement, subsections (3), (4), and (5) are not applicable to
a resulting bank or trust company or to the shares or holders of shares of a
resulting bank or trust company the cash, shares, rights, obligations, or other
securities or property of which, in whole or in part, is provided in the plan of
merger or merger agreement to be exchanged for the shares of the other
constituent banks or trust companies.
(8) The stock, rights, obligations, and other securities of a resulting
bank or trust company may be issued as provided by the terms of the plan of
merger and merger agreement, free from any preemptive rights of the holders of
any of the shares of stock or of any of the rights, obligations, or other
securities, of such resulting bank or trust company or of any of the constituent
banks or trust companies.
(9) After approval of the plan of merger and merger agreement by the
stockholders as provided in subsection (1), there shall be filed with the
department, within 30 days after the time limit in s. 658.43(5), a fully
executed counterpart of the plan of merger and merger agreement as so approved
if it differs in any respect from any fully executed counterpart thereof
theretofore filed with the department, and copies of the resolutions approving
the same by the stockholders of each constituent bank or trust company,
certified by the president, or chief executive officer if other than the
president, and the cashier or corporate secretary of each constituent bank or
trust company, respectively, with the corporate seal impressed thereon.
D-2
<PAGE> 185
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Charter of the Registrant provides as follows:
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the
Corporation may indemnify or purchase and maintain insurance to
indemnify any of its directors, officers, employees or agents and any
persons who may serve at the request of the Corporation as directors,
officers, employees, trustees or agents of any other corporation, firm,
association, national banking association, state-chartered bank, trust
company, business trust, organization or any other type of entity
whether or not the Corporation shall have any ownership interest in
such entity. Such indemnification(s) may be provided for in the Bylaws,
or by resolution of the Board of Directors or by appropriate contract
with the person involved.
Article V, INDEMNIFICATION, of the Registrant's Amended and Restated
Bylaws provides as follows:
The Corporation does hereby indemnify its directors and
officers to the fullest extent permitted by the laws of the State of
Tennessee and by ARTICLE TWELFTH of its Charter. The Corporation may
indemnify any other person to the extent permitted by the Charter and
by applicable law.
Indemnification of corporate directors and officers is
governed by Sections 48-18-501 through 48-18-509 of the Tennessee
Business Corporation Act (the "Act"). Under the Act, a person may be
indemnified by a corporation against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorneys' fees) actually
and necessarily incurred by him in connection with any threatened or
pending suit or proceeding or any appeal thereof (other than an action
by or in the right of the corporation), whether civil or criminal, by
reason of the fact that he is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director or officer, employee or agent of another corporation of any
type or kind, domestic or foreign, if such director or officer acted in
good faith for a purpose which he reasonably believed to be in the best
interest of the corporation and, in criminal actions or proceedings
only, in addition, had no reasonable cause to believe that his conduct
was unlawful. A Tennessee corporation may indemnify a director or
officer thereof in a suit by or in the right of the corporation against
amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred as a result of such
suit unless such director or officer did not act in good faith or with
the degree of diligence, care and skill which ordinarily prudent men
exercise under similar circumstances and in like positions.
A person who has been wholly successful, on the merits or
otherwise, in the defense of any of the foregoing types of suits or
proceedings is entitled to indemnification for the foregoing amounts. A
person who has not been wholly successful in any such suit or
proceeding may be indemnified only upon the order of a court or a
finding that the director or officer met the required statutory
standard of conduct by (i) a majority vote of a disinterested quorum of
the Board of Directors, (ii) the Board of Directors based upon the
written opinion of independent legal counsel to such effect, or (iii) a
vote of the shareholders.
II-1
<PAGE> 186
ITEM 21. EXHIBITS.
The following exhibits are filed herein or have been, as noted,
previously filed:
Exhibit No. Description
- ----------- --------------------------------------------------------------
2.1 Agreement and Plan of Reorganization, as amended, dated as of
February 26, 1998, by and between Union Planters Corporation
and Transflorida Bank (Included as Appendix A to the Proxy
Statement included as part of this Registration Statement.)
2.2 Plan of Merger of Transflorida Bank with and into Union
Planters Bank, National Association. (Included as Appendix B
to the Proxy Statement included as part of this Registration
Statement.)
2.3 Termination Fee Agreement, dated as of February 26, 1998, by
and between Union Planters Corporation and Transflorida Bank.
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 three months ended March 31, 1998.)
