Registration No. ________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4 EF
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
- --------------------------------------------------------------------------------
SPARTA UNION BANCSHARES, INC.
(Exact name of registrant as specified in its Charter)
WISCONSIN Applied For 6711
(State of (I.R.S. Employer I.D. No.) (Primary Standard Industrial
Incorporation) Classification Code No.)
124 WEST OAK STREET
SPARTA, WISCONSIN 54656
(608) 269-6737
(Address and telephone number of principal executive offices)
- --------------------------------------------------------------------------------
JOHN J. SUND, JR. JOHN E. KNIGHT
124 West Oak Street Boardman, Suhr, Curry & Field
Sparta, WI 54656 One S. Pinckney Street, Suite 410
(608) 269-6737 Post Office Box 927
Madison, WI 53701-0927
(Name, address, telephone no.
of agent for service) (Copy of Notices)
- --------------------------------------------------------------------------------
Approximate date of commencement of proposed sale of the securities to the
public: upon consummation of the reorganization.
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. [x]
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
- --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
Title of each class Proposed maximum Proposed maximum
of securities to be Amount to be offering price per aggregate offering Amount of
registered registered unit* price* registration fee
- ----------------- -------------- ------------------ ------------------- ----------------
Common Stock, no 3,869 $2,122.00 $8,210,018.00 $2,487.88
par value
<FN>
*Based on the book value of the common stock of Union National Bank & Trust Company on June 30, 1997, estimated solely for
purposes of calculating the registration fee pursuant to Rule 457(f)(2).
</FN>
SPARTA UNION BANCSHARES, INC.
Cross Reference Sheet
Form S-4, Part I
Item Number Location in Prospectus
1 FACING PAGE OF REGISTRATION STATEMENT; OUTSIDE FRONT
COVER PAGE OF PROSPECTUS
2 TABLE OF CONTENTS
3 SUMMARY
4 SUMMARY; THE REORGANIZATION; COMPARISON OF BANK
STOCK WITH HOLDING COMPANY STOCK
5 Not applicable
6 SPARTA UNION BANCSHARES, INC.; UNION NATIONAL BANK
& TRUST COMPANY
7 Not applicable
8 THE REORGANIZATION
9 SPARTA UNION BANCSHARES, INC.; UNION NATIONAL BANK
& TRUST COMPANY
10 Not applicable
11 Not applicable
12 Not applicable
13 Not applicable
14 SPARTA UNION BANCSHARES, INC.; COMPARISON OF BANK
STOCK WITH HOLDING COMPANY STOCK
15 Not applicable
16 Not applicable
17 UNION NATIONAL BANK & TRUST COMPANY; COMPARISON OF
BANK STOCK WITH HOLDING COMPANY STOCK
18 THE REORGANIZATION; SPARTA UNION BANCSHARES, INC.;
UNION NATIONAL BANK & TRUST COMPANY; RIGHTS OF
DISSENTING STOCKHOLDERS OF BANK
19 Not applicable
______________, 1997
To the Shareholders of Union National Bank & Trust Company:
Union National Bank & Trust Company ("Bank") will hold a special meeting of
its shareholders on October 23, 1997, at 1:00 p.m., at the offices of the Bank,
124 West Oak Street, Sparta, Wisconsin.
This meeting is of great importance to Bank shareholders, because you will
again be asked to consider and approve the formation of a one-bank holding
company for the Bank. A bank holding company is a corporation that owns most or
all of the stock of a bank. If a bank holding company is approved for the Bank,
the Bank shareholders would have their Bank stock exchanged for holding company
stock. The Bank shareholders would become the holding company shareholders, and
the holding company would become the sole shareholder of the Bank. The formation
of a bank holding company would not involve any sale of the Bank.
On September 26, 1996, the Bank shareholders approved the formation of the
bank holding company. Because of regulatory obstacles, that application was
withdrawn.
More than 150 one-bank holding companies have been formed throughout
Wisconsin. The Board of Directors continues to believe that a holding company
would be beneficial to the Bank and to its shareholders, because it would enable
the Bank to:
1. Respond rapidly and effectively to changes that may occur in the future
in the laws and regulations governing banks and bank-related activities;
2. Be better able to acquire other banks, to be operated either as branches
of the Bank or as separate banks, in areas not now served by the Bank;
3. Offer bank-related services, through nonbanking affiliates to be
acquired or created in the future, to present Bank customers and other members
of the public;
4. Provide a potential market for the stock of the holding company;
5. Meet any future capital requirements, that are not provided by the
future earnings of the Bank, through borrowings by the holding company that are
repaid by nontaxable dividends from the Bank; and
6. Compete more effectively with other bank holding companies.
Another Bank shareholder meeting is necessary to have this transaction
approved.
If the holding company is approved, shareholders of the Bank will receive
one (1) share of holding company stock for each share of Bank stock.
This letter is followed by a formal notice of the special meeting of
shareholders and a Prospectus/Proxy Statement ("Prospectus"). The Prospectus
serves two purposes. First, it is the proxy statement of the Bank which
describes the proposed transaction and asks you to send in your Proxy to vote on
the holding company at the special meeting of shareholders. A form of Proxy is
enclosed separately (on blue paper). Second, it is a Prospectus of the holding
company which describes the holding company and its stock.
The Board of Directors of the Bank unanimously recommends approval of the
holding company formation. All of the Bank's Directors have indicated their
intention to vote in favor of the holding company. The Board of Directors urges
you to read the enclosed Prospectus carefully, and hopes that you choose to join
them in approving the holding company formation.
Please return the enclosed Proxy to ensure that your shares are represented
in the voting on this transaction. IN ORDER TO APPROVE THE HOLDING COMPANY, THE
AFFIRMATIVE VOTE OF TWO-THIRDS (66.67%) OF ALL OF THE OUTSTANDING SHARES OF THE
BANK WILL BE NEEDED. YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY SHARES YOU
OWN. PLEASE SIGN AND RETURN THE PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, EVEN IF
YOU PLAN TO ATTEND THE MEETING. If you do attend the meeting, you may at that
time revoke your proxy and vote your shares in person at the meeting.
The Directors believe that the formation of a holding company is an
important step forward for the Bank. If you have questions about the holding
company or the Prospectus, please call me at (608) 269-6737.
Very truly yours,
John J. Sund, Jr., President
UNION NATIONAL BANK & TRUST COMPANY
124 West Oak Street
Sparta, Wisconsin 54656
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 23, 1997
A special meeting of shareholders of Union National Bank & Trust Company
(the "Bank"), will be held on Thursday, October 23, 1997, at 124 West Oak
Street, Sparta, Wisconsin at 1:00 p.m., Central Time, for the following
purposes:
1. To vote on the following resolution:
RESOLVED, that the formation of a bank holding company for Union
National Bank & Trust Company, pursuant to the terms and conditions of
an Agreement and Plan of Reorganization between Union National Bank &
Trust Company and Sparta Union Bancshares, Inc. and a Merger Agreement
between Union National Bank & Trust Company and New Union National
Bank & Trust Company whereby (i) Union National Bank & Trust Company
will become a wholly-owned subsidiary of Sparta Union Bancshares,
Inc., and (ii) shareholders of Union National Bank & Trust Company
will become shareholders of Sparta Union Bancshares, Inc., is hereby
authorized and approved.
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
At this meeting, holders of record of common stock of the Bank at the close
of business on October 1, 1997 will be entitled to vote. Two-thirds (66.67%) of
the issued and outstanding shares of the Bank must be voted in favor of the
above resolution in order to permit the holding company formation to proceed.
Shareholders and beneficial shareholders are or may be entitled to assert
dissenters' rights under Subsections 215a(b), (c) and (d) of the United States
Code. A copy of those sections is attached to the following Proxy
Statement/Prospectus as Exhibit C.
THE BOARD OF DIRECTORS OF THE BANK BELIEVES THAT THE PROPOSED HOLDING
COMPANY IS IN THE BEST INTERESTS OF THE BANK AND ITS SHAREHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE BANK VOTE "FOR" THE PROPOSED
HOLDING COMPANY.
By Order of the Board of Directors
Karl Wall, Secretary
_______________, 1997
PROXY STATEMENT
OF
UNION NATIONAL BANK & TRUST COMPANY
AND
PROSPECTUS
OF
SPARTA UNION BANCSHARES, INC.
Special Meeting of Union National Bank & Trust Company
Shareholders to be held October 23, 1997
This Proxy Statement is being furnished to the shareholders of Union
National Bank & Trust Company, Sparta, Wisconsin ("Bank"), in connection with
the solicitation of proxies by the Board of Directors of the Bank for use at the
special meeting of shareholders to be held on October 23, 1997. At that meeting,
the shareholders of Bank will again consider and vote upon the proposed
acquisition of the Bank by Sparta Union Bancshares, Inc. ("Holding Company") by
means of a reorganization.
On September 26, 1996, the Bank's shareholders approved the formation of a
one-bank holding company for the Bank. Because of the Bank's inability to
satisfy regulatory concerns, the Bank withdrew its application. Because the
Bank's Board of Directors continues to believe that a bank holding company will
benefit the Bank, the Board has decided to go ahead with plans to form the
one-bank holding company. To do so, however, requires that the matter again be
submitted to the Bank's shareholders.
Under its Articles of Incorporation, the Holding Company will have a right
of first refusal to purchase shares of its stock at the price and on the terms
and conditions offered to any Holding Company shareholder by a prospective
purchaser. Such a limitation does not currently exist on the stock of the Bank.
The right of first refusal will apply to Holding Company shares in the hands of
all shareholders, including subsequent transferees. Certificates evidencing
shares of Holding Company stock will bear a legend describing the right of first
refusal. The Holding Company's right to purchase may limit a shareholder's
ability to sell shares to other purchasers. The right of first refusal might
also limit the formation of a market for the stock outside the Holding Company.
See "COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK - Market for the
Stock."
--------------------------------------------
Sparta Union Bancshares, Inc. has filed a Registration Statement on Form
S-4 pursuant to the Securities Act of 1933, as amended, covering the shares of
Sparta Union Bancshares, Inc. common stock to be issued in connection with the
reorganization. These materials constitute the Prospectus of Sparta Union
Bancshares, Inc. to the shareholders of Union National Bank & Trust Company.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO PURCHASE THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR
TO OR FROM ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION
OF ANY OFFER. IN THOSE JURISDICTIONS THE SECURITIES OR BLUE SKY LAWS OF WHICH
REQUIRE THIS OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THIS OFFER MAY BE
MADE ON BEHALF OF SPARTA UNION BANCSHARES, INC. ONLY BY REGISTERED BROKERS OR
DEALERS WHO ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTIONS.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES TO WHICH THIS
PROSPECTUS RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SPARTA UNION BANCSHARES, INC. OR
UNION NATIONAL BANK & TRUST COMPANY SINCE THE DATE OF THIS PROSPECTUS. SPARTA
UNION BANCSHARES, INC. IS REQUIRED TO ADVISE SHAREHOLDERS OF ANY FUNDAMENTAL
CHANGE AFFECTING THE TERMS OF THE TRANSACTION BETWEEN UNION NATIONAL BANK &
TRUST COMPANY AND SPARTA UNION BANCSHARES, INC.
THE SECURITIES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
THIS PROSPECTUS DOES NOT COVER ANY RESALE OF THE SECURITIES TO BE RECEIVED
BY SHAREHOLDERS OF UNION NATIONAL BANK & TRUST COMPANY UPON CONSUMMATION OF THE
REORGANIZATION AND NO PERSON IS AUTHORIZED TO MAKE ANY USE OF THIS PROSPECTUS IN
CONNECTION WITH ANY SUCH RESALE.
------------------------------------------
THE SHARES OF SPARTA UNION BANCSHARES, INC. COMMON STOCK TO BE ISSUED IN
THE REORGANIZATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/ PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------
The date of this Proxy Statement/Prospectus is ___________, 1997.
TABLE OF CONTENTS
Page
SUMMARY i
INTRODUCTION 1
THE REORGANIZATION 2
General 2
Reasons for the Reorganization 2
Summary of the Reorganization 4
Special Meeting of Shareholders 5
Operation of the Bank Following the Reorganization 6
Conditions Precedent to the Reorganization 6
Closing Date 7
Affiliates 8
Tax Considerations 8
Securities Regulation 12
Resale of Holding Company Common Stock 13
Expenses of Reorganization 13
RIGHTS OF DISSENTING STOCKHOLDERS OF BANK 13
SPARTA UNION BANCSHARES, INC. 14
History, Business, and Properties 14
Management 15
Principal Shareholders 15
Description of Holding Company's Common Stock 16
Executive Compensation 16
Transactions with Related Parties 16
Certain Anti-Takeover and Indemnification Provisions 16
UNION NATIONAL BANK & TRUST COMPANY 18
History, Business, and Properties 18
Management 19
Business Background of Directors and Executive Officers 20
Executive Compensation 21
Director Compensation 22
Board Review of Management Compensation 22
Principal Shareholders 22
Description of the Stock of the Bank 22
Transactions with Related Parties 23
Indemnification of Directors and Officers 23
Shares of the Stock Owned or Controlled by Management 24
Recommendation of the Bank's Board of Directors 24
FINANCIAL INFORMATION 24
COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK 25
Authorized Shares and Par Value 25
Voting Rights 25
Dividends 26
Market for the Stock 27
Value 30
Other 31
SUPERVISION AND REGULATION 32
General 32
Banking Regulation 32
Capital Requirements for Holding Company and Bank 33
Liquidity Requirements for Holding Company and Bank 34
FDIC Insurance Premiums 35
Loan Limits to Borrowers 35
Recent Regulatory Developments 35
AVAILABLE INFORMATION 36
LEGAL MATTERS 37
EXHIBIT A - Agreement and Plan of Reorganization
EXHIBIT B - Tax Opinion of Boardman, Suhr, Curry & Field
EXHIBIT C - United States Code Sections
EXHIBIT D - Articles of Incorporation of Sparta Union Bancshares, Inc.
SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus/Proxy Statement. This summary is necessarily incomplete and
selective, and is qualified in its entirety by reference to the more detailed
information contained elsewhere in this Prospectus/Proxy Statement. Shareholders
are urged to review carefully the entire Prospectus/Proxy Statement including
the Exhibits.
Parties Sparta Union Bancshares, Inc. ("Holding Company")
124 West Oak Street
Sparta, Wisconsin 54656
(608) 269-6737
Union National Bank & Trust Company ("Bank")
124 West Oak Street
Sparta, Wisconsin 54656
(608) 269-6737
The Holding Company, a Wisconsin corporation, was organized at the request
of the management of the Bank for the purpose of becoming a one-bank holding
company for the Bank. The Holding Company is currently in the organizational
stage and has no operating history. See "SPARTA UNION BANCSHARES, INC. -
History, Business, and Properties." The Bank is a bank chartered by the
Comptroller of the Currency and has been operating as a commercial bank in
Sparta, Wisconsin since 1969. The Bank offers comprehensive banking services to
the residential, commercial, industrial and agricultural areas that it serves.
Such services include agricultural, commercial, real estate and personal loans;
checking, savings and time deposits; and other customer services, such as safe
deposit facilities. See "UNION NATIONAL BANK & TRUST COMPANY - History,
Business, and Properties."
The Reorganization
The Board of Directors of the Bank proposes to form a bank holding company
for the Bank. The Holding Company will acquire all the outstanding shares of the
Bank through a reorganization ("Reorganization"). As a result of the
Reorganization, the Holding Company will be owned by the former Bank
shareholders and the Bank will become a wholly-owned subsidiary of the Holding
Company. For more information about the Reorganization, see "THE REORGANIZATION
- - Summary of the Reorganization" and the Agreement and Plan of Reorganization
attached as Exhibit A.
(i)
Special Meeting of Shareholders
A special meeting of the shareholders of the Bank will be held on October
23, 1997, at 1:00 p.m., Central Time, at 124 West Oak Street, Sparta, Wisconsin.
The purpose of the meeting is to consider and vote upon the formation of a bank
holding company pursuant to the Agreement and Plan of Reorganization attached as
Exhibit A. Shareholders of record as of the close of business on October 1, 1997
will be entitled to vote at the meeting. The affirmative vote of the holders of
two-thirds (66.67%) of the outstanding Bank stock will be required to approve
the transaction. Directors and executive officers of the Bank own or control,
directly or indirectly, approximately 12.3% of the outstanding Bank stock. See
"THE REORGANIZATION - Special Meeting of Shareholders."
