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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______________)*
George Mason Bankshares, Inc.
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(Name of Issuer)
George Mason Bankshares, Inc. Common Stock
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(Title of Class of Securities)
37248610
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(CUSIP Number)
Richard M. Adams
Chairman of the Board and Chief Executive Officer
300 United Center
500 Virginia Street, East
Charleston, West Virginia 25301
(304) 424-8761
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 11, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |_|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746(12-91)
<PAGE>
SCHEDULE 13D
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CUSIP No. 37248610 Page 2 of 17 Pages
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
United Bankshares, Inc.
IRS #55-0641179
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |_|
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
WC*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_|
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
West Virginia
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NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 1,018,000*
OWNED BY ------------------------------------------------------------
EACH 8. SHARED VOTING POWER
REPORTING
PERSON 0
WITH ------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
1,018,000*
------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,018,000*
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
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14. TYPE OF REPORTING PERSON
CO
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*Beneficial ownership of 1,018,000 shares of Common Stock
reported hereunder is so being reported solely as a result of
the Stock Option Agreement described in Item 4 hereof. The
option granted pursuant to such Stock Option Agreement has
not yet become exercisable. United Bankshares, Inc. expressly
disclaims beneficial ownership of such shares.
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $1.11 per share
("Common Stock"), of George Mason Bankshares, Inc., a Virginia corporation (the
"Company"), the principal executive offices of which are located at 1185 Main
Street, Fairfax, VA 22030.
Item 2. Identity and Background.
(a)-(c) and (f) This statement is being filed by United Bankshares,
Inc., a West Virginia corporation registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended ("United"). The principal business
offices of United are located at 300 United Center, 500 Virginia Street, East,
Charleston, West Virginia 25301. United has two principal banking subsidiaries,
United National Bank and United Bank, the assets of which currently constitute
substantially all of the assets of United. The names of the directors and
executive officers of United and their respective business addresses,
citizenship and present principal occupations or employment, as well as the
names, principal businesses and addresses of any corporations and other
organizations in which such employment is conducted, are set forth on Schedule I
hereto, which Schedule is incorporated herein by reference.
(d)-(e) Neither United, nor, to the best of its knowledge, any of the
persons listed in Schedule I hereto has during the last five years been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). Neither United nor, to the best of its knowledge, any of the
persons listed in Schedule I hereto has during the last five years been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
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<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 4, the Company has granted to United an
option pursuant to which United has the right, upon the occurrence of certain
events (none of which has occurred), to purchase up to 1,018,000 shares of
Common Stock (subject to adjustment in certain circumstances) at a price per
share equal to the average of last reported sales prices per share of $32.375
(the "Option"). Certain terms of the Option are summarized in Item 4.
If the Option were exercisable and United were to exercise the Option
on the date hereof, the funds required to purchase the shares of Common Stock
issuable upon such exercise would be $32,957,750. It is currently anticipated
that such funds would be derived from working capital.
Subject to market conditions and developments with respect to the
Merger (as defined below) United may purchase shares of Common Stock in the open
market or in privately negotiated transactions. It is currently anticipated that
any funds used to make such purchases would be derived from working capital.
Item 4. Purpose of the Transaction.
(a)-(j) United is seeking to acquire the entire equity interest in the
Company pursuant to the Merger (as defined below). The transactions reported
hereunder are intended to assist in the achievement of that purpose.
The Merger Agreement. The Company and United have entered into an
Agreement and Plan of Merger, dated as of September 10, 1997 (the "Merger
Agreement"), pursuant to which the Company will be merged with and into United
(the "Merger"), with United being the surviving corporation (the "Surviving
Company"). At the effective time of the Merger (the "Effective Time"), each
outstanding share of the Company's Common Stock will be converted into the right
to receive 0.85 of a share of common stock of United ("United Common Stock")(the
"Exchange Ratio").
In the event United changes (or establishes a record date for changing)
the number of shares of United Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, recapitalization or
similar transaction with respect to the
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<PAGE>
outstanding United Common Stock and the record date therefor shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted. As of
the Effective Time, each share of Common Stock held directly or indirectly by
the Company, other than shares held in a fiduciary capacity or in satisfaction
of a debt previously contracted, will be canceled, and no exchange or payment
will be made with respect thereto.
As a result of the Merger, the Company will cease to exist as a
separate legal entity.
The Merger is subject to various regulatory approvals, the approvals of
the stockholders of the Company and the satisfaction of other terms and
conditions set forth in the Merger Agreement.
As a result of the Merger, the Common Stock will be eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"). In addition, the Company's
Common Stock will be eligible for delisting from the NASDAQ Stock Market's
National Market System, where it has been traded under the symbol "GMBS". United
has agreed in the Merger Agreement to cause five members of the Company's Board
on the date of the Merger Agreement (selected by United after consultation with
the Company), who are still members of the Company's Board immediately prior to
the Effective Time and willing and eligible to serve, to be elected or appointed
as directors of the Surviving Company at, or as promptly as practicable after,
the Effective Time.
The Option Agreement. In connection with the Merger Agreement, on
September 11, 1997 United and the Company entered into a Stock Option Agreement,
dated as of September 11, 1997 (the "Option Agreement"). The Option Agreement is
designed to enhance the likelihood that the Merger will be successfully
consummated in accordance with the terms contemplated by the Merger Agreement.
Pursuant to the Option Agreement, the Company granted United an Option to
purchase, subject to adjustments in certain circumstances, up to 1,018,000 fully
paid and non-assessable shares of Common Stock (the "Option Shares") at a price
per share of $32.375.
Subject to applicable law and regulatory restrictions, United may
exercise the Option, in whole or in
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<PAGE>
part, if, but only if, both an Initial Triggering Event (as defined below) and a
Subsequent Triggering Event (as defined below) have occurred prior to the
occurrence of an Exercise Termination Event (as defined below), provided that
written notice of such exercise as required by the Option Agreement is provided
within six months following such Subsequent Triggering Event (or such later
period as provided in the Option Agreement).
As defined in the Option Agreement, "Initial Triggering Event" means
any of the following events or transactions occurring on or after the date of
signing the Option Agreement:
(i) The Company or its Significant Subsidiary (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (the "Company Subsidiary"), without having
received United's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of the Option
Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the 1934 Act, and the rules and regulations thereunder)
other than United or any United Subsidiaries (each, a "United
Subsidiary") or the Board of Directors of the Company (the "Company
Board") shall have recommended that the shareholders of the Company
approve or accept any Acquisition Transaction other than as
contemplated by the Merger Agreement. For purposes of the Merger
Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving the Company or the
Company Subsidiary (other than mergers, consolidations or similar
transactions (i) involving solely the Company and/or one or more
wholly-owned (except for directors' qualifying shares and a de minimis
number of other shares) United Subsidiaries, provided, that any such
transaction is not entered into in violation of the terms of the Merger
Agreement, or (ii) in which the shareholders of the Company immediately
prior to the completion of such transaction own at least 50% of the
Common Stock of the Company (or the resulting or surviving entity in
such transaction) immediately after completion of such transaction,
provided any such transaction is not entered into in violation of the
terms of the Merger Agreement), (y) a purchase, lease or other
acquisition of all or any
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<PAGE>
substantial part of the assets or deposits of the Company or the
Company Subsidiary, or (z) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of the Company
or the Company Subsidiary and (b) "Subsidiary" shall have the meaning
set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than United or any United Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common Stock (the
term "beneficial ownership" for purposes of the Merger Agreement having
the meaning assigned thereto in Section 13(d) of the 1934 Act, and the
rules and regulations thereunder);
(iii) The shareholders of the Company shall have voted and failed
to approve the Merger Agreement and the Merger at a meeting which has
been held for that purpose or any adjournment or postponement thereof,
or such meeting shall not have been held in violation of the Merger
Agreement or shall have been canceled prior to termination of the
Merger Agreement if, prior to such meeting (or if such meeting shall
not have been held or shall have been canceled, prior to such
termination), it shall have been publicly announced that any person
(other than United or any United Subsidiaries) shall have made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Company Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any manner
adverse in any respect to United its recommendation that the
shareholders of the Company approve the transactions contemplated by
the Merger Agreement, or the Company or the Company Subsidiary shall
have authorized, recommended, proposed (or publicly announced its
intention to authorize, recommend or propose) an agreement to engage in
an Acquisition Transaction with any person other than United or a
United Subsidiary;
(v) Any person other than United or any United Subsidiary shall
have made a proposal to the Company or its shareholders to engage in an
Acquisition
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<PAGE>
Transaction and such proposal shall have been publicly announced;
(vi) Any person other than United or any United Subsidiary shall
have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction (or filed a preliminary
proxy statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an
exchange offer);
(vii) The Company shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of
engaging in an Acquisition Transaction, and following such breach
United would be entitled to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or both);
or
(viii) Any person other than United or any United Subsidiary
shall have filed an application or notice with the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") or other
federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
As defined in the Option Agreement, "Subsequent Triggering Event" means
any of the following events or transactions occurring after the date of signing
the Option Agreement:
(i) The acquisition by any person (other than United or any United
Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
(i) above, except that the percentage referred to in clause (z) in the
definition of Initial Triggering Event shall be 25%.
As defined in the Option Agreement, "Exercise Termination Event" means
each of the following: (i) the Effective Time of the Merger; (ii) termination of
the Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial
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<PAGE>
Triggering Event except a termination by United pursuant to Section 8.01(b) or
Section 8.01(e) of the Merger Agreement (but only if the breach giving rise to
the termination was willful) (each, a "Listed Termination"); or (iii) the
passage of eighteen (18) months (or such longer period as provided in the Option
Agreement) after termination of the Merger Agreement if such termination follows
the occurrence of an Initial Triggering Event or is a Listed Termination. The
term "Holder" shall mean the holder or holders of the Option. Notwithstanding
anything to the contrary contained herein, (i) the Option may not be exercised
at any time when United shall be in material breach of any of its covenants or
agreements contained in the Merger Agreement such that the Company shall be
entitled to terminate the Merger Agreement pursuant to Section 8.01(b) thereof
as a result of a material breach and (ii) the Option Agreement shall
automatically terminate upon the proper termination of the Merger Agreement (x)
by the Company pursuant to Section 8.01(b) thereof as a result of the material
breach by United of its covenants or agreements contained in the Merger
Agreement, (y) by the Company or United pursuant to Section 8.01(d)(ii) if
United's shareholders do not approve the Merger Agreement at the meeting, or (z)
by the Company or United pursuant to Section 8.01(d)(i) if a necessary approval
by a governmental authority has been denied.