4.2 Amended and Restated Bylaws of Union Planters Corporation.
(Incorporated by reference to exhibit 3(d) to the Annual
Report on Form 10-K of UPC for the fiscal year ended December
31, 1996 (File No. 0-6919).)
5.1 Opinion of E. James House, Jr., Secretary and Manager of the
Legal Department of Union Planters Corporation, as to the
validity of the shares of UPC Common Stock.
8.1 Form of opinion of Alston & Bird LLP as to federal income tax
consequences.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Coopers & Lybrand, LLP.
23.3 Consent of E. James House, Jr., Secretary and Manager of the
Legal Department of Union Planters Corporation (included in
Exhibit 5.1).
23.4 Consent of Alston & Bird llp (to be filed by amendment and
included in Exhibit 8.1).
23.5 Consent of Alex Sheshunoff & Co.
24.1 Power of Attorney (contained on the signature page hereof).
99.1 Form of Proxy of Transflorida Bank
II-2
<PAGE> 187
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
(7) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(8) That every prospectus: (i) that is filed pursuant to Paragraph (7)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 188
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Memphis,
State of Tennessee on this the 19th day of February, 1998.
REGISTRANT
UNION PLANTERS CORPORATION
By: /s/ Benjamin W. Rawlins, Jr.
--------------------------------------
Benjamin W. Rawlins, Jr.
President and Chief Executive
Officer
We, the undersigned directors and officers of Union Planters
Corporation do hereby constitute and appoint E. James House, Jr. and M. Kirk
Walters, and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for us and in our name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and we do hereby ratify and confirm all that said attorneys-in-fact
and agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and at the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Benjamin W. Rawlins, Jr. Chairman of the Board, Chief Executive February 19, 1998
- ------------------------------ Officer, Director (Principal
Benjamin W. Rawlins, Jr. Executive Officer)
/s/ Jackson W. Moore President, Chief Operating Officer, February 19, 1998
- ------------------------------ Director
Jackson W. Moore
/s/ John W. Parker Executive Vice President and February 19, 1998
- ------------------------------ Executive Officer)
John W. Parker (Principal Financial Officer)
/s/ M. Kirk Walters Senior Vice President, Treasurer, February 19, 1998
- ------------------------------ and Chief Accounting Officer
M. Kirk Walters
/s/ Edgar H. Bailey Vice Chairman of the Board February 19, 1998
- ------------------------------ and Director
Edgar H. Bailey
</TABLE>
II-4
<PAGE> 189
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Albert M. Austin Director February 19, 1998
- ------------------------------
Albert M. Austin
/s/ Marvin E. Bruce Director February 19, 1998
- ------------------------------
Marvin E. Bruce
/s/ George W. Bryan Director February 19, 1998
- ------------------------------
George W. Bryan
/s/ James E. Harwood Director February 19, 1998
- ------------------------------
James E. Harwood
/s/ Parnell S. Lewis, Jr. Director February 19, 1998
- ------------------------------
Parnell S. Lewis, Jr.
/s/ C. J. Lowrance, III Director February 19, 1998
- ------------------------------
C. J. Lowrance, III
/s/ Stanley D. Overton Director February 19, 1998
- ------------------------------
Stanley D. Overton
/s/ Dr. V. Lane Rawlins Director February 19, 1998
- ------------------------------
Dr. V. Lane Rawlins
/s/ Donald F. Schuppe Director February 19, 1998
- ------------------------------
Donald F. Schuppe
/s/ Mike P. Sturdivant Director February 19, 1998
- ------------------------------
Mike P. Sturdivant
/s/ David M. Thomas Director February 19, 1998
- ------------------------------
David M. Thomas
- ------------------------------ Director _________, 1998
Richard A. Trippeer, Jr.
- ------------------------------ Director _________, 1998
Spence L. Wilson
</TABLE>
II-5
<PAGE> 190
EXHIBIT INDEX
The following exhibits are filed herein or have been, as noted,
previously filed:
Exhibit No. Description
- ----------- --------------------------------------------------------
2.1 Agreement and Plan of Reorganization, as amended, dated as of
February 26, 1998, by and between Union Planters Corporation
and Transflorida Bank (Included as Appendix A to the Proxy
Statement included as part of this Registration Statement.)
2.2 Plan of Merger of Transflorida Bank with and into Union
Planters Bank, National Association. (Included as Appendix B
to the Proxy Statement included as part of this Registration
Statement.)