Recommendation of the Bank's Board of Directors
The Board of Directors of the Bank believes that the proposed
Reorganization will benefit the Bank and is in the best interests of its
shareholders. Accordingly, the Board recommends that its shareholders vote their
Bank shares to approve the Reorganization. See "THE REORGANIZATION - Reasons for
the Reorganization" and "UNION NATIONAL BANK & TRUST COMPANY - Recommendation of
the Bank's Board of Directors."
Effect on Bank Shareholders
Subject to certain limitations and appraisal rights provided by law, on the
effective date of the Reorganization each outstanding share of Bank common stock
outstanding immediately prior to the effective date will be exchanged for one
share of Holding Company stock, and the Bank shareholders will become the
shareholders of the Holding Company.
Dissenters' Rights
Under certain provisions of the United States Code, holders of Bank stock
have the right to object to the Reorganization and demand payment of the fair
value of their shares in cash if they (i) either vote against the reorganization
at the special meeting of the shareholders or give written notice to the Holding
Company of their intent to demand payment for their shares at or before the
shareholder meeting, (ii) demand payment in writing before the date stated in
the dissenters' notice, (iii) surrender their Bank stock certificates, and (iv)
take certain other actions. See "RIGHTS OF DISSENTING STOCKHOLDERS OF BANK."
(ii)
Federal Income Tax Consequences
The Reorganization has been structured with the intent that it qualify for
federal income tax purposes as a tax-free transaction, so that shareholders of
the Bank will recognize no gain or loss on the exchange of their Bank stock for
Holding Company stock. Exhibit B to this Prospectus is an opinion of counsel
that the Reorganization is a tax-free transaction. The opinion of counsel will
not be binding on the Internal Revenue Service. See "THE REORGANIZATION - Tax
Considerations."
Date of the Reorganization
The Reorganization will take place as promptly as practicable after receipt
of all necessary approvals of governmental agencies and authorities and
satisfaction of certain other terms and conditions. See "THE REORGANIZATION -
Closing Date."
Conditions for the Reorganization
The Reorganization is conditioned upon approval by the Office of the
Comptroller of the Currency, the Federal Reserve Board and at least two-thirds
(66.67%) of the outstanding stock of the Bank, and upon other terms and
conditions. See "THE REORGANIZATION - Conditions Precedent to the
Reorganization." The Holding Company and the Bank may amend, modify or waive
certain conditions if, in the opinion of the Boards of Directors of the Holding
Company and the Bank, the action would not have a material adverse effect on the
benefits intended for holders of Holding Company stock.
Right of First Refusal
The Articles of Incorporation of the Holding Company contain a provision
giving the Holding Company a right of first refusal to purchase shares of its
stock at a price and on the terms and conditions offered to a shareholder by a
prospective purchaser. Transactions within a shareholder's immediate family and
certain other stock transactions are permitted. The right of first refusal may
limit a shareholder's ability to sell shares to purchasers other than the
Holding Company. In addition, the right of first refusal may reduce the
likelihood of another buyer obtaining control of the Holding Company through the
acquisition of large blocks of Holding Company stock. The Bank's Articles of
Incorporation do not contain a comparable limitation. See "COMPARISON OF BANK
STOCK WITH HOLDING COMPANY STOCK - Market for the Stock."
(iii)
------------------------------------------
PROXY STATEMENT
AND
PROSPECTUS
------------------------------------------
INTRODUCTION
Sparta Union Bancshares, Inc. ("Holding Company") is a business corporation
organized at the request of the management of the Union National Bank & Trust
Company ("Bank") for the purpose of the reorganization. See "SPARTA UNION
BANCSHARES, INC." The Bank is a national banking association that has been
operating as a commercial bank in Sparta, Wisconsin since 1969. See "UNION
NATIONAL BANK & TRUST COMPANY".
The reorganization is being conducted for the purpose of forming a holding
company for the Bank, according to a plan of reorganization approved by the
Board of Directors of the Holding Company and by the Board of Directors of the
Bank. See "THE REORGANIZATION - Summary of the Reorganization." The Board of
Directors of the Bank believes that the formation of a bank holding company will
benefit the Bank and its shareholders. See "THE REORGANIZATION - Reasons for the
Reorganization" and "UNION NATIONAL BANK & TRUST COMPANY - Recommendation of the
Bank's Board of Directors."
This Prospectus contains information intended to help each Bank shareholder
decide whether to vote to approve the formation of a bank holding company. See,
for example, "COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK." The Board of
Directors of the Holding Company urges each Bank shareholder to carefully read
the entire Prospectus.
THE REORGANIZATION
General
The reorganization is designed to offer shareholders of the Union National
Bank & Trust Company ("Bank") the opportunity to form a bank holding company.
Pursuant to the reorganization, the following steps have already occurred:
1. Sparta Union Bancshares, Inc. ("Holding Company"), a Wisconsin
business corporation, has been incorporated for the purpose of
participating in the reorganization and becoming a bank holding
company.
2. The Board of Directors of the Bank and the Board of Directors of the
Holding Company have adopted and approved an Agreement and Plan of
Reorganization.
The following steps, among others, remain to be completed pursuant to the
reorganization (See "THE REORGANIZATION - Conditions Precedent to the
Reorganization"):
1. The shareholders of the Bank must approve the reorganization by the
affirmative vote of two-thirds (66.67%) of the outstanding Bank stock.
2. The Federal Reserve Board must approve the Holding Company's
application to become a bank holding company under the Bank Holding
Company Act of 1956.
3. The Comptroller of the Currency must approve the reorganization.
Reasons for the Reorganization
The Board of Directors of the Bank recommends the reorganization because it
believes that a bank holding company will offer opportunities to the Bank to
compete more effectively and to expand its services in type, in number, and in
geographical scope. In addition, the Board believes that the formation of a
holding company will provide benefits to the shareholders and to its community.
Flexibility. The proposed reorganization will, in the opinion of the Board,
better prepare the Bank for responding flexibly and efficiently to future
changes in the laws and regulations governing banks and bank-related activities.
Often, opportunities arise for bank holding companies that are not available to
banks, and vice versa. The bank holding company corporate structure may prove
valuable in taking advantage of any new opportunities in banking and
bank-related fields that are made available by deregulation or otherwise.
2
Market for the Stock. Under federal law, a national bank is prohibited from
purchasing its own stock, except in certain limited circumstances. Therefore,
any Bank shareholder who desires to sell his or her Bank stock must generally
locate a person willing to purchase the stock. In the past, there has been a
limited market for Bank stock, making it difficult for a seller to find a buyer,
particularly if the seller owns a large number of shares that would require a
substantial purchase price.
The Holding Company will not be prohibited by law from purchasing Holding
Company stock, unless such a purchase would make the Holding Company insolvent.
Therefore, the Holding Company may become a potential buyer of that stock, and
may create a market that presently does not exist. The Holding Company will not
be required to purchase stock, but may do so in the discretion of its Board of
Directors. In certain circumstances, approval by the Federal Reserve Board may
be required for the purchase of Holding Company stock. For more information
about the Holding Company's ability to purchase stock, see "COMPARISON OF BANK
STOCK WITH HOLDING COMPANY STOCK - Market for the Stock."
Expansion. The principal means for a bank to seek continued growth, apart
from utilizing more fully the business potential within its present market area,
is by use of the holding company structure to reach into other geographic
markets. After the reorganization, the Holding Company will be able to, and may,
subject to approval of regulatory authorities, create new banks or acquire
existing banks anywhere in Wisconsin and neighboring states. The Holding Company
has no present plans to acquire any such banks.
Diversification. The proposed bank holding company offers the ability to
diversify the business of the Bank by creating or acquiring corporations engaged
in bank-related activities. Diversification into bank-related activities is
governed by the Bank Holding Company Act of 1956, and the regulations of the
Federal Reserve Board promulgated pursuant to that Act. The range of activities
in which the Holding Company may engage through nonbank subsidiaries includes,
subject to approval of the Federal Reserve Board, loan service companies,
mortgage companies, independent trust companies, small loan and factoring
companies, equipment leasing companies, credit life and disability insurance
companies, and certain insurance, advisory, and brokerage operations. The
Holding Company may in the future engage directly or through subsidiaries in one
or more of those activities. However, the timing and extent of those operations
by the Holding Company will depend on many factors, including competitive and
financial conditions existing in the future as well as the then financial
condition of the Holding Company and the Bank.
Capital Requirements. The proposed reorganization will also provide, in the
opinion of the Board, greater flexibility in meeting financing needs of the Bank
or other banks or corporations acquired by the Holding Company. Currently, there
is no need for the Bank to obtain additional capital. If the need for additional
capital should arise, however, those capital requirements of the Bank could be
obtained through borrowings by the Holding Company, which would then be paid to
the Bank by the Holding Company as a capital contribution or as a purchase of
additional Bank stock. The loan to the Holding Company would be paid with
dividends received from the Bank, which would not be taxable to the
3
Holding Company if it holds at least 80% of the Bank stock. The interest expense
incurred by the Holding Company on the loan could be used to offset Bank
earnings on a consolidated federal income tax return.
General. The Board believes that greater overall strength will result to
the Bank through the formation of the Holding Company. The formation of the
Holding Company is not part of a plan or effort to adversely affect any
shareholder, or to unduly benefit any shareholder, director, or officer. Except
for those shareholders who exercise dissenter's rights, the proportionate
interests of the Bank shareholders in the Holding Company stock will be
identical to their current proportionate interests in the Bank stock.
Summary of the Reorganization
The Holding Company intends to acquire all of the outstanding stock of the
Bank through a reorganization. To perform the reorganization, the Holding
Company will incorporate a new bank, called New Union National Bank & Trust
Company ("New Bank"), as a wholly-owned subsidiary of the Holding Company. The
New Bank will not conduct any banking business or any other business. It will
have no employees, no liabilities, no operations, and (except for a nominal
capital contribution required by law) no assets. It will be a "shell"
corporation, and will be incorporated for the sole purpose of assisting in the
reorganization.
To perform the reorganization, the Bank will be merged into the New Bank.
The stock of the Bank now held by the shareholders will be converted into the
Holding Company stock at the rate of one share of the Holding Company stock for
each one share of Bank stock that they currently own. Therefore, the Bank
shareholders will become shareholders of the Holding Company. In addition, by
virtue of the merger of the Bank into the New Bank, the Bank will become a
wholly-owned subsidiary of the Holding Company.
Currently, the Bank shareholders own 3,869 shares of the Bank's stock. The
remaining 231 authorized shares are owned by the Bank as Treasury Stock. The
Holding Company will purchase those 231 shares of Treasury Stock at their par
value. After the reorganization, the Holding Company will own the Bank, and the
former Bank shareholders will own the Holding Company, as follows:
4
Current After Reorganization
Shareholders Shareholders
- ------------ ------------
3,869 shares (100%) of 3,869 shares (100%) of
outstanding Bank stock Holding Company stock
Holding Company
---------------
3,869 shares (100%) of
outstanding Bank stock
Bank
- ----
Bank
----
Special Meeting of Shareholders
The regulations of the Comptroller of the Currency require that at least
two-thirds of the outstanding stock of a national bank approve a merger of that
bank. Because the reorganization will be conducted as a merger of the New Bank
and the Bank, that requirement must be fulfilled.
A vote on the proposed holding company will be taken at the special meeting
of shareholders of the Bank, to be held on October 23, 1997, at 1:00 p.m., local
time, at the Bank, 124 West Oak Street, Sparta, Wisconsin. The close of business
on October 1, 1997, has been fixed as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting. On that date
there were outstanding and entitled to vote 3,869 shares of Bank stock. Each
outstanding share of Bank stock entitles the record holder to one vote on all
matters to be acted upon at the meeting. The presence at the meeting in person
or by proxy of the holders of a majority of the issued and outstanding shares of
Bank stock entitled to vote will constitute a quorum for the transaction of
business. The affirmative vote of 2,554 of the issued and outstanding shares of
Bank stock is required to approve the holding company. The Bank's articles of
association and by-laws as well as applicable law do not appear to address the
issue of whether a vote for abstention is treated as a "yes" vote or "no" vote.
Accordingly, for purposes of voting at this special meeting of shareholders,
abstentions are treated as "no" votes.
THE BOARD OF DIRECTORS OF THE BANK UNANIMOUSLY RECOMMENDS THAT HOLDERS OF
BANK STOCK VOTE "FOR" THE TRANSACTION. See "UNION NATIONAL BANK & TRUST COMPANY
- - Recommendations of the Bank's Board of Directors." As of the date of this
Prospectus, the directors and executive officers of Bank owned or controlled 476
shares, or 12.3% percent, of the Bank stock outstanding. See "UNION NATIONAL
BANK & TRUST COMPANY - Management." The directors and officers of Bank have
indicated that they will vote to approve the transaction, and are soliciting
proxies from Bank shareholders.
5
Each shareholder is encouraged to return the enclosed Proxy (on blue
paper), even if he or she intends to attend the meeting. All properly executed
proxies not revoked will be voted at the meeting in accordance with the
instructions on the proxy. Proxies containing no instructions will be voted
"FOR" approval of the holding company. On any other matters properly brought
before the meeting and submitted to a vote, all proxies will be voted in
accordance with the judgment of the persons voting the proxies. Any shareholder
executing and returning a proxy may revoke it by (1) submitting a later proxy to
Bank, (2) giving written notice to Bank, or (3) attending the meeting and voting
in person. However, the mere presence of a holder of Bank stock at the meeting
will not operate to revoke a proxy previously executed and submitted, unless
that shareholder indicates at the meeting that he or she wishes to vote
directly. Failure to submit a proxy or to vote at the meeting has the same
effect as a negative vote for purposes of approving or disapproving the
transaction.
Federal law provides appraisal rights to holders of Bank stock who dissent
from the merger, if statutory procedures are followed. See "RIGHTS OF DISSENTING
SHAREHOLDERS OF BANK."
Operation of the Bank Following the Reorganization
The Holding Company anticipates that, following the reorganization, the
business of the Bank will be conducted substantially unchanged from the manner
in which it is now being conducted. The Bank's name will not be changed. The
Holding Company anticipates that the Bank will be operated under substantially
the same management, and no changes in personnel are anticipated as a result of
the reorganization. After the reorganization, the Bank will continue to be
subject to regulation and supervision by regulatory authorities, to the same
extent as currently applicable. See "SUPERVISION AND REGULATION." The Bank will
continue to prepare an annual report in the same format as in prior years, and
the Holding Company will send to all of its shareholders a consolidated annual
report, in a similar format as that used in the Bank's report. The Holding
Company will convene an annual meeting of its shareholders, at a similar time
and for similar purposes as the Bank's annual meeting.
Conditions Precedent to the Reorganization
The Agreement and Plan of Reorganization (Exhibit A) provides that the
consummation of the reorganization is subject to certain conditions that have
not yet been met, including, but not limited to, the following:
1. No investigation, action, suit or proceeding before any court or any
governmental or regulatory authority shall have been commenced or
threatened seeking to restrain, prevent or change the reorganization
or otherwise arising out of or concerning the reorganization.
6
2. The application by the Holding Company to be a registered bank holding
company under the Bank Holding Company Act of 1956 must have been
approved by the Federal Reserve Board.
3. The Comptroller of the Currency must have granted all required
approvals for consummation of the reorganization.
4. The reorganization must have been approved by shareholders owning at
least two- thirds of the outstanding Bank stock.
5. The Holding Company and the Bank must have received an opinion from
counsel for the Holding Company and the Bank to the effect that the
reorganization will be a tax-free reorganization (that opinion is
attached to this Prospectus as Exhibit B).
6. No change shall have occurred or be threatened in the business,
financial condition or operations of the Bank, which, in the judgment
of the Holding Company, is materially adverse.
7. No more than five percent (5%) of the Bank stock (193 shares or fewer)
shall be "dissenting shares" pursuant to the exercise of dissenter's
rights.
8. The reorganization must be completed by March 31, 1998, unless
extended by the both the Bank and the Holding Company.
These conditions are for the sole benefit of the Holding Company and the Bank,
and may be asserted by them or may be waived or extended by them, in whole or in
part, at any time or from time to time. Any determination by the Holding Company
and the Bank concerning the events described above shall be final and binding.