As provided in the Option Agreement, in the event that United is
entitled to and wishes to exercise the Option or any portion thereof, it shall
send to the Company a written notice (the "Option Notice" and the date of which
being hereinafter referred to as the "Notice Date") specifying (i) the total
number of shares of Common Stock it will purchase pursuant to such exercise and
(ii) a place and date not earlier than three business days nor later than 60
business days from the Notice Date for the closing of such purchase (the
"Closing Date"); provided, that if prior notification to or approval of the
Federal Reserve Board or any other regulatory or antitrust agency is required in
connection with such purchase, United is obligated to promptly file the required
notice or application for approval, promptly notify the Company of such filing,
and expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence will run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option will be deemed to occur on the Notice Date
relating thereto.
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<PAGE>
Under applicable law, United may be required to obtain the prior
approval of the Federal Reserve Board prior to acquiring 5% or more of the
issued and outstanding shares of Common Stock. Certain other regulatory
approvals may also be required before such an acquisition could be completed.
Neither of the parties to the Option Agreement may assign any of its
rights or obligations under the Merger Agreement or the Option created
thereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, United may assign in whole or
in part its rights and obligations under the Option Agreement; provided,
however, that until the date 15 days following the date on which the Federal
Reserve Board has approved an application by United to acquire the shares of
Common Stock subject to the Option, United may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of the Company, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of conducting a widely
dispersed public distribution on United's behalf or (iv) any other manner
approved by the Federal Reserve Board.
In addition, any shares of the Common Stock purchased upon the exercise
of the Option may be resold by United pursuant to registration rights under the
Option Agreement.
In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise of the Option will be appropriately adjusted and proper provision will
be made so that, in the event that any additional shares of Common Stock are to
be issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
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Stock then issued and outstanding. Whenever the number of shares of Common Stock
purchasable upon exercise of the Option is adjusted as provided in the Stock
Option Agreement, the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which shall be equal to the number of
shares of Common Stock purchasable prior to the adjustment and the denominator
of which shall be equal to the number of shares of Common Stock purchasable
after the adjustment.
At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10 of the Option
Agreement), the Company (or any successor thereto) shall repurchase the Option
from the Holder at a price (the "Option Repurchase Price") equal to the amount
by which (A) the market/offer price (as defined below) exceeds (B) the Option
Price, multiplied by the number of shares for which the Option may then be
exercised and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered prior to an Exercise Termination Event (or such
later period as provided in Section 10 of the Option Agreement), the Company (or
any successor thereto) must repurchase such number of the Option Shares from the
Owner as the Owner designates at a price (the "Option Share Repurchase Price")
equal to the market/offer price multiplied by the number of Option Shares so
designated.
A "Repurchase Event" will be deemed to have occurred upon the
occurrence of any of the following events or transactions after the date hereof:
(i) the acquisition by any person (other than United or any United
Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
subparagraph (i) under the definition of Initial Triggering Event,
except that the percentage referred to in clause (z) shall be 50%.
In the event that prior to an Exercise Termination Event, the Company
enters into an agreement (i) to consolidate with or merge into any person, other
than United or a United Subsidiary, or engage in a plan of exchange with any
person, other than United or a United Subsidiary, and the Company is not the
continuing or surviving corporation
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of such consolidation or merger or the acquirer in such plan of exchange, (ii)
to permit any person, other than United or a United Subsidiary, to merge into
the Company or be acquired by the Company in a plan of exchange and the Company
is the continuing or surviving or acquiring corporation, but, in connection with
such merger or plan of exchange, the then outstanding shares of Common Stock are
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common Stock after
such merger or plan of exchange represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or a substantial part of its or the Company
Subsidiary's assets or deposits to any person, other than United or a United
Subsidiary, then, and in each such case, the agreement governing such
transaction must make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and conditions set forth
in the Option Agreement, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Holder, of either (x) the Acquiring
Corporation (as defined in the Option Agreement) or (y) any person that controls
the Acquiring Corporation.
United may, at any time following a Repurchase Event and prior to the
occurrence of an Exercise Termination Event (or such later period as provided in
the Option Agreement), relinquish the Option (together with any Option Shares
issued to and then owned by United) to the Company in exchange for a cash fee
equal to the Surrender Price; provided, however, that United may not exercise
such rights if the Company has repurchased the Option (or any portion thereof)
or any Option Shares pursuant to the Option Agreement as described above. The
"Surrender Price" shall be equal to $9.0 million (i) plus, if applicable,
United's purchase price with respect to any Option Shares and (ii) minus, if
applicable, the excess of (B) the net cash amounts, if any, received by United
pursuant to the arms' length sale of Option Shares (or any other securities into
which such Option Shares were converted or exchanged) to any unaffiliated party,
over (B) United's purchase price of such Option Shares.
Copies of the Option Agreement and the Merger Agreement are filed as
exhibits to this Schedule 13D and are incorporated herein by reference. The
foregoing summary is not intended to be complete and is qualified in its
entirety by reference to such exhibits.
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<PAGE>
Purchase of Common Stock. Subject to market conditions and developments
with respect to the Merger, United may purchase shares of Common Stock in the
open market or in privately negotiated transactions.
Item 5. Interest in Securities of the Company.
(a) United may be deemed to be the beneficial owner of the Option
Shares. As provided in the Option Agreement, United may exercise the Option only
upon the happening of one or more events, none of which has occurred. See Item 4
hereof. If the Option were exercised in full, the Option Shares would represent
approximately 16.6% of the currently outstanding Common Stock (after giving
effect to the issuance of such Option Shares). United has no right to vote or
dispose of the shares of Common Stock subject to the Option unless and until
such time as the Option is exercised. To the best knowledge of United, none of
the persons listed in Schedule I hereto beneficially owns any shares of Common
Stock.
(b) If United were to exercise the Option, it would have sole power to
vote and, subject to the terms of the Option Agreement, sole power to direct the
disposition of the shares of Common Stock covered thereby.
(c) United acquired the Option in connection with the Merger Agreement.
See Item 4 hereof.
To the best knowledge of United, none of the persons listed in Schedule
I hereto has effected any transactions in Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
United explicity disclaims beneficial ownership of any shares of Common
Stock related to the Option Agreement.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Company.
Except as described in Item 4 and Item 5 hereof, neither United nor, to
the best of its knowledge, any of the persons listed on Schedule I hereto, has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including the transfer or voting
of any of the securities, finder's fees, joint ventures, loan or option
arrangements,
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puts or calls, guarantees of profits, division of profits or losses, or the
giving or withholding of proxies.
Item 7. Material to Be Filed as Exhibits.
2 Agreement and Plan of Merger, dated as of
September 10, 1997, by and among United
Bankshares, Inc. and George Mason Bankshares, Inc.
99 Stock Option Agreement, dated as of September 11,
1997, between United Bankshares, Inc. and George
Mason Bankshares, Inc.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
hereby certify that the information set forth in this statement is true,
complete and correct.
Dated: September 22, 1997
UNITED BANKSHARES, INC.
By:/s/ Richard M. Adams
Name: Richard M. Adams
Title: Chairman of the Board and
Chief Executive Officer
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<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
UNITED BANKSHARES, INC.
The names, business addresses and present principal occupations of the
directors and executive officers of United Bankshares, Inc. are set forth below.
The business address of each of the directors of United Bankshares, Inc. is also
the business address of such director's employer, if any. Directors of United
Bankshares, Inc. are identified by an asterisk. Unless otherwise indicated, all
directors and officers listed below are citizens of the United States.
Name Present Principal Occupation or Employment and
Address
Richard M. Adams* Chairman of the Board and Chief Executive Officer of
United, c/o UBSI, P.O. Box 1508 Parkersburg, West
Virginia 26102
Douglass H. Adams* Executive Vice President of United, c/o UNB-Vienna,
P.O. Box 5190, Vienna, West Virginia 26105
William W. Wagner* Retired Executive Vice President of United and
Retired Chairman of the Board of United Mortgage
Company, Inc., 406 Plantation Road, Huddleston,
Virginia 24104-3003
I.N. Smith, Jr.* Retired Executive Officer of United, c/o UNB-
Charleston, P.O. Box 393, Charleston, West Virginia
25392
William C. Pitt III* Hotel Resort Developer, 1620 Dye Place, Wilmington,
North Carolina 28405
H. Smoot Fahlgren* Chairman and former Chief Executive Officer of
Fahlgren, Inc., Fahlgren, P.O. Box 1628, Parkersburg,
West Virginia 26101
Russell L. Isaacs* Owner of Russell L. Isaacs and Company, a consulting
firm, P.O. Box 441, Charleston, West Virginia 25322
F.T. Graff, Jr.* Attorney at Law and Partner with law firm of McDavid
Bowles Rice Graff and Love, P.O. Box 1386,
Charleston, West Virginia 25325
Warren A. Thornhill, III* Attorney at Law, P.O. Box 1597, Beckley, West
Virginia 25802
Harold L. Wilkes* President of Little General Stores, Inc., P.O. Box
908, Beckley, West Virginia 25802
Robert P. McLean* President of Stanaford Acres, Inc. and Vice President
of Sigmund-McClean, Inc., P.O. Box 1517, Beckley,
West Virginia 25802
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Name Present Principal Occupation or Employment and
Address
G. Ogden Nutting* President of the Ogden Newspapers, Inc., The Ogden
Newspapers, Inc., 1500 Main Street, Wheeling, West
Virginia 26003
Harry L. Buch* Attorney at Law, and Partner with Bailey, Riley, Buch
& Harman, Bailey Riley Buch and Harman, P.O. Box 631,
Wheeling, West Virginia 26003
Robert G. Astorg* Managing Director, IDS, P.O. Box 2119
Parkersburg, West Virginia 26101
C.E. Goodwin* Attorney at Law and Counsel with Goodwin & Goodwin,
Goodwin & Goodwin, P.O. Box 636
Ripley, West Virginia 25271
P. Clinton Winter, Jr.* President of Bray & Oakley Insurance Agency, P.O. Box
386, Logan, West Virginia 25601-0386
R. Terry Butcher* Attorney at Law and Partner with Butcher & Butcher,
Butcher & Butcher, P.O. Box 100, Glenville, West
Virginia 26351
James W. Word, Jr.* President of Beckley Loan Company and Vice President
of Beckley Loan and Industrial Corporation, P.O. Box
1575, Beckley, West Virginia 25802
Thomas J. Blair III* President and Chief Executive Officer of Kelley,
Gidley, Blair & Wolfe, Inc, P.O. Box 2986,
Charleston, West Virginia 25321
Andrew Houvouras* President of A&L Industries, 1237 South Park Drive,
Huntington, West Virginia 25705
Charles E. Stealey* A Private Consultant, 605 Crestwood Drive, Holmes
Beach, Florida 34217
John W. Dudley* President of J.W. Dudley Sons & Company, 2419 Dudley
Avenue, Parkersburg, West Virginia 26101
Ted J. Georgelas* President of Georgelas and Sons, Inc., Georgelas &
Sons, Inc., 7601 Lewisville Road,
Suite 250, McLean, Virginia 22102-2815
Gaston Caperton* Fellow at John F. Kennedy School of Government at
Harvard University, P.O. Box 891, Martinsburg, West
Virginia 25401
Steven E. Wilson Chief Financial Officer, Secretary, Treasurer and
Executive Vice President of United, P.O. Box 1508
Parkersburg, West Virginia 26102
Gary L. Ellis Executive Vice President, 300 United Center, 500
Virginia Street, East, Charleston, West
Virginia 25301
James B. Hayhurst Executive Vice President, P.O. Box 1508, Parkersburg,
West Virginia 26102
Joe L. Wilson Executive Vice President, 1501 Market Street
Wheeling, West Virginia 26003
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Exhibit Index
2 Agreement and Plan of Merger, dated as of September 10,
1997, by and between United Bankshares, Inc. and George
Mason Bankshares, Inc.
