As filed with the Securities and Exchange Commission on August 3, 1998.
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
UNITED BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
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<S><C>
WEST VIRGINIA 6711 55-0641179
(State or other jurisdiction of (Primary Standard Industrial) (I.R.S. Employer I.D. No.)
incorporation or organization)
</TABLE>
UNITED BANKSHARES, INC.
300 UNITED CENTER
500 VIRGINIA STREET, EAST
CHARLESTON, WEST VIRGINIA 25301
(304) 348-8400
(Address, including Zip Code, and telephone number, including area code, of
registrant's principal executive offices)
JOSEPH WILLIAM SOWARDS
EXECUTIVE VICE PRESIDENT
UNITED BANKSHARES, INC.
514 MARKET STREET
PARKERSBURG, WEST VIRGINIA 26102
(304) 424-8761
(Name, address, including Zip Code, and telephone number, including area code,
of agent for service)
WITH COPIES TO:
SANDRA M. MURPHY, ESQ. GERARD L. HAWKINS, ESQ.
BOWLES RICE MCDAVID GRAFF & LOVE, PLLC ELIAS, MATZ, TIERNAN & HERRICK, L.L.P.
600 QUARRIER STREET 734 15TH STREET, N.W., 12TH FLOOR
P.O. BOX 1386 WASHINGTON, DC 20005
CHARLESTON, WEST VIRGINIA 25325-1386 (202) 347-0300
(304) 347-1100
Approximate date of commencement of the proposed sale of the
securities to the public:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G check the following box. _____
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration for the same offering. _____
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ______
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF
SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED(1) OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE
<S><C>
Common Stock 4,221,572 shares $ N/A (2) $121,634,028.84(2) $11,188.32(3)
</TABLE>
(1) The number of shares of common stock, par value $2.50 per share
("United Common Stock") of United Bankshares, Inc. ("United") to be registered
pursuant to this Registration Statement is based upon the number of shares of
common stock, par value$.10 per share ("Fed One Common Stock"), of Fed One
Bancorp, Inc. ("Fed One") presently outstanding or reserved for issuance under
various plans or otherwise expected to be issued upon the consummation of the
proposed transaction to which this Registration Statement relates, multiplied by
the exchange ratio of 1.5 shares of United Common Stock for each share of Fed
One Common Stock. The Registrant also registers hereby such additional shares of
United Common Stock as may be issuable in the Merger pursuant to the
anti-dilution provision of the Merger Agreement described herein.
(2) Pursuant to Rules 457(f) and 457(c) under the Securities Act of
1933, as amended, the registration fee is based on the average of the high and
low sales prices of United Common Stock, as reported in the NASDAQ National
Market System on July 29, 1998 ($28.813), and computed based on the estimated
maximum number of such shares (2,814,381) that may be exchanged for the United
Common Stock being registered.
(3) A registration fee of $24,693.72 was previously paid in
connection with the joint filing by United and Fed One of preliminary proxy
solicitation materials, under Section 14(g) and Rule 0-11(a)(2) of the
Securities Exchange Act of 1934, as amended, which fee, pursuant to Rule 457(b)
under the Securities Act of 1933, as amended, has been credited against the
registration fee payable hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
FED ONE BANCORP, INC.
21 TWELFTH STREET
WHEELING, WEST VIRGINIA 26003
AUGUST 12, 1998
Dear Shareholders:
You are cordially invited to attend a Special Meeting of
Shareholders (the "Special Meeting") of Fed One Bancorp, Inc. ("Fed One") to be
held at Fed One's corporate headquarters located at 21 Twelfth Street, Wheeling,
West Virginia 26003 at 10:00 a.m. on September 18, 1998.
At the Special Meeting, you will be asked to consider and vote
upon a proposal to approve an Agreement and Plan of Merger, dated as of February
18, 1998, among Fed One, United Bankshares, Inc. ("United") and UBC Holding
Company, a wholly owned subsidiary of United ("Merger Sub"), and the related
Plan of Merger (together, the "Merger Agreement"), under which Fed One will be
merged with and into Merger Sub and will become a wholly owned subsidiary of
United (the "Merger"). Upon consummation of the Merger, each outstanding share
of common stock of Fed One will be converted into and exchanged for 1.5 shares
of common stock of United, as adjusted pursuant to the Merger Agreement.
Pursuant to the adjustments set forth in the Merger Agreement and in light of a
100% stock dividend declared by United, paid March 27, 1998 to shareholders of
record of United as of the close of business on March 13, 1998, the exchange
ratio has been adjusted from 0.75 of a share to 1.5 shares of common stock of
United (the "Exchange Ratio"). The Merger is contingent upon the shareholders of
United approving an increase in the number of authorized shares of common stock
of United from 41,000,000 to 100,000,000 shares. No fractional shares of United
Common Stock will be issued; rather cash (without interest) will be paid in lieu
of any fractional share interest pursuant to the Merger Agreement.
The Board of Directors of Fed One has unanimously approved the
Merger. THE BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF FED ONE
AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL. Fed One's
financial adviser, Ryan, Beck & Co., Inc., has issued its opinion to Fed One's
Board of Directors that the Exchange Ratio is fair to Fed One's shareholders
from a financial point of view.
Consummation of the Merger is subject to certain conditions,
including, but not limited to, the receipt of certain regulatory approvals.
Regardless of the number of shares you own, or whether you
plan to attend the Special Meeting, it is very important that your shares be
represented and voted at the Special Meeting. The affirmative vote of a majority
of the outstanding shares of common stock of Fed One entitled to vote at the
Special Meeting is required for approval of the Merger Agreement. Please read
the enclosed material carefully and complete, sign and return the enclosed proxy
in the envelope provided as soon as possible.
We have engaged ChaseMellon Shareholder Services, L.L.C.
("ChaseMellon") to assist us with the proxy solicitation effort. You may receive
a phone call from one of their representatives reminding you to send in your
proxy. In addition, if you have questions, you may call Jean E. Huff, Corporate
Secretary at (304) 234-1100.
We look forward to seeing you at the Special Meeting.
Sincerely,
Alan E. Groover
Chairman, President and
Chief Executive Officer
<PAGE>
FED ONE BANCORP, INC.
21 TWELFTH STREET
WHEELING, WEST VIRGINIA 26003
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 18, 1998
To the Shareholders of Fed One Bancorp, Inc.:
Notice is hereby given that a Special Meeting of Shareholders
(the "Special Meeting") of Fed One Bancorp, Inc. ("Fed One") will be held at Fed
One's corporate headquarters located at 21 Twelfth Street, Wheeling, West
Virginia 26003, at 10:00 a.m., on Friday, September 18, 1998, for the following
purposes:
(1) To consider and vote upon an Agreement and Plan of Merger,
dated as of February 18, 1998, among Fed One, United Bankshares, Inc.
("United") and UBC Holding Company, a wholly owned subsidiary of United
("Merger Sub"), and the related Plan of Merger (together, the "Merger
Agreement"). Pursuant to the Merger Agreement, Fed One would merge with
and into Merger Sub with Merger Sub surviving the merger (the "Merger")
and each share of outstanding common stock, par value $.10 per share,
of Fed One ("Fed One Common Stock") on the effective date of the Merger
will be converted into 1.5 shares of common stock, par value $2.50 per
share, of United, as adjusted pursuant to the Merger Agreement.
Pursuant to the adjustments set forth in the Merger Agreement and in
light of a 100% stock dividend declared by United and paid March 27,
1998 to shareholders of record of United as of the close of business on
March 13, 1998, the exchange ratio has been adjusted from 0.75 of a
share to 1.5 shares of common stock of United (the "Exchange Ratio").
The Merger is contingent upon the shareholders of United approving an
increase in the number of authorized shares of common stock of United
from 41,000,000 to 100,000,000 shares. A copy of the Merger Agreement
is set forth in Appendix A to the accompanying Joint Proxy
Statement/Prospectus and is incorporated by reference therein.
(2) To transact such other business as may properly come
before the Special Meeting or any adjournment or postponement of the
Special Meeting.
Only shareholders of record at the close of business on August
4, 1998 are entitled to receive notice of and to vote at the Special Meeting or
any adjournments or postponements thereof. Approval of the Merger Agreement
requires the affirmative vote of a majority of the outstanding shares of Fed One
Common Stock entitled to vote at the Special Meeting.
THE BOARD OF DIRECTORS OF FED ONE UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT. ON BEHALF OF THE BOARD
OF DIRECTORS, I URGE YOU TO VOTE "FOR" THE PROPOSAL.
By Order of the Board of Directors,
Jean Huff
Corporate Secretary
August 12, 1998
Wheeling, West Virginia
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE
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UNITED BANKSHARES, INC.
300 UNITED CENTER
500 VIRGINIA STREET, EAST
CHARLESTON, WEST VIRGINIA 25301
(304) 424-8761
AUGUST 10, 1998
Dear Shareholders:
You are cordially invited to attend a special meeting of
Shareholders (the "Special Meeting") of United Bankshares, Inc. ("United") to be
held at the 10th floor of United Square, located at Fifth and Avery Streets,
Parkersburg, West Virginia 26102, at 10:00 a.m. on Monday, September 21, 1998.
At the Special Meeting, you will be asked to consider and vote
upon a proposal in connection with the proposed merger of UBC Holding Company
("Merger Sub"), a wholly owned subsidiary of United, and Fed One Bancorp, Inc.
("Fed One") (the "Merger"). The proposal is to amend the articles of
incorporation of United (the "United Articles Amendment") to increase the number
of authorized shares of common stock, par value $2.50 per share, of United
("United Common Stock") from 41,000,000 to 100,000,000 shares. If the Merger is
consummated, each outstanding share of common stock of Fed One will be converted
into and exchanged for 1.5 shares of United Common Stock, as adjusted pursuant
to the Merger Agreement. Pursuant to the adjustments set forth in the Merger
Agreement and in light of a 100% stock dividend declared by United and paid
March 27, 1998, to shareholders of record of United as of the close of business
on March 13, 1998, the exchange ratio has been adjusted from 0.75 of a share to
1.5 shares of common stock of United (the "Exchange Ratio"). The Merger is
contingent upon the shareholders of United approving the United Articles
Amendment. No fractional shares of United Common Stock will be issued; rather,
cash (without interest) will be paid in lieu of any fractional share interest
pursuant to the Merger Agreement.
The Board of Directors of United has unanimously approved the
United Articles Amendment and believes that it and the transactions contemplated
by the Merger Agreement are in the best interests of United and its
shareholders. Accordingly, the Board strongly encourages you to vote FOR the
United Articles Amendment.
Regardless of the number of shares you own, or whether you
plan to attend the Special Meeting, it is very important that your shares be
represented and voted at the Special Meeting. The affirmative vote of a majority
of the outstanding shares entitled to vote is required for approval of the
United Articles Amendment. Please read the enclosed material carefully and
complete, sign and return the enclosed proxy in the envelope provided as soon as
possible.
We have engaged Corporate Investor Communications, Inc. to
assist us with the proxy solicitation effort. You may receive a phone call from
one of its representatives reminding you to send in your proxy.
We look forward to seeing you at the Special Meeting.
Sincerely,
Richard M. Adams
Chairman of the Board and Chief Executive Officer
<PAGE>
UNITED BANKSHARES, INC.
300 UNITED CENTER
500 VIRGINIA STREET, EAST
CHARLESTON, WEST VIRGINIA 25301
(304) 424-8761
NOTICE OF UNITED SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 21, 1998
To the Shareholders of United Bankshares, Inc.:
Notice is hereby given that a special meeting of shareholders
(the "Special Meeting") of United Bankshares, Inc. ("United") will be held at
the 10th floor of United Square, located at Fifth and Avery Streets,
Parkersburg, West Virginia 26102, at 10:00 a.m., on Monday, September 21, 1998,
for the following purposes:
(1) To consider and vote upon a proposal to amend the articles
of incorporation of United to increase the number of authorized shares of common
stock, par value $2.50 per share of United ("United Common Stock"), from
41,000,000 to 100,000,000 shares (the "United Articles Amendment").
(2) To transact such other business as may properly come
before the Special Meeting or any adjournment or postponement of the Special
Meeting.
Only shareholders of record at the close of business on August
3, 1998 are entitled to receive notice of and to vote at the Special Meeting or
any adjournments or postponements thereof. The affirmative vote of a majority of
the outstanding shares entitled to vote for the United Articles Amendment is
required for approval of the United Articles Amendment.
THE BOARD OF DIRECTORS OF UNITED UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE UNITED ARTICLES AMENDMENT. ON BEHALF OF
THE BOARD OF DIRECTORS, I URGE YOU TO VOTE "FOR" THE PROPOSAL.
By Order of the Board of Directors
Richard M. Adams
Chairman of the Board and
Chief Executive Officer
August 12, 1998
Charleston, West Virginia
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
<PAGE>
PROXY STATEMENT OF PROXY STATEMENT OF
FED ONE BANCORP, INC. UNITED BANKSHARES, INC.
Special Meeting of Shareholders Special Meeting of Shareholders
To be Held on September 18, 1998 To be Held on September 21, 1998
Prospectus
United Bankshares, Inc.
Common Stock
$2.50 Par Value Per Share
This Joint Proxy Statement/Prospectus is being furnished by
Fed One Bancorp, Inc., a Delaware corporation ("Fed One"), to holders of common
stock, par value $0.10 per share of Fed One ("Fed One Common Stock"), as a proxy
statement in connection with the solicitation of proxies by the Board of
Directors of Fed One (the "Fed One Board") for use at a Special Meeting of
Shareholders to be held at 10:00 a.m., on September 18, 1998, at Fed One's
corporate headquarters located at 21 Twelfth Street, Wheeling, West Virginia
26003, and at any adjournments or postponements thereof (the "Fed One Meeting").
This Joint Proxy Statement/Prospectus is also being furnished
by United Bankshares, Inc., a West Virginia corporation ("United"), to holders
of common stock, par value $2.50 per share of United ("United Common Stock"), as
a proxy statement in connection with the solicitation of proxies by the Board of
Directors of United (the "United Board") for use at a Special Meeting of
Shareholders to be held at 10:00 a.m., on Monday, September 21, 1998, at the
10th floor of United Square, located at Fifth and Avery Streets, Parkersburg,
West Virginia, and at any adjournments or postponements thereof (the "United
Special Meeting"), and to holders of Fed One Common Stock as a Prospectus with
respect to the shares (the "United Common Shares") of United Common Stock that
are issuable upon consummation of the Merger (as hereinafter defined).