It is anticipated that these conditions will be met. Any waiver or
extension of conditions not met will be conducted only if, in the opinion of the
Boards of Directors of the Holding Company and the Bank, the action would not
have a material adverse effect on the benefits intended for holders of the
Holding Company stock under the reorganization. The reorganization may be
terminated and abandoned by the mutual consent of the Board of Directors of the
Holding Company and the Board of Directors of the Bank at any time prior to the
closing date.
Closing Date
The closing of the reorganization shall take place on a date, the "Closing
Date," to be selected by the Holding Company, at the offices of the Bank, 124
West Oak Street, Sparta, Wisconsin; provided, however, that the Closing Date
shall be a date no later than thirty (30) days after all conditions have been
met and all approvals, consents and authorizations for the valid and lawful
consummation of the reorganization have been obtained.
7
On the Closing Date, all of the Bank shareholders' right, title and
interest in and to the shares of the Bank stock, without any action on the part
of the shareholders, shall automatically become and be converted into a right
only to receive the Holding Company stock. Commencing on the Closing Date, the
Holding Company shall issue and deliver the Holding Company stock to the
shareholders as set forth in the Agreement and Plan of Reorganization (Exhibit
A).
Affiliates
The obligation of the Holding Company to consummate the reorganization is
subject to the condition that each person who is an affiliate of the Bank for
purposes of Rule 145 of the Securities and Exchange Commission, promulgated
under the Securities Act of 1933 (the "Securities Act"), execute and deliver to
the Holding Company a letter to the effect that, among other things, (i) such
person will not dispose of any shares of Holding Company stock to be received by
him or her pursuant to the reorganization in violation of the Securities Act or
the rules and regulations thereunder, and (ii) that person consents to the
placing of a legend on the certificates representing his or her shares of
Holding Company stock referring to the issuance of the shares in a transaction
to which Rule 145 is applicable and to the giving of stop-transfer instructions
to the Holding Company transfer agent with respect to such certificates. The
Holding Company reserves the right to condition the exchange of its stock with
affiliates on an affiliate's execution and delivery of a letter agreeing to
these terms. Neither the Bank nor the Holding Company will register the shares
of Holding Company stock for resale, and any such registration shall be at the
expense and instance of any shareholder desiring such registration.
For the purposes of this transaction, the Bank will treat as affiliates
directors and executive officers and any person who, individually or through a
group, controls, is controlled by or is under common control with, an entity.
Members of a family may be regarded as members of a group if, by acting in
concert, they have the power to control the Bank. Control will be evidenced by
ownership of 10% or more of the voting securities of the Bank.
This Prospectus may not be used by an affiliate of the Bank or the Holding
Company for the resale of Holding Company stock received pursuant to the
reorganization.
Tax Considerations
Corporate Income Tax. After the reorganization, the Holding Company will
own at least 80% of the outstanding stock of the Bank. This will permit the
Holding Company to file a consolidated federal income tax return with the Bank.
The filing of a consolidated federal income tax return will permit the deduction
of any interest expense the Holding Company may incur as an expense against the
income of the Bank, and any dividend paid to the Holding Company by the Bank on
the shares of the Bank's capital stock held by the Holding Company would not be
8
taxable as income to the Holding Company. In addition, the ability to file a
consolidated federal income tax return may increase the cash flow available to
the Holding Company to meet its obligations. The State of Wisconsin does not
permit consolidated income tax returns.
The creation of the Holding Company creates a separate taxpayer under the
Internal Revenue Code. The Holding Company, through its consolidated tax return
with the Bank and any other subsidiaries that may be formed or acquired in the
future, will be required to pay federal and state income taxes on its net
income. Immediately after the formation of the Holding Company, the principal
income to the Holding Company will be dividends from the Bank. Those dividends
will not be taxable income to the Holding Company as long as the Holding Company
holds at least 80% of the outstanding Bank stock. Therefore, until such time as
the Holding Company generates substantial income from sources other than Bank
dividends, it is not anticipated that it will incur any significant tax
liability.
As a separate taxpayer, the Holding Company may incur a separate tax on any
liquidation of the Holding Company or on an acquisition of the Holding Company's
assets by a third party. Therefore, a liquidation of the Holding Company or a
sale of Bank stock by the Holding Company could generate a double-level tax, a
tax on the Holding Company and a tax on the Holding Company shareholders. A
double-level tax can be avoided, however, if the third party acquires the
Holding Company stock for cash or acquires Holding Company stock or Bank stock
in a tax-free reorganization.
Individual Income Tax. The Holding Company has been advised by its counsel,
Board man, Suhr, Curry & Field, Madison, Wisconsin, that as a result of the
transaction contemplated by the reorganization, for federal income tax purposes:
(i) no gain or loss will be recognized to the Bank shareholders on the
conversion of their shares of Bank stock into shares of Holding Company's common
stock; (ii) the income tax basis of the shares of Holding Company's common stock
in the hands of the Bank shareholders will be the same as their basis in the
shares of the Bank stock; and (iii) the holding period of the shares of Holding
Company's common stock in the hands of the Bank shareholders will include the
holding period of the shares of the Bank stock, provided the shares of the Bank
stock constituted a capital asset as of the time of the reorganization. A copy
of that opinion is attached hereto as Exhibit B (which opinion also includes
matters pertaining to corporate tax consequences of the reorganization). Counsel
is also of the opinion that the same treatment will apply for Wisconsin income
tax purposes.
The opinion is based on the following representations of the Holding
Company and Bank:
1. The fair market value of the Holding Company stock and other
consideration received by each Bank shareholder will be approximately equal to
the fair market value of the Bank stock surrendered in the exchange.
9
2. There is no plan or intention by the Bank shareholders who own one
percent (1%) or more of the Bank stock, and to the best of the knowledge of the
management of the Bank, there is no plan or intention on the part of the
remaining Bank shareholders to sell, exchange, or otherwise dispose of a number
of shares of Holding Company stock received in the transaction that would reduce
the Bank shareholders' ownership of Holding Company stock to a number of shares
having a value, as of the date of the transaction, of less than fifty percent
(50%) of the value of all of the formerly outstanding Bank stock as of the same
date. For purposes of the representation, shares of Bank stock exchanged for
cash or other property, surrendered by dissenters, or exchanged for cash in lieu
of fractional shares of Holding Company stock will be treated as outstanding
Bank stock on the date of the transaction. Moreover, shares of Bank stock and
shares of Holding Company stock held by Bank shareholders and otherwise sold,
redeemed or disposed of prior or subsequent to the transaction will be
considered in making this representation.
3. New Union National Bank & Trust Company ("New Bank"), as the surviving
corporation, will acquire at least ninety 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 held by the Bank immediately prior to the transaction. For
purposes of this representation, amounts paid by the Bank to dissenters, amounts
paid by the Bank to shareholders who receive cash or other property, Bank assets
used to pay its reorganization expenses, and all redemptions and distributions
(except for normal dividends) made by the Bank immediately preceding the
transfer will be included as assets of the Bank immediately prior to the
transaction.
4. Prior to the transaction, the Holding Company will be in control of the
New Bank within the meaning of I.R.C. sections 368(c).
5. Following the transaction, the New Bank will not issue additional shares
of its stock that would result in the Holding Company losing control of the New
Bank within the meaning of I.R.C. sections 368(c).
6. The Holding Company has no plan or intention to reacquire any of its
stock issued in the transaction.
7. The Holding Company has no plan or intention to liquidate the New Bank,
to merge the New Bank with and into another bank or corporation, to sell or
otherwise dispose of the stock of the New Bank, or to cause the New Bank to sell
or otherwise dispose of any of the Bank's assets acquired in the transaction,
except for dispositions made in the ordinary course of business or transfers
described in I.R.C. sections 368(a)(2)(c).
8. The liabilities of the Bank assumed by the New Bank and the liabilities
to which the transferred assets of the Bank are subject, were incurred in the
ordinary course of Bank's business.
10
9. Following the transaction, the New Bank will continue the historic
business of the Bank or use a significant portion of Bank's business assets in a
business.
10. The Holding Company, Bank, New Bank, and the Bank's shareholders will
pay their respective expenses, if any, incurred in connection with the
transaction.
11. There is no intercorporate indebtedness existing between the Holding
Company and the Bank or between the New Bank and the Bank which was issued,
acquired or will be settled at a discount.
12. No two parties to the transaction are investment companies as defined
in I.R.C. sections 368(1)(2)(F)(iii) and (iv).
13. The Bank is not under the jurisdiction of a court in a Title 11
(bankruptcy) or similar case.
14. The fair market value of the assets of the Bank transferred to the New
Bank will equal or exceed the sum of the liabilities assumed by the New Bank,
plus the liabilities, if any, to which the transferred assets are subject.
15. No stock of New Bank will be issued in the transaction.
Based on these representations, legal counsel is of the opinion that, under
current law,
(1) The proposed merger will constitute a reorganization within the
meaning of sections 368(a)(1)(A) by reason of sections
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended,
and Chapter 71 of the Wisconsin Statutes. The reorganization will
not be disqualified by reason of the fact that Holding Company
common stock is used in the transaction. (Internal Revenue Code
Section 368(a)(2)(D).)
(2) No gain or loss will be recognized to the Bank on the transfer of
substantially all of its assets to the New Bank in exchange for
Holding Company common stock and the assumption by the New Bank
of the liabilities of the Bank.
(3) No gain or loss will be recognized to the Holding Company or the
New Bank upon the receipt by the New Bank of substantially all of
the assets of the Bank in exchange for the Holding Company common
stock and the assumption by the New Bank of the liabilities of
the Bank.
(4) The basis of the Bank assets in the hands of the New Bank will be
the same as the basis of those assets in the hands of the Bank
immediately prior to the proposed transaction.
11
(5) The holding period of the assets of the Bank in the hands of the
New Bank will include the period during which such assets were
held by the Bank.
(6) The basis of the New Bank stock in the hands of the Holding
Company will be increased by an amount equal to the basis of the
Bank assets acquired by the New Bank in the transaction, and will
be decreased by the amount of liabilities of the Bank assumed by
the New Bank and the amount of liabilities to which the acquired
assets of the Bank are subject.
(7) No gain or loss will be recognized by the shareholders on the
exchange of their Bank common stock for Holding Company common
stock; provided, however, that no opinion is expressed with
respect to Bank shareholders who dissent from the transaction and
receive cash for their Bank stock.
(8) The income tax basis of the Holding Company common stock to be
received by the shareholders will be the same as the basis of the
Bank common stock surrendered in exchange.
(9) The holding period of the Holding Company common stock to be
received by the shareholders will include the period during which
the Bank common stock surrendered in exchange was held, provided
that the Bank common stock is held as a capital asset on the date
of the exchange.
No tax rulings from the Internal Revenue Service have been obtained, and
the opinion of counsel will not be binding on the Internal Revenue Service.
Therefore, shareholders may find it advisable to consult their own counsel as to
the specific tax consequences to them under the federal tax laws, as well as any
consequences under applicable state or local tax laws.
Shareholders who exercise dissenter's rights and receive cash for their
Bank stock should be aware that the transaction will be a taxable transaction
for federal and state income tax purposes, and those shareholders are urged to
consult their tax advisors to determine the tax consequences to them under the
federal tax laws, as well as any consequence under applicable state or local tax
laws. The opinion of counsel attached as Exhibit B does not pertain to cash
payments received pursuant to the reorganization.
Securities Regulation
The offer to enter into this Exchange Offer is not being made to (nor can
it be accepted from or on behalf of) holders of Bank stock in any jurisdiction
in which the making of the offer or the acceptance thereof would not be in
compliance with the securities laws of such jurisdiction. The Holding Company is
not, and shall not be, obligated to acquire any shares of Bank stock, or issue
or deliver any shares of its common stock, in any jurisdiction in which the
agreement to do so would not be in compliance with the securities laws of such
12
jurisdiction. However, the Holding Company, at its discretion, may take such
action as it may deem necessary or desirable to comply with the securities laws
of any such jurisdiction.
This transaction may be registered in certain states, according to the laws
of those states. No securities commissioner, securities department, or similar
office of any state has approved or disapproved the Holding Company stock to be
issued in the reorganization or has passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary may be a criminal offense.
Resale of Holding Company Common Stock
The Holding Company stock issued in the exchange has been registered under
the Securities Act of 1933, as amended, and may be traded by a shareholder
subject to the Holding Company's right of first refusal. See "COMPARISON OF BANK
STOCK WITH HOLDING COMPANY STOCK - Market For the Stock." Shareholders who, at
the Effective Date, are "affiliates" of the Bank and are affiliates of the
Holding Company at the time of the proposed resale are subject to additional
restrictions on the resale of their shares. See "REORGANIZATION - Affiliates."
Expenses of Reorganization
If the reorganization is consummated, the Holding Company and the Bank will
assume and pay their respective costs and expenses, if any, incurred in
connection with the reorganization. If the reorganization is not consummated,
all costs and expenses will be paid by the Bank. It is estimated that those
costs and expenses will be approximately $15,000.
RIGHTS OF DISSENTING SHAREHOLDERS OF THE BANK
Subsections 215a(b), (c), and (d) of the United States Code, the full text
of which is attached hereto as Exhibit C, set forth the procedure to be followed
by any shareholder of Bank who wishes to dissent from the reorganization and
obtain the value of his or her shares of Bank stock in cash in lieu of Holding
Company stock pursuant to the reorganization. Shareholders should refer to
Exhibit C because the following description does not purport to be a complete
summary of those subsections.
In order to exercise such dissenter's rights, a Bank shareholder (1) must
either vote against the reorganization at the special meeting of shareholders or
give written notice to an officer of the Bank at or before the special meeting
of shareholders that he or she dissents from the reorganization, and (2) must
make a written request to the Bank within 30 days after the consummation of the
reorganization to receive the value of his or her shares, and that written
request must be accompanied by the surrender of his or her Bank stock
certificates. The written request should be addressed to: John J. Sund, Jr.,
13
President, 124 West Oak Street, Sparta, Wisconsin 54656. The law does not
provide for a dissent with respect to less than all of a dissenting
shareholder's shares.
After receipt by the Bank of a timely request for payment, the law provides
for an appraisal of the shares held by the dissenters. The value of those shares
is to be determined by a committee of three persons, one selected by the
dissenting shareholders, one selected by the directors of the Bank, and the
third selected by the two so chosen. The value determined by any two of the
three appraisers shall govern. The expense of appraisal is to be borne by the
Bank. If the value fixed by the committee is not satisfactory to a dissenting
shareholder he or she may, within five days after being notified of such value,
appeal to the Comptroller, who will then appoint an appraiser or appraisers for
reappraisal. The value of a dissenting Bank shareholder's shares as determined
by such appraisal, or reappraisal if such is performed, is final and binding and
will be paid by Bank as soon as practicable thereafter.
If a Bank shareholder properly exercises dissenter's rights, then as of the
Effective Date of the reorganization, all of the Bank stock owned by such
shareholder shall cease to represent any ownership rights in the Bank, and shall
be converted into the right to receive fair value for those shares, as required
by law.
SPARTA UNION BANCSHARES, INC.
History, Business, and Properties
The Holding Company was incorporated as a Wisconsin business corporation
under the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin
Statutes, in March, 1996, at the direction of the management of the Bank. The
Holding Company was formed to acquire the Bank stock and to engage in business
as a bank holding company under the Bank Holding Company Act of 1956, as amended
(the "Act"). A true and correct copy of the Articles of Incorporation of the
Holding Company is attached as Exhibit D. A copy of the Holding Company's Bylaws
will be provided to any Bank shareholder upon request.
The Holding Company is in the organizational and developmental stage, and
has no earnings or history of operation. The Holding Company has no employees,
no current business, and owns no property, except that the Holding Company will
own all of the stock of the New Bank immediately prior to the reorganization. It
has not issued any stock. It is not a party to any legal proceedings.
The Holding Company has no present plans to engage in any activities other
than as a holding company for the capital stock of the Bank. The Holding
Company's management, how ever, believes that the opportunities available to a
bank holding company for diversification of its business and raising of capital
cause the bank holding company to be a more advantageous form of operation than
a bank. The Holding Company may examine and may pursue opportunities from time
14
to time that arise for expansion of its operations and activities. See "THE
REORGANIZATION - Reasons for the Reorganization."