99 Stock Option Agreement, dated as of September 11, 1997,
between United Bankshares, Inc. and George Mason Bankshares,
Inc.
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Execution Copy
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
dated as of September 10, 1997
by and between
UNITED BANKSHARES, INC.
and
GEORGE MASON BANKSHARES, INC.
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<PAGE>
TABLE OF CONTENTS
PAGE
RECITALS.....................................................................1
ARTICLE I
CERTAIN DEFINITIONS..........................................................1
1.01 Certain Definitions............................................1
ARTICLE II
The Merger...................................................................6
2.01 The Merger.....................................................6
2.02 Articles Amendment.............................................6
2.03 Effective Date and Effective Time..............................7
2.04 Plan of Merger.................................................7
ARTICLE III
Consideration; Exchange Procedures...........................................7
3.01 Merger Consideration...........................................7
3.02 Rights as Stockholders; Stock Transfers........................7
3.03 Fractional Shares..............................................8
3.04 Exchange Procedures............................................8
3.05 Anti-Dilution Provisions.......................................9
3.06 Options........................................................9
ARTICLE IV
Actions Pending Acquisition.................................................10
4.01 Forebearances of Mason........................................10
4.02 Forebearances of United.......................................12
ARTICLE V
Representations and Warranties..............................................13
5.01 Disclosure Schedules..........................................13
5.02 Standard......................................................13
5.03 Representations and Warranties of Mason.......................14
5.04 Representations and Warranties of United......................24
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PAGE
ARTICLE VI
Covenants...................................................................28
6.01 Reasonable Best Efforts.......................................28
6.02 Stockholder Approvals.........................................29
6.03 Registration Statement........................................29
6.04 Press Releases................................................30
6.05 Access; Information...........................................30
6.06 Acquisition Proposals.........................................31
6.07. Affiliate Agreements..........................................31
6.08 Takeover Laws.................................................32
6.09 Certain Policies..............................................32
6.10 NASDAQ Listing................................................32
6.11 Regulatory Applications.......................................32
6.12 Indemnification...............................................33
6.13 Benefit Plans.................................................34
6.14 Notification of Certain Matters...............................34
6.15 Directors and Officers........................................34
6.16 Dividend Coordination.........................................34
6.17 Bank Merger...................................................34
6.18 Mason Fee.....................................................35
ARTICLE VII
Conditions to Consummation of the Merger....................................35
7.01 Conditions to Each Party's Obligation to Effect the Merger....35
7.02 Conditions to Obligation of Mason.............................36
7.03 Conditions to Obligation of United............................37
ARTICLE VIII
Termination.................................................................38
8.01 Termination...................................................38
8.02 Effect of Termination and Abandonment.........................39
ARTICLE IX
Miscellaneous...............................................................39
9.01 Survival......................................................39
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PAGE
9.02 Waiver; Amendment.............................................39
9.03 Counterparts..................................................39
9.04 Governing Law.................................................39
9.05 Expenses......................................................40
9.06 Notices.......................................................40
9.07 Entire Understanding; No Third Party Beneficiaries............41
9.08 Interpretation; Effect........................................41
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Mason Affiliate Agreement
EXHIBIT C Form of United Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of September 10, 1997 (this
"Agreement"), by and between George Mason Bankshares, Inc. ("Mason") and United
Bankshares, Inc. ("United").
RECITALS
A. Mason. Mason is a Virginia corporation, having its principal place
of business in Fairfax, Virginia.
B. United. United is a West Virginia corporation, having its principal
place of business in Charleston, West Virginia.
C. Stock Option Agreement. As an inducement to the willingness of
United to continue to pursue the transactions contemplated by this Agreement ,
Mason expects (but is not obligated) to grant to United an option pursuant to a
stock option agreement, in substantially the form of Exhibit A.
D. Intentions of the Parties. It is the intention of the parties to
this Agreement that the business combination contemplated hereby be accounted
for under the "pooling-of-interests" accounting method and treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 (the
"Code").
E. Board Action. The respective Boards of Directors of each of United
and Mason have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal for
a merger, consolidation or other business combination involving Mason or
any of its Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, Mason or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
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"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m).
"Corporation Commission" has the meaning set forth in Section 2.01(b).
"Costs" has the meaning set forth in Section 6.12(a).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided
for in Section 2.03.
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water
Act, the Federal Clean Air Act, and the Occupational Safety and Health Act,
each as amended, regulations promulgated thereunder, and state
counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Amount" has the meaning set forth in Section 6.12(b).
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"Insurance Policy" has the meaning set forth in Section 5.03(t).
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Mason" has the meaning set forth in the preamble to this Agreement.
"Mason Affiliate" has the meaning set forth in Section 6.07(a).
"Mason Board" means the Board of Directors of Mason.
"Mason By-Laws" means the By-laws of Mason.
"Mason Certificate" means the Amended Articles of Incorporation of
Mason.
"Mason Common Stock" means the common stock, par value $1.11 per share,
of Mason.
"Mason Meeting" has the meaning set forth in Section 6.02.
"Mason Preferred Stock" means the preferred stock, par value $0.01 per
share, of Mason.
"Mason Stock" means, collectively, Mason Common Stock and Mason
Preferred Stock.
"Mason Stock Plans" has the meaning set forth in Section 3.06.
"Material Adverse Effect" means, with respect to United or Mason, any
effect that (i) is material and adverse to the financial position, results
of operations or business of United and its Subsidiaries taken as a whole
or Mason and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either United or Mason to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking
and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to
banks and their holding companies generally and (c) any modifications or
changes to valuation policies and practices in connection with the Merger
or restructuring charges taken in connection with the Merger, in each case
in accordance with generally accepted accounting principles.
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 3.01.
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"Multiemployer Plan" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"New Certificate" has the meaning set forth in Section 3.04.
"Old Certificate" has the meaning set forth in Section 3.04.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plans" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
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"Stock Option Agreement" has the meaning set forth in Recital C.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03 (o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Mason Stock held by Mason or any
of its Subsidiaries or by United or any of its Subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted in good faith.
"United" has the meaning set forth in the preamble to this Agreement.
"United Board" means the Board of Directors of United.
"United Common Stock" means the common stock, par value $2.50 per
share, of United.
"United Meeting" has the meaning set forth in Section 6.02.
"VSCA" means the Virginia Stock Corporation Act.
"West Virginia Secretary" has the meaning set forth in Section 2.01(b).
"WVCA" means the West Virginia Corporation Act.
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ARTICLE II
THE MERGER
2.01 The Merger. (a) At the Effective Time, Mason shall merge with and
into United (the "Merger"), the separate corporate existence of Mason shall
cease and United shall survive and continue to exist as a West Virginia
corporation (United, as the surviving corporation in the Merger, sometimes being
referred to herein as the "Surviving Corporation"). United may at any time prior
to the Effective Time change the method of effecting the combination with Mason
(including, without limitation, the provisions of this Article II) if and to the
extent it deems such change to be necessary, appropriate or desirable; provided,
however, that no such change shall (i) alter or change the amount or kind of
consideration to be issued to holders of Mason Stock as provided for in this
Agreement (the "Merger Consideration"), (ii) adversely affect the tax treatment
of Mason's stockholders as a result of receiving the Merger Consideration or the
Merger qualifying for "pooling of interests" accounting treatment or (iii)
materially impede or delay consummation of the transactions contemplated by this
Agreement; and provided further, that United shall provide Mason written notice
of such change.
(b) Subject to the satisfaction or waiver of the conditions set forth
in Article VII, the Merger shall become effective upon the occurrence of the
filing in the office of the Virginia State Corporation Commission (the
"Corporation Commission") of articles of merger in accordance with Section
13.1-720 of the VSCA and the filing in the Office of the Secretary of State of
the State of West Virginia (the "West Virginia Secretary") of articles of merger
in accordance with Section 31-1-36 of the WVCA or such later date and time as
may be set forth in such articles and the issuance of a certificate of merger by
the Corporation Commission under the VSCA and the issuance of a certificate of
merger by the West Virginia Secretary. The Merger shall have the effects
prescribed in the WVCA and the VSCA.