At the Fed One Special Meeting, the holders of Fed One Common
Stock will consider and vote upon a proposal to approve an Agreement and Plan of
Merger, dated as of February 18, 1998, among Fed One, United and UBC Holding
Company, a West Virginia corporation and wholly owned subsidiary of United
("Merger Sub"), and the related Plan of Merger (together, the "Merger
Agreement"), pursuant to which Fed One will merge with and into Merger Sub (the
"Merger"), all on and subject to the terms and conditions contained therein. The
Merger Agreement is included in this Joint Proxy Statement/Prospectus as
Appendix A.
At the United Special Meeting, the holders of United Common
Stock will consider and vote upon a proposal to approve the amendment of the
articles of incorporation of United (the "United Articles") to increase the
number of authorized shares of United Common Stock from 41,000,000 to
100,000,000 shares (the "United Articles Amendment"). See "Summary," "The
Merger," "United Articles Amendment" and Appendix A.
Upon consummation of the Merger, each share of Fed One Common
Stock issued and outstanding immediately prior to the Merger shall cease to be
outstanding and each such share (excluding certain shares held by Fed One,
United or their subsidiaries, if any) shall be converted into and exchanged for
1.5 shares of United Common Stock, as adjusted pursuant to the Merger Agreement
and as described herein with cash paid in lieu of fractional shares. Pursuant to
the adjustments set forth in the Merger Agreement and in light of the
two-for-one stock split effected in the form of a 100% stock dividend declared
by United and paid March 27, 1998 to shareholders of record of United as of
March 13, 1998 (the "United Stock Dividend"), the exchange ratio expressed in
the Merger Agreement, 0.75 of a share has been adjusted to 1.5 shares of United
Common Stock (the "Exchange Ratio"). The Merger Agreement also provides for the
conversion upon consummation of the Merger of all stock options (the "Fed One
Stock Options") outstanding under the Fed One Stock Plans
<PAGE>
(as defined herein) into options to acquire shares of United Common Stock,
appropriately adjusted to reflect the Exchange Ratio. See "The Merger."
Based on the 2,401,540 shares of Fed One Common Stock
outstanding on the Fed One Record Date (as hereinafter defined), the 188,841
shares issuable upon exercise of outstanding Stock Options, and approximately
224,000 shares expected to be reissued by Fed One prior to the Effective Time
and the Exchange Ratio of 1.5, up to approximately 4,222,000 shares of United
Common Stock will be issuable upon consummation of the Merger. The shares of Fed
One Common Stock and United Common Stock are listed and traded on The Nasdaq
Stock Market Inc. (the "Nasdaq Stock Market"). On February 17, 1998, the last
business day prior to public announcement of the execution of the Merger
Agreement, the last reported sale prices per share of Fed One Common Stock and
of United Common Stock on the Nasdaq Stock Market were $33.50 and $24.31 (as
adjusted), respectively, and on July 29, 1998, the last practicable date prior
to the mailing of this Joint Proxy Statement/Prospectus, the last reported sale
prices per share were $41.50 and $29.00, respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
THE SHARES OF UNITED COMMON STOCK OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A
BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
------------------
The date of this Joint Proxy Statement/Prospectus is August
12, 1998, and it is first being mailed or otherwise delivered to Fed One and
United shareholders on or about such date.
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TABLE OF CONTENTS
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AVAILABLE INFORMATION.............................................................................................1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................2
SUMMARY .........................................................................................................3
Parties to the Merger....................................................................................3
Special Meetings; Record Date............................................................................3
The Merger...............................................................................................4
United Articles Amendment................................................................................4
Consideration; Exchange Ratio............................................................................4
Votes Required and Board Recommendations.................................................................4
General ................................................................................................5
Recent Developments......................................................................................8
Market for Common Stock and Related Shareholder Matters .................................................9
Comparison of Certain Unaudited per Share Data .........................................................11
Selected Financial Data of United (Historical)..........................................................12
Selected Financial Data of Fed One (Historical) ........................................................13
United and Fed One Unaudited Pro Forma Condensed Consolidated Financial Data ...........................14
RECENT DEVELOPMENTS..............................................................................................16
GENERAL INFORMATION..............................................................................................17
Special Meetings .......................................................................................17
Record Date, Solicitation and Revocability of Proxies ..................................................17
General ...............................................................................................19
Votes Required .........................................................................................19
Recommendation of Fed One Board of Directors ...........................................................19
Recommendation of United Board of Directors ............................................................19
THE MERGER.......................................................................................................20
General ...............................................................................................20
Background of the Merger ...............................................................................20
Reasons of Fed One for the Merger ......................................................................21
Opinion of Fed One's Financial Advisor .................................................................21
Reasons of United for the Merger .......................................................................25
Effective Time ....................................................................................... 25
Distribution of United Certificates ....................................................................26
Fractional Shares .................................................................................... 26
Stock Options ..........................................................................................26
Certain Federal Income Tax Consequences .............................................................. 27
Management and Operations After the Merger .............................................................28
Post-Acquisition Compensation and Benefits ........................................................... 28
Interests of Certain Persons in the Merger ............................................................ 29
Conditions to Consummation ........................................................................... 29
Regulatory Approvals .................................................................................. 30
Amendment, Waiver and Termination ..................................................................... 31
Conduct of Business Pending the Merger .................................................................33
Dividend Coordination ................................................................................ 35
Expenses and Fees ..................................................................................... 35
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i
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Accounting Treatment .................................................................................. 35
No Dissenters' Rights ................................................................................. 35
Nasdaq Listing of United Common Stock ................................................................. 35
Resales of United Common Stock ........................................................................ 36
Stock Option Agreement ................................................................................ 36
UNITED ARTICLES AMENDMENT ...................................................................................... 40
UNITED AND FED ONE UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION ................................................ 41
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
As of March 31, 1998 (in thousands) ................................................................... 42
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended March 31, 1998 ............................................................. 43
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended March 31, 1997 ............................................................. 44
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Year Ended December 31, 1997 .................................................................. 45
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Year Ended December 31, 1996 .................................................................. 46
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Year Ended December 31, 1995 .................................................................. 47
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS .................................................................................. 48
DESCRIPTION OF UNITED CAPITAL STOCK ............................................................................ 49
General .............................................................................................. 49
Voting Rights ......................................................................................... 49
Dividends ............................................................................................. 49
Preemptive Rights ..................................................................................... 49
Liquidation ........................................................................................... 49
Issuance of Stock ..................................................................................... 49
CERTAIN DIFFERENCES IN THE RIGHTS OF UNITED
SHAREHOLDERS AND FED ONE SHAREHOLDERS ................................................................. 50
Authorized Capital Stock .............................................................................. 50
Voting Rights ......................................................................................... 50
Dividends and Other Distributions ..................................................................... 50
Director Conflict of Interest Transactions ............................................................ 50
Amendment of Articles of Incorporation and Bylaws ..................................................... 51
Special Meetings of Shareholders ...................................................................... 51
Number of Directors, Classified Board of Directors .................................................... 51
Director Vacancies and Removal of Directors ........................................................... 51
Restrictions on Certain Business Combinations ......................................................... 52
Indemnification, Limitation on Liability .............................................................. 52
Dissenters' Rights .................................................................................... 53
</TABLE>
ii
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<TABLE>
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Shareholder Inspection Rights; Shareholder Lists ...................................................... 53
COMPARATIVE MARKET PRICES AND DIVIDENDS ........................................................................ 54
United .............................................................................................. 54
Fed One .............................................................................................. 55
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF FED ONE ........................................................ 56
Principal Beneficial Owners .......................................................................... 56
Shares Beneficially Owned by Directors and Executive Officers ......................................... 56
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF UNITED ......................................................... 58
Principal Beneficial Owners ........................................................................... 58
Shares Beneficially Owned by Directors and Executive Officers ......................................... 58
EXPERTS ....................................................................................................... 61
VALIDITY OF UNITED COMMON STOCK................................................................................. 61
OTHER MATTERS .................................................................................................. 61
SHAREHOLDER PROPOSALS .......................................................................................... 61
Fed One .............................................................................................. 61
United .............................................................................................. 61
APPENDICES:
Appendix A - Agreement & Plan of Merger
Appendix B - Stock Option Agreement
Appendix C - Written Opinion of Fed One's Financial Advisor
Appendix D - Proposal to Amend the Articles of Incorporation of United Bankshares, Inc.
</TABLE>
iii
<PAGE>
AVAILABLE INFORMATION
United and Fed One are each subject to the reporting and
informational requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "Exchange Act"), and, in
accordance therewith, file reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information filed
by United and Fed One with the Commission may be inspected and copied at the
principal office of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and may be inspected at the Commission's
Regional Offices at 7 World Trade Center, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Certain of such reports, proxy statements and other
information are also available from the Commission over the Internet at
http://www.sec.gov. In addition, both United Common Stock and Fed One Common
Stock are traded on the Nasdaq Stock Market. Reports, proxy statements and other
information concerning United and Fed One may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
This Joint Proxy Statement/Prospectus does not contain all of
the information set forth in the Registration Statement on Form S-4 of which
this Joint Proxy Statement/Prospectus is a part, and exhibits thereto (together
with any amendments thereto, the "Registration Statement"), which has been filed
by United with the Commission under the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "Securities Act"), certain portions of
which have been omitted pursuant to the rules and regulations of the Commission
and to which portions reference is hereby made for further information.
Statements contained in this Joint Proxy Statement/Prospectus concerning the
provisions of certain documents filed as exhibits to the Registration Statement
are necessarily brief descriptions thereof and are not necessarily complete, and
each such statement is qualified in its entirety by reference to the full text
of such document.
This Joint Proxy Statement/Prospectus contains statements
describing the material provisions of certain documents included herein as
Appendices or filed or incorporated by reference as exhibits to the Registration
Statement. Such descriptions are not necessarily complete, and all such
statements contained in this Joint Proxy Statement/Prospectus are qualified in
their entirety by reference to the full text of such documents.
All information contained herein with respect to United and
its subsidiaries has been supplied by United, and all information with respect
to Fed One and its subsidiaries has been supplied by Fed One.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY UNITED OR FED ONE.
NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF THE SECURITIES TO WHICH THIS JOINT PROXY STATEMENT/PROSPECTUS
RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF UNITED, FED ONE, OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS JOINT PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE THE
SECURITIES OFFERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS IN ANY JURISDICTION
IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT LAWFUL.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by United with the Commission
(File No. 0-13322) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference into this Joint Proxy Statement/Prospectus: United's
Annual Report on Form 10-K as of and for the year ended December 31, 1997 (the
"1997 United 10-K"); the portions of United's Proxy Statement for the Annual
Meeting of shareholders held on May 18, 1998 (the "1998 United Proxy Statement")
that have been incorporated by reference into the 1997 United 10-K; United's
Quarterly Report on Form 10- Q for the three months ended March 31, 1998; and
United's Current Reports on Form 8-K, dated July 28, 1998 and August 3, 1998.
The following documents filed by Fed One with the Commission
(File No. 0-25348) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference into this Joint Proxy Statement/Prospectus: Fed One's
Annual Report on Form 10-K for the year ended December 31, 1997 (the "1997 Fed
One 10-K"), the portions of Fed One's Proxy Statement for the Annual Meeting of
shareholders held on April 22, 1998 that have been incorporated by reference
into the 1997 Fed One 10-K; Fed One's Quarterly Report on Form 10-Q for the
three months ended March 31, 1998; and Fed One's Current Report on Form 8-K,
dated February 20, 1998.
All documents filed by United and Fed One pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Joint Proxy Statement/Prospectus and prior to the Special Meetings are hereby
incorporated by reference into this Joint Proxy Statement/Prospectus and shall
be deemed a part hereof from the date of filing of such document.
Any statement contained herein, in any supplement hereto or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Joint Proxy Statement/Prospectus to the extent that a
statement contained herein, in any supplement hereto or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement, this Joint Proxy
Statement/Prospectus, or any supplement hereto.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES BY
REFERENCE CERTAIN DOCUMENTS THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
SUCH DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM: UNITED
BANKSHARES, INC., 300 UNITED CENTER, 500 VIRGINIA STREET, EAST, CHARLESTON, WEST
VIRGINIA 25301, (304) 424-8761, ATTENTION: STEVEN E. WILSON, EXECUTIVE VICE
PRESIDENT AND SECRETARY, AS TO UNITED DOCUMENTS; AND FED ONE BANCORP, INC., 21
TWELFTH STREET, WHEELING, WEST VIRGINIA 26003, (304) 234-1100, ATTENTION: JEAN
E. HUFF, CORPORATE SECRETARY, AS TO FED ONE DOCUMENTS. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST 28, 1998.
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS OR INCORPORATES
BY REFERENCE CERTAIN FORWARD LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF EACH OF UNITED AND FED ONE.
THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES.
FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE
FOLLOWING POSSIBILITIES: (1) EXPECTED COST SAVINGS FROM THE PROPOSED MERGER
CANNOT BE FULLY REALIZED OR REALIZED WITHIN THE EXPECTED TIME FRAME; (2) COSTS
OR DIFFICULTIES RELATED TO THE INTEGRATION OF THE BUSINESSES OF UNITED AND FED
ONE ARE GREATER THAN EXPECTED; (3) REVENUES FOLLOWING THE PROPOSED MERGER ARE
LOWER THAN EXPECTED; (4) COMPETITIVE PRESSURE AMONG DEPOSITORY INSTITUTIONS
INCREASES SIGNIFICANTLY; (5) CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE
INTEREST MARGINS; (6) GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR IN THE
STATES IN WHICH THE COMBINED COMPANY WILL BE DOING BUSINESS, ARE LESS FAVORABLE
THAN EXPECTED; OR (7) LEGISLATION OR REGULATORY CHANGES ADVERSELY AFFECT THE
BUSINESSES IN WHICH THE COMBINED COMPANY WOULD BE ENGAGED.
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SUMMARY
The following is a summary of certain information contained
elsewhere in this Joint Proxy Statement/Prospectus. This summary is not intended
to be a complete description of the matters covered in this Joint Proxy
Statement/Prospectus and is subject to and qualified in its entirety by
reference to the more detailed information contained elsewhere in this Joint
Proxy Statement/Prospectus, including the Appendices hereto, and in the
documents incorporated by reference in this Joint Proxy Statement/Prospectus. A
copy of the Merger Agreement is set forth in Appendix A to this Joint Proxy
Statement/Prospectus and reference is made thereto for a complete description of
the terms of the Merger. A copy of the Stock Option Agreement (as defined
herein) is included as Appendix B to this Joint Proxy Statement/Prospectus and
reference is made thereto for a complete description of the terms of the Option
(as defined herein). Shareholders are urged to read carefully the entire Joint
Proxy Statement/Prospectus, including the Appendices and the documents
incorporated by reference. As used in this Joint Proxy Statement/Prospectus, the
terms "United" and "Fed One" refer to such corporations, respectively, and where
the context requires, such corporations and their respective subsidiaries.