2.3 Termination Fee Agreement, dated as of February 26, 1998, by
and between Union Planters Corporation and Transflorida Bank.
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 three months ended March 31, 1998.)
4.2 Amended and Restated Bylaws of Union Planters Corporation.
(Incorporated by reference to exhibit 3(d) to the Annual
Report on Form 10-K of UPC for the fiscal year ended December
31, 1996 (File No. 0-6919).)
5.1 Opinion of E. James House, Jr., Secretary and Manager of the
Legal Department of Union Planters Corporation, as to the
validity of the shares of UPC Common Stock.
8.1 Form of opinion of Alston & Bird LLP as to federal income tax
consequences.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Coopers & Lybrand, LLP.
23.3 Consent of E. James House, Jr., Secretary and Manager of the
Legal Department of Union Planters Corporation (included in
Exhibit 5.1).
23.4 Consent of Alston & Bird llp (to be filed by amendment and
included in Exhibit 8.1).
23.5 Consent of Alex Sheshunoff & Co.
24.1 Power of Attorney (contained on the signature page hereof).
99.1 Form of Proxy of Transflorida Bank
<PAGE> 1
EXHIBIT 2.3
TRANSFLORIDA BANK
Suite 300
1489 West Palmetto Park Road
Boca Raton, Florida 33486
February 26, 1998
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attention: Benjamin W. Rawlins, Jr.
Chief Executive Officer
Ladies and Gentlemen:
We refer to the Agreement and Plan of Reorganization (the "Merger
Agreement") of even date herewith between Union Planters Corporation ("UPC") and
Transflorida Bank ("Transflorida"). Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Merger Agreement.
In order to induce UPC to enter into the Merger Agreement, and in
consideration of UPC's undertaking of efforts in furtherance of the transactions
contemplated thereby, Transflorida agrees as follows:
1. Representations and Warranties. Transflorida hereby represents and
warrants to UPC that Transflorida has all requisite corporate power and
authority to enter into this letter agreement (the "Agreement") and to perform
its obligations set forth herein. The execution, deliver and performance of this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of Transflorida. This Agreement has been duly executed and
delivered by Transflorida.
2. Termination Fee. (a) Unless a Nullifying Event shall have occurred and
be continuing at the time the Merger Agreement is terminated, in the event that
(i) the Merger Agreement shall have been terminated pursuant to Article 10
thereof, (ii) prior to or concurrently with such termination of the Merger
Agreement a First Trigger Event shall have occurred, and (iii) prior to,
concurrently with or within 18 months after such termination an Acquisition
Event (as such term is defined below) shall have occurred, Transflorida shall
pay to UPC a cash fee of $3.5 million. Such fee shall be payable in immediately
available funds on or before the second business day following the occurrence
of such Acquisition Event.
(b) As used herein, a "First Trigger Event" shall mean the occurrence of
any of the following events:
<PAGE> 2
(i) Transflorida's Board of Directors shall have failed to approve
or recommend the Merger Agreement or the Merger, or shall have withdrawn
or modified in a manner adverse to UPC its approval or recommendation of
the Merger Agreement or the Merger, or shall have resolved or publicly
announced an intention to do either of the foregoing;
(ii) Transflorida or any Significant Subsidiary (as such term is
defined below), or the Board of Directors of Transflorida or a
Significant Subsidiary, shall have recommended that the shareholders of
Transflorida approve any Acquisition Proposal (as such term is defined
below) or shall have entered into an agreement with respect to,
authorized, approved, proposed or publicly announced its intention to
enter into, any Acquisition Proposal;
(iii) the Merger Agreement shall not have been approved at a meeting
of Transflorida shareholders which has been held for that purpose prior
to termination of the Merger Agreement in accordance with its terms, if
prior thereto it shall have been publicly announced that any person
(other than UPC or any of its Subsidiaries) shall have made, or disclosed
an intention to make, an Acquisition Proposal;
(iv) any person (together with its affiliates and associates) or
group (as such terms are used for purposes of Section 13(d) of the
Exchange Act) (other than UPC and its Subsidiaries) shall have acquired
beneficial ownership (as such term is used for purposes of Section 13(d)
of the Exchange Act) or the right to acquire beneficial ownership of 20%
or more of the then outstanding shares of the stock then entitled to vote
generally in the election of directors of Transflorida or a Significant
Subsidiary; or
(v) following the making of an Acquisition Proposal, Transflorida
shall have breached any covenant or agreement contained in the Merger
Agreement such that UPC would be entitled to terminate the Merger
Agreement under Section 10(c) thereof (without regard to any grace period
provided for therein) unless such breach is promptly cured without
jeopardizing consummation of the Merger pursuant to the terms of the
Merger Agreement.