(c) Articles of Incorporation and By-Laws. Subject to Section 2.02, the
articles of incorporation and by-laws of United immediately after the Merger
shall be those of United as in effect immediately prior to the Effective Time.
(d) Directors and Officers of the Surviving Corporation. The directors
and officers of United immediately after the Merger shall be the directors and
officers of United (except as provided in Section 6.15) immediately prior to the
Effective Time, until such time as their successors shall be duly elected and
qualified.
2.02 Articles Amendment. At the Effective Time, Article VI of the
United Restated Articles of Incorporation shall be amended to read as follows
(the "Articles Amendment"):
"VI. The amount of the authorized capital stock of the corporation is
$100,000,000 which shall be divided into 40,000,000 shares of a par value
of $2.50 per share."
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2.03 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Merger (the "Effective Date") to occur on (i) the fifth
business day to occur after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (or, at the election of United, on the last business day of the month
in which such fifth business day occurs or, if such fifth business day occurs
within the last five business days of such month, on the last business day of
the succeeding month) or (ii) such other date to which the parties may agree in
writing; provided, however, that in no event shall the Effective Date occur on
or prior to January 1, 1998. The time on the Effective Date when the Merger
shall become effective is referred to as the "Effective Time."
2.04 Plan of Merger. At the request of United, United and Mason shall
enter into a separate plan of merger reflecting the terms hereof for purposes of
any filing requirement.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) Outstanding Mason Common Stock and Mason Rights. Each share,
excluding Treasury Stock, of Mason Common Stock issued and outstanding
immediately prior to the Effective Time shall become and be converted into
0.85 of a share of United Common Stock (the "Exchange Ratio"). The Exchange
Ratio shall be subject to adjustment as set forth in Section 3.05.
(b) Outstanding United Stock. Each share of United Common Stock issued
and outstanding immediately prior to the Effective Time shall remain issued
and outstanding and unaffected by the Merger, subject to any applicable
dissenters or appraisal rights under the WVCA.
(c) Treasury Shares. Each share of Mason Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Mason Stock shall cease to be, and shall have no rights as,
stockholders of Mason, other than to receive any dividend or other distribution
with respect to such Mason Stock with a record date occurring prior to the
Effective Time and the consideration provided under this Article III. After the
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Effective Time, there shall be no transfers on the stock transfer books of Mason
or the Surviving Corporation of shares of Mason Stock.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of United Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
United shall pay to each holder of Mason Common Stock who would otherwise be
entitled to a fractional share of United Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the last
sale prices of United Common Stock, as reported by NASDAQ reporting system (as
reported in The Wall Street Journal or, if not reported therein, in another
authoritative source), for the five NASDAQ trading days immediately preceding
the Effective Date.
3.04 Exchange Procedures. (a) At or prior to the Effective Time, United
shall deposit, or shall cause to be deposited, with United Bank (in such
capacity, the "Exchange Agent"), for the benefit of the holders of certificates
formerly representing shares of Mason Common Stock ("Old Certificates"), for
exchange in accordance with this Article III, certificates representing the
shares of United Common Stock ("New Certificates") and an estimated amount of
cash (such cash and New Certificates, together with any dividends or
distributions with a record date occurring after the Effective Date with respect
thereto (without any interest on any such cash, dividends or distributions),
being hereinafter referred to as the "Exchange Fund") to be paid pursuant to
this Article III in exchange for outstanding shares of Mason Common Stock.
(b) As promptly as practicable after the Effective Date, United shall
send or cause to be sent to each former holder of record of shares of Mason
Common Stock immediately prior to the Effective Time transmittal materials for
use in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. United shall cause the New Certificates into which
shares of a stockholder's Mason Common Stock are converted on the Effective Date
and/or any check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Mason Common Stock (or indemnity reasonably
satisfactory to United and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, if any,
nor any party hereto shall be liable to any former holder of Mason Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
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(d) No dividends or other distributions with respect to United Common
Stock with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Mason Common
Stock converted in the Merger into the right to receive shares of such United
Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.04, and, following 90 days after the Effective Date, no such
shares of Mason Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
United Common Stock such holder had the right to receive upon surrender of the
Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Mason for six months after the Effective Time shall be paid to
United. Any stockholders of Mason who have not theretofore complied with this
Article III shall thereafter look only to United for payment of the shares of
United Common Stock, cash in lieu of any fractional shares and unpaid dividends
and distributions on United Common Stock deliverable in respect of each share of
Mason Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
3.05 Anti-Dilution Provisions. In the event United changes (or
establishes a record date for changing) the number of shares of United Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding United Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted.
3.06 Options. (a) At the Effective Time, each outstanding option to
purchase shares of Mason Common Stock under the Mason Stock Plans (each, a
"Mason Stock Option"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such Mason Stock Option, the number of shares of United Common Stock equal to
(a) the number of shares of Mason Common Stock subject to the Mason Stock
Option, multiplied by (b) the Exchange Ratio (such product rounded to the
nearest whole number) (a "Replacement Option"), at an exercise price per share
(rounded to the nearest whole cent) equal to (y) the aggregate exercise price
for the shares of Mason Common Stock which were purchasable pursuant to such
Mason Stock Option divided by (z) the number of full shares of United Common
Stock subject to such Replacement Option in accordance with the foregoing.
Notwithstanding the foregoing, each Mason Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code. At or
prior to the Effective Time, Mason shall use its best efforts, including using
its best efforts to obtain any necessary consents from optionees, with respect
to the Mason Stock Plans to permit the replacement of the outstanding Mason
Stock
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Options by United pursuant to this Section and to permit United to assume the
Mason Stock Plans. Mason shall further take all action necessary to amend the
Mason Stock Plans to eliminate automatic grants or awards thereunder following
the Effective Time. At the Effective Time, United shall assume the Mason Stock
Plans; provided, that such assumption shall be only in respect of the
Replacement Options and that United shall have no obligation with respect to any
awards under the Mason Stock Plans other than the Replacement Options and shall
have no obligation to make any additional grants or awards under such assumed
Mason Stock Plans.
(b) At all times after the Effective Time, United shall reserve for
issuance such number of shares of United Common Stock as necessary so as to
permit the exercise of options granted under the Mason Stock Plans in the manner
contemplated by this Agreement and the instruments pursuant to which such
options were granted. United shall make all filings required under federal and
state securities laws no later than the Effective Time so as to permit the
exercise of such options and the sale of the shares received by the optionee
upon such exercise at and after the Effective Time and United shall continue to
make such filings thereafter as may be necessary to permit the continued
exercise of options and sale of such shares.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forebearances of Mason. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of United, Mason will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Mason and its Subsidiaries
other than in the ordinary and usual course or fail to use reasonable
efforts to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action reasonably
likely to have an adverse affect upon Mason's ability to perform any of its
material obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Mason Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or (iii) permit any additional shares of Mason Stock to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights.
(c) Dividends, Etc. (a) Make, declare, pay or set aside for payment any
dividend, other than (A) quarterly cash dividends on Mason Stock in an
amount not to exceed $0.14 per share with record and payment dates
consistent with past practice, and (B) dividends from
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wholly owned Subsidiaries to Mason or another wholly owned Subsidiary of
Mason) on or in respect of, or declare or make any distribution on any
shares of Mason Stock or (b) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Mason or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit, (including incentive or bonus payments) except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i) as
may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any director,
officer or employee of Mason or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity.
(h) Governing Documents. Amend the Mason Certificate, Mason By-laws or
the certificate of incorporation or by-laws (or similar governing
documents) of any of Mason's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by
generally accepted accounting principles.
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(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(k) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other
material claims, actions or proceedings and which involve solely money
damages in an amount, individually or in the aggregate for all such
settlements, that is not material to Mason and its Subsidiaries, taken as a
whole.
(l) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
(m) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(n) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 Forebearances of United. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Mason, United will not, and will cause each of its
Subsidiaries not to:
(a) Preservation. Fail to use reasonable efforts to preserve intact in
any material respect their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates.
(b) Extraordinary Dividends. Make, declare, pay or set aside for
payment any extraordinary dividend.
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(c) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation; provided, however, that nothing contained
herein shall limit the ability of United to exercise its rights under the
Stock Option Agreement.
(d) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, United has
delivered to Mason a schedule and Mason has delivered to United a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04 or to one or more of its covenants contained in Article IV; provided,
that (a) no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not be reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under the standard established by Section 5.02, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect on the party
making the representation. Mason's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached as a
result of effects arising solely from actions taken in compliance with a written
request of United.
5.02 Standard. No representation or warranty of Mason or United
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect. For purposes of this Agreement, "knowledge" shall mean,
with respect to a party hereto, actual
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knowledge of any officer of that party with the title, if any ranking not less
than senior vice president and that party's in-house counsel, if any.
5.03 Representations and Warranties of Mason. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Mason hereby represents
and warrants to United:
(a) Organization, Standing and Authority. Mason is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Mason is duly qualified to do business and is in
good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Mason Stock. As of the date hereof, the authorized capital stock of
Mason consists solely of (i) 9,000,000 shares of Mason Common Stock, of
which 5,117,405 shares were outstanding as of the date hereof, and (ii)
1,000,000 shares of Mason Preferred Stock, of which no shares are
outstanding. As of the date hereof, no shares of Mason Common Stock and no
shares of Mason Preferred Stock were held in treasury by Mason or otherwise
owned by Mason or its Subsidiaries ("Treasury Stock"). The outstanding
shares of Mason Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). As of
the date hereof, except as Previously Disclosed in its Disclosure Schedule,
there are no shares of Mason Stock authorized and reserved for issuance,
Mason does not have any Rights issued or outstanding with respect to Mason
Stock, and Mason does not have any commitment to authorize, issue or sell
any Mason Stock or Rights, except pursuant to this Agreement and the Stock
Option Agreement. The number of shares of Mason Common Stock which are
issuable and reserved for issuance upon exercise of Mason Stock Options as
of the date hereof are Previously Disclosed in Mason's Disclosure Schedule.