PARTIES TO THE MERGER
United. United is a West Virginia corporation registered as a
bank holding company under the Bank Holding Company Act of 1956, as amended
("BHCA") with its principal executive office located at 300 United Center, 500
Virginia Street, East, Charleston, West Virginia 25301 and its telephone number
is (304) 424-8761. On April 2, 1998, United consummated the merger with George
Mason Bankshares, Inc. using the pooling of interests method of accounting.
Accordingly, all United financial information included or incorporated by
reference herein has been restated to reflect the George Mason acquisition.
United operates through its subsidiaries, United National Bank ("UNB") which
operates in West Virginia through 45 offices, and United Bank, a Virginia state
chartered commercial bank headquartered in Fairfax, Virginia and operating
principally in Northern Virginia through 25 offices. United also owns United
Venture Fund, Inc., a West Virginia capital company which is primarily engaged
in lending activities consistent with the requirements of the West Virginia
Capital Company Act and the BHCA. As of March 31, 1998, United had consolidated
assets of $ 2.78 billion, consolidated deposits of $2.95 billion and
shareholders' equity of $363.64 million. See " -- Comparison of Certain
Unaudited Per Share Data," " -- Selected Financial Data of United
(Historical),"and "Incorporation of Certain Information By Reference."
United regularly evaluates acquisition opportunities and
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases, negotiations may take place
and future acquisitions involving cash, debt or equity securities may occur.
Acquisitions typically involve the payment of a premium , and therefore, some
dilution of United's book value and net income per common share may occur in
connection with any future transactions.
Fed One. Fed One is a Delaware corporation and a registered
thrift holding company under the Home Owners' Loan Act, as amended ("HOLA"),
with its principal executive offices located at 21 Twelfth Street, Wheeling,
West Virginia 26003, and its telephone number is (304) 234-1100. Fed One
operates through its principal subsidiary, Fed One Bank, a federally chartered
savings bank ("Fed One Bank"). Fed One Bank provides a wide range of financial
services principally to individuals and offers services customarily provided by
banks, including checking, money market, savings and time deposit accounts, real
estate and consumer loans. Fed One Bank operates through 12 offices in the
northern West Virginia and eastern Ohio area. See " -- Comparison of Certain
Unaudited Per Share Data," " -- Selected Financial Data of Fed One
(Historical)," "Incorporation of Certain Information By Reference" and "Recent
Developments -- Fed One."
SPECIAL MEETINGS; RECORD DATE
Fed One. The Fed One Special Meeting will be held at 10:00
a.m., on Friday, September 18, 1998, at Fed One's corporate headquarters located
at 21 Twelfth Street, Wheeling, West Virginia 26003. At the Fed One Special
Meeting, Fed One shareholders will consider and vote upon approval of the Merger
Agreement. The Fed One Board has fixed the close of business on August 4, 1998,
as the record date for determining the Fed One shareholders entitled to receive
notice of and to vote at the Fed One Special Meeting (the "Fed One Record
Date"). As of the Fed One Record Date, there were 2,401,540 shares of Fed One
Common Stock issued and outstanding and entitled to be voted at the Special
Meeting.
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United. The United Special Meeting will be held at 10:00 a.m.,
on Monday, September 21, 1998, at the 10th floor of United Square, located at
Fifth and Avery Streets, Parkersburg, West Virginia. At the United Special
Meeting, United shareholders will consider and vote upon the United Articles
Amendment. The United Board has fixed the close of business on August 3, 1998,
as the record date for determining the United shareholders entitled to receive
notice of and to vote at the United Special Meeting (the "United Record Date").
As of the United Record Date, there were 39,135,051 shares of United Common
Stock issued and outstanding and entitled to be voted at the United Special
Meeting.
THE MERGER
The Merger Agreement provides that Fed One will merge with and
into Merger Sub, which will be the surviving corporation and will be governed by
the laws of West Virginia. If the Merger Agreement is approved at the Fed One
Special Meeting and the United Articles Amendment is approved at the United
Special Meeting, all required governmental and other consents and approvals are
obtained and all of the other conditions to the obligations of the parties to
consummate the Merger are either satisfied or waived (as permitted), the Merger
will be consummated. A copy of the Merger Agreement is set forth in Appendix A
to this Joint Proxy Statement/Prospectus. See "The Merger."
UNITED ARTICLES AMENDMENT
In connection with the Merger, the United Board approved the
United Articles Amendment to increase the number of authorized shares of United
Common Stock from 41,000,000 to 100,000,000 shares. Approval of the United
Articles Amendment requires the approval of a majority of the outstanding shares
of United Common Stock entitled to vote on the matter. The purpose of the United
Articles Amendment is to provide United with a sufficient number of authorized
shares of United Common Stock to consummate the Merger and to create sufficient
additional shares for future acquisitions, United's benefit plans involving
United Common Stock, and other appropriate corporate purposes. Approval of the
United Articles Amendment is a condition precedent to consummation of the
Merger. United will, under certain circumstances, be able to issue shares of
United Common Stock without approval and the creation and future issuance of
authorized Common Stock beyond what is necessary for the Merger could have the
effect of diluting shareholders' interests. See "The Merger -- Conditions to
Consummation" and "United Articles Amendment."
CONSIDERATION; EXCHANGE RATIO
Upon consummation of the Merger, all of the outstanding shares
of Fed One Common Stock (excluding certain shares held by Fed One, United or
their subsidiaries, if any) will be converted into and exchanged for shares of
United Common Stock based upon the Exchange Ratio. No fractional shares of
United Common Stock will be issued. Rather, cash (without interest) will be paid
in lieu of any fractional share interest to which any Fed One shareholder would
be entitled upon consummation of the Merger, based on the average of the last
sale prices of the United Common Stock as reported by the Nasdaq Stock Market
(as reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) for the five trading days immediately preceding the
Effective Date (as defined herein).
VOTES REQUIRED AND BOARD RECOMMENDATIONS
Fed One. Approval of the Merger Agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of the
Fed One Common Stock entitled to vote at the Special Meeting. As of the Fed One
Record Date, the directors and executive officers of Fed One and their
affiliates held 375,384 shares (or approximately 15.0% of the outstanding
shares) of Fed One Common Stock so entitled to vote. As of the Fed One Record
Date, United held 19,000 shares of Fed One Common Stock and directors and
executive officers of United and their affiliates held 100 shares of Fed One
Common Stock. As of the Fed One Record Date, Fed One held no shares and United
held 43,919 shares of Fed One Common Stock in a fiduciary capacity for others.
See "General Information -- Vote Required" and "The Merger -- Interests of
Certain Persons in the Merger."
The Fed One Board believes that the Merger is in the best
interests of Fed One and its shareholders and has unanimously adopted the Merger
Agreement and approved the consummation of the transactions contemplated
therein. In deciding to adopt the Merger Agreement and approve the transactions
contemplated therein, the Fed One Board considered a number of factors,
including the financial condition, results of operations and future prospects of
Fed One and United and the opinion referred to below. See "The Merger --
Background of the Merger" and "The Merger -- Reasons of Fed One for the Merger."
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THE FED ONE BOARD UNANIMOUSLY RECOMMENDS THAT FED ONE SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT.
Ryan, Beck & Co., Inc. ("Ryan, Beck") has served as financial
adviser to Fed One in connection with the Merger and has rendered an opinion to
the Fed One Board that the Exchange Ratio is fair from a financial point of view
to Fed One shareholders. For additional information concerning Ryan, Beck and
its opinion, see "The Merger -- Opinion of Fed One's Financial Adviser" and the
opinion included as Appendix C to this Joint Proxy Statement/Prospectus.
United. The affirmative vote of a majority of the outstanding
shares of United Common Stock entitled to vote is required for approval of the
United Articles Amendment increasing the number of authorized shares of United
Common Stock from 41,000,000 to 100,000,000. As of the United Record Date, the
directors and executive officers of United and their affiliates held 5,153,503
shares (or approximately 13% of the outstanding shares) of United Common Stock.
As of the United Record Date, Fed One held no shares of United Common Stock and
directors and executive officers of Fed One and their affiliates held 1,232
shares of United Common Stock. As of the United Record Date, United held
3,473,382 shares and Fed One held no shares of United Common Stock in a
fiduciary capacity for others. See "General Information -- Vote Required" and
"The Merger -- Interests of Certain Persons in the Merger."
The United Board believes that the United Articles Amendment
is in the best interests of United and its shareholders and unanimously
recommends that United Shareholders vote for the United Articles Amendment. See
"Background of the Merger," "Reasons of United for the Merger," and "United
Articles Amendment."
THE UNITED BOARD UNANIMOUSLY RECOMMENDS THAT UNITED SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE UNITED ARTICLES AMENDMENT.
GENERAL
Effective Time. If the Merger Agreement is approved by the
requisite vote of the Fed One shareholders, the United Articles Amendment is
approved by the requisite vote of United shareholders, all required governmental
and other consents and approvals are obtained and the other conditions to the
obligations of the parties to consummate the Merger are either satisfied or
waived (as permitted), the Merger will be consummated and will become effective
on the date (the "Effective Date") and at the time (the "Effective Time") that
articles of merger are filed with the West Virginia Secretary of State's Office
("WV Secretary") and the Delaware Secretary of State's Office ("Delaware
Secretary"). Subject to the conditions to the obligations of the parties to
effect the Merger, the parties have agreed to cause the Effective Date to occur
on the fifth business day to occur after the last of the conditions to the
consummation of the Merger have been satisfied or waived (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 such other
date to which the parties may agree in writing. United and Fed One each has the
right, acting unilaterally, to terminate the Merger Agreement should the Merger
not be consummated by December 31, 1998, except to the extent that the failure
of the Merger to be consummated arises out of or results from the knowing action
or inaction of the party seeking to terminate the Merger Agreement. See "The
Merger -- Amendment, Waiver and Termination."
Delivery of United Certificates. Promptly after the Effective
Time, United will send or will cause to be sent transmittal materials to each
record holder of shares of Fed One Common Stock outstanding at the Effective
Time for use in exchanging those certificates for shares of United Common Stock.
See "The Merger -- Distribution of United Certificates."
Certain Federal Income Tax Consequences. The Merger is
intended to be a tax-free reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). Generally, no gain
or loss will be recognized for federal income tax purposes by Fed One
shareholders as a result of the Merger except with respect to any cash received
in lieu of fractional share interests and no gain or loss will be recognized by
United shareholders as a result of the Merger. A condition to consummation of
the Merger is the receipt by each of United and
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Fed One of an opinion from their respective legal counsel as to the
qualification of the Merger as a tax-free reorganization and certain other
federal income tax consequences of the Merger. All shareholders should carefully
read the discussion of the material federal income tax consequences of the
proposed Merger under "The Merger -- Certain Federal Income Tax Consequences"
and are urged to consult with their own tax advisers as to the federal, state,
local and foreign tax consequences in their particular circumstances.
Effects of the Merger on Rights of Fed One Shareholders. As a
result of the Merger, holders of Fed One Common Stock who receive shares of
United Common Stock will become shareholders of United. For a comparison of the
charter and bylaw provisions of United and Fed One governing the rights of
United and Fed One shareholders, see "Certain Differences in the Rights of
United and Fed One Shareholders."
Management After the Merger. United has agreed to cause Alan
E. Groover, the Chief Executive Officer and President of Fed One, to be elected
or appointed as a director of United at the Effective Time. United has also
agreed to cause four members of the Fed One Board (selected by Fed One after
consultation with United), who are members of the Fed One Board immediately
prior to the Effective Time, to be elected or appointed to the Northern West
Virginia Regional Advisory Board of Directors of UNB. See "The Merger --
Management and Operations After the Merger" and " -- Interests of Certain
Persons in the Merger."
Interests of Certain Persons in the Merger. Certain members of
the management of Fed One have interests in the Merger in addition to their
interests generally as shareholders of Fed One. Mr. Groover has commitments
regarding the position described above with United and has entered into a
consulting agreement with United which generally provides, among other things,
that Mr. Groover shall provide consulting services to United during the 18
months following the Effective Time and that United shall (i) pay to Mr. Groover
$1,000 per month during such period and (ii) permit Mr. Groover and his spouse
to participate in all group insurance, life insurance, health and accident, and
disability plans, programs and arrangements offered by United to its executive
employees and their spouses for a period commencing on the date that United is
no longer required to provide employee benefits to Mr. Groover pursuant to his
existing employment agreements with Fed One and Fed One Bank and ending on the
earlier of Mr. Groover's 65th birthday and the date of Mr. Groover's full-time
employment by any other employer (provided that Mr. Groover is entitled to and
accepts, under the terms of such employment, benefits substantially similar to
those to be provided pursuant to the consulting agreement). In addition, United
has also agreed to cause four members of the Fed One Board (selected by Fed One
after consultation with United), who are members of the Fed One Board
immediately prior to the Effective Time, to be elected or appointed to the
Northern West Virginia Regional Advisory Board of Directors of UNB.
Under Fed One's stock benefit plans, all outstanding stock
options and recognition share awards held by employees and directors which are
not yet vested will accelerate at the Effective Time pursuant to the provisions
in the plans related to a change in control of Fed One. In addition, under the
Merger Agreement, United has agreed to indemnify, for a period of six years
after the Effective Date, the present directors, officers and employees of Fed
One for all acts and omissions occurring at or prior to the Effective Time to
the same extent as such persons could be indemnified by Fed One as of the date
of the Merger Agreement. United has also agreed to provide directors' and
officers' liability insurance for the present and former officers and directors
of Fed One for a period of six years following the Effective Time.
The Merger Agreement provides that all options to acquire Fed
One Common Stock outstanding at the Effective Time under the Fed One Stock Plans
(as defined below), including those held by management, will be converted at the
Exchange Ratio into options to acquire shares of United Common Stock.
The Board of Directors of Fed One was aware of these interests
and considered them, among other interests and other matters, in approving the
Merger Agreement and the transactions contemplated thereby. See "The Merger --
Interests of Certain Persons in the Merger."