Management
Development and management of the Holding Company will be dependent upon
the efforts and skills of the following individuals, who constitute the initial
executive officers and directors of the Holding Company:
Name and Age Position with Principal Shares of Percentage
Holding Company Occupation Holding
Company (1)
Eugene A. Arenz, 62 Director Retail 10 .3%
Gary Edwards, 53 Director Insurance 10 .3
Sherwin Giraud, 53 Director Farming 10 .3
Donald L. Goodman, 71 Director Retired 20 .5
J. David Rice, 51 Director Attorney 68 1.8
John J. Sund, Jr., 60 Director/President Banking 130 3.4
Karl Wall, 43 Secretary Banking 208 5.4
TOTALS 456 11.8%
<FN>
(1) Represents the aggregate number of shares which would be owned of record individually and jointly, or by a spouse or
children residing at the same address, and the shares which any such person controls the right to vote, after the reorganization.
The beneficial owners are listed on page 19, footnote 1.
</FN>
Each of the directors and executive officers named has had the same
principal occupation or employment for the past five years. Each of the
directors and executive officers named has served in the capacity listed above
since the incorporation of the Holding Company in March, 1996. The term of
office for each of the directors and executive officers named above is one year.
Please refer to page 20 of this Prospectus for a description of the business
background of the directors and executive officers named above.
Principal Shareholders
After the reorganization, the persons beneficially owning 5% or more of
Holding Company common stock will be the same persons who currently own 5% or
more of the Bank Stock. See "UNION NATIONAL BANK & TRUST - Principal
Shareholders."
15
Description of Holding Company's Common Stock
The Holding Company's authorized capital stock consists of 9,000 shares,
all of one class, designated as common stock, none of which shares, as of the
date hereof, is issued or out standing. The maximum number of shares of the
Holding Company's common stock which will be issued to the holders of Bank
stock, upon the terms and subject to the conditions of the reorganization, is
3,869 shares. The Holding Company currently has no plans to sell, distribute, or
otherwise issue the remaining 5,131 shares of authorized but unissued stock. The
excess 5,131 shares have been authorized at this time to provide the Holding
Company with greater flexibility to expand or diversify its business in the
future.
For more information about the Holding Company's common stock, see
"COMPARISON OF BANK STOCK WITH HOLDING COMPANY STOCK."
Executive Compensation
Since its incorporation, the Holding Company has not paid any remuneration
to any of its directors or executive officers, to date has not proposed
remuneration to be made in the future to any of its directors or executive
officers, and to date has not established standards or other arrangements by
which its directors are compensated for services as directors, including any
additional amounts payable for committee participation or special assignments.
No profit-sharing plan or any other benefit plan exists or is contemplated for
the Holding Company. No change in the compensation or benefits to the Bank
employees is contemplated by reason of the Holding Company formation.
Transactions with Related Parties
The Holding Company has not engaged in any transactions or entered into any
contracts with any of its directors or officers. No such transactions or
contracts are anticipated at this time by the Holding Company.
Certain Anti-Takeover and Indemnification Provisions
The Holding Company's Articles of Incorporation give the Holding Company a
right of first refusal to purchase shares of its stock at a price and on the
terms and conditions offered to a shareholder by a prospective purchaser.
Transactions within a shareholder's immediate family and stock pledges are
permitted (although the stocks so transferred or pledged remain subject to the
right of first refusal). The right of first refusal may limit a shareholder's
ability to sell shares to purchasers other than the Holding Company. In
addition, the right of first refusal may reduce the likelihood of another buyer
obtaining control of the Holding Company through the acquisition of large blocks
of holding company stock. The Bank's bylaws do not contain a comparable
provision. See "COMPARISONS OF BANK STOCK WITH HOLDING COMPANY STOCK - Market
for the Stock."
16
As set forth in Sections 180.0850 through 180.0859 of the Wisconsin
Statutes, the Bylaws of the Holding Company require that the Holding Company
indemnify a person from all reasonable expenses and liabilities asserted
against, incurred by, or imposed on that person in any proceeding to which he or
she is made or threatened to be made a party by reason of being or having been
an officer or director of the Holding Company. Indemnification will not be made
if the person breached a duty to the Holding Company in one of the following
ways: (a) a willful failure to deal fairly with the Holding Company in a matter
involving a conflict of interest; (b) a violation of criminal law, unless the
person had reasonable cause to believe his or her conduct was lawful or had no
reasonable cause to believe his or her conduct was unlawful; (c) a transaction
from which the person derived improper personal profit; or (d) willful
misconduct. The right to indemnification includes, in some circumstances, the
right to receive reimbursement of costs and expenses in such a proceeding as
they are incurred.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be available to directors, officers, and controlling
persons of the Holding Company pursuant to the foregoing provisions of its
Bylaws, or otherwise, the Holding Company has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act.
The Holding Company may purchase insurance against liabilities asserted
against its directors, officers, employees, or agents whether or not it has the
power to indemnify them against such liabilities under the provisions of its
Bylaws or pursuant to applicable law. Indemnification insurance for directors,
officers, employees, and agents of the Holding Company has not been purchased
either by such persons or by Holding Company.
Sections 180.1140 through 180.1144 of the Wisconsin Business Corporation
Law ("WBCL") prohibit certain "business combinations" between a "resident
domestic corporation" and a person beneficially owning 10% or more of the
outstanding voting stock of such corporation (an "interested stockholder")
within three years after the date such person became a 10% beneficial owner (the
"acquisition date"), unless the business combination or the acquisition of such
stock has been approved before the acquisition date by the corporation's board
of directors. After such three-year period, a business combination with the
interested stockholder may be consummated with the approval of the holders of a
majority of the voting stock not beneficially owned by the interested
stockholder, or if the combination satisfies certain adequacy-of-price standards
intended to provide a fair price for shares held by disinterested stockholders
or under certain other circumstances. The Holding Company may meet the
definition of a "resident domestic corporation" upon completion of this
offering.
The foregoing provisions of the WBCL could have the effect, among others,
of discouraging take-over proposals for the Holding Company or impeding a
business combination between the Holding Company and a major shareholder of the
Holding Company.
17
UNION NATIONAL BANK & TRUST COMPANY
History, Business, and Properties
The Bank was chartered by the Comptroller of the Currency in 1969. The Bank
offers comprehensive banking services to the residential, commercial,
industrial, and agricultural areas that it serves. Services include
agricultural, commercial, real estate and personal loans; checking, savings, and
time deposits; and other customer services, such as safe deposit facilities. The
Bank's loan portfolio, as of June 30, 1997, consisted of approximately 16%
consumer loans, 12% commercial loans, 65% real estate loans, and 7% agricultural
loans.
The general banking business in the State of Wisconsin is characterized by
a high degree of competition. The principal methods of competition among
commercial banks are price, including interest rates paid on deposits, interest
rates charged on borrowings, and fees charged, and service, including
convenience and quality of service rendered to customers. In addition to
competition among commercial banks, banks face significant competition from
non-banking financial institutions, including savings and loan associations,
credit unions, small loan companies, and insurance companies.
There are two other commercial banks, one savings bank and one credit union
located in Sparta. The Bank's competition comes from those institutions and
others located near Sparta. Insurance companies, mortgage bankers, and brokerage
firms provide additional competition for certain banking services. The Bank also
competes for interest bearing funds with issuers of commercial paper and other
securities, including the United States Government.
There are no pending or threatened legal proceedings known to the Bank
that, in the opinion of the directors and officers of the Bank, may be
materially adverse to the Bank's financial condition, business, or operations.
There are no material pending or threatened legal proceedings known to the Bank
in which any director, executive officer, or affiliate of the Bank (or any
associate of any of them) has a material interest that is adverse to the Bank.
The Bank's principal banking office is located at 124 West Oak Street,
Sparta, Wisconsin, in a facility built in 1970. On June 30, 1997, the Bank's
staff included 8 officers and 12 full-time and 5 part-time employees. There are
approximately 84 shareholders of the Bank.
On September 26, 1996, the Bank's shareholders approved the formation of a
bank holding company for the Bank, pursuant to the terms and conditions of an
agreement and Plan of Reorganization between the Bank and the Holding Company
and a Merger Agreement between the Bank and the New Bank whereby (i) the Bank
would become a wholly-owned subsidiary of the Holding Company, and (ii) the
Bank's shareholders would become shareholders of the Holding Company.
Subsequently, in deciding whether to approve the formation of the Holding
Company, the Federal Reserve Bank expressed concerns with John Wall's
18
affiliation with the Bank of Cashton. Because the Bank's management was unable
to satisfy those concerns, the Bank withdrew its application with the Federal
Reserve Bank and the reorganization was abandoned.
Upon the death of John Wall in August, 1997, the Bank board met and
unanimously decided to again proceed with the reorganization. The Board's
decision is based upon its belief that the Bank's affiliation with the Holding
Company is in the best interest of the Bank and the shareholders.
Management
The following persons constitute the executive officers and directors of
the Bank:
Name and Age Position with Served Since Number of Percentage
Bank/Number of Shares of
Years at Bank Stock (1)
John J. Sund, Jr., 60 President/ 1962 130 3.4%
Director, 35 yrs
Karl Wall, 44 Cashier/Vice 1977 208 5.4
President, 20 yrs
Harold A. Lietzau, 49 Vice President, 5 1992 20 .5
yrs
Eugene A. Arenz, 62 Director, 11 yrs 1986 10 .3
Gary Edwards, 53 Director, 8 yrs 1989 10 .3
Sherwin Giraud, 53 Director, 12 yrs 1985 10 .3
Donald L. Goodman, 71 Director, 28 yrs 1969 20 .5
J. David Rice, 51 Director, 9 yrs 1988 68 1.8
TOTALS 476 12.3%
<FN>
(1) Represents the aggregate number of shares owned of record individually and jointly, or by a spouse or children residing at the
same address, and the shares which any such person controls the right to vote. The beneficial owners are as follows:
Eugene Arenz: Spouse, Dorothy Arenz
Gary Edwards: Spouse, Lorraine Edwards
Sherwin Giraud: Spouse, Anita Giraud
Donald Goodman: Spouse, Betty Goodman
J. David Rice: Spouse, Kathryn Rice
John J. Sund: Spouse, Marlene E. Sund
Karl Wall: Spouse, Patricia Wall
</FN>
19
The term of office for all directors is one year. The directors are elected
at the annual meeting of the shareholders of the Bank. All executive officers
are appointed to their respective positions for a one year period by the board
of directors at the annual meeting of the Bank.
Business Background of Directors and Executive Officers
Eugene Arenz: Mr. Arenz is currently President of Arenz Shoe Company, Sparta,
Wisconsin. He has been in retail shoe sales for the past 41 years and the owner
of his company for the last 11 years.
Gary Edwards: Mr. Edwards has been a general insurance agent in the Sparta area
for 21 years and the owner of his own agency for the last 11 years.
Sherwin Giraud: Mr. Giraud was born and raised on a dairy farm. He has been the
owner and operator of his dairy farm, located in Sparta, for the past 21 years.
Donald Goodman: Mr. Goodman has been an attorney for the past 46 years. He is
currently retired from practice.
Harold Lietzau: Mr. Lietzau is a vice-president and senior loan officer of the
Bank. He has been employed in the financial and/or banking field since 1972 and
has worked at the Bank since 1992.
J. David Rice: Mr. Rice has been practicing law for approximately 20 years. He
is a partner in the law firm of Rice & Heitman, S.C., Sparta, Wisconsin.
John J. Sund, Jr.: Mr. Sund has been in the banking field since 1963. He became
President of the Bank in 1992, and has been on its Board of Directors since
1976.
Karl Wall: Mr. Wall is the Cashier and a vice-president of the Bank. He has been
in the banking field since 1977 when he began his employment at the Bank after
graduating from college. He has attended the Graduate School of Banking in
Madison, Wisconsin.
20
Executive Compensation
The following tables outline the annual compensation and estimated annual
benefits payable upon retirement to Mr. Sund for services rendered in his
capacity as chief executive officer ("CEO") of the Bank:
Summary Compensation Table
Name and Principal Position Year Salary ($) Bonus ($) Other ($)
John J. Sund 1996 $70,980.00 $ 500.00 $6150.00(1)
1995 $67,600.00 $ 500.00 $6050.00(1)
1994 $64,350.00 $2000.00 $5950.00(1)
<FN>
(1) Bank-paid portion of health and life insurance.
</FN>
The Bank maintains a noncontributory pension plan covering substantially
all of its employees. The table below reflects illustrative estimated single
life retirement benefits payable by the plan on an annual basis to participants
at age 65 in selected remuneration and years of service classifications.
Benefits paid to the participants under the plan are not reduced by
participants' Social Security benefits.
Pension Plan Table
Remuneration Years of Service
Average Final Earnings 15 20 25 30 35*
$50,000 $13,050 $17,400 $21,750 $26,100 $30,450
75,000 $20,925 $27,900 $34,875 $41,850 $48,825
100,000 $28,800 $38,400 $48,000 $57,600 $67,200
125,000 $36,675 $48,900 $61,125 $73,350 $85,575
150,000 $44,550 $59,400 $74,250 $89,100 103,950
<FN>
* Maximum number of years credited for benefit accrual purposes. Benefits are based
on covered compensation for someone born in 1936.
</FN>
21
The credited years of service and the current average covered remuneration
for Mr. Sund, as of December 31, 1996, are 34 years and $5,486.00 per month. The
compensation reported in the Pension Plan Table is separate from and in addition
to the annual compensation reported in the Summary Compensation Table above.
Director Compensation
Each of the following directors is paid $500 on a monthly basis, to attend
all regular and special meetings of the board of directors of the Bank: Eugene
Arenz, Gary Edwards, Sherwin Giraud, Donald Goodman and J. David Rice. No other
directors receive any compensation from the Bank for their services as members
of the board of directors.
Board Review of Management Compensation
The entire board of directors reviews and determines the compensation for
the officers of the Bank. The executive officers that are members of the board
of directors and thus participate in the decisions concerning compensation are
John J. Sund Jr., Harold Lietzau and Karl Wall.
Principal Shareholders
As of the date of this Prospectus, the following persons are the only
persons (including any "group" as used in Section 13(d)(3) of the Securities
Exchange Act of 1934) known to the Bank to be the beneficial owner of more than
five percent of the Bank's outstanding capital stock:
Name and Address Shares Percent
Doris Wall and John R. Wall (deceased) 1,306 33.8%
1012 North Fairway Drive
Sparta, WI 54656
Description of the Stock of the Bank
As of the date hereof, the Bank is authorized to issue 4,100 shares of
common stock, all of one class, of which 3,869 shares are issued and
outstanding. The Bank has approximately 84 shareholders of record. For further
information about the Stock, see "COMPARISON OF BANK STOCK WITH HOLDING COMPANY
STOCK."
22
Transactions with Related Parties
The Bank has had in the ordinary course of business, and will continue to
have in the future, banking transactions such as personal and business loans
with its directors, officers, and/or the owners of more than ten percent of the
Bank stock. Such loans are now and will continue to be on the same terms,
including collateral and interest rate, as those prevailing at the same time for
comparable transactions with others of similar credit standing and do not and
will not in the future involve more than normal risks of collectibility or
present other unfavorable features.
At no time during 1994, 1995, and 1996 did or has the maximum aggregate
direct and indirect extensions of credit to such persons and to such businesses
in which such persons are interested, as a group, exceed ten percent (10%) of
the Bank's capital. From time to time, the Bank has entered into nonbanking
business transactions with entities with which some of its directors are
affiliated. Those transactions have been at arm's length and have been at
competitive prices.
Indemnification of Directors and Officers
Wisconsin law governing indemnification of the Bank's directors, officers,
and employees is substantially similar to the law governing indemnification of
the Holding Company's directors, officers, and employees. For a brief discussion
of that law, see "SPARTA UNION BANCSHARES, INC. - Indemnification of Directors
and Officers and Certain Anti-takeover Provisions."
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers, and controlling
persons of the Bank pursuant to the foregoing provisions, or otherwise, the Bank
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act.
The Bank has purchased insurance insuring the Bank, its directors and
officers, against liabilities asserted against its directors and officers
subject to certain conditions and limitations. Expenses of an officer or
director in such a proceeding may be advanced based upon her or his agreement to
repay such expenses if it is determined that he or she is not entitled to
indemnification. If the officer or director is successful on the merits his
expenses shall be paid; otherwise indemnification can only be made upon a
showing that he or she met the applicable standard of conduct as determined by a
court, a quorum of disinterested directors, by independent legal counsel, or by
the shareholders.