(c) Subsidiaries. (i)(A) Mason has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) except as Previously Disclosed, it owns, directly or
indirectly, all the issued and outstanding equity securities of each of its
Subsidiaries, (C) no equity securities of any of its Subsidiaries are or
may become required to be issued (other than to it or its wholly-owned
Subsidiaries) by reason of any Right or otherwise, (D) there are no
contracts, commitments, understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer any equity
securities of any such Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (E) there are no contracts, commitments, understandings, or
arrangements relating to its rights to vote or to dispose of such
securities and (F) all the equity securities of each Subsidiary held by
Mason or its Subsidiaries are fully paid and nonassessable (except
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pursuant to 12 U.S.C. ss.55) and are owned by Mason or its Subsidiaries
free and clear of any Liens.
(ii) Mason does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Mason's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) Corporate Power. Each of Mason and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Mason has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of this Agreement (including the
agreement of merger set forth herein) by the holders of more than
two-thirds of the outstanding shares of Mason Common Stock entitled to vote
thereon (which is the only shareholder vote required thereon), this
Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby have been authorized by all necessary corporate action
of Mason and the Mason Board prior to the date hereof. This Agreement is a
valid and legally binding obligation of Mason, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles). In approving this Agreement and
the Merger and the related transactions, the Board of Directors of Mason
has satisfied its obligations under Article 8 of the Mason Certificate. The
Mason Board of Directors has received the written opinion of Friedman,
Billings, Ramsey & Co., Inc. to the effect that as of the date hereof the
consideration to be received by the holders of Mason Common Stock in the
Merger is fair to the holders of Mason Common Stock from a financial point
of view.
(f) Regulatory Filings; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Mason or any of its
Subsidiaries in connection with the execution, delivery or performance by
Mason of this Agreement or the Stock Option Agreement or to consummate the
Merger except for (A) filings of applications or notices with federal and
Virginia banking authorities, (B) filings with the SEC and state securities
authorities, and (C) the filing of articles of merger with the Corporation
Commission pursuant to the VSCA and
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the issuance of a certificate of merger in connection therewith. As of the
date hereof, Mason is not aware of any reason why the approvals set forth
in Section 7.01(b) will not be received without the imposition of a
condition, restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any right
of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Mason or of any of its Subsidiaries or to which Mason or any
of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Mason Certificate or the
Mason By-Laws, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) Financial Reports and SEC Documents. (i) Mason's Annual Reports on
Form 10- K for the fiscal years ended December 31, 1994, 1995 and 1996, and
all other reports, registration statements, definitive proxy statements or
information statements filed or to be filed by it or any of its
Subsidiaries subsequent to December 31, 1994 under the Securities Act, or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed or to be filed (collectively, Mason's "SEC Documents") with the SEC,
as of the date filed, (A) complied or will comply in all material respects
with the applicable requirements under the Securities Act or the Exchange
Act, as the case may be, and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and each of
the balance sheets or statements of condition contained in or incorporated
by reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of Mason and its Subsidiaries as of its date, and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and cash flows, as the case
may be, of Mason and its Subsidiaries for the periods to which they relate,
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments and the
absence of footnotes in the case of unaudited statements.
(ii) Since December 31, 1996, Mason and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
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(iii) Since December 31, 1996, (A) Mason and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to this Agreement
and the transactions contemplated hereby) and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.03
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Mason.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Mason or any of its Subsidiaries
and, to Mason's knowledge, no such litigation, claim or other proceeding has
been threatened.
(i) Regulatory Matters. (i) Neither Mason nor any of its Subsidiaries
or properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any federal
or state governmental agency or authority charged with the supervision or
regulation of financial institutions (or their holding companies) or issuers of
securities or engaged in the insurance of deposits (including, without
limitation, the Office of the Comptroller of the Currency, the Federal Reserve
System and the FDIC) or the supervision or regulation of it or any of its
Subsidiaries (collectively, the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(j) Compliance with Laws. Each of Mason and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses
as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
Mason's knowledge, no suspension or cancellation of any of them is
threatened; and
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(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that Mason
or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to Mason's knowledge, do any
grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for this Agreement, the Stock
Option Agreement and those agreements and other documents filed as exhibits
to its SEC Documents, neither it nor any of its Subsidiaries is a party to,
bound by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material contract"
within the meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii)
that restricts or limits in any way the conduct of business by it or any of
its Subsidiaries (including without limitation a non-compete or similar
provision). Neither it nor any of its Subsidiaries is in default under any
contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receive benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
(l) No Brokers. No action has been taken by Mason that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee to be
paid to Friedman, Billings, Ramsey & Co., Inc.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of Mason's
Disclosure Schedule contains a complete and accurate list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, severance, welfare and
fringe benefit plans, employment or severance agreements and all similar
practices, policies and arrangements in which any employee or former
employee (the "Employees"), consultant or former consultant (the
"Consultants") or director or former director (the "Directors") of Mason or
any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (the "Compensation and Benefit
Plans"). Neither Mason nor any of its Subsidiaries has any commitment to
create any additional Compensation and Benefit Plan or to modify or change
any existing Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
or any regulations or rules promulgated thereunder, and all filings,
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disclosures and notices required by ERISA, the Code, the Securities Act,
the Exchange Act, the Age Discrimination in Employment Act and any other
applicable law have been timely made. Each Compensation and Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter (including a determination that the related trust under such
Compensation and Benefit Plan is exempt from tax under Section 501(a) of
the Code) from the Internal Revenue Service ("IRS"), and Mason is not aware
of any circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
Mason, threatened legal action, suit or claim relating to the Compensation
and Benefit Plans. Neither Mason nor any of its Subsidiaries has engaged in
a transaction, or omitted to take any action, with respect to any
Compensation and Benefit Plan that would reasonably be expected to subject
Mason or any of its Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA, assuming for purposes of
Section 4975 of the Code that the taxable period of any such transaction
expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of
ERISA has been or is expected to be incurred by Mason or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any single-employer
plan of any entity (an "ERISA Affiliate") which is considered one employer
with Mason under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA Affiliate Plan"). None of Mason, any of its
Subsidiaries or any ERISA Affiliate has contributed, or has been obligated
to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA at any time since September 26, 1980. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed
for any Compensation and Benefit Plan or by any ERISA Affiliate Plan within
the 12-month period ending on the date hereof, and no such notice will be
required to be filed as a result of the transactions contemplated by this
Agreement. The PBGC has not instituted proceedings to terminate any Pension
Plan or ERISA Affiliate Plan and, to Mason's knowledge, no condition exists
that presents a material risk that such proceedings will be instituted. To
the knowledge of Mason, there is no pending investigation or enforcement
action by the PBGC, the Department of Labor (the "DOL") or IRS or any other
governmental agency with respect to any Compensation and Benefit Plan.
Under each Pension Plan and ERISA Affiliate Plan, as of the date of the
most recent actuarial valuation performed prior to the date of this
Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did not
exceed the then current value of the assets of such Pension Plan or ERISA
Affiliate Plan and since such date there has been neither an adverse change
in the financial condition of such Pension Plan or ERISA Affiliate Plan nor
any
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amendment or other change to such Pension Plan or ERISA Affiliate Plan that
would increase the amount of benefits thereunder which reasonably could be
expected to change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which
Mason or any of its Subsidiaries is a party have been timely made or have
been reflected on Mason's financial statements. Neither any Pension Plan
nor any ERISA Affiliate Plan has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and all required payments to the PBGC with respect to
each Pension Plan or ERISA Affiliate Plan have been made on or before their
due dates. None of Mason, any of its Subsidiaries or any ERISA Affiliate
(x) has provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has taken any action,
or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a lien under Section 412(n) of the
Code or pursuant to ERISA.
(v) Neither Mason nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death benefits
under any Compensation and Benefit Plan, other than benefits mandated by
Section 4980B of the Code, and each such Compensation and Benefit Plan may
be amended or terminated without incurring liability thereunder. There has
been no communication to Employees by Mason or any of its Subsidiaries that
would reasonably be expected to promise or guarantee such Employees retiree
health or life insurance or other retiree death benefits on a permanent
basis.
(vi) Mason and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign Employees.
(vii) With respect to each Compensation and Benefit Plan, if
applicable, Mason has provided or made available to United, true and
complete copies of existing: (A) Compensation and Benefit Plan documents
and amendments thereto; (B) trust instruments and insurance contracts; (C)
two most recent Forms 5500 filed with the IRS; (D) most recent actuarial
report and financial statement; (E) the most recent summary plan
description; (F) forms filed with the PBGC (other than for premium
payments); (G) most recent determination letter issued by the IRS; (H) any
Form 5310 or Form 5330 filed with the IRS; and (I) most recent
nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(viii) Except as disclosed on Section 5.03(m)(viii) of Mason's
Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement would not, directly or indirectly (including, without
limitation, as a result of any termination of employment prior to
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or following the Effective Time) reasonably be expected to (A) entitle any
Employee, Consultant or Director to any payment (including severance pay or
similar compensation) or any increase in compensation, (B) result in the
vesting or acceleration of any benefits under any Compensation and Benefit
Plan or (C) result in any material increase in benefits payable under any
Compensation and Benefit Plan.
(ix) Except as disclosed on Section 5.03(m)(ix) of Mason's Disclosure
Schedule, neither Mason nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which would
not reasonably be expected to be deductible as a result of the limitations
under Section 162(m) of the Code and the regulations issued thereunder.
(x) Except as disclosed on Section 5.03(m)(x) of Mason's Disclosure
Schedule, as a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result
of any termination of employment prior to or following the Effective Time),
none of United, Mason or the Surviving Corporation, or any of their
respective Subsidiaries will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of the
Code), without regard to whether such payment is reasonable compensation
for personal services performed or to be performed in the future.