Conditions to Consummation. Consummation of the Merger is
subject to various conditions, including, among other matters: (i) approval of
the Merger Agreement by the Fed One shareholders and approval of the United
Articles Amendment by the United shareholders; (ii) receipt of all governmental
and other consents and approvals necessary to permit consummation of the Merger;
and (iii) satisfaction of certain other usual conditions, including the receipt
of the tax opinions discussed above. Under the terms of the Merger Agreement,
the conditions to the Merger
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(other than regulatory and shareholder approvals) may generally be waived by
United or Fed One, as applicable. See "The Merger -- Conditions to Consummation"
and " -- Amendment, Waiver and Termination."
Regulatory Approvals. The Merger is subject to the prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and the Office of the Comptroller of the Currency ("the OCC"), and may
be subject to the approval of or notice to other regulatory authorities. Other
applications for approval of the Merger have been filed with such agencies.
There can be no assurance that the approval of the Federal Reserve or the OCC or
any other authority will be obtained or as to the timing or conditions of such
approval. See "The Merger -- Regulatory Approvals."
Termination. The Merger Agreement may be terminated, and the
Merger abandoned, at any time prior to the Effective Time by mutual action of
the board of directors of both Fed One and United, or by action of the board of
directors of either company under certain circumstances, including (i) the other
party breaches and does not timely cure any breach of, a representation,
warranty, covenant or other agreement contained in the Merger Agreement and such
breach, individually of or in the aggregate, would be reasonably likely-to have
a Material Adverse Effect (as defined in the Merger Agreement); (ii) any consent
or approval of certain regulatory authorities is denied by final nonappealable
action of such authority; (iii) Fed One shareholders fail to approve the Merger
Agreement or United shareholders fail to approve the United Articles Amendment;
(iv) if the Merger is not consummated by December 31, 1998, unless the failure
to consummate by such time is due to knowing action or inaction of the party
seeking to terminate; or (v) the other party's board of directors has failed to
recommend approval of The Merger or the United Articles Amendment, as the case
may be, withdrawn such recommendation or modified or changed such recommendation
in a manner adverse in any respect to the interests of the other party. Further,
Fed One has the right to terminate the Merger Agreement (i) if there is a
decline in United's Common Stock Price such that the Average Closing Price
divided by the Starting Price (as defined in the Merger Agreement) is less than
0.80 and such quotient is less than a similar quotient calculated by dividing
the Final Index Price by the Index Price on the Starting Date, minus 0.20 (as
defined in the Merger Agreement), and, (ii) United, after receipt of notice of
Fed One's intention to terminate due to such a decline, fails to adjust the
Exchange Ratio as provided in the Merger Agreement. See "The Merger --
Amendment, Waiver and Termination."
Accounting Treatment. It is intended that the Merger be
accounted for under the pooling-of-interests accounting method. It is a
condition to closing that Fed One and United shall each have received from KPMG
Peat Marwick LLP, and Ernst & Young LLP, their respective independent auditors,
letters, dated the date of or shortly prior to the Effective Date, rendering
their respective opinions that the Merger qualifies for pooling-of-interests
accounting treatment.
United and Fed One have no reason to believe that the Merger
will not qualify as a pooling of interests for financial accounting and
financial reporting purposes, provided that Fed One reissues approximately
224,000 shares of Fed One Common Stock for fair value to individuals or entities
unaffiliated with Fed One and United prior to the Effective Time (the "Fed One
Stock Sale"). Fed One has agreed in the Merger Agreement to use its reasonable
best efforts to effect the Fed One Stock Sale prior to the Effective Time after
the Merger has been approved by the Fed One shareholders, the United Articles
Amendment has been approved by the United shareholders and all required
regulatory approvals have been obtained.
No assurances can be provided as to when or if all of the
conditions precedent to the Merger can or will be satisfied or waived by the
appropriate party. As of the date of this Joint Proxy Statement/Prospectus, the
parties have no reason to believe that any of the conditions set forth above
will not be satisfied.
Bank Merger. Each of Fed One and United have agreed to use
reasonable best efforts to cause and effect the merger of Fed One Bank into
United National Bank (the "Bank Merger") as promptly as reasonably practicable
following the Effective Date.
No Dissenters' Rights. Under the Delaware General Corporate
Law (the "DGCL"), holders of Fed One Common Stock have no dissenters' rights in
connection with the Merger. Under the West Virginia Corporation Act ("WVCA"),
holders of United Common Stock have no dissenters' rights in connection with the
United Articles Amendment. See "The Merger -- No Dissenters' Rights."
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Resales of United Common Stock. The shares of United Common
Stock to be issued in connection with the Merger will be freely tradeable by the
holders of such shares, provided that the resale of shares held by persons who
may be deemed to be "affiliates" of Fed One and United under applicable federal
securities laws will be subject to the requirements of such laws and regulations
thereunder, as well as restrictions which are intended to ensure that the Merger
will be accounted for as a pooling-of-interests under generally accepted
accounting principles.
Stock Option Agreement. As a condition and an inducement to
United's entering into the Merger Agreement, on February 18, 1998, Fed One, as
issuer, entered into a stock option agreement with United, as grantee (the
"Stock Option Agreement"). The Stock Option Agreement is attached hereto as
Appendix B and is incorporated by reference herein.
Pursuant to the Stock Option Agreement, Fed One granted to
United an irrevocable option (the "Option") pursuant to which United has the
right, upon the occurrence of certain events (none of which has occurred to the
best of United's and Fed One's knowledge), to purchase up to 474,800 shares of
Fed One Common Stock, subject to adjustment in certain cases as described below
but in no event exceeding 19.9% of the number of shares of Fed One Common Stock
outstanding immediately before exercise of the Option, for a purchase price of
$33.50 per share, subject to termination during certain periods.
Under certain circumstances, United also could elect to sell
the Option, and any shares previously purchased thereunder, back to Fed One at a
price generally reflecting the price offered or paid by a third-party acquirer
for other shares of Fed One (minus the exercise price of the Option if the
Option has not been exercised). Alternatively, under certain circumstances,
United could surrender the Option for a cash payment from Fed One of $4 million,
subject to adjustment under certain circumstances.
If the Merger Agreement is terminated either subsequent to the
occurrence of an Initial Triggering Event (as defined herein) or by United as
the result of a willful breach by Fed One, then the Stock Option Agreement will
survive until 14 months after such termination. United will be entitled to
exercise its rights under the Stock Option Agreement if a Subsequent Triggering
Event (as defined herein) also occurs prior to the expiration of such 14 month
period. The purchase of any shares of Fed One Common Stock pursuant to the
Option is subject to compliance with applicable law, including, but not limited
to, the receipt of necessary approvals under the BHCA.
Arrangements such as the Stock Option Agreement are
customarily entered into in connection with corporate mergers and acquisitions
in an effort to increase the likelihood that the transactions will be
consummated in accordance with their terms and to compensate the grantee for the
efforts undertaken and the expenses, losses and opportunity costs incurred by it
in connection with the transactions if they are not consummated under certain
circumstances involving an acquisition or potential acquisition of the option
issuer by a third party. The Stock Option Agreement was entered into to
accomplish these objectives. The Stock Option Agreement may have the effect of
discouraging offers by third parties to acquire Fed One prior to the Merger,
even if such persons might have been prepared to offer to pay consideration to
Fed One shareholders that has a higher current market price than the shares of
United Common Stock to be received by such holders pursuant to the Merger
Agreement. See "The Merger -- Background of the Merger," "The Merger -- Reasons
of Fed One for the Merger," "The Merger -- Reasons of United for the Merger,"
"The Merger -- Stock Option Agreement" and Appendix B to this Joint Proxy
Statement/Prospectus.
RECENT DEVELOPMENTS
UNITED. During the second quarter of 1998, United completed
the merger of George Mason Bankshares, Inc. ("George Mason"), Fairfax, Virginia.
In connection with the merger, United incurred merger-related and one-time
charges to consolidate George Mason's operations and conform certain policies to
those of United. In addition, United implemented a strategic tax initiative in
the second quarter related to restructuring certain operations that reduced
income tax expense in the second quarter and will reduce income tax expense for
the remainder of 1998. Excluding the aforementioned charges and initiatives,
core earnings for the second quarter and first half of 1998 were 37(cents) and
72(cents) per share, respectively. United reported second quarter and first half
1998 earnings of 17(cents) and 52(cents) per share, respectively. See "Recent
Developments---United."
8
<PAGE>
FED ONE. Fed One reported net income of $1.4 million for the
six months ended June 30, 1998, compared to net income of $1.6 million for the
six months ended June 30, 1997. Earnings per diluted share were 58 cents for the
six months ended June 30, 1998, compared to 69 cents per diluted share for the
year earlier period.
Net income for the quarter ended June 30, 1998 was $725,000 or
30 cents per diluted share compared to $818,000 or 35 cents per diluted share
for the comparable period in 1997. The annualized return on average assets and
annualized return on average equity for the quarter ended June 30, 1998 were .78
percent and 7.02 percent, respectively. See "Recent Developments--Fed One."
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
United Common Stock and Fed One Common Stock are each traded
on the Nasdaq Stock Market. The following table sets forth the last sale price
of United Common Stock, the last sale price of Fed One Common Stock, and the
equivalent price per share (as explained below) of Fed One Common Stock at (i)
the close of business on February 17, 1998, the last trading day immediately
preceding the public announcement of the Merger, and (ii) July 29, 1998, the
last practicable date prior to the mailing of this Joint Proxy
Statement/Prospectus:
<TABLE>
<CAPTION>
MARKET PRICE PER SHARE
----------------------
UNITED FED ONE EQUIVALENT PER
COMMON STOCK (1) COMMON STOCK PRICE SHARE (2)
---------------- ------------ ---------------
<S><C>
February 17, 1998 $ 24.31 $33.50 $36.47
July 29, 1998 $ 29.00 $41.50 $43.50
(1) United's stock price has been adjusted to reflect the the two for one stock
split effected in the form of a 100% stock dividend, payable as of March 27,
1998.
(2) The equivalent price per share of Fed One Common Stock at the specified
dates represents the last sale price of a share of United Common Stock on such
date multiplied by the Exchange Ratio of 1.5.
Shareholders are advised to obtain current market quotations
for United Common Stock. The market price of United Common Stock will fluctuate
between the date of this Joint Proxy Statement/Prospectus and the Effective
Time. Fluctuations in the market price of United Common Stock will result in an
increase or decrease in the market value of the consideration to be received by
holders of Fed One Common Stock in the Merger. The number of shares of United
Common Stock to be received for each share of Fed One Common Stock has been
fixed by the Exchange Ratio. Accordingly, an increase in the market value of
United Common Stock will increase the market value of the consideration to be
received in the Merger. A decrease in the market value of United Common Stock
will have the opposite effect. The market value of the consideration at the time
of the Merger will depend upon the market value of a share of United Common
Stock at such time. See "Comparative Market Prices and Dividends."
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following summary presents selected comparative unaudited
per share data for United and Fed One on an historical basis and on a pro forma
combined basis and equivalent pro forma combined basis assuming the Merger had
been effective during the periods presented and accounted for under the
pooling-of-interests accounting method. On April 2, 1998, United consummated the
merger with George Mason Bankshares, Inc. using the pooling of interests method
of accounting. Accordingly, all United financial information has been restated
to reflect the George Mason acquisition. The information shown below should be
read in conjunction with the historical financial data and statements of United
and Fed One incorporated by reference herein, including the respective notes
thereto. See "Available Information," "Incorporation of Certain Information by
Reference," " -- Selected Financial Data of United
9
<PAGE>
(Historical)," " -- Selected Financial Data of Fed One (Historical)", "Selected
Financial of Data United and Fed One (ProForma Combined)", and "The Merger --
Accounting Treatment."
The per share data set forth herein are presented for
comparative purposes only and are not necessarily indicative of the future
combined financial position, the results of the future operations or the actual
results or combined financial position of United that would have been achieved
had the Merger and the Fed One Stock Sale been consummated as of the dates or
for the periods indicated. While no assurance can be given, United expects that
it will achieve substantial benefits from the Merger, including operating cost
savings and revenue enhancements. However, the pro forma comparative unaudited
per share data do not reflect any direct costs, potential savings or revenue
enhancements which are expected to result from the consolidation of operations
of Fed One and United and, therefore, do not purport to be indicative of the
results of future operations of United. Results for the interim periods are not
necessarily indicative of results which may be expected for any other interim or
annual period.
To conform with pooling of interests criteria and as discussed
herein, Fed One has agreed in the Merger Agreement to use its reasonable best
efforts to effect a sale of Fed One Common Stock prior to the Effective Time
after the Merger has been approved by the Fed One shareholders, the United
Articles Amendment has been approved by the United shareholders and all required
regulatory approvals have been obtained. The impact of such sale on the
following comparative data is not material.
10
<PAGE>
COMPARATIVE PER SHARE DATA (UNAUDITED)
</TABLE>
<TABLE>
<CAPTION> Years Ended December 31,
Three Months Ended ------------------------------
March 31, 1998 1997 1996 1995
------------------ ---- ---- ----
<S><C>
UNITED BANKSHARES, INC.
Basic net income per common share
Historical $0.35 $1.27 $0.97 $1.02
Fed One pro forma combined (1) $0.34 $1.24 $0.94 $1.01
Diluted net income per common share
Historical $0.35 $1.25 $0.96 $1.02
Fed One pro forma combined (1) $0.33 $1.22 $0.93 $1.00
Dividends per common share
Historical (2) $0.175 $0.675 $0.620 $0.585
Fed One pro forma combined (2) $0.175 $0.675 $0.620 $0.585
Book value per common share
Historical $9.31 $9.14 $8.34 $8.01
Fed One pro forma combined (1) $9.52 $9.35 $8.59 $8.27
FED ONE BANCORP, INC.
Basic net income per common share
Historical $0.30 $1.43 $0.97 $1.24
Equivalent Fed One pro forma combined (3) $0.51 $1.87 $1.41 $1.51
Diluted net income per common share
Historical $0.28 $1.36 $0.94 $1.20
Equivalent Fed One pro forma combined (3) $0.50 $1.83 $1.39 $1.49
Dividends per common share
Historical $0.155 $0.600 $0.560 $0.520
Equivalent Fed One pro forma combined (3) $0.263 $1.013 $0.930 $0.878
Book value per common share
Historical (4) $17.83 $17.67 $16.88 $16.34
Equivalent Fed One pro forma combined (3) $14.28 $14.03 $12.88 $12.40
</TABLE>
- -------------
(1) Assumes receipt of 100% of the outstanding shares of Fed One Common Stock
in exchange for United Common Stock at the Exchange Ratio.
(2) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation.
(3) The equivalent per share amounts are the result of multiplying the pro
forma combined dividends, the pro forma combined net income, and pro forma
combined book value by the Exchange Ratio.
(4) Amounts calculated exclude ESOP shares not committed to be released.