23
Shares of the Stock Owned or Controlled by Management
As of the date hereof, the executive officers and directors of the Bank own
or control, directly or indirectly, 476 shares of the Stock, or 12.3% of the
total Bank stock outstanding. To the knowledge of the Holding Company no person
above named has any material interest in the transaction proposed by the
reorganization, direct or indirect, other than in their status as shareholders.
In March 1997, in response to an unsolicited proposal to buy shares of Bank
stock from certain Bank shareholders by another financial trust, several Bank
shareholders, including the Bank's executive officers and directors, entered
into an agreement whereby those shareholders agreed to give those shareholders
who signed the agreement a right of first refusal. Under the agreement,
shareholders could purchase a number of shares equal to their proportionate
interest in the Bank. Those shareholders have agreed to terminate that agreement
upon the successful consummation of this reorganization.
Recommendation of the Bank's Board of Directors
The Board of Directors of the Bank recommends that all shareholders vote to
approve the reorganization. The decision of the Board of Directors of the Bank
to recommend the reorganization to the shareholders is based on their belief
that the Bank's affiliation with the Holding Company is in the best interest of
the Bank and its shareholders.
Such belief is based on a number of factors, including recent and
historical transactions in the Bank's capital stock, the Board of Directors'
knowledge of the business, operations, properties, assets, earnings and
prospects of the Bank, and the advantages provided by a holding company
corporate organizational structure. The Board of Directors of the Bank did not
attach a relative weight to the factors it considered in reaching its decision,
but considering all factors made the determination to recommend the
reorganization to the shareholders. See "THE REORGANIZATION - Reasons for the
Reorganization."
FINANCIAL INFORMATION
Financial statements, prepared in accordance with generally accepted
accounting principles and dated December 31, 1996, with compiled interim
financial statements dated June 30, 1997, accompany this Prospectus.
24
COMPARISON OF BANK STOCK
WITH HOLDING COMPANY STOCK
Authorized Shares and Par Value
The Bank is authorized to issue 4,100 shares of capital stock, all of one
class, designated as common stock. Of those 4,100 shares, 3,869 shares are
issued and outstanding. The Holding Company is authorized to issue 9,000 shares
of capital stock, all of one class, designated as common stock. No Holding
Company stock has been issued. Either the Bank or the Holding Company could
increase the amount of authorized stock at any time by an amendment to its
Articles of Association or Incorporation approved by its shareholders.
The Holding Company will issue less than the full amount of its 9,000
authorized shares in the reorganization. The Holding Company has no specific
plans at this time regarding the sale or distribution of any authorized but
unissued shares.
Voting Rights
Each share of Bank stock has one vote on all matters presented to the
shareholders of the Bank. Each act by the shareholders of the Bank requires a
majority vote, except as otherwise provided by law. Bank shareholders are
entitled to cumulative voting in the election of Directors. Similarly, each
share of the Holding Company stock has one vote on all matters presented to the
shareholders of the Holding Company. Each act by the shareholders of the Holding
Company requires a majority vote, except as otherwise provided by law. The
Holding Company will not have cumulative voting in the election of Directors.
There are some differences in the voting requirements imposed by the
federal banking laws as compared to the Wisconsin general corporate laws. For
example, under federal banking law, a shareholder vote of two-thirds of the
outstanding Bank stock is required to approve a Bank merger. Under the Wisconsin
Business Corporation Law, however, a vote of the majority of the outstanding
Holding Company stock can approve a Holding Company merger. Additionally, under
the Wisconsin Business Corporation Law, a vote of the majority of the
outstanding Holding Company stock can amend the Holding Company's articles of
incorporation, whereas under federal banking law, a two-thirds vote of
shareholders is required to amend the Bank's articles of association.
All of the directors of the Bank and the Holding Company are elected at
each respective annual meeting. Currently, the shareholders of the Bank elect
the Bank's Board of Directors at the Bank's annual meeting of shareholders held
in January of each year. Bank shareholders exercise direct control over the
Bank's affairs by election of the Bank's directors and by the right to vote on
other Bank matters from time to time.
25
If the proposed reorganization is consummated, the shareholders who receive
Holding Company stock will elect the Holding Company Board of Directors. The
officers of the Holding Company will be elected annually by the Holding Company
Board of Directors. The officers of the Holding Company will vote the shares of
Bank stock held by the Holding Company, and therefore will elect the Bank Board
of Directors, acting pursuant to the instructions of the Board of Directors of
the Holding Company. There is no requirement that the boards of the Bank and of
the Holding Company be identical. Shareholders of the Holding Company will
exercise direct control over the Holding Company by election of the Holding
Company directors and by other voting rights, and therefore will exercise
indirect control over the Bank. The direct control of the Bank stock will be
exercised by the Holding Company Board of Directors, who are obligated to act in
the best interests of the Holding Company shareholders.
Dividends
The Bank has paid cash dividends on its common stock each year since 1969,
and expects to continue to pay dividends in the future. Recent dividends have
been as follows:
Dividend
Year Per Share
1992 $ 18.00
1993 19.00
1994 20.00
1995 20.00
1996 22.00
It is the intention of the Board of Directors of the Holding Company to pay
cash dividends on its common stock at least annually. Substantially all of the
Holding Company's assets will consist of its investment in the Bank, and
immediately after the reorganization the availability of funds for dividends to
be paid by the Holding Company will depend primarily upon the receipt of
dividends from the Bank. Dividends of the Holding Company will also be dependent
on future earnings, the financial condition of the Holding Company and its
subsidiaries, and other factors.
Whether the dividends, if any, paid by the Holding Company in the future
will be equal to, less than, or more than the dividends paid by the Bank in the
past cannot be predicted. However, it is unlikely that dividends paid by the
Holding Company in the initial few years of operation would be significantly
larger than the dividends paid by the Bank in prior years, and such dividends
may not be as large. If the Holding Company incurs indebtedness, such as
expenses for the reorganization or a loan to purchase Holding Company stock,
Bank dividends received by the Holding Company will be applied toward that
indebtedness, at least in part, rather than be paid to Holding Company
shareholders as dividends from the Holding Company.
26
Under applicable national banking law, the Bank is restricted as to the
maximum amount of dividends it may pay on its common stock. A national bank may
not pay dividends except out of undivided profits. Additionally, a national bank
may not pay any dividend until an amount equal to at least 10% of net income for
the preceding two consecutive half years has been transferred to surplus. Such
transfers are required until the surplus fund equals 100% of the bank's common
capital. A bank's ability to pay dividends may also be restricted in the event
that losses in excess of undivided profits have been charged against surplus and
in certain other circumstances. Federal regulators have authority to prohibit a
bank from engaging in any action deemed by them to constitute an unsafe or
unsound practice, including the payment of dividends. In addition to the
foregoing, Wisconsin business corporations such as the Holding Company are
prohibited by Wisconsin law from paying dividends while they are insolvent or if
the payment of dividends would render them unable to pay debts as they come due
in the usual course of business.
Market for the Stock
(a) In General: As of August 1997, the Bank had approximately 84
shareholders of record. No established public trading market exists for the Bank
stock. No brokerage firm regularly makes a market for the Bank stock. The stock
is infrequently traded, and the current market for the stock is limited. The
Bank is prohibited by law from purchasing its own shares except in limited
circumstances.
Similarly, there will be no established public trading market for Holding
Company stock. Unlike the Bank, however, the Holding Company will generally be
able to purchase its own shares. In some circumstances, a bank holding company
may not purchase its own shares without giving prior notice to the Federal
Reserve Board. If the Holding Company desires to purchase as much as 10% (in
value) of its own stock in any 12-month period, it may be required in some
instances to obtain approval for so doing from the Federal Reserve Board. If
less than 10% is purchased, however, the Holding Company is restricted only by
sound business judgments, its prior commitments, and the consolidated financial
condition of the Holding Company and its subsidiaries. In no event may a
Wisconsin corporation purchase its own shares when the corporation is insolvent
or when such a purchase would make it insolvent. Although the Holding Company
may generally, in the Board's discretion, purchase shares of its stock, it is
not obligated to do so.
(b) Right of First Refusal: Pursuant to Article 5A of its Articles of
Incorporation, the Holding Company shall have a right of first refusal to
purchase any shares of its stock at the price and on the terms and conditions
offered to any Holding Company shareholder by a prospective purchaser.
Stockholders should refer to Article 5A of the Articles of Incorporation,
attached as Exhibit D. The following description does not purport to be a
comprehensive statement of the terms of the Holding Company's right of first
refusal.
27
(i) Summary of the Provision. The right of first refusal shall apply to all
sales, assignments, or dispositions of any right, title or interest in or to
Holding Company shares, whether voluntary or by operation of law, except for (1)
transactions between a shareholder and his or her spouse, a member of his or her
immediate family or lineal descendants of his or her immediate family, and (2)
any pledge of Holding Company stock. For purposes of transactions described in
(1), "immediate family" shall mean a shareholder's children, ancestors, brothers
and sisters (whether by full or half blood), the spouses of such brothers and
sisters, and the lineal decedents of the shareholder's spouse. Transferees in
either of the transactions described in (1) or (2) shall be subject to the
Holding Company's right of first refusal. The Holding Company is not obligated
to make any purchases of the Holding Company stock, but may do so at the
discretion of its Board of Directors.
In the event a shareholder (the "Selling Shareholder"), desires to dispose
of his or her shares of stock, or any portion thereof (the "Offered Shares"),
other than in a transaction of the type described in (1) or (2) above, without
first obtaining the written consent of the Holding Company, the Selling
Shareholder, first, shall give the Holding Company written notice of his or her
intent to do so, stating the identity of the proposed transferee of the Offered
Shares, the number of Offered Shares the Selling Shareholder proposes to
transfer, the proposed consideration for the Offered Shares and the other terms
and conditions of the proposed transfer of the Offered Shares. The Holding
Company shall have a right of first refusal to acquire all, but not less than
all, of the Offered Shares for the consideration and on the other terms and
conditions offered by the proposed transferee and as contained in the written
notice given to the Holding Company by the Selling Shareholder. The Holding
Company shall exercise its right to acquire the Offered Shares by giving written
notice to the Selling Shareholder, indicating the number of Offered Shares it
will acquire, within thirty (30) days following receipt of the written notice
from the Selling Shareholder. If the Holding Company does not exercise its
acquisition rights within that time period, the Selling Shareholder shall be
free for a period of thirty (30) days thereafter to transfer all of the Offered
Shares to the transferee identified in the written notice to the Holding
Company, at the same consideration and on the same terms and conditions set
forth in the notice. After giving notice of the intended transfer, the Selling
Shareholder shall refrain from participating as an officer, director or
shareholder of the Holding Company with respect to the Holding Company's
decision on whether or not to acquire the Offered Shares unless requested by the
other shareholders holding a majority of the Holding Company's outstanding
shares of capital stock, not including the shares held by the Selling
Shareholder. As a condition precedent to the effectiveness of any transfer of
Offered Shares, the transferee shall agree in writing to be bound by all of the
terms and conditions of the Holding Company's right of first refusal.
Each certificate representing shares of Holding Company stock shall bear a
legend in substantially the following form:
"The shares represented by this certificate and any sale, transfer, or
other disposition thereof are restricted under and subject to the
terms and conditions contained in Article 5A of the Corporation's
Articles of Incorporation, a copy of which is on file at the offices
of the Corporation."
28
The provisions of the Holding Company's Articles of Incorporation relating
to this right of first refusal may not be amended, altered or repealed except by
the affirmative vote of the holders of at least two-thirds (2/3rds) of the
shares of Holding Company stock.
(ii) Potential Anti-takeover and Other Effects. The Holding Company's right
of first refusal may reduce the ability of third parties to obtain control of
the Holding Company. In particular, the Holding Company's right to match the
price offered by a prospective buyer might make acquisitions of large blocks of
Holding Company stock by other buyers more difficult. The right of first refusal
might also discourage tender offers, proxy contests, or other attempts to gain
control of the Holding Company through the acquisition of voting stock.
Shareholders who might support the takeover of the Holding Company in a given
situation could amend, alter or repeal the right-of-first-refusal provision only
by obtaining an affirmative vote of two-thirds of the issued and outstanding
shares.
Because of these effects, this provision may render removal of current
management by a new owner less likely. This could be the case whether or not
such removal would be beneficial to shareholders generally. Another overall
effect of the provision may be to limit shareholder participation in
transactions such as tender offers.
Whether the right of first refusal serves as an advantage to management or
to shareholders depends on the particular circumstances. In a hostile tender
offer, for example, members of management and shareholders who support the
present ownership may benefit from the provision, while shareholders desirous of
participating in the tender offer or removing management would be disadvantaged.
The Holding Company's charter and bylaws do not contain provisions having
an anti-takeover effect other than the right-of-first-refusal provision
described above.
(iii) Reasons for the Right of First Refusal. The Boards of Directors of
the Holding Company and the Bank believe that giving the Holding Company a right
of first refusal to purchase shares of its stock is in the best interests of the
Holding Company and its shareholders and the Bank. One of the purposes of
forming a Holding Company for the Bank is to enable the Bank to continue under
local control. The proposed right of first refusal effectuates this purpose by
providing a mechanism for assuring local control of the Holding Company and the
Bank. The proposal is not the result of Bank management's knowledge of any
specific effort to obtain control of the Bank by means of a merger, tender
offer, solicitation in opposition to management or otherwise. Nevertheless, the
Boards of Directors are concerned that, without this provision, local control of
the Bank may not be achieved over the long term.
29
Value
As of June 30, 1997, the per share book value of the Bank Stock, according
to the Bank's internal financial statements, was approximately $2,122.00. To the
best knowledge of the Bank, there have been 40 different transfers of Bank
stock, involving a total of 1,248 shares of Bank stock, between January 1, 1990
and the date of this Prospectus.
An appraisal of the Bank stock prepared for the Bank's Board of Directors
by Bankers' Service Corporation as of December 31, 1995, estimated the value of
the Bank's stock as it relates to minority share transactions at $1,807.00 per
share, or 80% of book value. The following is a listing of sales of Bank stock
known to the Bank for the years shown. Where no "Price Per Share" is stated, the
price is not known to the Bank.
Date Number of Shares Price Per Share
August 1990 10 $ 400.00
10 $ 400.00
16 $ 400.00
11
11
11
11
December 1990 76
76
76
18 $ 400.00
May 1991 20 $ 400.00
July 1991 20 $ 400.00
August 199 40 $ 400.00
May 1994 8 $ 400.00
June 1994 66 $ 400.00
6 $ 400.00
36 $ 400.00
35 $ 400.00
January 1997 20 $2,200.00
March 1997 36 $2,200.00
70 $2,200.00
April 1997 22 $2,200.00
27 $2,200.00
27 $2,200.00
27 $2,200.00
27 $2,200.00
10 $2,200.00
30
May 1997 124 $2,200.00
8 $2,200.00
12 $2,200.00
104 $2,200.00
June 1997 5 $1,900.00
July 1997 50 $1,900.00
5 $1,900.00
5 $1,900.00
12 $1,900.00
10 $1,900.00
25 $1,900.00
38 $1,900.00
August 1997 20 $1,900.00
8 $1,900.00
Other
(a) Liquidation Rights: Shareholders of the Bank and the Holding Company
are entitled to share pro rata in the net assets of the organization, after
payment of all liabilities, if the organization is ever liquidated.
(b) Preemptive Rights: Shareholders of the Bank have preemptive rights to
acquire additional shares of the organization that may be issued in the future.
Shareholders of the Holding Company will not have preemptive rights. Authorized
but unissued shares of Holding Company may be issued for cash or other
consideration on authorization of the Board of Directors for proper corporate
purposes.
(c) Conversion Rights: Neither the Bank stock nor the Holding Company stock
is convertible into any other security.
(d) Call: Neither the Bank stock nor the Holding Company stock is subject
to any call or redemption rights on the part of the organization.
(e) Assessability: All of the Bank and Holding Company stock issued or to
be issued is or will be fully paid and nonassessable, except as provided by law.
The Wisconsin Business Corporation Law imposes a statutory liability on
shareholders of every corporation up to an amount equal to the par value of
their shares, and to the consideration for which their shares without par value
were issued, for all debts owing to employees of the corporation for services
performed for such corporation, but not exceeding six months' service in any one
case.