(n) Labor Matters. Neither Mason nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
Mason or any of its Subsidiaries the subject of a proceeding asserting that
it or any such Subsidiary has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel Mason
or any such Subsidiary to bargain with any labor organization as to wages
or conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to Mason's knowledge,
threatened, nor is Mason aware of any activity involving its or any of its
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
(o) Takeover Laws; Dissenters Rights. Mason has taken all action
required to be taken by it in order to exempt this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby from,
and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
"moratorium", "control share", "fair price", "affiliate transaction",
"business combination" or other antitakeover laws and regulations of any
state (collectively, "Takeover Laws"), including, without limitation, the
Commonwealth of Virginia, and including, without limitation, Sections
13.1-725 through 13.1-728 of the VSCA (because a majority of Mason's
disinterested directors approved such transactions for such purposes prior
to any "determination date" with respect to United) and Sections 13.1-728.1
through 13.1-728.9 of
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the VSCA. The provisions of Article 7 of the Mason Certificate do not apply
to the entering into of this Agreement, this Agreement and the transactions
contemplated hereby, including the Merger, as they have been approved by
the required majority votes of the directors referred to therein. The
provisions of Article 7 of the Mason Certificate do not apply to the
entering into of the Stock Option Agreement, the Stock Option Agreement and
the transactions contemplated thereby. Holders of Mason Common Stock do not
have dissenters' rights in connection with the Merger.
(p) Environmental Matters. To Mason's knowledge, neither the conduct
nor operation of Mason or its Subsidiaries nor any condition of any
property presently or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, violates or violated Environmental Laws and
to Mason's knowledge, no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To Mason's knowledge, neither Mason nor any of its
Subsidiaries has received any notice from any person or entity that Mason
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(q) Tax Matters. (i) All Tax Returns that are required to be filed by
or with respect to Mason and its Subsidiaries have been duly filed, (ii)
all Taxes shown to be due on the Tax Returns referred to in clause (i) have
been paid in full, (iii) the Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have been raised by
the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (i) are currently pending, and (vi)
no waivers of statutes of limitation have been given by or requested with
respect to any Taxes of Mason or its Subsidiaries. Mason has made available
to United true and correct copies of the United States federal income Tax
Returns filed by Mason and its Subsidiaries for each of the three most
recent fiscal years ended on or before December 31, 1996. Neither Mason nor
any of its Subsidiaries has any liability with respect to income, franchise
or similar Taxes that accrued on or before the end of the most recent
period covered by Mason's SEC Documents filed prior to the date hereof in
excess of the amounts accrued with respect thereto that are reflected in
the financial statements included in Mason's SEC Documents filed on or
prior to the date hereof. As of the date hereof, neither Mason nor any of
its Subsidiaries has any
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reason to believe that any conditions exist that might prevent or impede
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(iii) Mason and its Subsidiaries will not be liable for any taxes as a
result of any Covered Transaction.
(r) Risk Management Instruments. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Mason's own account, or
for the account of one or more of Mason's Subsidiaries or their customers
(all of which are listed on Mason's Disclosure Schedule), were entered into
(i) in accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory policies and (ii) with counterparties
believed to be financially responsible at the time; and each of them
constitutes the valid and legally binding obligation of Mason or one of its
Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and is in full force and effect. Neither Mason nor its
Subsidiaries, nor to Mason's knowledge any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement.
(s) Books and Records. The books and records of Mason and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein and they fairly reflect the
substance of events and transactions included therein.
(t) Insurance. Mason's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Mason or its
Subsidiaries. Mason and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Mason
reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; Mason
and its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(u) Accounting Treatment. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
(v) Disclosure. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary
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in order to make the statements and information contained in this Section
5.03 not misleading.
5.04 Representations and Warranties of United. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, United hereby represents
and warrants to Mason as follows:
(a) Organization, Standing and Authority. United is a corporation duly
organized, validly existing and in good standing under the laws of the
State of West Virginia. United is duly qualified to do business and is in
good standing in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified.
(b) United Stock. (i) As of the date hereof, the authorized capital
stock of United consists solely of 20,000,000 shares of United Common
Stock, of which no more than 15,295,130 shares were outstanding as of the
date hereof. As of the date hereof, except as set forth in its Disclosure
Schedule, United does not have any Rights issued or outstanding with
respect to United Stock and United does not have any commitment to
authorize, issue or sell any United Stock or Rights, except pursuant to
this Agreement. The outstanding shares of United Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights).
(ii) The shares of United Common Stock to be issued in exchange for
shares of Mason Common Stock in the Merger, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and subject to no preemptive rights.
(c) Subsidiaries. Each of United's Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the jurisdiction
of its organization, and is duly qualified to do business and is in good
standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and it owns,
directly or indirectly, all the issued and outstanding equity securities of
each of its Significant Subsidiaries.
(d) Corporate Power. Each of United and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and United has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of this Agreement (including the
agreement of merger set forth herein) and the Articles Amendment by the
holders of a majority of the outstanding shares of United
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Common Stock entitled to vote thereon (which are the only shareholder votes
required thereon), this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby have been authorized by all
necessary corporate action of United and the United Board prior to the date
hereof. This Agreement is a valid and legally binding agreement of United,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles).
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by United or any of its
Subsidiaries in connection with the execution, delivery or performance by
United of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) the adoption and approval by the
shareholders of United of this Agreement and the Articles Amendment; (C)
the filing and declaration of effectiveness of the Registration Statement;
(D) the filing of articles of merger with the Corporation Commission
pursuant to the VSCA and the West Virginia Secretary pursuant to the WVCA
and the issuance of related certificates of merger and the filing of the
Articles Amendment with the West Virginia Secretary of State; (E) such
filings as are required to be made or approvals as are required to be
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of United Stock in the Merger; and (F) receipt
of the approvals set forth in Section 7.01(b). As of the date hereof,
United is not aware of any reason why the approvals set forth in Section
7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of United or of any of its
Subsidiaries or to which United or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of United or any of its Subsidiaries, or (C) require any consent
or approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect. (i)
United's SEC Documents, as of the date filed, (A) complied or will comply
in all material respects with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (B) did not and
will not contain any untrue statement of a material fact or omit to state a
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material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets or statements of
condition contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of United and its
Subsidiaries as of its date, and each of the statements of income or
results of operations and changes in stockholders' equity and cash flows or
equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and cash flows, as the case
may be, of United and its Subsidiaries for the periods to which they
relate, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in each
case as may be noted therein, subject to normal year-end audit adjustments
in the case of unaudited statements.
(ii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to United.
(h) Litigation; Regulatory Action. (i) No litigation, claim or other
proceeding before any Governmental Authority is pending against United or
any of its Subsidiaries and, to the best of United's knowledge, no such
litigation, claim or other proceeding has been threatened.
(ii) Neither United nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has United or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) Compliance with Laws. Each of United and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices; and
(ii)has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are
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required in order to permit them to conduct their businesses
substantially as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect and, to the best of its knowledge, no suspension or cancellation
of any of them is threatened; and
. (iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that United
or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to United's knowledge, do any
grounds for any of the foregoing exist).
(j) No Brokers. No action has been taken by United that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement.
(k) Takeover Laws. United has taken all action required to be taken by
it in order to exempt this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby
are exempt from, the requirements of any Takeover Laws applicable to
United.
(l) Environmental Matters. To United's knowledge, neither the conduct
nor operation of United or its Subsidiaries nor any condition of any
property presently or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, violates or violated Environmental Laws and
to Mason's knowledge no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To United's knowledge, neither United nor any of its
Subsidiaries has received any notice from any person or entity that United
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(m) Tax Matters. (i) All Tax Returns that are required to be filed by
or with respect to United and its Subsidiaries have been duly filed, (ii)
all Taxes shown to be due on the Tax Returns referred to in clause (i) have
been paid in full, (iii) the Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or
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assessments made as a result of such examinations have been paid in full,
(v) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in
clause (i) are currently pending, and (vi) no waivers of statutes of
limitation have been given by or requested with respect to any Taxes of
United or its Subsidiaries. Neither United nor any of its Subsidiaries has
any liability with respect to income, franchise or similar Taxes that
accrued on or before the end of the most recent period covered by United's
SEC Documents filed prior to the date hereof in excess of the amounts
accrued with respect thereto that are reflected in the financial statements
included in United's SEC Documents filed on or prior to the date hereof.
(n) Books and Records. The books and records of United and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
(o) Insurance. United's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by United or its
Subsidiaries. United and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of United
reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; United
and its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(p) Accounting Treatment. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
(q) Disclosure. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Mason and United agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end. Without limiting the foregoing,
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United agrees to use its reasonable best efforts prior to the Effective Time to
file the Articles Amendment.
6.02 Stockholder Approvals. United and Mason agree to take, in
accordance with applicable law or NASDAQ rules and its articles of incorporation
and by-laws, all action necessary to convene an appropriate meeting of its
stockholders to consider and vote upon in the case of United, the approval and
adoption of this Agreement and the Articles Amendment and any other matter
required to be approved by United's stockholders for consummation of the Merger
(including any adjournment or postponement, the "United Meeting") and, in the
case of Mason, the approval and adoption of this Agreement and any other matters
required to be approved by Mason's stockholders for consummation of the Merger
(including any adjournment or postponement, the "Mason Meeting"), in each case
as promptly as practicable after the Registration Statement is declared
effective. The United Board and the Mason Board shall each recommend such
approval, and United and Mason shall take all reasonable, lawful action to
solicit such approval by its stockholders.
6.03 Registration Statement. (a) United agrees to prepare a
registration statement on Form S-4 (the "Registration Statement") to be filed by
United with the SEC in connection with the issuance of United Common Stock in
the Merger (including the joint proxy statement and prospectus and other proxy
solicitation materials of United and Mason constituting a part thereof (the
"Proxy Statement") and all related documents). Mason agrees to cooperate, and to
cause its Subsidiaries to cooperate, with United, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement; and provided that Mason and its Subsidiaries have cooperated as
required above, United agrees to file the Proxy Statement in preliminary form
with the SEC as promptly as reasonably practicable, and to file the Registration
Statement with the SEC as soon as reasonably practicable after any SEC comments
with respect to the preliminary Proxy Statement are resolved. Each of Mason and
United agrees to use all reasonable efforts to cause the Registration Statement
to be declared effective under the Securities Act as promptly as reasonably
practicable after filing thereof. United also agrees to use all reasonable
efforts to obtain, prior to the effective date of the Registration Statement,
all necessary state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement. Mason agrees to
furnish to United all information concerning Mason, its Subsidiaries, officers,
directors and stockholders as may be reasonably requested in connection with the
foregoing.