11
<PAGE>
SELECTED FINANCIAL DATA OF UNITED (HISTORICAL)
The following table sets forth selected historical financial
data of United and has been derived from its financial statements. Such selected
historical financial data should be read in conjunction with United's audited
consolidated financial statements, including the respective notes thereto, and
unaudited interim financial information, in each case incorporated herein by
reference. On April 2, 1998, United consummated the merger with George Mason
Bankshares, Inc. using the pooling of interests method of accounting.
Accordingly, the United information has been restated to reflect the George
Mason acquisition. The interim financial information has been derived from
unaudited financial statements of United, which, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for fair statement of the results for the unaudited interim periods.
Results for the interim periods are not necessarily indicative of results which
may be expected for any other interim or annual period. See "Incorporation of
Certain Information by Reference."
<TABLE>
<CAPTION>
At or for the Three Months Ended
March 31, At or for the Year Ended December 31,
-------------------------------- -----------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S><C>
SUMMARY OF OPERATIONS:
Total interest income $ 69,666 $ 59,062 $ 254,758 $ 226,085 $ 209,934 $ 181,296 $ 169,358
Total interest expense 32,480 26,566 117,060 99,449 90,116 67,299 64,877
Net interest income 37,186 32,496 137,698 126,636 119,818 113,997 104,481
Provision for loan losses 2,050 603 3,120 2,791 2,338 2,369 5,450
Other income 13,850 7,719 36,376 29,041 25,111 17,628 17,911
Other expenses 27,809 21,979 95,757 95,728 83,605 76,361 72,707
Income taxes 7,431 5,769 25,178 19,763 19,877 17,539 13,761
Income before cumulative
effect of accounting change 13,746 11,864 49,019 37,395 39,109 35,356 30,474
Net income 13,746 11,864 49,019 37,395 39,109 35,356 32,020
Cash dividends (1) 5,251 4,965 20,344 17,847 13,817 12,604 10,918
PER COMMON SHARE: (2)
Income before cumulative
effect of accounting change:
Basic 0.35 0.31 1.27 0.97 1.02 0.93 0.82
Diluted 0.35 0.30 1.25 0.96 1.02 0.92 0.81
Net income:
Basic 0.35 0.31 1.27 0.97 1.02 0.93 0.86
Diluted 0.35 0.30 1.25 0.96 1.02 0.92 0.85
Cash dividends (1) 0.175 0.165 0.675 0.620 0.585 0.530 0.475
Book value 9.31 8.39 9.14 8.34 8.01 7.23 6.88
SELECTED RATIOS:
Return on average
shareholders' equity 15.37% 14.74% 14.56% 11.83% 13.47% 13.05% 12.96%
Return on average assets 1.54% 1.53% 1.47% 1.24% 1.42% 1.36% 1.32%
SELECTED BALANCE SHEET DATA:
Average assets $3,616,853 $3,135,575 $3,328,328 $3,013,511 $2,757,851 $2,591,597 $2,433,265
Investment Securities 801,070 717,187 826,831 677,764 582,953 594,983 620,052
Total loans 2,781,391 2,289,955 2,607,406 2,294,200 2,088,026 1,917,237 1,705,359
Total assets 3,804,958 3,219,995 3,726,359 3,199,347 2,889,826 2,721,139 2,496,636
Total deposits 2,950,014 2,614,647 2,925,349 2,521,148 2,329,063 2,174,992 2,072,020
Long-term borrowings 5,162 6,797 5,695 29,621 39,497 84,374 32,564
Total borrowings and
other liabilities 491,301 281,605 445,536 355,341 253,602 273,737 163,736
Shareholders' equity 363,643 323,743 355,474 322,858 307,161 272,410 260,880
</TABLE>
- -----------
(1) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation.
(2) All references to per share data have been retroactively restated for the
effect of a two-for-one stock split effected in the form of a 100% stock
dividend distributed on March 27, 1998, to shareholders of record as of
March 13, 1998.
12
<PAGE>
SELECTED FINANCIAL DATA OF FED ONE (HISTORICAL)
The following table sets forth selected historical financial
data of Fed One and has been derived from its financial statements. Such
selected historical financial data should be read in conjunction with Fed One's
audited consolidated financial statements, including the respective notes
thereto, and unaudited interim financial information, in each case incorporated
herein by reference. The interim financial information has been derived from
unaudited financial statements of Fed One, which, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for fair statement of the results for the unaudited interim periods.
Results for the interim periods are not necessarily indicative of results which
may be expected for any other interim or annual period. See "Incorporation of
Certain Information by Reference."
<TABLE>
<CAPTION>
At or for the Three Months Ended
March 31, At or for the Year Ended December 31,
-------------------------------- -------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S><C>
SUMMARY OF OPERATIONS:
Total interest income $ 6,593 $ 6,190 $ 25,694 $ 24,556 $ 23,022 $ 18,717 $ 17,252
Total interest expense 3,755 3,240 14,062 12,807 11,325 8,585 7,855
Net interest income 2,838 2,950 11,632 11,749 11,697 10,132 9,397
Provision for loan losses 30 30 160 90 120 115 254
Other income 162 150 692 613 624 622 785
Other expenses 1,886 1,733 7,095 8,657 7,127 6,126 5,804
Income taxes 409 516 1,827 1,291 1,824 1,649 1,465
Income before cumulative
effect of accounting change 675 821 3,242 2,324 3,250 2,864 2,659
Net income 675 821 3,242 2,324 3,250 2,864 3,165
Cash dividends 354 338 1,368 1,350 1,373 (1) (1)
PER COMMON SHARE:
Income before cumulative
effect of accounting change:
Basic 0.30 0.36 1.43 0.97 1.24 (1) (1)
Diluted 0.28 0.34 1.36 0.94 1.20 (1) (1)
Net income:
Basic 0.30 0.36 1.43 0.97 1.24 (1) (1)
Diluted 0.28 0.34 1.36 0.94 1.20 (1) (1)
Cash dividends 0.155 0.145 0.60 0.56 0.52 (1) (1)
Book value (2) 17.83 17.07 17.67 16.88 16.34 (1) (1)
SELECTED RATIOS:
Return on average
shareholders' equity 6.65% 8.23% 8.18% 5.70% 7.73% 10.33% 12.47%
Return on average assets 0.73% 0.96% 0.92% 0.69% 1.02% 1.04% 1.33%
SELECTED BALANCE SHEET DATA:
Average assets $368,329 $342,870 $353,974 $339,083 $319,780 $276,083 $237,537
Investment Securities 174,174 184,009 179,011 187,256 188,228 161,117 126,251
Total loans 168,895 145,073 167,618 134,835 120,950 113,832 109,226
Total assets 367,667 346,214 366,776 341,897 334,297 303,465 247,872
Total deposits 264,096 253,244 258,913 249,685 241,567 238,541 184,160
Long-term borrowings 38,510 22,576 40,979 15,256 4,948 7,000 12,300
Total borrowings and
other liabilities 62,243 52,774 67,281 52,238 50,630 36,205 36,860
Shareholders' equity 41,328 40,196 40,582 39,974 42,100 28,719 26,852
</TABLE>
- ----------------
(1) Information is not applicable as Fed One did not complete its stock
offering and reorganization of Fed One Bank until January 19, 1995.
(2) Amounts calculated exclude ESOP shares not committed to be released.
13
<PAGE>
UNITED AND FED ONE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected unaudited pro forma
financial data giving effect to the Merger as though United and Fed One had been
combined during all periods presented. On April 2, 1998, United consummated the
merger with George Mason Bankshares, Inc. using the pooling of interests method
of accounting. Accordingly, all United financial information has been restated
to reflect the George Mason acquisition.
The Merger is expected to be accounted for as a
pooling-of-interests. Such selected unaudited pro forma financial data should be
read in conjunction with the United and Fed One Unaudited Pro Forma Condensed
Consolidated Financial Statements, including the notes thereto. The Unaudited
Pro Forma Condensed Consolidated Balance Sheet is not necessarily indicative of
the actual financial position that would have existed had the Merger been
consummated as of the beginning of the periods indicated below, or that may
exist in the future. The Unaudited Pro Forma Condensed Consolidated Statements
of Income are not necessarily indicative of the results that would have occurred
had the Merger and the Fed One Stock Sale been consummated on the date indicated
or that may be achieved in the future. To conform with pooling of interests
criteria and as discussed elsewhere herein, Fed One has agreed in the Merger
Agreement to use its reasonable best efforts to effect the Fed One Stock Sale
prior to the Effective Time after the Merger has been approved by the Fed One
shareholders, the United Articles Amendment has been approved by the United
shareholders and all required regulatory approvals have been obtained. The
impact of such sale on the following Selected Financial Data of United and Fed
One (ProForma Combined) is not material. See "Incorporation of Certain
Information by Reference" and "United and Fed One Unaudited Pro Forma Condensed
Consolidated Financial Information."
14
<PAGE>
SELECTED FINANCIAL DATA OF UNITED AND FED ONE (PRO FORMA COMBINED) (DOLLARS IN
THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
At or for the Three Months Ended
March 31, At or for the Year Ended December 31,
-------------------------------- ----------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S><C>
SUMMARY OF OPERATIONS:
Total interest income $ 76,259 $ 65,252 $ 280,452 $ 250,641 $ 232,956 $ 200,013 $ 186,610
Total interest expense 36,235 29,806 131,122 112,256 101,441 75,884 72,732
Net interest income 40,024 35,446 149,330 138,385 131,515 124,129 113,878
Provision for loan losses 2,080 633 3,280 2,881 2,458 2,484 5,704
Other income 14,012 7,869 37,068 29,654 25,735 18,250 18,696
Other expenses 29,695 23,712 103,852 104,385 90,732 82,487 78,511
Income taxes 7,840 6,285 27,005 21,054 21,701 19,188 15,226
Income before cumulative
effect of accounting change 14,421 12,685 52,261 39,719 42,359 38,220 33,133
Net income 14,421 12,685 52,261 39,719 42,359 38,220 35,185
Cash dividends (1) 5,251 4,965 20,344 17,847 13,817 12,604 10,918
PER COMMON SHARE:
Income before cumulative
effect of accounting change:
Basic 0.34 0.30 1.24 0.94 1.01 0.85 0.76
Diluted 0.33 0.30 1.22 0.93 1.00 0.84 0.75
Net income:
Basic 0.34 0.30 1.24 0.94 1.01 0.85 0.80
Diluted 0.33 0.30 1.22 0.93 1.00 0.84 0.80
Cash dividends (1) 0.175 0.165 0.675 0.620 0.585 0.530 0.475
Book value 9.52 8.64 9.35 8.59 8.27 7.99 7.59
SELECTED RATIOS:
Return on average
shareholders' equity 14.50% 14.04% 13.89% 11.13% 12.75% 12.79% 12.91%
Return on average assets 1.47% 1.48% 1.42% 1.18% 1.38% 1.33% 1.32%
SELECTED BALANCE SHEET DATA:
Average assets 3,985,182 3,478,445 3,682,302 3,352,594 3,077,631 2,867,680 2,670,802
Investment Securities 975,244 901,196 1,005,842 865,020 771,181 756,100 746,303
Total loans 2,950,286 2,435,028 2,787,458 2,429,035 2,208,976 2,031,069 1,814,585
Total assets 4,172,625 3,566,209 4,093,135 3,541,244 3,224,123 3,024,604 2,744,508
Total deposits 3,214,110 2,867,891 3,184,262 2,770,833 2,570,630 2,413,533 2,256,180
Long-term borrowings 43,672 29,373 46,674 44,877 44,445 91,374 44,864
Total borrowings and
other liabilities 553,544 334,379 512,817 407,579 304,232 309,942 200,596
Shareholders' equity 404,971 363,939 396,056 362,832 349,261 301,129 287,732
</TABLE>
- -------------
(1) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation.
15
<PAGE>
RECENT DEVELOPMENTS
UNITED
United reported second quarter and first half 1998 earnings of
17(cents) and 52(cents) per share, respectively. This compares with 31(cents)
and 61(cents) per share reported a year earlier. United earned $20.6 million of
net income for the first six months of 1998, compared to $24.0 million reported
during the first half of 1997. These amounts have been restated to include the
acquisition of George Mason.
On April 2, 1998, United completed its acquisition of George
Mason Bankshares, Inc. ("George Mason"), Fairfax, Virginia. In connection with
the merger, United recognized approximately $8 million of merger-related
charges. Merger-related charges consisted primarily of employee benefits,
severance, facilities, system costs and other costs to effect the merger.
One-time charges of approximately $7 million were also incurred to align George
Mason's operations and policies to those of United and to realign certain other
operating components within the new organizational structure. In addition,
United implemented certain strategic income tax initiatives in the second
quarter that reduced the effective tax rate for 1998 from 35% to approximately
28%. In future years (beyond 1998) the estimated effective tax rate is expected
to return to approximately 35%. Excluding the aforementioned charges and
initiatives, core earnings for the second quarter and first half of 1998 were
37(cents) and 72(cents) per share, respectively.
On a tax-equivalent basis, the net interest margin declined
slightly to 4.51% for the first six months of 1998 as compared to 4.56% for the
first six months of 1997. Higher average loan volume of $446.3 million for the
first half of 1998 was the primary reason for the $10.9 million increase in net
interest income over the same period of 1997. Other income, excluding security
transactions, increased $7.7 million or 49.3% when comparing the first six
months of 1998 to the first six months of 1997 primarily from increased income
from mortgage banking operations. Other expense increased $22.3 million or 50.5%
when comparing the first six months of 1998 to the first six months of 1997 due
to the previously mentioned merger and one-time restructuring charges and
United's third quarter 1997 purchase acquisition of First Patriot Bankshares
Corporation. For the six months ended June 30, 1998, income taxes approximated
$7.9 million compared to $12.1 million for the six months ended June 30, 1997.
This decrease is principally the result of certain tax initiatives implemented
by United and lower earnings due to merger-related and other charges. For the
six months ended June 30, 1998 and 1997, the provision for loan losses was $7.3
million and $1.2 million, respectively.
FED ONE
Fed One reported that net income for the quarter ended June
30, 1998 was $725,000 or 30 cents per diluted share compared to $818,000 or 35
cents per diluted share for the comparable period in 1997. The annualized return
on average assets and annualized return on average equity for the quarter ended
June 30, 1998 were .78 and 7.02 percent respectively.