(c) As used herein, "Acquisition Event" shall mean the consummation of
any event described in the definition of "Acquisition Proposal," except that the
percentage reference contained in clause (C) of such definition shall be 50%
instead of 20%.
(d) As used herein, "Acquisition Proposal" shall mean any (i) publicly
announced proposal, (ii) regulatory application or notice (whether in draft or
final form), (iii) agreement or understanding, (iv) disclosure of an intention
to make a proposal, or (v) amendment to any of the foregoing, made or filed on
or after the date hereof, in each case with respect to any of the following
transactions with a counterparty other than parent or any of its Subsidiaries:
(A) a merger or consolidation, or any similar transaction, involving
Transflorida or any Significant Subsidiary (other than mergers, consolidations
or similar transactions involving solely Transflorida
<PAGE> 3
and/or one or more wholly owned Subsidiaries of Transflorida and other than a
merger or consolidation as to which the common shareholders of Transflorida
immediately prior thereto in the aggregate own at least 70% of the common stock
of the publicly held surviving or successor corporation (or any publicly held
ultimate parent company thereof) immediately following consummation thereof);
(B) a purchase, lease or other acquisition of all or substantially all of the
assets or deposits of Transflorida or any Significant Subsidiary; or (C) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 20% or more of the voting
power of Transflorida or any Significant Subsidiary.
(e) As used herein, "Nullifying Event" shall mean any of the following
events occurring and continuing at a time when Transflorida is not in material
breach of any of its covenants or agreements contained in the Merger Agreement:
(i) UPC shall be in breach of any of its covenants or agreements contained in
the Merger Agreement such that Transflorida shall be entitled to terminate the
Merger Agreement pursuant to Section 10(c) thereof (without regard to any grace
period provided for therein) or (ii) the shareholders of UPC shall have voted
and failed to approve the UPC Charter Amendment at a meeting of such
shareholders which has been held for that purpose or at any adjournment or
postponement thereof (unless the Merger Agreement shall not have been approved
at a meeting of Transflorida shareholders which was held on or prior to such
date for the purpose of voting with respect to the Merger Agreement).
(f) As used herein, "Significant Subsidiary" shall mean a "significant
subsidiary," as defined in Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission, of Transflorida.
3. To the extent that Transflorida is prohibited by applicable law or
regulation, or by administrative actions or policy of a federal or state
financial institution supervisory agency having jurisdiction over it, from
making the payments required to be paid by Transflorida herein in full, it shall
immediately so notify UPC and thereafter deliver or cause to be delivered, from
time to time, to UPC, the portion of the payments required to be paid by it
herein that it is no longer prohibited from paying, within five business days
after the date on which the Transflorida is no longer so prohibited; provided,
however, that if Transflorida at any time is prohibited by applicable law or
regulation, or by administrative actions or policy of a federal or state
financial institution supervisory agency having jurisdiction over it, from
making the payments required hereunder in full, it shall (i) use its reasonable
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to make such payments,
(ii) within five days of the submission or receipt of any documents relating to
any such regulatory and legal approvals, provide parent with copies of the same,
and (iii) keep UPC advised of both the status of any such request for regulatory
and legal approvals, as well as any discussions with any relevant regulatory or
other third party reasonably related to the same.
4. Except where federal law specifically applies, this Agreement shall be
construed and interpreted according to the laws of the State of Tennessee
without regard to conflicts of laws principles thereof.
<PAGE> 4
5. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6. Nothing contained herein shall be deemed to authorize Transflorida or
UPC to breach any provision of the Merger Agreement.
Please confirm your agreement with the understanding set forth herein by
signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
TRANSFLORIDA BANK
By: /s/ Carl F. Griswold
---------------------------------------
Carl F. Griswold
President and Chief Executive Officer
Accepted and agreed to as of
the date first above written:
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
------------------------------------------
Jackson W. Moore
President and Chief Operating Officer
<PAGE> 1
EXHIBIT 5.1
[UNION PLANTERS CORPORATION LETTERHEAD]
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Re: 1,750,000 Shares of the Common Stock, $5.00 Par Value Per Share
of Union Planters Corporation, a Tennessee Corporation ("UPC")
Ladies and 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 1,750,000 shares
of UPC's common stock, $5.00 par value per share, including accompanying
Preferred Share Rights ("UPC Common Stock") which may be issued by UPC pursuant
to an Agreement and Plan of Reorganization, as amended, dated as of February 26,
1998, by and between UPC and Transflorida Bank ("Transflorida") (the
"Agreement").