(b) Each of Mason and United agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to stockholders and at the time of the United Meeting or the Mason Meeting, as
the case may be, contain any untrue statement of a
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material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or any statement
which, in the light of the circumstances under which such statement is made,
will be false or misleading with respect to any material fact, or which will
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier statement in the Proxy Statement or any amendment or supplement thereto.
Each of Mason and United further agrees that if it shall become aware prior to
the Effective Date of any information furnished by it that would cause any of
the statements in the Proxy Statement to be false or misleading with respect to
any material fact, or to omit to state any material fact necessary to make the
statements therein not false or misleading, to promptly inform the other party
thereof and to take the necessary steps to correct the Proxy Statement.
(c) United agrees to advise Mason, promptly after United receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of United Stock for offering or sale in
any jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
(d) United and Mason, in consultation with the other, shall employ
professional proxy solicitors to assist it in contacting stockholders in
connection with soliciting votes on the Merger.
6.04 Press Releases. Each of Mason and United agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules.
6.05 Access; Information. (a) Each of Mason and United agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
the business, properties and personnel of it as the other may reasonably
request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives to
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keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party to
which such information pertains or (iv) is or becomes readily ascertainable from
published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
or extracts thereof containing information and data as to another party hereto
to be returned to the party which furnished the same. No investigation by either
party of the business and affairs of the other shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the Effective
Time, each party shall promptly furnish the other with copies of all monthly and
other interim financial statements produced in the ordinary course of business
as the same shall become available.
6.06 Acquisition Proposals. Mason agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal. It shall immediately cease and cause to
be terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than United with respect to any of
the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. Mason
shall promptly (within 24 hours) advise United following the receipt by Mason of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise United of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07. Affiliate Agreements. (a) Not later than the 15th day prior to
the mailing of the Proxy Statement, (i) United shall deliver to Mason a schedule
of each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the United Meeting, deemed to be an "affiliate" of United
(each, a "United Affiliate") as that term is used in SEC Accounting Series
Releases 130 and 135; and (ii) Mason shall deliver to United a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the Mason Meeting, deemed to be an "affiliate" of Mason (each, a
"Mason Affiliate") as that term is used in Rule 145 under the Securities Act or
SEC Accounting Series Releases 130 and 135.
(b) Each of Mason and United shall use its respective reasonable best
efforts to cause each person who may be deemed to be a Mason Affiliate or a
United Affiliate, as the case may
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be, to execute and deliver to Mason and United on or before the date of mailing
of the Proxy Statement an agreement in the form attached hereto as Exhibit B or
Exhibit C, respectively.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Mason shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and United, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of United; provided, however, that Mason shall not be obligated to take any such
action pursuant to this Section 6.09 unless and until United acknowledges that
all conditions to its obligation to consummate the Merger have been satisfied
and certifies to Mason that United's representations and warranties, subject to
Section 5.02, are true and correct as of such date and that United is otherwise
material in compliance with this Agreement. Mason's representations, warranties
and covenants contained in this Agreement shall not be deemed to be untrue or
breached in any respect for any purpose as a consequence of any modifications or
changes undertaken solely on account of this Section 6.09.
6.10 NASDAQ Listing. To the extent so required, United agrees to use
its reasonable best efforts to list, prior to the Effective Date, on the NASDAQ,
subject to official notice of issuance, the shares of United Common Stock to be
issued to the holders of Mason Common Stock in the Merger.
6.11 Regulatory Applications. (a) United and Mason and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement. Each of United and Mason shall have the right to review in advance,
and to the extent practicable each will consult with the other, in each case
subject to applicable laws relating to the exchange of information, with respect
to, all material written information submitted to any third party or any
Governmental Authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable. Each party hereto agrees that
it will consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of material matters relating to completion of the
transactions contemplated hereby.
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(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 Indemnification. (a) Following the Effective Date and for a period
of six years thereafter, United shall indemnify, defend and hold harmless the
present directors, officers and employees of Mason and its Subsidiaries (each,
an "Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement) to the fullest extent that Mason is permitted to indemnify (and
advance expenses to) its directors and officers under the laws of the
Commonwealth of Virginia, the Mason Certificate and the Mason By-Laws as in
effect on the date hereof; provided that any determination required to be made
with respect to whether an officer's, director's or employee's conduct complies
with the standards set forth under Virginia law, the Mason Certificate and the
Mason By-Laws shall be made by independent counsel (which shall not be counsel
that provides material services to United) selected by United and reasonably
acceptable to such officer or director.
(b) For a period of four years from the Effective Time, United shall
use its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of Mason or any of its Subsidiaries (determined as of the
Effective Time) (as opposed to Mason) with respect to claims against such
directors and officers arising from facts or events which occurred before the
Effective Time, which insurance shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that coverage
currently provided by Mason; provided, however, that in no event shall United be
required to expend more than 200 percent of the current amount expended by Mason
(the "Insurance Amount") to maintain or procure such directors and officers
insurance coverage; provided, further, that if United is unable to maintain or
obtain the insurance called for by this Section 6.12(b), United shall use its
reasonable best efforts to obtain as much comparable insurance as is available
for the Insurance Amount; provided, further, that officers and directors of
Mason or any Subsidiary may be required to make application and provide
customary representations and warranties to United's insurance carrier for the
purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify United thereof; provided
that the failure so to notify shall not affect the obligations of United under
Section 6.12(a) unless and to the extent that United is actually prejudiced as a
result of such failure.
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(d) If United or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of United shall assume the
obligations set forth in this Section 6.12.
6.13 Benefit Plans. It is the intention of United that within a
reasonable period of time following the Effective Time (a) it will provide
employees of the Surviving Corporation with employee benefit plans substantially
similar in the aggregate to those provided to similarly situated employees of
United, (b) any such employees will receive credit for years of service with
Mason or any of its Subsidiaries prior to the Effective Time for the purpose of
eligibility and vesting and (c) United shall cause any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under the Compensation and Benefit Plans) and eligibility
waiting periods under group health plans to be waived with respect to such
participants and their eligible dependents.
6.14 Notification of Certain Matters. Each of Mason and United shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained
herein.
6.15 Directors and Officers. (a) United agrees to cause five members of
the Mason Board on the date hereof (selected by United after consultation with
Mason), including Bernard J. Clineburg, who are still members of the Mason Board
immediately prior to the Effective Time and willing and eligible to serve to be
elected or appointed as a director of United at the Effective Time and shall
cause Mr. __________ to also be elected or appointed as a member of the
Executive Committee of the United Board.
(b) United agrees to cause Bernard J. Clineburg, the Chief Executive
Officer and President of Mason to be elected or appointed as the President of
United at the Effective Time.
6.16 Dividend Coordination. After November 1, 1997, the Board of
Directors of Mason shall cause its regular quarterly dividend record dates and
payment dates for Mason Common Stock to be the same as United's regular
quarterly dividend record dates and payment dates for United Common Stock (e.g.,
Mason shall move its next dividend record and payment dates from October and
October to September and October, respectively), and Mason shall not thereafter
change its regular dividend payment dates and record dates.
6.17 Bank Merger. Each of Mason and United shall use its reasonable
best efforts to cause and effect the merger of United's state-chartered Virginia
bank into Mason's state-chartered Virginia bank as promptly as reasonably
practicable following the Effective Date.
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6.18 Mason Fee. If (a) the United Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any respect to
the interests of Mason, (b) United shall be in material and willful breach of
any of its covenants contained in this Agreement such that Mason shall be
entitled to terminate the Merger Agreement pursuant to Section 8.01(b) or (c)
the stockholders of United do not approve this Agreement at the United Meeting,
in each case after there has been proposed by a third party a United Acquisition
Transaction (the "Proposal"), then, in any such event, upon the actual
consummation of a United Acquisition Transaction with such third party within 18
months after the Proposal, United shall pay Mason a fee of $9,000,000.
Notwithstanding anything to the contrary contained herein, the fee
provided for in this Section 6.18 shall not be payable if United has terminated,
or has or had the right to terminate, the Merger Agreement pursuant to Section
8.01(b), 8.01(d)(ii) as a result of the Mason stockholders not approving this
Agreement or Section 8.01(e).
For purposes of the foregoing, "United Acquisition Transaction" shall
have the same meaning as the term "Acquisition Transaction" in the Stock Option
Agreement except that the term "Issuer" therein shall refer to and mean United
and the percentage referred to in clause (z) of the second sentence shall be
25%.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of United and Mason to consummate the Merger is
subject to the fulfillment or written waiver by United and Mason prior to the
Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the stockholders of Mason and
duly adopted by the requisite vote of the stockholders of United and the
Articles Amendment and any required approvals in connection with the Mason
Stock Options shall have been duly adopted by the requisite vote of the
stockholders of United.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
(i) any conditions, restrictions or requirements which the United Board
reasonably determines would either before or after the Effective Time have
a Material Adverse Effect on the Surviving Corporation and its Subsidiaries
taken as a whole or (ii) any conditions, restrictions or requirements that
are not customary and usual for approvals of
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such type and which the United Board reasonably determines would either
before or after the Effective Date be unduly burdensome.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) Blue Sky Approvals. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of United Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) Listing. To the extent required, the shares of United Common Stock
to be issued in the Merger shall have been approved for listing on the
NASDAQ, subject to official notice of issuance.
(g) Articles Amendment. The Articles Amendment shall have been filed
and effective under the WVCA.
(h) Dissenters. Holders of not more than 10% of the United Common Stock
shall have elected to exercise dissenters or appraisal rights under the
WVCA.
7.02 Conditions to Obligation of Mason. The obligation of Mason to
consummate the Merger is also subject to the fulfillment or written waiver by
Mason prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of United set forth in this Agreement shall be true and correct, subject to
Section 5.02, as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date), and Mason
shall have received a certificate, dated the Effective Date, signed on
behalf of United by the Chief Executive Officer and the Chief Financial
Officer of United to such effect.
(b) Performance of Obligations of United. United shall have performed
in all material respects all obligations required to be performed by them
under this Agreement at or prior to the Effective Time, and Mason shall
have received a certificate, dated the Effective Date,
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signed on behalf of United by the Chief Executive Officer and the Chief
Financial Officer of United to such effect.