For the six months ended June 30, 1998, earnings per diluted
share were 58 cents compared to 69 cents per diluted share for the year earlier
period. Net income was $1.4 million for the six months ended June 30, 1998
compared to $1.6 million for the same period in 1997. Net income was impacted by
a decrease in net interest income as a result of a decline in rates earned on
interest earning assets and an increase in the rates paid on interest bearing
liabilities, resulting in a narrower net interest margin. Net income was also
impacted by an increase in operating expenses of $268,000 due mostly to the
establishment of three 7 Day Bank Centers and seven ATM's during the last twelve
months.
Fed One's total assets grew to $373.8 million at June 30, 1998
compared to $366.8 million at December 31, 1997. Net loans receivable increased
to $167.7 million at June 30, 1998 versus $166.1 million at year-end 1997.
Deposits increased to $259.9 million at June 30, 1998 compared to $258.9 million
at year-end 1997. Shareholders' equity was $41.9 million at June 30, 1998
representing a capital-to-assets ratio of 11.20 percent.
16
<PAGE>
GENERAL INFORMATION
Special Meetings
This Joint Proxy Statement/Prospectus is being furnished to
the shareholders of Fed One and United in connection with the solicitation of
proxies by the Fed One Board and United Board for use at the Fed One Special
Meeting and the United Special Meeting, respectively.
Fed One
The Fed One Special Meeting will be held at Fed One's
corporate headquarters, located at 21 Twelfth Street, Wheeling, West Virginia
26003, at 10:00 a.m., on Friday, September 18, 1998, and any adjournments and
postponements thereof to consider and vote upon a proposal to approve the Merger
Agreement.
United
The United Special Meeting will be held at the 10th floor of
United Square, located at Fifth and Avery Streets, Parkersburg, West Virginia
26102, at 10:00 a.m., on Monday, September 21, 1998, and at any adjournments and
postponements thereof to consider and vote upon the proposal to approve the
United Articles Amendment increasing the number of authorized shares of United
Common Stock from 41,000,000 to 100,000,000 shares.
RECORD DATE, SOLICITATION AND REVOCABILITY OF PROXIES
Fed One
The Fed One Board has fixed the close of business on August 4,
1998 as the record date for determining the Fed One shareholders entitled to
receive notice of and to vote at the Fed One Special Meeting. Only holders of
record of Fed One Common Stock as of the Fed One Record Date are entitled to
notice of and to vote at the Special Meeting. As of the Fed One Record Date,
2,401,540 shares of Fed One Common Stock were issued and outstanding (all of
which are entitled to vote at the Fed One Special Meeting) and held by
approximately ____ record holders. Holders of Fed One Common Stock are entitled
to one vote on each matter considered and voted on at the Special Meeting for
each share of Fed One Common Stock held of record at the close of business on
the Fed One Record Date. The presence, in person or by properly executed proxy,
of the holders of a majority of the shares of Fed One Common Stock entitled to
vote at the Fed One Special Meeting is necessary to constitute a quorum at the
Fed One Special Meeting. For purposes of determining the presence of a quorum,
abstentions will be counted as shares present. The proposal to approve the
Merger is a non- discretionary item on which brokers or other nominee holders
may not vote unless they receive instructions from the beneficial owner.
However, because there are no discretionary proposals to be voted on by Fed
One's shareholders, there will be no "broker non-votes" at the Fed One Special
Meeting. Because approval of the Merger Agreement requires the affirmative vote
of a majority of the outstanding shares of Fed One Common Stock, abstentions and
the failure to vote will have the effect of votes against the Merger Agreement.
Proxies in the form delivered to Fed One Shareholders with
this Joint Proxy Statement/Prospectus are being solicited by the Fed One Board.
Shares of Fed One Common Stock represented by properly executed proxies, if such
proxies are received in time and are not revoked, will be voted in accordance
with the instructions indicated on the proxies. If no instructions are
indicated, such proxies will be voted "FOR" approval of the Merger Agreement,
and as determined by a majority of the Fed One Board as to any other matter that
may come before the Fed One Special Meeting or any adjournment or postponement
thereof including, among other things, a motion to adjourn or postpone the Fed
One Special Meeting to another time and/or place, for the purpose of soliciting
additional proxies or otherwise; provided, however, that no proxy which is voted
against the proposal to approve the Merger Agreement will be voted in favor of
any such adjournment or postponement.
A Fed One shareholder who has given a proxy may revoke it at
any time prior to its exercise at the Fed One Special Meeting by (i) giving
written notice of revocation to the Secretary of Fed One, (ii) properly
submitting to Fed One a duly executed proxy bearing a later date, or (iii)
voting in person at the Fed One Special Meeting. All written notices of
revocation and other communications with respect to revocation of proxies should
be addressed to Fed One as follows:
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Jean E. Huff, Corporate Secretary, Fed One Bancorp, Inc., 21 Twelfth Street,
Wheeling, West Virginia 26003. A proxy appointment will not be revoked by death
or supervening incapacity of the shareholder executing the proxy unless, before
the shares are voted, notice of such death or incapacity is filed with Fed One's
Secretary or other person responsible for tabulating votes on behalf of Fed One.
Fed One has retained ChaseMellon Shareholder Services, L.L.C.
("ChaseMellon") to assist Fed One in connection with its communications with its
shareholders with respect to, and to provide other services to Fed One in
connection with, the Special Meeting. ChaseMellon will receive a fee of $3,750
for its services and reimbursement of reasonable out-of-pocket expenses in
connection therewith. Fed One has agreed to indemnify ChaseMellon against
certain liabilities arising out of or in connection with its engagement.
United
The United Board has fixed the close of business on August 3,
1998, as the record date for determining the United shareholders entitled to
receive notice of and to vote at the United Special Meeting. Only holders of
record of United Common Stock as of the United Record Date are entitled to
notice of and to vote at the United Special Meeting. As of the United Record
Date, 39,135,251 shares of United Common Stock were issued and outstanding and
held by approximately 6,025 record holders. Holders of United Common Stock are
entitled to one vote on each matter considered and voted on at the United
Special Meeting for each share of United Common Stock held of record at the
close of business on the United Record Date. The presence, in person or by
properly executed proxy, of the holders of a majority of the shares of United
Common Stock entitled to vote at the United Special Meeting is necessary to
constitute a quorum at the United Special Meeting. For purposes of determining
the presence of a quorum, abstentions will be counted as shares present. The
proposal to approve the United Articles Amendment is a non-discretionary item on
which brokers or other nominee holders may not vote unless they receive
instructions from the beneficial owner. Because there are no discretionary
proposals to be voted on by United's shareholders, there will be no "broker
non-votes" at the United Special Meeting. However, because the United Articles
Amendment to increase the number of authorized shares from 41 million to 100
million shares requires the affirmative vote of a majority of the outstanding
shares of United Common Stock, abstentions and the failure to vote will have the
effect of voting against the United Articles Amendment.
Proxies in the form delivered to United Shareholders with this
Joint Proxy Statement/Prospectus are being solicited by the United Board. Shares
of United Common Stock represented by properly executed proxies, if such proxies
are received in time and are not revoked, will be voted in accordance with the
instructions indicated on the proxies. If no instructions are indicated, such
proxies will be voted "FOR" approval of the United Articles Amendment to
increase the number of authorized shares of United Common Stock from 41,000,000
to 100,000,000 shares, and as determined by a majority of the United Board as to
any other matter that may come before the United Special Meeting or any
adjournment or postponement thereof including, among other things, a motion to
adjourn or postpone the Special Meeting to another time and/or place, for the
purpose of soliciting additional proxies or otherwise; provided, however, that
no proxy which is voted against either of the proposals will be voted in favor
of any such adjournment or postponement.
A United shareholder who has given a proxy may revoke it at
any time prior to its exercise at the United Special Meeting by (i) giving
written notice of revocation to the Secretary of United, (ii) properly
submitting to United a duly executed proxy bearing a later date, or (iii) voting
in person at the United Special Meeting. All written notices of revocation and
other communications with respect to revocation of proxies should be addressed
to United as follows: United Bankshares, Inc., 514 Market Street, Parkersburg,
West Virginia 26102, Attention: Steven E. Wilson, Executive Vice President and
Secretary. A proxy appointment will not be revoked by death or supervening
incapacity of the shareholder executing the proxy unless, before the shares are
voted, notice of such death or incapacity is filed with United's Secretary or
other person responsible for tabulating votes on behalf of United.
United has retained Corporate Investor Communications, Inc.
("CIC") to assist United in connection with its communications with its
shareholders with respect to, and to provide other services to United in
connection with, the
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Special Meeting. CIC will receive a fee of $3,500 for its services and
reimbursement of out-of-pocket expenses in connection therewith. United has
agreed to indemnify CIC against certain liabilities arising out of or in
connection with its engagement.
GENERAL
The expense of soliciting proxies for the Fed One Special
Meeting and the United Special Meeting will be paid for by Fed One and United,
respectively. Pursuant to the Merger Agreement, United has agreed to share
equally with Fed One all filing fees and printing expenses payable in connection
with the Registration Statement and this Joint Proxy Statement/Prospectus. In
addition to the solicitation of shareholders of record by mail, telephone or
personal contact, Fed One and United and their appropriate agents will be
contacting brokers, dealers, banks and voting trustees or their nominees who can
be identified as record holders of Fed One and United Common Stock,
respectively; such holders, after inquiry by Fed One and United, respectively,
will provide information concerning quantity of proxy and other materials needed
to supply such materials to beneficial owners, and Fed One and United,
respectively, will reimburse them for the expense of mailing the proxy materials
to such persons.
VOTES REQUIRED
Fed One
Approval of the Merger Agreement requires the affirmative vote
of the holders of a majority of the shares of Fed One Common Stock outstanding
as of the Fed One Record Date.
As of the Fed One Record Date, Fed One directors and executive
officers and their affiliates held approximately 15.0% of the outstanding shares
of Fed One Common Stock entitled to vote at the Fed One Special Meeting. As of
the Fed One Record Date, United holds 19,000 shares of Fed One Common Stock and
one of its directors, William W. Wagner, owns 100 shares of Fed One Common
Stock. See "The Merger -- Interests of Certain Persons in the Merger."
United
Approval of the United Articles Amendment requires the
affirmative vote of a majority of the outstanding shares of United Common Stock
entitled to vote on the matter at the United Special Meeting. As of the United
Record Date, United directors and executive officers and their affiliates held
approximately 13% of the outstanding shares of United Common Stock entitled to
vote at the United Special Meeting. As of the United Record Date, Fed One held
no shares of United Common Stock and its directors and executive officers or
their affiliates held 1,232 shares of United Common Stock.
RECOMMENDATION OF FED ONE BOARD OF DIRECTORS
For the reasons described in the section of this Joint Proxy
Statement/Prospectus entitled "The Merger -- Reasons of Fed One for the Merger,"
the Fed One Board has unanimously adopted the Merger Agreement, believes that
the Merger is in the best interests of Fed One and its shareholders and
unanimously recommends that shareholders of Fed One vote "FOR" approval of the
Merger Agreement. See "The Merger -- Background of the Merger," " -- Reasons of
Fed One for the Merger" and -- "Interests of Certain Persons in the Merger."
RECOMMENDATION OF UNITED BOARD OF DIRECTORS
For the reasons described in the section of this Joint Proxy
Statement/Prospectus entitled "The Merger -- Reasons of United for the Merger,"
the United Board has unanimously approved the United Articles Amendment and
believes that such proposal is in the best interests of United and its
shareholders and unanimously recommends that shareholders of United vote "FOR"
approval of the United Articles Amendment. See "The Merger -- Background of the
Merger," " -- Reasons of United for the Merger" and "United Articles Amendment."
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THE MERGER
The following information describes certain information
pertaining to the Merger. This description does not purport to be complete and
is qualified in its entirety by reference to the Appendices hereto, including
the Merger Agreement and related Plan of Merger, which are attached as Appendix
A and incorporated herein by reference. All shareholders are urged to read the
Appendices in their entirety.
GENERAL
The Merger Agreement provides for a transaction in which Fed
One will merge with and into Merger Sub. Merger Sub will be the surviving
corporation of the Merger. At the Effective Time, each share of issued and
outstanding Fed One Common Stock will cease to be outstanding and each such
share (other than certain shares held by Fed One, United or their subsidiaries,
if any) will be converted into and exchanged for 1.5 shares of United Common
Stock. The Merger Agreement provides that 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 for such transaction is
prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted. The above Exchange Ratio reflects United's 100% stock dividend paid
March 27, 1998 to shareholders of record as the close of business on of March
13, 1998.
The Merger Agreement provides that United may change the
method of effecting the combination with Fed One at any time prior to the
Effective Time, provided that it cannot alter the consideration to be received
by Fed One shareholders, adversely affect the tax treatment for Fed One
shareholders or materially delay the transactions contemplated by the Merger
Agreement.
BACKGROUND OF THE MERGER
On September 17, 1997, the Executive Committee of Fed One
reviewed merger and acquisition trends in the banking industry and considered
Fed One's competitive position in the market. The Executive Committee considered
the increase in competition from non-bank financial service providers and large
regional bank companies, and the committee reviewed the then current level of
bank and thrift stock prices. After a considerable amount of discussion, the
Executive Committee concluded that it might be beneficial for Fed One and its
shareholders to consider exploring the possibility of a merger. The Committee
requested that this matter be brought before the Board for full discussion and
consideration.
The Board of Directors of Fed One considered the matter
previously discussed with the Executive Committee, and after a lengthy
discussion, the Board of Directors authorized Chairman Groover and Director
Anetakis to meet with Ryan, Beck, who had assisted Fed One as a financial
advisor in connection with its mutual holding company reorganization and stock
conversion. In October 1997, Chairman Groover and Director Anetakis met with
Ryan, Beck and subsequently engaged Ryan, Beck to serve as Fed One's financial
advisor in connection with a possible sale or merger of Fed One.
Ryan, Beck, in consultation with Fed One, prepared a
confidential offering memorandum containing September 30, 1997 financial
information. In December 1997, Ryan, Beck contacted 12 financial institutions or
their holding companies, which Ryan, Beck and Fed One had identified as possible
acquirors, to determine to what extent, if any, there was a preliminary
indication of interest in Fed One. The confidential offering memorandum was sent
to ten of these companies after they executed a confidentiality agreement. The
companies were requested to provide their preliminary non-binding expression of
interest by January 15, 1998.
On January 21, 1998, representatives of Ryan, Beck met with
the Board of Directors and advised the Board that Fed One had received six
preliminary indications of interest. After reviewing the bids, three companies
were identified by the Board as candidates for further consideration. Ryan, Beck
prepared an analysis of each of these preliminary indications and of each
company, which included an analysis of each institution's profitability, key
financial ratios, future projections, and relative market valuations. After
review of these analyses, Fed One determined that two of the companies
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should be permitted to perform due diligence on Fed One. Upon completion of
their due diligence reviews, Fed One requested that each of these companies
provide it with a firm bid.