For purposes of rendering the opinion expressed herein, the undersigned
has examined UPC's corporate charter and all amendments thereto; UPC's by-laws
and amendments thereto; the Agreement and such of UPC's corporate records as the
undersigned has deemed necessary and material to rendering the undersigned's
opinion. The undersigned has relied upon certificates of public officials and
representations of UPC officials, and has assumed that all documents examined by
the undersigned as originals are authentic, that all documents submitted to the
undersigned as photocopies are exact duplicates of original documents, and that
all signatures on all documents are genuine.
Further, the undersigned is familiar with, and has supervised all
corporate action taken in connection with the authorization of the issuance and
offering of the subject securities.
Based upon and subject to the foregoing and subsequent assumptions,
qualifications and exceptions, it is the undersigned's opinion that:
1. UPC is a duly organized and validly existing corporation in
good standing under the laws of the State of Tennessee and has all requisite
power and authority to issue, sell and deliver the subject securities, and to
carry on its business and own its property; and
2. The shares of UPC Common Stock to be issued by UPC pursuant to
the Merger have been duly authorized and when issued by UPC in accordance
therewith, such shares of UPC Common Stock will be fully paid and
nonassessable.
3. The opinion expressed above is limited by the following
assumptions, qualifications, and exceptions.
(a) The undersigned is licensed to practice law only in
the State of Tennessee and expresses no opinion with respect to the effect of
the laws other than those of the State of Tennessee and of the United States of
America.
<PAGE> 2
(b) The opinion stated herein is based upon statutes,
regulations, rules, court decisions, and other authorities existing and
effective as of the date of this opinion, and the undersigned undertakes no
responsibility to update or supplement said opinion in the event of or in
response to any subsequent changes in the law or said authorities, or upon the
occurrence after the date hereof of events or circumstances that, if occurring
prior tot he 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 consent to the
undersigned being named as a party rendering a legal opinion under the caption
"Opinions" in the Proxy Statement/Prospectus constituting part of the
Registration Statement and to the filing of this opinion with the Securities and
Exchange Commission as well as all state regulatory bodies and jurisdictions
where qualification is sought for the sale of the subject securities.
The undersigned is an officer of, and receives compensation from UPC
and therefore is not independent from UPC.
Very truly yours,
UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr.
-------------------------
E. James House, Jr.
<PAGE> 1
EXHIBIT 8.1
[ALSTON & BIRD LLP LETTERHEAD]
FORM OF TAX OPINION
June __, 1998
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Transflorida Bank
1489 West Palmetto Park Road
Suite 300
Boca Raton, Florida 33486
Re: Proposed Agreement and Plan of Reorganization involving
Union Planters Corporation, Union Planters Bank, National
Association, Union Planters Holding Corporation, and
Transflorida Bank.
Ladies and Gentlemen:
We have served as counsel to Union Planters Corporation
("UPC") in connection with the proposed reorganization of UPC, Union Planters
Bank, National Association ("UPBNA"), Union Planters Holding Corporation
("UPHC") and Transflorida Bank ("Transflorida") pursuant to an Agreement and
Plan of Reorganization, as amended ("Agreement"), which provides for the merger
("Merger") of Transflorida into UPBNA. In our capacity as counsel to UPC, our
opinion has been requested with respect to certain of the federal income tax
consequences of the proposed transaction.
In rendering this opinion, we have examined (i) the Internal
Revenue Code of 1986, as amended ("Code") and Treasury regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Registration Statement (defined below), and, unless
otherwise specified, all section references herein are to the Code.
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined
such documents as we have deemed appropriate, including:
(1) The Agreement; and
(2) The Registration Statement on Form S-4 filed by UPC
with the Securities and Exchange Commission under the Securities Act of 1933, on
June 26, 1998, including the Proxy Statement/Prospectus for the special meeting
of shareholders of Transflorida ("Registration Statement").
In our examination of the documents, we have assumed with your
consent that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, that all
statements set forth in such documents are accurate, that the transactions
contemplated by the Agreement will be consummated
<PAGE> 2
in accordance therewith and as described in the Registration Statement.