(c) Opinion of Mason's Counsel. Mason shall have received an opinion of
Silver, Freedman & Taff, L.L.P. counsel to Mason, dated the Effective Date,
to the effect that, on the basis of facts, representations and assumptions
set forth in such opinion, (i) the Merger constitutes a "reorganization"
within the meaning of Section 368 of the Code and (ii) no gain or loss will
be recognized by stockholders of Mason who receive shares of United Common
Stock in exchange for shares of Mason Common Stock, except that gain or
loss may be recognized as to cash received in lieu of fractional share
interests. In rendering its opinion, Silver, Freedman & Taff, L.L.P. may
require and rely upon representations contained in letters from Mason and
others.
(d) Accounting Treatment. Mason shall have received from Ernst & Young
LLP, Mason's independent auditors, letters, dated the date of or shortly
prior to each of the mailing date of the Proxy Statement and the Effective
Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
7.03 Conditions to Obligation of United. The obligation of United to
consummate the Merger is also subject to the fulfillment or written waiver by
United prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Mason set forth in this Agreement shall be true and correct, subject to
Section 5.02, as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date) and United
shall have received a certificate, dated the Effective Date, signed on
behalf of Mason by the Chief Executive Officer and the Chief Financial
Officer of Mason to such effect.
(b) Performance of Obligations of Mason. Mason shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and United shall have
received a certificate, dated the Effective Date, signed on behalf of Mason
by the Chief Executive Officer and the Chief Financial Officer of Mason to
such effect.
(c) Opinion of United's Counsel. United shall have received an opinion
of Sullivan & Cromwell, special counsel to United, dated the Effective
Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from United and others.
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(d) Accounting Treatment. United shall have received from Ernst & Young
LLP, United's independent auditors, letters, dated the date of or shortly
prior to each of the mailing date of the Proxy Statement and the Effective
Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of United and Mason, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by United or
Mason, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein (subject to
the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the Effective Time, by United or Mason,
if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Acquisition is not
consummated by July 15, 1998, except to the extent that the failure of the
Acquisition then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate pursuant to
this Section 8.01(c).
(d) No Approval. By Mason or United, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) any stockholder approval required by Section
7.01(a) herein is not obtained at the Mason Meeting or the United Meeting.
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(e) Failure to Recommend, Etc. At any time prior to the Mason Meeting,
by United if the Mason Board shall have failed to make its recommendation
referred to in Section 6.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the
interests of United; or at any time prior to the United Meeting, by Mason,
if the United Board shall have failed to make its recommendation referred
to in Section 6.02, withdrawn such recommendation or modified or changed
such recommendation in a manner adverse in any respect to the interests of
Mason.
(f) Failure to Execute and Deliver Stock Option Agreement. At any time
prior to September 13, 1997, by United if Mason shall not have executed and
delivered the Stock Option Agreement to United.
8.02 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (i) as set forth in Section 9.01 and (ii)
that termination will not relieve a breaching party from liability for any
willful breach of this Agreement giving rise to such termination.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than Section
6.12, 6.13, 6.15, 6.17 and this Article IX which shall survive the Effective
Time) or the termination of this Agreement if this Agreement is terminated prior
to the Effective Time (other than Sections 6.03(b), 6.04, 6.05(b), 6.18, 8.02,
and this Article IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that (A)
after the Mason Meeting, this Agreement may not be amended if it would violate
the VSCA and (B) after the United Meeting, this Agreement may not be amended if
it would violate the WVCA.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of West Virginia
applicable to contracts made and to be performed entirely within such State
(except to the extent that mandatory provisions of Federal law or of the VSCA
are applicable).
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9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing expenses and SEC fees shall be shared equally between Mason
and United.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Mason, to:
George Mason Bankshares, Inc.
1185 Main Street
Fairfax, VA 22030
Facsimile: (703) 246-0157
Attn: Bernard H. Clineburg,
Chief Executive Officer
James Consagra,
Chief Financial Officer
With a copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Suite 700
Washington, D.C. 20005-3934
Facsimile: (202) 682-0354
Attn: Barry P. Taff, P.C.
Christopher R. Kelly, P.C.
If to United, to:
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Attn: Richard M. Adams,
Chairman of the Board and Chief Executive Officer
Steven Wilson
Chief Financial Officer
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With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Facsimile: (212) 558-3588
Attn: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
and any Stock Option Agreement entered into represent the entire understanding
of the parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than any such Stock Option Agreement). Except
for Section 6.12, nothing in this Agreement expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Mason, United or any of their respective Subsidiaries,
affiliates or directors to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
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* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
GEORGE MASON BANKSHARES, INC.
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title: Secretary
UNITED BANKSHARES, INC.
By: _____________________________________
Name: Richard M. Adams
Title: Chairman of the Board and Chief
Executive Officer
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EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 11, 1997, between United
Bankshares, Inc., a West Virginia corporation ("Grantee"), and George Mason
Bankshares, Inc., a Virginia corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Grantee to continue to
pursue the transactions contemplated by the Merger Agreement, Issuer has agreed
to grant Grantee the Option (as hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 1,018,000 fully paid and nonassessable shares of the common stock,
par value $1.11 per share, of Issuer ("Common Stock") at a price per share equal
to the average of last reported sale prices per share of Common Stock as
reported on the NASDAQ National Market System on September 4 and 5, 1997;
provided, however, that in the event Issuer issues or agrees to issue any shares
of Common Stock (other than shares of Common Stock issued pursuant to stock
options granted pursuant to any employee benefit plan prior to the date hereof)
at a price less than such average price per share (as adjusted pursuant to
subsection (b) of Section 5), such price shall be equal to such lesser price
(such price, as adjusted if applicable, the "Option Price"); provided, further,
that in no event shall the number of shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Common Stock. The number of
shares of Common Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued
<PAGE>
pursuant to the Option. Nothing contained in this Section l(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer to issue shares in breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e) of the
Merger Agreement (but only if the breach giving rise to the termination was
willful) (each, a "Listed Termination"); or (iii) the passage of eighteen (18)
months (or such longer period as provided in Section 10) after termination of
the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination. The term "Holder" shall mean the
holder or holders of the Option. Notwithstanding anything to the contrary
contained herein, (i) the Option may not be exercised at any time when Grantee
shall be in material breach of any of its covenants or agreements contained in
the Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.01(b) thereof as a result of a material breach
and (ii) this Agreement shall automatically terminate upon the proper
termination of the Merger Agreement (x) by Issuer pursuant to Section 8.01(b)
thereof as a result of the material breach by Grantee of its covenants or
agreements contained in the Merger Agreement, (y) by Issuer or Grantee pursuant
to Section 8.01(d)(ii) if Grantee's shareholders do not approve the Merger
Agreement at the meeting, or (z) by Issuer or Grantee pursuant to Section
8.01(d)(i).
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) (an "Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer (the "Issuer Board")
shall have recommended that the shareholders of Issuer approve or accept
any Acquisition Transaction other than as contemplated by the Merger
Agreement. For purposes of this Agreement, (a) "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction,
involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions (i) involving solely Issuer and/or
one or more wholly-owned (except for directors'
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qualifying shares and a de minimis number of other shares) Subsidiaries of
the Issuer, provided, any such transaction is not entered into in
violation of the terms of the Merger Agreement or (ii) in which the
shareholders of Issuer immediately prior to the completion of such
transaction own at least 50% of the Common Stock of the Issuer (or the
resulting or surviving entity in such transaction) immediately after
completion of such transaction, provided any such transaction is not
entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of the
assets or deposits of Issuer or any Issuer Subsidiary, or (z) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the
voting power of Issuer or any Issuer Subsidiary and (b) "Subsidiary" shall
have the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or
shall have been cancelled prior to termination of the Merger Agreement if,
prior to such meeting (or if such meeting shall not have been held or
shall have been cancelled, prior to such termination), it shall have been
publicly announced that any person (other than Grantee or any of its
Subsidiaries) shall have made, or publicly disclosed an intention to make,
a proposal to engage in an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, or Issuer
or any Issuer Subsidiary shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a proposal to Issuer or its shareholders to engage in an
Acquisition Transaction and such proposal shall have been publicly
announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy
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statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an
exchange offer);
(vii) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of engaging
in an Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or other federal or
state bank regulatory or antitrust authority, which application or notice
has been accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
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(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option .
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of ________, 199_,
between the registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of Counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed subject to the receipt of any necessary regulatory
approvals to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and
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other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.
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(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and
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Issuer in the aggregate; and provided further, however, that if such reduction
occurs, then Issuer shall file a registration statement for the balance as
promptly as practicable thereafter as to which no reduction pursuant to this
Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
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(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
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(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer Subsidiary's assets or deposits to
any person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of the Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the
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issuer of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person,
as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute
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Option Issuer shall repurchase the Substitute Shares at a price (the "Substitute
Share Repurchase Price") equal to the Highest Closing Price multiplied by the
number of Substitute Shares so designated. The term "Highest Closing Price"
shall mean the highest closing price for shares of Substitute Common Stock
within the six-month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the Substitute
Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver,
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as appropriate, either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder to purchase that
number of shares of the Substitute Common Stock obtained by multiplying the
number of shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in
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whole or in part its rights and obligations hereunder; provided, however, that
until the date 15 days following the date on which the Federal Reserve Board has
approved an application by Grantee to acquire the shares of Common Stock subject
to the Option, Grantee may not assign its rights under the Option except in (i)
a widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf or (iv) any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; provided, however, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $9.0 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) the net cash amounts, if any, received by Grantee pursuant to
the arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from
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<PAGE>
paying to Grantee the Surrender Price in full, (i) Issuer shall (A) use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to make
such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 14(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of West Virginia, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law or of the VSCA are applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions
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<PAGE>
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
GEORGE MASON BANKSHARES, INC.
By _____________________________
Name:
Title:
By _____________________________
Name:
Title: Secretary
UNITED BANKSHARES, INC.
By _____________________________
Name: Richard M. Adams
Title: Chairman of the Board and
Chief Executive Officer
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