31
SUPERVISION AND REGULATION
General
Financial institutions and their holding companies are extensively
regulated under federal and state law. Consequently, the growth and earnings
performance of the Holding Company and the Bank can be affected not only by
management decisions and general economic conditions, but also by the statutes
administered by, and the regulations and policies of, various governmental
regulatory authorities including, but not limited to, the Federal Reserve Board,
the Federal Deposit Insurance Corporation ("FDIC"), the OCC, the Internal
Revenue Service, federal and state taxing authorities, and the Securities and
Exchange Commission (the "SEC"). The effect of such statutes, regulations and
policies can be significant, and cannot be predicted with a high degree of
certainty.
Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, the nature and amount of collateral for loans, the establishment of
branches, mergers, consolidations and dividends. The system of supervision and
regulation applicable to the Holding Company and the Bank establishes a
comprehensive framework for their respective operations and is intended
primarily for the protection of the FDIC's deposit insurance funds and the
depositors, rather than the shareholders, of the Bank.
The following references to material statutes and regulations affecting the
Holding Company and the Bank are brief summaries thereof and do not purport to
be complete, and are qualified in their entirely by reference to such statutes
and regulations. Any change in applicable law or regulations may have a material
effect on the business of the Holding Company and the Bank.
Banking Regulation
The Holding Company, if the reorganization is successful, will be a bank
holding company subject to the supervision of the Board of Governors of the
Federal Reserve System under the Bank Holding Company Act of 1956, as amended
(the "Act"). In accordance with Federal Reserve Board policy, the Holding
Company will be expected to act as a source of financial strength to the Bank
and to commit resources to support the Bank in circumstances where the Holding
Company might not do so absent such policy. As a bank holding company, the
Holding Company will be required to file with the Board of Governors annual
reports and such additional information as the Board of Governors may require
pursuant to the Act. The Board of Governors may also make examinations of the
Holding Company and its subsidiary.
The Act requires every bank holding company to obtain the prior approval of
the Board of Governors before it may acquire direct or indirect ownership of
32
more than five percent (5%) of the voting securities or substantially all of the
assets of any bank. The Act limits the activities by bank holding companies to
managing, controlling, and servicing their subsidiary banks and to engaging in
certain non-banking activities which have been determined by the Board of
Governors to be closely related to banking. Similarly, the Act, with specified
exceptions relating to permissible non-banking activities, forbids holding
companies from acquiring voting control (generally, 25% or more of the voting
power) of any company which is not a bank. Some of the activities that the Board
of Governors has determined by regulation to be closely related to banking are
making or servicing loans, leasing real and personal property where the lease
serves as the functional equivalent of an extension of credit, making
investments in corporations or projects designed primarily to promote community
welfare, acting as an investment or financial advisor, providing data processing
services, and acting as an insurance agent or broker, as those activities are
defined and limited by the regulation.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on any extensions of credit to
the bank holding company or any of its subsidiaries, on investments in the stock
or other securities thereof, and on the taking of such stock or securities as
collateral for loans to any borrower. Further, under the Act and regulations of
the Board of Governors, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit or provision of any property or services. The Board of
Governors possesses cease and desist powers over bank holding companies and
their non-banking subsidiaries if their actions represent an unsafe or unsound
practice or a violation of law.
The Bank is a national bank and is subject to the supervision and
examination of the Comptroller of the Currency. The Bank is a member of the
Federal Deposit Insurance Corporation. Areas subject to regulation by the
authorities include reserves, investments, loans, mergers, issuance of
securities, payment of dividends, establishment of branches, and other aspects
of banking operations.
Capital Requirements for the Holding Company and the Bank
The Federal Reserve Board and the OCC use capital adequacy guidelines in
their examination and regulation of bank holding companies and banks. If capital
falls below minimum guideline levels, a bank holding company may, among other
things, be denied approval to acquire or establish additional banks or non-bank
businesses.
The Federal Reserve Board and the OCC's capital guidelines establish the
following minimum regulatory capital requirements for bank holding companies and
banks: a risk-based requirement expressed as a percentage of total risk-weighted
assets, and a leverage requirement expressed as a percentage of total assets.
The risk-based requirement consists of a minimum ratio of total capital to a
total risk-weighted assets of 8%, of which at least one-half must be Tier 1
capital (which consists principally of stockholders' equity). The leverage
33
requirement consists of a minimum ratio of Tier 1 capital to total assets of 3%
for the most highly rated companies, with minimum requirements of 4% to 5% for
all others.
As of June 30, 1997, the Bank's Tier 1 risk-based ratio was approximately
22.88%, its total risk-based capital ratio was approximately 24.00%, and its
leverage ratio was approximately 12.46%.
The risk-based and leverage standards presently used by the Federal Reserve
Board and the OCC are minimum requirements, and higher capital levels will be
required if warranted by the particular circumstances or risk profiles of
individual banking organizations. Further, any banking organization experiencing
or anticipating significant growth would be expected to maintain capital ratios,
including tangible capital positions (i.e., Tier 1 capital less all intangible
assets), well above the minimum levels.
The Federal Reserve Board's regulations provide that the foregoing capital
requirements will generally be applied on a bank-only (rather than a
consolidated) basis in the case of a bank holding company with less than $150
million in total consolidated assets.
Liquidity Requirements for Holding Company and Bank
Generally, under federal banking law, a national bank may purchase and sell
for its own account three different types of investments. A bank may purchase
and sell an unlimited amount of Type 1 securities--that is, obligations of the
United States or general obligations of a state or a political subdivision of a
state--subject only to the exercise of prudent banking judgment. A bank may
purchase for its own account Type II and III securities, when in its prudent
business judgment it believes that the obligator will, among other things, be
able to meet all debt service obligations and that the security is readily
marketable. A bank may not hold Type II and III securities of any one obligator
in a total amount in excess of 10% of the bank's capital and surplus. Type II
securities include general obligations of a state or a political subdivision or
any agency of a state or political subdivision for housing, university or
dormitory purposes.
The OCC does not have any specific requirements as to a bank's liquidity
adequacy. Rather, the OCC reviews a number of different factors to determine
whether a bank's liquidity is adequate. These factors include, among other
things, the bank's capital adequacy (this factor is discussed in more detail
above in the section titled "Capital Requirements for Holding Company and
Bank"), its funds management practices, its core deposits, its volatile deposits
(generally, deposits that are not insured), its liquid assets and whether the
funding meets of the bank. The Bank believes that its present liquidity is
adequate.
The Federal Reserve Board's Regulation Y does not impose specific liquidity
requirements on bank holding companies. However, a key principle underlying the
Federal Reserve Board's supervision of bank holding companies is that such
companies should be operated in a way that promotes the soundness of their
34
subsidiary banks. In this regard, a principal objective of a bank holding
company's funding strategy should be to support capital investments in
subsidiaries with capital and long-term sources of funds, and maintain
sufficient liquidity and capital strength to provide assurance that any
outstanding debt obligations can be serviced and repaid without adversely
affecting the condition of the affiliated bank. In addition, there are special
rules limiting acquisition of debt in connection with the formation of small
one-bank holding companies. The Federal Reserve Board requires that new holding
companies' debt-to-equity ratio decline to 30% within 12 years after acquisition
of a bank and that the holding company will be able to safely meet debt
servicing and other requirements imposed by its creditors. The debt-to-equity
ratio limitations are generally applied to releveraging transactions except in
connection with further bank acquisitions.
FDIC Insurance Premiums
The Bank pays deposit insurance premiums to the FDIC based on a risk-based
assessment system established by the FDIC for all institutions insured by the
Bank Insurance Fund of the FDIC ("BIF"). Beginning January 1, 1997, and for each
of the years 1997, 1998 and 1999, the Bank will pay premiums on its BIF-insured
deposits at the minimum for top rated banks. the premium assessable in 1997 for
BIF insurance is approximately $4,000.00.
Loan Limits to Borrowers
Generally, under federal banking laws, a national bank may make to any one
borrower total loans and extensions of credit not fully secured by collateral
having a market value at least equal to the loan in an amount not to exceed 15%
of the unimpaired capital and unimpaired surplus of the bank. Generally, the
total loans to any one person fully secured by marketable collateral having a
value at least equal to the outstanding loan may not exceed 10% of the
unimpaired capital and unimpaired surplus of the bank. Bank holding companies
are not subject to specific limitations on loans to one borrower. However, bank
holding company lending activities require the prior approval of the Federal
Reserve Board under Regulation Y.
Recent Regulatory Developments
On September 23, 1994, the "Riegle Community Development and Regulatory
Improvement Act of 1994" (the "Riegle Act") was signed into law. The provisions
of Title III of the Riegle Act are intended to reduce the paperwork and
regulatory burdens of federally-insured financial institutions and their holding
companies. These provisions require the federal banking regulators, among other
things: (i) to consider the burdens and benefits to depository institutions and
their customers of proposed regulatory and administrative requirements; (ii)
within two years of the enactment of the Riegle act, to eliminate from their
regulations and written supervisory policies regulatory inconsistencies,
outmoded or duplicative requirements and unwarranted constraints on credit
availability and to adopt uniform requirements to implement common statutory
schemes or regulatory concerns; (iii) to create a unified examination process
for financial institutions subject to the jurisdiction of more than one
35
regulator; (iv) within six months of enactment of the Riegle Act, to establish
an internal regulatory appeals process by which regulated institutions may
obtain review of agency determinations relating to such matters as examination
ratings, adequacy of loan loss reserves and significant loan classifications;
(v) to streamline the quarterly call report format; and (vi) in considering
revisions to risk-based capital requirements, to ensure that the standards take
into account the size, activities and reporting burdens of institutions. The
Riegle Act also gives the federal banking agencies greater flexibility with
respect to the implementation and enforcement of certain provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
including the FDICIA provisions regarding safety and soundness standards,
examination frequency and independent audit requirements.
In addition, on September 29, 1994, the "Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994" (the "Riegle-Neal Act") was signed into law.
Effective September 29, 1995, the Riegle-Neal Act allows bank holding companies
to acquire banks located in any state in the United States without regard to
geographic restrictions or reciprocity requirements imposed by state law, but
subject to certain conditions, including limitations on the aggregate amount of
deposits that may be held by the acquiring holding company and all of its
insured depositor institution affiliates. Effective June 1, 1997, the
Riegle-Neal Act allows banks to establish interstate branch networks through
acquisitions of other banks, subject to certain conditions, including certain
limitations on the aggregate amount of deposits that may be held by the
surviving bank and all of its insured depository institution affiliates. The
establishment of de novo interstate branches or the acquisition of individual
branches of a bank in another state (rather than the acquisition of an
out-of-state bank in its entirety) is allowed by the Riegle-Neal Act only if
specifically authorized by state law. The Riegle-Neal Act is not expected to
have an immediate significant impact on the Holding Company or the Bank. Over
time, however, the provisions of the Riegle-Neal Act may increase competition in
the market served by the Holding Company and the Bank.
AVAILABLE INFORMATION
The Holding Company has filed with the Securities and Exchange Commission
("SEC"), Washington, D.C., a Registration Statement (No. _______) on Form S-4
under the Securities Act of 1933, for the registration of Holding Company stock
to be issued in the reorganization. This Prospectus constitutes the Prospectus
that was filed as a part of that registration statement.
The Bank currently is not subject to the requirements of the Securities
Exchange Act of 1934 ("Exchange Act"), and files no reports or proxy statements
with the SEC pursuant thereto. After consummation of the reorganization, the
Holding Company will be subject to the reporting requirements of the Exchange
Act, pursuant to Section 15(d) thereof, but the Holding Company's duty to file
such reports is automatically suspended as to each fiscal year at the beginning
of which the Holding Company's stock is held by fewer than 300 shareholders.
Immediately upon completion of the reorganization, the Holding Company's stock
will be held by no more than 84 shareholders. Accordingly, the Holding Company
36
will not for the foreseeable future file reports or proxy statements with the
SEC. However, the Holding Company will voluntarily provide shareholders with
reports of the same nature, and with the same frequency, as are currently
provided by the Bank to Bank shareholders.
LEGAL MATTERS
Certain legal matters in connection with the reorganization will be passed
upon for the Holding Company and the Bank by Boardman, Suhr, Curry & Field, One
South Pinckney Street, Madison, Wisconsin 53701-0927.
37
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT and Plan of Reorganization ("Agreement") is made as of
____________, 1997, by and between UNION NATIONAL BANK & TRUST COMPANY, a
national banking association ("Bank"), and SPARTA UNION BANCSHARES, INC., a
Wisconsin corporation ("SUB").
RECITALS
The parties consider it advantageous to form a one-bank holding company,
which will be SUB, to own all of the outstanding stock of the Bank. To form the
holding company, SUB will organize a wholly-owned subsidiary bank, called New
Union National Bank & Trust Company, a national banking association ("New
Bank"). Bank will then merge with and into New Bank, leaving New Bank as the
survivor, and converting the outstanding stock of Bank into stock of SUB, so
that the shareholders of Bank will become the shareholders of SUB.
This reorganization is comprised of the organization of New Bank and the
merger of Bank into New Bank, as the surviving entity (the "merger"). Pursuant
to the terms of this Agreement, and a Merger Agreement between Bank and New Bank
(to be executed after New Bank is formed), as of the Effective Date of the
Merger, each of the then issued and outstanding shares of Bank Common Stock
("Bank Common") will be converted into one share of the authorized but
previously unissued common stock of SUB ("SUB Common").
NOW, THEREFORE, the parties do adopt this plan of reorganization and agree
as follows:
1. Merger. Subject to compliance with all requirements of law and the terms
and conditions set forth in this Agreement, Bank will be merged with and into
New Bank.
(a) Effective Date; Surviving Bank. The Effective Date of this Merger (the
"Effective Date") shall be the date specified in a Merger Certification Letter
to be issued by the Comptroller of the Currency (the "Comptroller"). At the
Effective Date, Bank shall be merged with and into New Bank, the separate
existence of Bank shall cease and New Bank, as the surviving corporation (the
"Surviving Bank"), shall succeed to and possess all of the properties, rights,
privileges, immunities, and powers, and shall be subject to all the liabilities,
obligations, restrictions, and duties, of Bank and New Bank.
(b) Charter Number. With the consent of the Comptroller, the charter number
of the Bank prior to the Effective Date shall be the charter number of the
Surviving Bank.
(c) Articles of Incorporation; Name. From and after the Effective Date and
until thereafter amended as provided by law, the Articles of Incorporation of
the Surviving Bank shall be the Articles of Incorporation of Bank, as amended or
restated, and the name of the Surviving Bank shall be that of Bank.
(d) Bylaws. From and after the Effective Date and until thereafter amended
as provided by law, the Bylaws of Bank in effect immediately prior to the
Effective Date shall constitute the Bylaws of the Surviving Bank.
(e) Directors and Officers. From and after the Effective Date and until
their respective successors are elected, the members of the Board of Directors
and the officers of the Surviving Bank shall consist of those persons who are
serving as directors and officers of the Bank immediately prior to the Effective
Date.
(f) Conversion of Stock. As of the Effective Date, by virtue of the merger
and without any action on the part of the shareholders of Bank, all of the Bank
Common outstanding immediately prior to the Effective Date shall cease to exist
and shall be converted into SUB Common, at the rate of one (1) share of SUB
Common for each one (1) share of Bank Common. As of the Effective Date, by
virtue of the merger and without any action on the part of the shareholders of
New Bank, all of the New Bank common stock outstanding immediately prior to the
Effective Date shall cease to exist and shall be converted to 4,100 shares of
common stock of the Surviving Bank, $100 par value.
(g) Transmittal Procedure. Bank will close its transfer records on a date
twenty (20) days prior to the Effective Date for a period through and including
the Effective Date. When the Effective Date is established, the date of closing
of transfer records will also be set, and the shareholders of Bank will be
notified of such. Bank will make every reasonable effort to have its
shareholders of record tender their certificates for Bank Common to the Exchange
Agent at least three (3) days prior to the Effective Date. Bank will serve as
the Exchange Agent for this transaction. On the Effective Date, SUB shall
provide to Bank, and Bank shall mail or deliver to its shareholders, stock
certificates of SUB Common to which those shareholders are entitled by reason of
the merger; provided, however, that no SUB Common certificate shall be mailed or
delivered to a Bank shareholder who is eligible to exercise dissenter's rights
or who has not delivered to the Bank all certificates of Bank Common owned by
such shareholder (or if a certificate has been lost, an indemnity bond or other
agreement satisfactory to SUB).