We have also obtained such additional information and
representations as we have deemed relevant and necessary through consultation
with various officers and representatives of Magna and UPC and through
certificates (the "Certificates") provided by the management of Magna and the
management of UPC and attached hereto as Exhibits A and B.
You have advised us that the Transflorida Board believes that,
among other things, the Merger will result in a company with expanded
opportunities for profitable growth and that the combined resources and capital
of Transflorida and UPC will provide an enhanced ability to compete in the
changing and competitive financial services industry.
OPINIONS
Based on the representations contained in the Certificates, the
foregoing assumptions and subject to the assumptions and qualifications set
forth in the Registration Statement under the heading "Description of
Transaction--Certain Federal Income Tax Consequences of the Merger," we are of
the opinion that under presently applicable federal income tax law:
(1) For federal income tax purposes, the proposed
transaction will be viewed as an acquisition by UPHC of substantially all of the
assets of Transflorida solely in exchange for UPC Common Stock and the
assumption of all of the liabilities of Transflorida followed by the transfer of
the assets and all of the liabilities acquired from Transflorida to UPBNA.
(2) The acquisition by UPHC of substantially all of the
assets of Transflorida in exchange solely for shares of UPC Common Stock and the
assumption by UPHC of Transflorida's liabilities will constitute a
reorganization within the meaning of section 368(a)(1)(C) of the Code. For
purposes of this opinion, "substantially all" means at least 90 percent (90%) of
the fair market value of the net assets and at least seventy percent (70%) of
the fair market value of the gross assets of Transflorida held immediately prior
to the proposed transaction. Pursuant to section 368(a)(2)(C), the
reorganization will not be disqualified under section 368(a)(1)(C) by reason of
the fact that the assets of Transflorida which were acquired by UPHC are
transferred to UPBNA, such transfer to be accomplished by the merger of
Transflorida into UPBNA as provided in the Agreement.
(3) No gain or loss will be recognized to the
shareholders of Transflorida upon the receipt of UPC Common Stock solely in
exchange for all of their shares of Transflorida Common Stock (except with
respect to any cash received in lieu of a fractional share interest of UPC
Common Stock).
(4) The aggregate tax basis of the UPC Common Stock to be
received by the Transflorida shareholders who exchange all of their Transflorida
Common Stock solely for UPC Common Stock in the Merger will be the same as the
aggregate tax basis of the Transflorida Common Stock surrendered in exchange
therefor, less the basis of any fractional share of UPC Common Stock settled by
cash payment.
(5) The holding period of the UPC stock to be received by
the Transflorida shareholders who exchange all of their Transflorida Common
Stock solely for UPC Common Stock in the Merger will include the period during
which the Transflorida Common Stock surrendered in the exchange therefor was
held, provided such Transflorida Common Stock is held as a capital asset on the
date of the exchange.
<PAGE> 3
(6) The payment of cash in lieu of fractional share
interests of UPC Common Stock will be treated as if the fractional shares were
distributed as part of the exchange and then redeemed by UPC. These cash
payments will be treated as having been received as distributions in exchange
for the shares of UPC Common Stock redeemed subject to the provisions and
limitations of section 302(a).
(7) Where cash is received by a shareholder of
Transflorida who exercises dissenters' rights, the cash will be treated as
having been received by such shareholder as a distribution in redemption of such
holder's Transflorida Common Stock subject to the provisions and limitations of
section 302. Any such Transflorida shareholders who, after the distribution,
owns no UPC Capital Stock directly or through the application of section 318(a)
shall be treated as having a complete termination of interest within the meaning
of section 302(b)(3), and the cash will be treated as a distribution in full
payment in exchange for such Transflorida Common Stock as provided in section
302(a).
(8) No gain or loss will be recognized to Transflorida
upon the transfer of substantially all of its assets to UPHC solely in exchange
for UPC Common Stock and the assumption by UPHC of the liabilities of
Transflorida.
(9) No gain or loss will be recognized to UPC or UPHC
upon the acquisition by UPHC of substantially all of the assets of Transflorida
in exchange for shares of UPC Common Stock and the assumption by UPHC of the
liabilities of Transflorida.
(10) No gain or loss will be recognized to UPHC upon the
transfer of all of Transflorida's assets to UPBNA in constructive exchange for
UPBNA stock and the assumption by UPBNA of the Transflorida liabilities which
were assumed by UPHC.