On February 9, 1998, after an extensive review of the two firm
bids, including the valuation, the performance of the institutions and their
future growth potential, and other factors, the Board of Directors determined
that the proposal from United to exchange each outstanding share of Fed One
Common Stock for 1.5 shares (as adjusted) of United Common Stock was in the best
interests of Fed One and its shareholders and should be considered. After
discussions and various questions, the Board of Directors of Fed One authorized
management and Fed One's representatives to negotiate the terms of a definitive
agreement with United.
The management of Fed One, with the assistance of Fed One's
legal counsel and investment banker, negotiated the form of the definitive
agreement which was provided in draft to each of Fed One's directors for their
review.
On February 18, 1998, the Board of Directors of Fed One
reviewed the proposed definitive Merger Agreement with Fed One's legal counsel
and Ryan, Beck. The Board of Directors considered all factors deemed relevant,
including information regarding United's then pending acquisition of George
Mason Bankshares and Ryan, Beck's opinion that the Exchange Ratio is fair to Fed
One's shareholders from a financial point of view. The Board of Directors
determined that the proposed Merger was in the best interests of Fed One and its
shareholders, and the Board unanimously approved the Merger. United and Fed One
publicly announced the Merger after the close of business on February 18, 1998.
REASONS OF FED ONE FOR THE MERGER
The terms of the Merger Agreement, including the Exchange
Ratio and the value of the United Common Stock to be received by Fed One's
shareholders, were the result of arm's-length negotiations between
representatives of United and Fed One. Among the factors considered by the Board
of Directors of Fed One in deciding to approve and recommend the terms of the
Merger were (i) the value of the United Common Stock to be received by Fed One's
shareholders based on the Exchange Ratio in relation to the market value, book
value, earnings per share and dividend rates of the Fed One Common Stock, (ii)
information concerning the financial condition, results of operations, capital
levels, asset quality and prospects of Fed One, (iii) industry and economic
conditions, (iv) the impact of the Merger on the depositors, employees,
customers and communities served by Fed One through expanded commercial,
consumer and retail banking products and services, (v) the opinion of Fed One's
financial advisor as to the fairness of the Exchange Ratio from a financial
point of view to the holders of the Fed One Common Stock, (vi) the general
structure of the transaction and the compatibility of management and business
philosophy, (vii) the likelihood of receiving the requisite regulatory approvals
in a timely manner, and (viii) the ability of the combined enterprise to compete
in relevant banking and non-banking markets. In making its determination, the
Board of Directors of Fed One did not ascribe relative weights to the factors
which it considered.
The Board of Directors of Fed One believes that the Merger is
in the best interest of Fed One and its shareholders. THE BOARD OF DIRECTORS OF
FED ONE UNANIMOUSLY RECOMMENDS THAT THE FED ONE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE MERGER AGREEMENT.
OPINION OF FED ONE'S FINANCIAL ADVISOR
On October 15, 1997, Fed One formally retained Ryan, Beck to
act as Fed One's financial advisor with respect to the acquisition of Fed One.
Ryan, Beck is regularly engaged in the valuation of banks, bank holding
companies, savings and loan associations, savings banks and savings and loan
holding companies in connection with mergers, acquisitions and other
securities-related transactions. Ryan, Beck has knowledge of, and experience
with, the Mid-Atlantic, Midwest and Southeast banking markets and banking
organizations operating in those markets, and was selected by Fed One because of
its knowledge of, experience with, and reputation in the financial services
industry.
In its capacity as Fed One's financial advisor, Ryan, Beck
participated in the negotiations with respect to the pricing and other terms and
conditions of the Merger, but the decision as to whether to accept the United
proposal and the final pricing of the Merger was ultimately made by the Board of
Directors of Fed One. Ryan, Beck rendered its oral opinion to the Fed One Board
of Directors on February 18, 1998, subsequently confirmed by a formal written
opinion dated as of the same date and rendered an additional formal written
opinion dated as of August 12, 1998 (the "Opinion") that based on and subject to
the assumptions, factors, and limitations as set forth in the opinion and as
described below, the Exchange
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Ratio is "fair" to Fed One's shareholders from a financial point of view. No
limitations were imposed by the Fed One Board of Directors upon Ryan, Beck with
respect to the investigations made or procedures followed by it in arriving at
its opinion.
THE FULL TEXT OF THE OPINION OF RYAN, BECK DATED AS OF AUGUST
12, 1998, WHICH SETS FORTH ASSUMPTIONS MADE AND MATTERS CONSIDERED, IS ATTACHED
AS APPENDIX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS. SHAREHOLDERS OF FED ONE
ARE URGED TO READ THIS OPINION IN ITS ENTIRETY. RYAN, BECK'S OPINION IS DIRECTED
ONLY TO THE EXCHANGE RATIO AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY FED
ONE SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING.
THE SUMMARY OF THE OPINION OF RYAN, BECK SET FORTH IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION. RYAN, BECK'S ORAL AND WRITTEN OPINIONS AS OF FEBRUARY 18, 1998
WERE TO THE SAME EFFECT AS SUCH OPINION. RYAN, BECK DOES NOT ADMIT THAT IT IS AN
EXPERT WITHIN THE MEANING OF THE TERM "EXPERT" AS USED WITHIN THE SECURITIES ACT
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, OR THAT ITS OPINIONS
CONSTITUTE A REPORT OR VALUATION WITHIN THE MEANING OF SECTION 11 OF THE ACT AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
In connection with its analysis, Ryan, Beck: (i) reviewed the
Agreement and related documents; (ii) reviewed this Joint Proxy
Statement/Prospectus; (iii) reviewed United's Annual Reports to Shareholders and
Annual Reports on Form 10-K for the years ended December 31, 1997, 1996, and
1995, and United's Quarterly Reports on Form 10-Q for the periods ended March
31, 1998, September 30, 1997, June 30, 1997 and March 31, 1997; (iv) reviewed
United's Registration Statement on Form S-4, dated January 29, 1998, with
respect to United's then pending acquisition of George Mason Bankshares; (v)
reviewed Fed One's Annual Reports to Shareholders and Annual Reports on Form
10-K for the years ended December 31, 1997, 1996, and 1995, and Fed One's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1998, September
30, 1997, June 30, 1997 and March 31, 1997; (vi) reviewed the historical stock
prices and trading volume of the United Common Stock; (vii) reviewed the
publicly available financial data of commercial banking organizations which
Ryan, Beck deemed generally comparable to United; (viii) reviewed the publicly
available financial data of thrift organizations which Ryan, Beck deemed
generally comparable to Fed One; (ix) reviewed the historical stock prices and
trading volume of the Fed One's Common Stock; (x) reviewed the terms of recent
acquisitions of thrift organizations which Ryan, Beck deemed generally
comparable in whole or in part to Fed One; (xi) reviewed the potential proforma
impact of the Merger on United's financial condition, operating results and per
share figures; and (xii) conducted such other studies, analyses, inquiries and
examinations as Ryan, Beck deemed appropriate. Ryan, Beck also reviewed certain
projections provided by Fed One and United for the year ending December 31, 1998
and met with certain members of Fed One and United's senior management to
discuss Fed One and United's past and current business operations, financial
condition, strategic plan and future prospects, including any potential
operating efficiencies and synergies which may arise from the Merger. As part of
its review of the Merger, Ryan, Beck also analyzed United's ability to
consummate the Merger and considered the future prospects of Fed One in the
event it remained independent.
In connection with its review, Ryan, Beck relied upon and
assumed, without independent verification, the accuracy and completeness of the
financial and other information regarding Fed One and United provided to Ryan,
Beck by Fed One and United and their representatives. Ryan, Beck is not an
expert in the evaluation of allowances for loan losses. Therefore, Ryan, Beck
has not assumed any responsibility for making an independent evaluation of the
adequacy of the allowances for loan losses as set forth on Fed One's and
United's balance sheets at March 31, 1998, and Ryan, Beck assumed such
allowances were adequate and complied fully with applicable law, regulatory
policy and sound banking practice as of the date of such financial statements.
Ryan, Beck has reviewed certain historical financial data and financial
projections (and the assumptions and bases therefor) provided by Fed One and
United. Ryan, Beck assumed that such forecasts and projections reflected the
best currently available estimates and judgments of the respective managements.
In certain instances, for the purposes of its analyses, Ryan, Beck made
adjustments to such financial and operating forecasts which in Ryan, Beck's
judgment were appropriate under the circumstances. Ryan, Beck was not retained
to nor did it make any independent evaluation or appraisal of the assets or
liabilities of Fed One or United nor did Ryan, Beck review any loan files of Fed
One or United or their respective subsidiaries. Ryan, Beck also assumed that the
Merger in all respects is, and will be, undertaken and consummated in compliance
with all laws and regulations that are applicable to Fed One and United.
The preparation of a fairness opinion on a transaction such as
the Merger involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances and, therefore, the Opinion is not readily
susceptible to summary description. In arriving at its opinion, Ryan, Beck
performed a variety of financial analyses. Ryan, Beck believes that its analyses
must be considered as a whole and the consideration of portions of such analyses
and the factors considered therein, without considering all factors and
analyses,
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could create an incomplete view of the analyses and the process underlying Ryan,
Beck's Opinion. No one of the analyses was assigned a greater significance than
any other.
The projections furnished to Ryan, Beck were prepared by the
respective managements of Fed One and United. Fed One and United do not publicly
disclose internal management projections of the type provided to Ryan, Beck in
connection with the review of the Merger. Such projections were not prepared
with a view towards public disclosure. The public disclosure of such projections
could be misleading since the projections were based on numerous variables and
assumptions which are inherently uncertain, including, without limitation,
factors related to general economic and competitive conditions. Accordingly,
actual results could vary significantly from those set forth in such
projections.
In its analyses, Ryan, Beck made numerous assumptions with
respect to industry performance, business and economic conditions, and other
matters, many of which are beyond the control of Fed One or United. Any
estimates contained in Ryan, Beck's analyses are not necessarily indicative of
future results or values, which may be significantly more or less favorable than
such estimates. Estimates of values of companies do not purport to be appraisals
nor do they necessarily reflect the prices at which companies or their
securities may actually be sold.
The following is a brief summary of the analyses and
procedures performed by Ryan, Beck in the course of arriving at its Opinion.
Analysis of Selected Publicly Traded Companies. Ryan, Beck
compared Fed One's financial data as of December 31, 1997 to a peer group of
nineteen selected thrifts located in West Virginia, Ohio and Pennsylvania with
assets between $200 million and $600 million. Ryan, Beck deemed this group to be
generally comparable to Fed One. At or for the twelve months ended December 31,
1997, Fed One had equity to assets of 11.06%, a return on average assets of
0.92%, a return on average equity of 8.18%, a dividend yield of 2.25%, a net
interest margin of 3.40%, a ratio of non-performing assets to total assets of
0.36%, a ratio of loan loss reserves to total loans of 0.89%, a ratio of loan
loss reserves to non-performing loans of 241.60% (excluding loans 90 days past
due and still accruing interest), a ratio of non-interest expenses to average
assets of 2.00%, and an efficiency ratio of 55.45%. These ratios were compared
to the median ratios of the nineteen selected thrift organizations, which were,
as calculated, an equity to assets ratio of 9.02%, a return on average assets of
0.88%, a return on average equity of 8.38%, a dividend yield of 1.57%, a net
interest margin of 3.17%, a ratio of non-performing assets to total assets of
0.29%, a ratio of loan loss reserves to total loans of 0.76%, a ratio of loan
loss reserves to non-performing loans of 196.91% (excluding loans 90 days past
due and still accruing interest), a ratio of non-interest expense to average
assets of 1.98%, and an efficiency ratio of 59.23%. Ryan, Beck noted that Fed
One's performance as measured by return on average assets and equity was
generally comparable to that of the peer group. Although Fed One's return on
average assets was slightly higher than the median of the peer group, Fed One's
return on average equity was slightly lower than the median of the peer group
due to the fact that Fed One had a higher level of equity to assets as compared
to the peer group. Ryan, Beck also noted that Fed One's non-interest expenses as
a percent of average assets was similar to that of the peer group, and its
efficiency ratio was superior to that of the peer group.
Ryan, Beck also compared United's financial data (pro forma
for the then pending acquisition of George Mason Bankshares) as of September 30,
1997 with that of a group of nineteen selected commercial banking organizations
with assets between $2.5 billion and $5 billion and which are located in the
Mid-Atlantic, Mid West, and Southeast regions of the United States for which
public trading and pricing information was available. Ryan, Beck deemed this
group to be generally comparable to United. At or for the twelve months ended
September 30, 1997, United had a ratio of equity to assets of 9.66%, a return on
average assets ratio of 1.49%, a return on average equity of 14.65%, a dividend
yield of 2.86%, a net interest margin of 4.48%, a ratio of non-performing assets
to total assets of 0.67% (including loans 90 days past due and still accruing
interest) and a ratio of loan loss reserves to non-performing loans (including
loans 90 days past due and still accruing interest) of 143.06%. These ratios
were compared to the median ratios of the nineteen selected commercial banking
organizations, which were, as calculated, an equity to assets ratio of 8.97%, a
return on average assets of 1.26%, a return on average equity of 14.03%, a
dividend yield of 2.04%, a net interest margin of 4.61%, a ratio of
non-performing assets to total assets of 0.51% (including loans 90 days past due
and still accruing interest) and a ratio of loan loss reserves to non-performing
loans (including loans 90 days past due and still accruing interest) of 212.35%.
Using United's common stock price as represented by the last trade on February
13, 1998, its price to median I/B/E/S 1998 estimated earnings per share was
16.57 times, price to book value was 275.04% and price to tangible book value
was 280.73%. The peer group's median price to 1998 earnings was 18.20 times,
price to book value was 275.32% and price to tangible book value was 282.83%.
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Analysis of Selected Transactions. Ryan, Beck compared Fed
One's financial data as of December 31, 1997 with that of a group of eleven
selected thrift organizations being acquired in transactions announced since
January 1, 1997 and for which pricing data pertaining to the transactions was
publicly available. The criteria for this group was thrifts with assets between
$250 million and $750 million, a return on average assets between 0.25% and
1.50% and an equity to assets ratio greater than 8.00%. Ryan, Beck deemed this
group to be generally comparable to Fed One. The median ratios of the eleven
selected companies, as calculated, represented a 9.54% tangible equity to
tangible assets ratio, a non-performing assets to assets ratio of 0.20%, an
annualized year-to-date return on average assets of 1.08% and an annualized
year-to-date return on average equity of 10.01%.