Until so delivered to the Bank, each outstanding certificate which prior to
the Effective Date represented shares of Bank Common will be deemed for all
purposes to evidence only the right to receive the ownership of the shares of
2
SUB Common into which such Bank Common has been converted; provided, however,
that until such Bank Common certificates are so delivered to Bank, no dividend
payable on SUB Common at any time after the Effective Date shall be paid to the
holder of such undelivered certificate. Upon the delivery of such certificate
after the Effective Date, SUB shall pay, without interest, any unpaid dividends
by reason of the preceding sentence to the record holder thereof, and Bank shall
deliver the stock certificate for SUB Common.
(h) Dissenting Shares of Bank. If any shares of Bank Common are dissenting
shares, Bank shall proceed according to applicable law to determine and pay the
fair value of those dissenting shares. "Dissenting shares" shall mean each
outstanding share of Bank Common as to which the holder has strictly complied
with the provisions of applicable law in order effectively to withdraw from Bank
and obtain the right to receive the appraised value of his shares of Bank
Common.
As of the Effective Date or the date that the last action is taken to
exercise dissenter's rights, whichever is later, dissenting shares shall, by
virtue of the merger, cease to represent any ownership interest or ownership
rights to the Bank or SUB, and shall be converted into the right to receive fair
value of those shares as provided by law.
(i) Business. From and after the Effective Date, the business of the
Surviving Bank shall be that of a national banking association, conducted at the
offices of Bank where located immediately prior to the Effective Date.
(j) Assets and Liabilities. From and after the Effective Date, the
Surviving Bank shall be liable for all liabilities of New Bank and Bank; and all
deposits, debts, liabilities, and contracts of New Bank and Bank, respectively,
matured or unmatured, whether accrued, absolute, contingent or otherwise, and
whether or not reflected or reserved against on balance sheets, books of account
or records of New Bank or Bank, shall be those of the Surviving Bank and shall
not be released or impaired by reason of the merger; and all rights of creditors
and other obligees and all liens on property of either New Bank or Bank shall be
preserved unimpaired. Further, all rights, franchises and interests of New Bank
and Bank, respectively, in and to every type of property (real, personal and
mixed) and choices in action shall be transferred to and vested in the Surviving
Bank by virtue of such merger without any deed or other transfer, and the
Surviving Bank, without any order or other action on the part of any court or
otherwise, shall hold and enjoy all rights of property, franchises and
interests, including appointments, designations and nominations, and all other
rights and interests in every fiduciary capacity, in the same manner and to the
3
same extent as such rights, franchises and interests were held or enjoyed by New
Bank and Bank, respectively, on the Effective Date.
(k) Tax Consequences. The parties intend and desire that the merger shall
be treated for income tax purposes as a forward triangular merger under Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code. The parties
shall act in all respects consistently with that intent.
(l) Shareholder Approvals. This Agreement and Plan of Reorganization will
be submitted to the respective shareholders of Bank and New Bank for
ratification and confirmation at shareholder meetings to be called and held in
accordance with the applicable provisions of law and the respective Articles of
Incorporation and Bylaws of Bank and New Bank. Each shareholder meeting shall be
called as soon as reasonably possible. Bank and New Bank will proceed
expeditiously and cooperate fully in the procurement of any other consents and
approvals and in the taking of any other action, and the satisfaction of all
other requirements prescribed by law or otherwise, necessary for consummation of
the merger. SUB, as sole shareholder of New Bank, shall vote its stock in New
Bank to approve the merger and the transactions set forth in this Agreement.
(m) Regulatory Approvals. The parties shall prepare and submit for filing
any and all applications, filings, and registrations with, and notifications to,
all federal and state authorities required for the merger to be consummated as
contemplated by this Agreement. Thereafter, the parties shall pursue all such
applications, filings, registrations, and notifications diligently and in good
faith, and shall file such supplements, amendments, and additional information
in connection therewith as may be reasonably necessary for the merger to be
consummated.
(n) Merger Agreement. SUB shall form New Bank promptly following execution
of this Agreement and shall cause New Bank to execute the Merger Agreement
attached hereto as Exhibit A. Within three days after execution by New Bank,
Bank shall execute the Merger Agreement.
2. Representations and Warranties by Bank. Bank represents and warrants to
SUB that this Agreement has been approved by the Board of Directors of Bank, and
upon approval by the shareholders of Bank will be fully authorized by all
necessary corporation action.
3. Representations and Warranties by SUB. SUB represents and warrants to
Bank that the shares of SUB Common to be delivered to Bank shareholders pursuant
to this Agreement will, upon issuance, be duly and validly authorized and issued
4
and fully paid and nonassessable voting shares, except as otherwise required by
law, and will constitute all of the issued and outstanding shares of SUB as of
the Effective Date.
4. Closing. Subject to the satisfaction of all closing conditions contained
herein or their waiver, the closing shall occur on the Effective Date, which
will be within thirty (30) days after the satisfaction of the last closing
condition. The Closing shall take place at the offices of Bank, or at such other
place as SUB and Bank may hereafter agree.
5. Conditions to Obligations of Both Parties.
The obligations of each party to be performed on the Effective Date shall
be subject to the following conditions:
(a) Regulatory Approval. On or before the Effective Date, Bank shall have
received the approval from those regulatory agencies whose approval of the
merger is required and any mandatory waiting period(s) associated with such
approval(s) shall have expired.
(b) No Litigation. At the Effective Date, no litigation or governmental
investigation shall have been commenced or, to the best knowledge of SUB or
Bank, threatened or proposed, which would have a material, adverse effect on the
value of Bank or an adverse effect on the ability of any party to close this
transaction, or which arises out of or concerns the transactions contemplated by
this Agreement.
(c) Closing Not Later Than March 31, 1998. The closing of the transactions
contemplated hereunder shall have occurred on or before March 31, 1998, unless
such date is extended by mutual written agreement of the parties.
(d) Shareholder Approval. This Agreement shall have been approved and
adopted by the shareholders of Bank and of New Bank in such manner as required
by law.
(e) Tax Opinion. The parties shall have received a written opinion of tax
counsel that the transactions contemplated by this Agreement and the Merger
Agreement will constitute a tax-free reorganization under the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code with respect
to those shareholders of Bank who will receive SUB Common in the merger.
(f) Securities Law Compliance. The SUB Common stock to be issued in the
merger shall have been registered, qualified or exempted under all applicable
federal and state securities laws, and there shall have been no stop order
5
issued or threatened by the SEC or any state that suspends the effectiveness of
any such registration, qualification, or exemption.
6. Conditions to Obligations of SUB and New Bank. The obligations of SUB
and New Bank to be performed on the Effective Date shall be subject to the
following conditions:
(a) Representations and Warranties True; Covenants and Obligations
Performed. All representations and warranties of Bank shall be true and correct
in all material respects on the Effective Date, and Bank shall have performed
all acts required of it under the terms of this Agreement.
(b) Dissenting Shares. There shall be not more than five percent (5%) of
the total outstanding shares of Bank that as of the Effective Date are eligible
to elect dissenter's rights by reason of having complied with the procedures
required by applicable law.
(c) No Material Adverse Change. The assets, business, operation, and
prospects of Bank shall not have been materially and adversely affected by a
loss or destruction not fully compensated by insurance, by any governmental
proceeding or action, or by any other event or occurrence, which in the
reasonable judgment of SUB would defeat or frustrate the purposes of the
reorganization or otherwise make the reorganization undesirable.
7. Conditions to Obligations of Bank. The obligations of Bank to be
performed on the Effective Date shall be subject to the following conditions:
All representations and warranties of SUB shall be true and correct in all
material respects on the Effective Date, and SUB and New Bank shall have
performed all acts required of them under the terms of this Agreement.
8. Additional Covenants of the Parties.
(a) Cooperation. The parties will fully cooperate with each other and their
respective counsels and accountants in connection with any steps to be taken as
part of their obligations under this Agreement, including without limitation,
the preparation of financial statements and the supplying of information in
connection with the preparation of regulatory applications.
(b) Expenses. All costs and expenses and charges incurred by a party hereto
shall be borne by such party, including the fees of their respective accountants
and attorneys; provided, however, that if the merger is not consummated for any
reason, all costs and expenses incurred by SUB and New Bank shall be paid by
Bank.
6
9. Termination. This Agreement and merger may be terminated and abandoned
upon prompt written notice to the other party before the Effective Date,
notwithstanding authorization and adoption of this Agreement by the shareholders
of one or both of Bank and New Bank:
(a) By mutual consent of Bank and SUB through their Boards of Directors;
(b) By Bank at any time after March 31, 1998, (or such later date as shall
have been agreed to in writing by the parties) if any of the conditions provided
for in Paragraphs 5 or 7 of this Agreement have not been met and have not been
waived in writing by Bank; or
(c) By SUB at any time after March 31, 1998 (or such later date as shall
have been agreed to in writing by the parties) if any of the conditions provided
for in Paragraphs 5 or 6 of this Agreement have not been met and have not been
waived in writing by SUB.
10. Miscellaneous.
(a) Assignment. This Agreement and the rights, interests, and benefits
hereunder shall not be assigned, transferred, or pledged in any way, and shall
not be subject to execution, attachment, or similar process. Any attempt to
assign, transfer, pledge, or make any other disposition of this Agreement or of
the rights, interests, and benefits contrary to the foregoing provision, or the
levy of any attachment or similar process thereupon, shall be null and void and
without effect.
(b) Waiver. No failure or delay of any party in exercising any right or
power given to it under this Agreement shall operate as a waiver thereof. No
waiver of any breach of any provision of this Agreement shall constitute a
waiver of any prior, concurrent, or subsequent breach. No waiver of any breach
or modification of this Agreement shall be effective unless contained in a
writing executed by both parties.
(c) Entire Agreement. This Agreement supersedes any other representations
or agreement, whether written or oral, that may have been made or entered into
by SUB, Bank, New Bank or by any officer or officers of such parties relating to
the acquisition of Bank, or its assets or business, by SUB. This Agreement
constitutes the entire agreement by the parties, and there are no agreements or
commitments except as set forth herein.
7
(d) Amendment. This Agreement may be modified or amended only by a written
agreement executed by duly authorized officers of both parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
ATTEST: UNION NATIONAL BANK & TRUST COMPANY
_______________________ By:________________________________
ATTEST: SPARTA UNION BANCSHARES, INC.
_______________________ By:________________________________
8
EXHIBIT A
MERGER AGREEMENT
MERGER AGREEMENT ("Merger Agreement") made this _____ day of
____________________, 1997, by and between Union National Bank & Trust, a
national banking association ("Bank"), and New Union National Bank & Trust
Company, a national banking association ("New Bank").
WITNESSETH
WHEREAS, Bank and Sparta Union Bancshares, Inc. ("SUB") have entered into
an Agreement and Plan of Reorganization dated ________________, 1997
("Agreement"), pursuant to which Bank has agreed to merge with and into SUB's
wholly-owned subsidiary, New Bank, in a forward triangular merger; and
WHEREAS, Bank and New Bank wish to agree on the terms of the merger now
that New Bank has been formed;
NOW, THEREFORE, the parties agree as follows:
1. Incorporation of Plan of Reorganization. The terms and conditions of the
Agreement are incorporated herein by reference in their entirety, and made a
part of this Merger Agreement with the same effect as if New Bank had been a
party to the Agreement.
2. Cooperation. New Bank shall cooperate with Bank to achieve a prompt
consummation of the transactions contemplated in the Agreement, and shall
perform all actions necessary or convenient to be performed by it for that
purpose.
3. Articles of Association. Effective as of the time this merger shall
become effective as specified in the Agreement, the articles of association of
that bank resulting from the merger of Bank and New Bank shall read in their
entirety as stated in the attached Articles of Association.
4. Capital Stock. The amount of capital stock of New Bank shall be $50,000,
divided into 500 shares of common stock, each of $100 par value. At the time the
merger shall become effective (and after the temporary capitalization of the
interim bank has been returned to SUB), the resulting bank shall have $410,000
in capital, a surplus of $2,000, and undivided profits of $6,257,047, adjusted,
however, for earnings and expenses between January 1, 1996, and the effective
date of the merger. At the time the merger shall become effective, the 500
9
shares of New Bank stock then outstanding shall be converted into 3,869 shares,
each of $100 par value, of the resulting bank.
IN WITNESS WHEREOF, the parties have executed this Merger Agreement by
their proper corporate officers duly authorized to execute this Agreement, as of
the date first above written.
Attest: UNION NATIONAL BANK & TRUST COMPANY
_________________________ By_________________________________
Attest: NEW UNION NATIONAL BANK & TRUST COMPANY
_________________________ By_________________________________
10
EXHIBIT B
TAX OPINION OF BOARDMAN, SUHR, CURRY & FIELD
_____________, 1997
The Board of Directors
Sparta Union Bancshares, Inc.
124 West Oak Street
Sparta, WI 54656
The Board of Directors
Union National Bank & Trust Co.
124 West Oak Street
Sparta, WI 54656
Gentlemen:
You have requested that we render an opinion as to the tax consequences to
Sparta Union Bancshares, Inc. ("Holding Company"), Union National Bank & Trust
Co. ("Bank"), New Union National Bank & Trust Co. ("New Bank"), and the
shareholders ("Shareholders") of the Bank in connection with a corporate
reorganization to form a one-bank holding company, as described in an Agreement
and Plan of Reorganization dated _____________, 1997, between the Holding
Company and the Bank ("Agreement") and in a certain Prospectus/Proxy Statement
dated __________________.
We acknowledge that this opinion is provided for the benefit and guidance
of the Shareholders as well as for the benefit and guidance of the Holding
Company and the Bank.
In making this opinion, we have relied on the Agreement, the
Prospectus/Proxy Statement, and the Merger Agreement (to be executed between the
Bank and the New Bank), and on the truth and completeness of the warranties,
representations, statements, and facts contained in those documents. We have
also relied upon the truth and completeness of the following representations of
the Holding Company and the Bank:
1. The fair market value of the Holding Company stock and other
consideration received by each Bank shareholder will be approximately equal to
the fair market value of the Bank stock surrendered in the exchange.
2. There is no plan or intention by the Bank shareholders who own one
percent (1%) or more of the Bank stock, and to the best of the knowledge of the
management of the Bank, there is no plan or intention on the part of the
remaining Bank shareholders to sell, exchange, or otherwise dispose of a number
of shares of Holding Company stock received in the transaction that would reduce
the Bank shareholders' ownership of Holding Company stock to a number of shares
having a value, as of the date of the transaction, of less than fifty percent
(50%) of the value of all of the formerly outstanding Bank stock as of the same
date. For purposes of the representation, shares of Bank stock exchanged for
__________________, 1997
Page 2
cash or other property, surrendered by dissenters, or exchanged for cash in lieu
of fractional shares of Holding Company stock will be treated as outstanding
Bank stock on the date of the transaction. Moreover, shares of Bank stock and
shares of Holding Company stock held by Bank shareholders and otherwise sold,
redeemed or disposed of prior or subsequent to the transaction will be
considered in making this representation.
3. New Union National Bank & Trust Company ("New Bank"), as the surviving
corporation, will acquire at least ninety 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 held by the Bank immediately prior to the transaction. For
purposes of this representation, amounts paid by the Bank to dissenters, amounts
paid by the Bank to shareholders who receive cash or other property, Bank assets
used to pay its reorganization expenses, and all redemptions and distributions
(except for normal dividends) made by the Bank immediately preceding the
transfer will be included as assets of the Bank immediately prior to the
transaction.
4. Prior to the transaction, the Holding Company will be in control of the
New Bank within the meaning of I.R.C. sections 368(c).
5. Following the transaction, the New Bank will not issue additional shares
of its stock that would result in the Holding Company losing control of the New
Bank within the meaning of I.R.C. sections 368(c).
6. The Holding Company has no plan or intention to reacquire any of its
stock issued in the transaction.
7. The Holding Company has no plan or intention to liquidate the New Bank,
to merge the New Bank with and into another bank or corporation, to sell or
otherwise dispose of the stock of the New Bank, or to cause the New Bank to sell
or otherwise dispose of any of the Bank's assets acquired in the transaction,
except for dispositions made in the ordinary course of business or transfers
described in I.R.C. sections 368(a)(2)(c).