(11) No gain or loss will be recognized to UPBNA upon the
receipt of assets of Transflorida from UPHC in constructive exchange for UPBNA
stock.
CONCLUSION
The opinions expressed herein are based upon existing
statutory, regulatory, and judicial authority, any of which may be changed at
any time with retroactive effect. In addition, our opinions are based solely on
the documents that we have examined, the additional information that we have
obtained, and the statements set out in the Certificates, which we have assumed
are true on the date hereof and will be true on the date on which the Merger is
consummated. Our opinions cannot be relied upon if any of the facts pertinent to
the Federal income tax treatment of the Merger stated in such documents or in
such additional information is, or later becomes, inaccurate, or if any of the
statements set out in the Certificates are, or later become, inaccurate.
Finally, our opinions are limited to the tax matters specifically covered
thereby, and we have not been asked to address, nor have we addressed, any other
tax consequences of the Merger, including for example any issues related to
intercompany transactions, accounting methods, or changes in accounting methods
resulting from the Merger.
This opinion is being provided solely for the use of UPC,
UPBNA, UPHC, Transflorida, and the shareholders of Transflorida. No other person
or party shall be entitled to rely on this opinion.
We hereby consent to the use of this opinion and to the
references made to the firm under the captions "Summary--The Merger",
"Description of the Transaction--Certain Federal Income Tax Consequences of the
Merger" and "Opinions" in the Proxy Statement/Prospectus constituting part of
the Registration Statement on Form S-4 of UPC.
<PAGE> 4
Very truly yours,
ALSTON & BIRD LLP
By:
--------------------------------
Philip C. Cook, Partner
<PAGE> 1
EXHIBIT 23.1
CONSENT OF PRICE WATERHOUSE LLP
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4 of Union Planters Corporation of our report dated January 15, 1998, except
as to Note 2 which is as of March 3, 1998, which appears on page 41 of Union
Planters Corporation's 1997 Annual Report to Shareholders, which is incorporated
by reference in its Annual Report on Form 10-K of the year ended December 31,
1997. We also consent to the reference to us under the heading "Experts" in such
Proxy Statement/Prospectus.
PRICE WATERHOUSE LLP
Memphis, Tennessee
June 25, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF COOPERS & LYBRAND LLP
We consent to the inclusion in this Registration Statement of Union
Planters Corporation on Form S-4 of our reports dated January 30, 1998 and
January 31, 1997 (on the Consolidated Financial Statements of Transflorida Bank
and subsidiaries as of and for the years ended December 31, 1997 and 1996 and
December 31, 1996 and 1995 which appear on pages F4 and F24 of the Registration
Statement, and to the reference to our firm under the heading "Experts" in this
Registration Statement.
Coopers & Lybrand LLP
Miami, Florida
June 25, 1998
<PAGE> 1
EXHIBIT 23.5
CONSENT OF ALEX SHESHUNOFF & CO. INVESTMENT BANKING
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of Union Planters Corporation of our opinion,
dated June 18, 1998 with respect to the merger of Union Planters Corporation and
Transflorida Bank and to our firm, respectively, included in the Registration
Statement of Union Planters Corporation (the "Initial Registration Statement")
and to the inclusion of such opinion as an annex to the Initial Registration
Statement. By giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
AUSTIN, TEXAS
June 19, 1998
<PAGE> 1
EXHIBIT 99.1
TRANSFLORIDA BANK
SPECIAL MEETING, AUGUST 18, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Carl F. Griswold and
______________________, or either of them in case the other is unable or
unwilling to act, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of voting stock of Transflorida Bank held of record by the undersigned on
June 25, 1998, at the Special Meeting of Shareholders to be held on August 18,
1998 or any adjournments thereof. The affirmative vote of a majority of the
shares represented at the meeting may authorize the adjournment of the meeting;
provided, however, that no proxy which is voted against the Merger Agreement
will be voted in favor of adjournment to solicit further proxies for such
proposal.
1. Adoption of the Agreement and Plan of Reorganization, as amended (the
"Merger Agreement"), dated as of February 26, 1998, by and between
Union Planters Corporation and Transflorida Bank and the related Plan
of Merger.
[ ] 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, BUT IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ADOPTION OF THE MERGER AGREEMENT.
The undersigned acknowledges receipt from Transflorida Bank prior to the
execution of this Proxy of Notice of the Special Meeting and the related Proxy
Statement/Prospectus.
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.