8. The liabilities of the Bank assumed by the New Bank and the liabilities
to which the transferred assets of the Bank are subject, were incurred in the
ordinary course of Bank's business.
9. Following the transaction, the New Bank will continue the historic
business of the Bank or use a significant portion of Bank's business assets in a
business.
10. The Holding Company, Bank, New Bank, and the Bank's shareholders will
pay their respective expenses, if any, incurred in connection with the
transaction.
__________________, 1997
Page 3
11. There is no intercorporate indebtedness existing between the Holding
Company and the Bank or between the New Bank and the Bank which was issued,
acquired or will be settled at a discount.
12. No two parties to the transaction are investment companies as defined
in I.R.C. sections 368(1)(2)(F)(iii) and (iv).
13. The Bank is not under the jurisdiction of a court in a Title 11
(bankruptcy) or similar case.
14. The fair market value of the assets of the Bank transferred to the New
Bank will equal or exceed the sum of the liabilities assumed by the New Bank,
plus the liabilities, if any, to which the transferred assets are subject.
15. No stock of New Bank will be issued in the transaction.
We have not undertaken to verify independently any of the factual matters
upon which we rely in providing this opinion. Moreover, we have assumed that no
changes have occurred or will occur with respect to the documents described
above or the representations set forth in numbers 1 through 15 above.
Based upon and subject to the foregoing, legal counsel is of the opinion
that, for federal and State of Wisconsin income purposes:
(1) The proposed merger will constitute a reorganization within the
meaning of sections 368(a)(1)(A) by reason of sections
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended,
and Chapter 71 of the Wisconsin Statutes. The reorganization will
not be disqualified by reason of the fact that Holding Company
common stock is used in the transaction. (Internal Revenue Code
Section 368(a)(2)(D).)
(2) No gain or loss will be recognized to the Bank on the transfer of
substantially all of its assets to the New Bank in exchange for
Holding Company common stock and the assumption by the New Bank
of the liabilities of the Bank.
(3) No gain or loss will be recognized to the Holding Company or the
New Bank upon the receipt by the New Bank of substantially all of
the assets of the Bank in exchange for the Holding Company common
stock and the assumption by the New Bank of the liabilities of
the Bank.
(4) The basis of the Bank assets in the hands of the New Bank will be
the same as the basis of those assets in the hands of the Bank
immediately prior to the proposed transaction.
__________________, 1997
Page 4
(5) The holding period of the assets of the Bank in the hands of the
New Bank will include the period during which such assets were
held by the Bank.
(6) The basis of the New Bank stock in the hands of the Holding
Company will be increased by an amount equal to the basis of the
Bank assets acquired by the New Bank in the transaction, and will
be decreased by the amount of liabilities of the Bank assumed by
the New Bank and the amount of liabilities to which the acquired
assets of the Bank are subject.
(7) No gain or loss will be recognized by the shareholders on the
exchange of their Bank common stock for Holding Company common
stock; provided, however, that no opinion is expressed with
respect to Bank shareholders who dissent from the transaction and
receive cash for their Bank stock.
(8) The income tax basis of the Holding Company common stock to be
received by the shareholders will be the same as the basis of the
Bank common stock surrendered in exchange.
(9) The holding period of the Holding Company common stock to be
received by the shareholders will include the period during which
the Bank common stock surrendered in exchange was held, provided
that the Bank common stock is held as a capital asset on the date
of the exchange.
Our opinion is limited to the specific issues addressed. We express no
opinion and make no representation, and no inference is intended or should be
drawn from any statement in this letter, as to any other issues involving the
transaction.
BOARDMAN, SUHR, CURRY & FIELD
EXHIBIT C
UNITED STATES CODE SECTIONS
National Banks 12 USCS Section 215a
(b) Dissenting shareholders. If a merger shall be voted for at the called
meetings by the necessary majorities of the shareholders of each association or
State bank participating in the plan of merger, and thereafter the merger shall
be approved by the Comptroller, any shareholder of any association or State bank
to be merged into the receiving association who has voted against such merger at
the meeting of the association or bank of which he is a stockholder, or has
given notice in writing at or prior to such meeting to the presiding officer
that he dissents from the plan of merger, shall be entitled to receive the value
of the shares so held by him when such merger shall be approved by the
Comptroller upon written request made to the receiving association at any time
before thirty days after the date of consummation of the merger, accompanied by
the surrender of his stock certificates.
(c) Valuation of shares. The value of the shares of any dissenting shareholder
shall be ascertained, as of the effective date of the merger, by an appraisal
made by a committee of three persons, composed of (1) one selected by the vote
of the holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the receiving association;
and (3) one selected by the two so selected. The valuation agreed upon by any
two of the three appraisers shall govern. If the value so fixed shall not be
satisfactory to any dissenting shareholder who has requested payment, that
shareholder may, within five days after being notified of the appraised value of
his shares, appeal to the Comptroller, who shall cause a reappraisal to be made
which shall be final and binding as to the value of the shares of the appellant.
(d) Application to shareholders of merging associations: Appraisal by
Comptroller; expenses of receiving association; sale and resale of shares; State
appraisal and merger law. If, within ninety days from the date of consummation
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 shares,
the Comptroller shall upon written request of any interested party cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal or the appraisal, as the
case may be, shall be paid by the receiving association. The value of the shares
ascertained shall be promptly paid to the dissenting shareholders by the
receiving association. The shares of stock of the receiving association which
would have been delivered to such dissenting shareholders had they not requested
payment shall be sold by the receiving association at an advertised public
auction, and the receiving association shall have the right to purchase any of
such shares at such public auction, if it is the highest bidder therefor, for
the purpose of reselling such shares within thirty days thereafter to such
person or persons and at such price not less than par as its board of directors
by resolution may determine. If the shares are sold at public auction at a price
greater than the amount paid to the dissenting shareholders, the excess in such
sale price shall be paid to such dissenting shareholders. The appraisal of such
shares of stock in any State bank shall be determined in the manner prescribed
by the law of the State in such cases, rather than as provided in this section,
if such provision is made in the State law; and no such merger shall be in
contravention of the law of the State under which such bank is incorporated. The
provision of this subsection shall apply only to shareholders of (and stock
owned by them in) a bank or association being merged into the receiving
association.
EXHIBIT D
ARTICLES OF INCORPORATION OF
SPARTA UNION BANCSHARES, INC.
ARTICLES OF INCORPORATION
Stock (for profit)
Executed by the undersigned for the purpose of forming a Wisconsin
for-profit corporation under Chapter 180 of the Wisconsin Statutes repealed and
recreated by 1989 Wis. Act 303:
ARTICLE 1. Name of Corporation: Sparta Union Bancshares, Inc.
ARTICLE 2. The Corporation shall be authorized to issue 9,000 shares.
ARTICLE 3. The street address of the initial registered office is: 124 West
Oak Street, Sparta, Wisconsin 54656
ARTICLE 4. The name of the initial registered agent at the above registered
office is: John J. Sund, Jr.
ARTICLE 5. Other provisions (OPTIONAL): See Article 5A attached to and made
a part of these Articles of Incorporation. See Article 5B attached to and made a
part of these Articles of Incorporation.
ARTICLE 6. Executed on February 28, 1996.
Name and complete address of each incorporator:
John E. Knight
BOARDMAN, SUHR, CURRY & FIELD
Firstar Plaza, Suite 410
1 South Pinckney Street
Madison, WI 53703
/s/ John E. Knight
--------------------------------
(Incorporator Signature)
This document was drafted by John E. Knight.
DFI CORP FILE ID NO. S048786
Document stamped Received February 28, 1996, 3:30 P.M. by State of
Wisconsin, Department of Financial Institutions.
Document stamped Filed March 5, 1996, by State of Wisconsin,
Department of Financial Institutions.
SPARTA UNION BANCSHARES, INC.
ARTICLES OF INCORPORATION
ARTICLE 5A: Except as provided below, shareholders of the Corporation's
capital stock (the "Stock") may not sell, transfer, assign, encumber, pledge,
hypothecate, or in any way dispose of or alienate any of their shares of the
Stock, or any right, title or interest therein, whether voluntarily or by
operation of law, or by gift or otherwise, without the prior written consent of
the Corporation. Provided, however, that the prior written consent of the
Corporation shall not be required as to: (i) any transaction between a
shareholder and his or her spouse, a member of his or her immediate family or
any lineal descendant thereof; or (ii) any pledge or hypothecation of shares of
the Stock, provided, that as a condition precedent to the effectiveness of
either of the transactions described in (i) or (ii) herein, the transferee in
any such transaction shall be bound by all of the terms and conditions of this
Article 5A.
In the event a shareholder (the "Selling Shareholder"), desires to dispose
of his or her shares of the Stock, or any portion thereof (the "Offered
Shares"), other than in a transaction of the type described in (i) or (ii)
above, without first obtaining the written consent of the Corporation, the
Selling Shareholder, first, shall give the Corporation written notice of his or
her intent to do so, stating therein the identity of the proposed transferee of
the Offered Shares, the number of Offered Shares the Selling Shareholder
proposes to transfer, the proposed consideration for the Offered Shares and the
other terms and conditions of the proposed transfer of the Offered Shares. The
Corporation shall have a right of first refusal to acquire all, but not less
than all, of the Offered Shares for the consideration and on the other terms and
conditions offered by the proposed transferee and as contained in the written
notice given to the Corporation by the Selling Shareholder. The Corporation
shall exercise its right to acquire the Offered Shares by giving written notice
to the Selling Shareholder, indicating the number of Offered Shares it will
acquire, within thirty (30) days following receipt of the written notice of the
Selling Shareholder. In the event the Corporation does not exercise its
acquisition rights within the time period as provided herein with respect to all
of the Offered Shares, the Selling Shareholder shall be free for a period of
thirty (30) days thereafter to transfer all of the Offered Shares to the
transferee identified in the written notice to the Corporation, at the same
consideration and on the same terms and conditions as set forth in such written
notice. After giving any notice of intended transfer of any shares of the Stock
pursuant to this Article 5A, the Selling Shareholder shall refrain from
participating as an officer, director or shareholder of the Corporation with
respect to the Corporation's decision on whether or not to acquire the Offered
Shares unless requested by the other shareholders of the Corporation holding a
majority of the Corporation's outstanding shares of capital stock, not including
the shares of the Stock held by the Selling Shareholder; and, if so requested to
participate, the Selling Shareholder shall cooperate with the other shareholders
and the Corporation in every reasonable way to effectuate the purpose of this
Article 5A. Except as provided in this Article 5A, the Selling Shareholder shall
be bound by the restrictions and limitations imposed by this Article 5A after
any notice of a desire to transfer is given and whether or not any such transfer
actually occurs. As a condition precedent to the effectiveness of any transfer
of Offered Shares to any person or entity, such transferee shall agree in
writing to be bound by all of the terms and conditions of this Article 5A.
Each certificate representing shares of the Stock shall have endorsed
thereon a legend in substantially the following form:
The shares represented by this certificate and any sale, transfer, or
other disposition thereof are restricted under and subject to the
terms and conditions contained in Article 5A of the Corporation's
Articles of Incorporation, a copy of which is on file at the offices
of the Corporation.
Any attempted or purported sale, transfer, assignment, encumbrance, pledge,
hypothecation or other disposition or alienation of any of the shares of the
Stock by a shareholder in violation of this Article 5A shall be null, void and
ineffectual, and shall not operate to transfer any right, title or interest
whatsoever in or to such shares of the Stock.
The provisions of this Article 5A may not be amended, altered or repealed
except by the affirmative vote of the holders of at least two-thirds (2/3) of
the shares of the capital stock of the Corporation issued and outstanding and
entitled to vote, at any regular or special meeting of the shareholders if
notice of the proposed amendment, alteration or repeal is contained in the
notice of the meeting.
ARTICLE 5B: The initial directors of the Corporation are:
Eugene A. Arenz J. David Rice
Route #2 603 North Water
Sparta, WI 54656 Sparta, WI 54656
Gary Edwards John J. Sund, Jr.
421 Highland Meadows Dr. 644 Teena Street
Sparta, WI 54656 Sparta, WI 54656
Donald L. Goodman John R. Wall
210 Grove Street 1012 N. Fairway Drive
Sparta, WI 54656 Sparta, WI 54656
Sherwin Giraud
Route #2
Sparta, WI 54656
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors.
Sections 180.0850 through 180.0859 of the Wisconsin Statutes permit and in
some cases require indemnification of directors, officers, employees, and agents
of a Wisconsin corporation. In general, such indemnification is required unless
the person violates a duty of loyalty or a duty of care as specifically set
forth in the statutes. Section 180.0851, Wis. Stats.
Article VII of the registrant's Bylaws provide for indemnification of
officers and directors under terms and conditions that follow the statutory
language cited above. A complete copy of the Bylaws is included in Exhibit 3
hereto.
Item 21. Exhibits and Financial Statement.
Schedules
(a) Exhibits. The following exhibits are submitted:
Exhibit No. Description
2 Agreement and Plan of Reorganization (set forth
as an exhibit to the Prospectus)
3 Articles of Incorporation (set forth as an exhibit to
the Prospectus) and Bylaws of Sparta Union
Bancshares, Inc.
4 Specimen stock certificate of Sparta Union
Bancshares, Inc.
5 Opinion of Boardman, Suhr, Curry & Field
8 Tax Opinion of Boardman, Suhr, Curry & Field (set
forth as an exhibit to the Prospectus)
24 Consent of Boardman, Suhr, Curry & Field (included in
opinion)
28 Form of Proxy for shareholders of Union National Bank
& Trust Company
(b) No financial statement schedules are required to be
filed with regard to Sparta Union Bancshares, Inc.
or Union National Bank & Trust Company.
Item 22. Undertakings.
(1) The registrant will file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by sections 10(a)(3) of the
Securities Act of 1933, as amended ("Act");
(ii) Reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or together,
represent a fundamental change in the information in the registration
statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Act, the registrant will treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) The registrant will file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(4) The undersigned registrant hereby undertakes 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, 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.
(5) The undersigned registrant hereby undertakes 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.
(6) Insofar as indemnification for liabilities arising under the Act 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 SEC such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against liability arising under the Act (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
2
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.
(7) The registrant will:
(i) For determining any liability under the Act, treat 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 small business issuer under Rule 424(b)(1) or (4) or 497(h)
under the Act as part of this registration statement as of the time the
Commission declared it effective; and
(ii) For determining any liability under the Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement No. ________ to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of Sparta,
State of Wisconsin, on the ____ day of _____________, 1997.
SPARTA UNION BANCSHARES, INC.
By:
/s/ John J. Sund, Jr.
------------------------------------
John J. Sund, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement No. ________ has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title(s) Date
/s/ Eugene A. Arenz Dir. ______________, 1997
- ----------------------------
Eugene A. Arenz
/s/ Gary Edwards Dir. ______________, 1997
- ----------------------------
Gary Edwards
/s/ Sherwin Giraud Dir. ______________, 1997
- ----------------------------
Sherwin Giraud
/s/ Donald L. Goodman Dir. ______________, 1997
- ----------------------------
Donald L. Goodman
/s/ J. David Rice Dir. ______________, 1997
- ----------------------------
J. David Rice
/s/ John J. Sund, Jr. Dir., Pres. ______________, 1997
- --------------------------------
John J. Sund, Jr.
/s/ Karl Wall Sec. ______________, 1997
- --------------------------------
Karl Wall
4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------
SPARTA UNION BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
E X H I B I T S
[PREVIOUSLY PROVIDED]
INDEX TO EXHIBITS
Exhibit No. Description
2 Agreement and Plan of Reorganization (set forth as an exhibit to
the Prospectus)
3 Articles of Incorporation (set forth as an exhibit to the Pros-
pectus) and Bylaws of Sparta Union Bancshares, Inc.
4 Specimen stock certificate of Sparta Union Bancshares, Inc.
5 Opinion of Boardman, Suhr, Curry & Field
8 Tax Opinion of Boardman, Suhr, Curry & Field (set forth as an
exhibit to the Prospectus)
24 Consent of Boardman, Suhr, Curry & Field (included in opinion)
99 Form of Proxy for shareholders of Union National Bank & Trust
Company