Ryan, Beck also calculated certain ratios based on the
Exchange Ratio of 1.50 shares (as adjusted for United's subsequent stock
dividend) of United Common Stock for each share of Fed One Common Stock,
United's closing price on February 13, 1998, and the median ratios for the
eleven selected thrift acquisitions ("Comparable Transactions"). The price
represented 207.45% of stated book value at December 31, 1997, 216.52% of
tangible book value at December 31, 1997, 26.95 times latest twelve months
diluted earnings, and a core deposit premium over tangible book value at
December 31, 1997 of 20.49%. The median ratios for the Comparable Transactions,
as calculated, represented a price to stated book value of 191.92%, a price to
tangible book value of 191.92%, a price to latest twelve months diluted earnings
of 21.18 times and a core deposit premium over tangible book value of 19.48%.
The imputed value of Fed One based on the median of the above mentioned
acquisition peer group was $33.91 based on price to stated book value, $32.49
based on price to tangible book value, $28.80 based on price to 1997 diluted
earnings and $35.65 based on the core deposit premium over tangible book value.
No company or transaction used in the "Analysis of Selected
Publicly Traded Companies" and "Analysis of Selected Transactions" sections is
identical to Fed One, United or the Merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies involved and other factors that could affect
the trading values of the securities of the company or companies to which they
are being compared.
Impact Analysis. Ryan, Beck analyzed the Merger in terms of
its effect on United's projected 1998 and 1999 earnings per share, current
stated book value and tangible book value based on projections derived from
information provided by both managements. Based upon certain assumptions,
including those with respect to cost savings and other synergies from the Merger
and the stand-alone earnings projections provided by United and Fed One, the
analysis showed that the Merger would not be material to United's projected
earnings per share, accretive to United's stated book value per share by
approximately 1.13% and accretive to United's diluted tangible book value by
approximately 0.71%. Ryan, Beck analyzed the impact of the merger on United
values per Fed One share based on the Exchange Ratio of 1.50 shares (as adjusted
for United's subsequent two-for-one stock split effected in the form of a 100%
stock dividend) of United Common Stock for each share of Fed One Common Stock
using pro forma projected 1998 fiscal year earnings per share, pro forma
projected 1999 fiscal year earnings per share, pro forma book value per share,
pro forma tangible book value per share and dividends per share at December 31,
1997. That analysis found that, based on such Exchange Ratio, Fed One's
equivalent projected 1998 earnings per share would increase by approximately
74.34%, projected 1999 earnings per share would increase by approximately
76.39%, stated book value would decrease by approximately 18.27% and tangible
book value would decrease by approximately 15.14%. Additionally, Fed One
shareholders, based on United's current dividend level, would receive annual
dividends of $1.05 per share as compared to $0.62 at the present time. The
actual results achieved may vary from the projected results and the variations
may be material.
Discounted Dividend Analysis. Using a discounted dividend
analysis, Ryan, Beck estimated the present value of the future dividend streams
that Fed One could produce in perpetuity. Projection ranges for Fed One's
five-year balance sheet and income statement were provided by Fed One's
management. Management's projections were based upon various factors and
assumptions, many of which are beyond the control of Fed One. These projections
are, by their nature, forward-looking and may differ materially from the actual
values or actual future results which may be significantly more or less
favorable than suggested by such projections. In producing a range of per share
Fed One values, Ryan, Beck utilized the following assumptions: discount rates
ranging from 11.0% to 13.0%, terminal price/earnings multiples ranging from
16.0x to 18.0x (which when applied to terminal year estimated earnings produces
a value which approximates the net present value of the dividends in perpetuity,
given certain assumptions regarding growth rates and discount rates) and
earnings that include estimated savings in Fed One's non-interest expense equal
to 42.6% in 1998 and 56.8% in 1999, with an assumed 5% growth in synergies in
years thereafter. The discounted dividend analysis produced a range of net
present values per
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share of Fed One Common Stock from $32.58 to $37.58. These analyses do not
purport to be indicative of actual values or expected values or an appraisal
range of the shares of Fed One Common Stock. The discounted dividend analysis is
a widely used valuation methodology, but Ryan, Beck noted that it relies on
numerous assumptions, including expense savings levels, dividend payout rates,
terminal values and discount rates, the future values of which may be
significantly more or less than such assumptions.
In connection with its written Opinion dated as of August 12,
1998, Ryan, Beck confirmed the appropriateness of its reliance on the analyses
used to render its February 18, 1998 written opinion by performing procedures to
update certain of such analyses and by reviewing the assumptions and conclusions
contained in the Opinion.
RYAN, BECK'S WRITTEN OPINION DATED AUGUST 12, 1998 WAS BASED
SOLELY UPON THE INFORMATION AVAILABLE TO IT AND THE ECONOMIC, MARKET AND OTHER
CIRCUMSTANCES AS THEY EXISTED AS OF THE DATE OF SUCH OPINION. RYAN, BECK DID NOT
EXPRESS ANY OPINION AS TO THE PRICE OR RANGE OF PRICES AT WHICH UNITED COMMON
STOCK MIGHT TRADE SUBSEQUENT TO THE MERGER. EVENTS OCCURRING AFTER SUCH DATE
COULD MATERIALLY AFFECT THE ASSUMPTIONS AND CONCLUSIONS CONTAINED IN SUCH
OPINION. RYAN, BECK HAS NOT UNDERTAKEN TO REAFFIRM OR REVISE ITS OPINION OR
OTHERWISE COMMENT UPON ANY EVENTS OCCURRING AFTER THE DATE HEREOF.
The summary set forth above does not purport to be a complete
description, but is a brief summary of the material analyses and procedures
performed by Ryan, Beck in the course of arriving at its Opinion.
With regard to Ryan, Beck's services in connection with the
financial advisory agreement and the Merger Agreement, Fed One has paid to Ryan,
Beck a $25,000 retainer and has agreed to pay Ryan, Beck an advisory fee equal
to 1.0% of the aggregate dollar value of the consideration received by Fed One's
shareholders in the Merger. Based upon the estimated aggregate purchase price to
be paid in connection with the Merger, Ryan, Beck's aggregate fees will be
approximately $950,000 (including the $25,000 retainer fee). Ryan, Beck's
advisory fee will be paid at the time of the closing of this transaction. In
addition, Fed One has agreed to reimburse Ryan, Beck for its reasonable
out-of-pocket expenses, which shall not exceed $10,000 without the prior consent
of Fed One. Fed One has also agreed to indemnify Ryan, Beck and certain related
persons against certain liabilities, including liabilities under federal
securities law, incurred in connection with its services. The amounts of Ryan,
Beck's fees were determined by negotiation between Fed One and Ryan, Beck.
As previously disclosed, Ryan, Beck has had an investment
banking relationship with Fed One for a number of years. Ryan, Beck was the sole
underwriter of Fed One's "second step" conversion from the mutual holding
company to the stock form of organization. Additionally, Ryan, Beck has also
acted as financial advisor to Fed One with respect to various other matters from
time to time. Ryan, Beck's research department has issued research reports on
Fed One and comments on Fed One in its periodic commentaries. Ryan, Beck is also
a market maker in Fed One's common stock and, in such capacity, may from time to
time own Fed One securities.
Ryan, Beck became a market maker in United stock subsequent to
issuing the February 18, 1998 opinion. Ryan, Beck had no prior investment
banking relationship with United and Ryan, Beck's research department does not
follow United.
REASONS OF UNITED FOR THE MERGER
The Merger is consistent with United's plan to have
operations, offices and distinct capabilities in every market of its choice
within its region. United believes that, in addition to expanding United's
presence in Northern West Virginia and adjacent Ohio markets, the Merger
provides an opportunity to enhance United's shareholder value by eliminating
redundant or unnecessary costs within those regions and enhancing revenue growth
prospects.
EFFECTIVE TIME
If the Merger Agreement is approved by the requisite vote of
the Fed One shareholders, the United Articles Amendment is approved by the
requisite vote of the United shareholders, all required governmental and other
consents and approvals are obtained and the other conditions to the obligations
of the parties to consummate the Merger are either satisfied or waived (as
permitted), the Merger will be consummated and will become effective on the
Effective Date and at the
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Effective Time. Subject to the conditions to the obligations of the parties to
effect the Merger, the parties have agreed to cause the Effective Date to occur
on the fifth business day to occur after the last of the conditions to the
consummation of the Merger have been satisfied or waived (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 such other
date to which the parties may agree in writing. United and Fed One each has the
right, acting unilaterally, to terminate the Merger Agreement should the Merger
not be consummated by December 31, 1998, except to the extent that the failure
of the Merger to be consummated arises out of or results from the knowing action
or inaction of the party seeking to terminate the Merger Agreement. See "The
Merger -- Amendment, Waiver and Termination."
DISTRIBUTION OF UNITED CERTIFICATES
Promptly after the Effective Time, United will send or cause
to be sent transmittal materials to each record holder of Fed One Common Stock
for use in exchanging those certificates for the shares of United Common Stock
to which such shareholder is entitled as a result of the Merger. Fed One
SHAREHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES FOR EXCHANGE UNTIL THEY
RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS. United will cause the
certificates for United Common Stock and/or any check in respect of any
fractional share interests or dividends or distributions which a holder of Fed
One Common Stock will be entitled to receive to be delivered upon surrender to
ChaseMellon Shareholder Services, L.L.C. as exchange agent (the "Exchange
Agent"), of certificates representing such shares of Fed One Common Stock owned
by such shareholder. No party will be liable to a holder of Fed One Common Stock
for any property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat or similar law.
After the Effective Time, no dividend or other distribution
payable after the Effective Time with respect to United Common Stock will be
paid to the holder of any unsurrendered certificate for Fed One Common Stock,
and no such unsurrendered shares will be entitled to vote following 90 days
after the Effective Date, until the holder duly surrenders such certificate.
Upon such surrender, all undelivered dividends and other distributions and, if
applicable, a check for the amount to be paid in lieu of any fractional share
interest will be delivered to such shareholder, in each case without interest.
After the Effective Time, there will be no transfers of shares
of Fed One Common Stock on Fed One's stock transfer books. If certificates
representing shares of Fed One Common Stock are presented for transfer after the
Effective Time, they will be canceled and exchanged for the shares of United
Common Stock and a check for the amount due in lieu of fractional shares and
unpaid dividends and distributions, if any, deliverable in respect thereof.
FRACTIONAL SHARES
Pursuant to the terms of the Merger Agreement, each holder of
shares of Fed One Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of United Common
Stock shall receive, in lieu thereof, cash (without interest) in an amount
determined by multiplying such fraction by the average of the last sale prices
of United Common Stock, as reported by the Nasdaq National Market System (as
reported in The Wall Street Journal or, if not reported therein, in another
authoritative source), for the five trading days on the Nasdaq Stock Market
immediately preceding the Effective Date. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder with respect to
any fractional shares.
STOCK OPTIONS
The Merger Agreement provides that each Fed One Stock Option
which is outstanding at the Effective Time will be converted into an option to
acquire, on the same terms and conditions as were applicable under Fed One's
1995 Stock Option Plan, 1992 Stock Option Plan for Officers and Employees and
1992 Stock Option Plan for Outside Directors (collectively, the "Fed One Stock
Plans"), as the case may be, shares of United Common Stock, with the exercise
price and number of shares purchasable thereunder being adjusted to reflect the
Exchange Ratio. Under the existing terms of Fed One's Stock Plans, all
outstanding stock options held by employees and directors which are not yet
vested will automatically accelerate at the Effective Time pursuant to the
provisions in such plans related to a change in control. In addition, under Fed
One's Recognition and Retention Plan, all share awards held by employees which
are not vested will accelerate at the Effective Time pursuant to the provisions
of such plans related to a change in control.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material federal income tax
consequences of the Merger to holders who hold shares of Fed One Common Stock as
capital assets deals only with holders who are (i) citizens or residents of the
United States, (ii) domestic corporations or (iii) otherwise subject to United
States federal income tax on a net income basis in respect of shares of Fed One
Common Stock ("U.S. Holders"). This summary may not apply to certain classes of
taxpayers, including, without limitation, foreign persons, insurance companies,
tax-exempt organizations, financial institutions, dealers in securities, persons
who acquired or acquire shares of Fed One Common Stock pursuant to the exercise
of employee stock options or otherwise as compensation and persons who hold
shares of Fed One Common Stock in a hedging transaction or as part of a straddle
or conversion transaction. Also, the summary does not address state, local or
foreign tax consequences of the Merger. Consequently, each holder should consult
such holder's own tax adviser as to the specific tax consequences of the Merger
to such holder.
This summary is based on current law and represents the
opinion of Bowles Rice McDavid Graff & Love, PLLC, special counsel to United.
Future legislative, judicial or administrative changes or interpretations, which
may be retroactive, could alter or modify the statements set forth herein. This
summary is based on, among other things, assumptions relating to certain facts
and circumstances of, and the intentions of the parties to, the Merger, which
assumptions have been made with the consent of United and Fed One. Neither
United nor Fed One intends to request any ruling from the Internal Revenue
Service as to the United States federal income tax consequences of the Merger.
It is intended that the Merger be treated as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that, accordingly, for federal income tax purposes no
gain or loss would be recognized by either Fed One or United as a result of the
Merger.
United's obligation to consummate the Merger is conditioned
upon, among other things, the receipt of an opinion of Bowles Rice McDavid Graff
& Love, PLLC, dated the Effective Date, to the effect that the Merger
constitutes a reorganization within the meaning of Section 368 (a) of the Code.
Fed One's obligation to consummate the Merger is conditioned upon, among other
things, the receipt of an opinion of Elias, Matz, Tiernan & Herrick L.L.P.,
dated the Effective Date, to the effect that (i) the Merger constitutes a
reorganization within the meaning of Section 368(a) of the Code and (ii) no gain
or loss will be recognized by U.S. Holders who receive shares of United Common
Stock in exchange for shares of Fed One Common Stock, except with respect to
cash received in lieu of fractional share interests. Such opinions will be based
upon facts, representations and assumptions set forth therein. In rendering such
opinions, counsel may require and rely upon representations contained in letters
to be received from Fed One, United and shareholders of Fed One.
Assuming the Merger qualifies as a "reorganization" within the
meaning of Section 368(a) of the Code, the material federal income tax
consequences of the Merger to each of United, Fed One and U.S. Holders who
exchange shares of Fed One Common Stock for shares of United Common Stock
pursuant to the Merger will be as follows:
(i) no gain or loss will be recognized by United or Fed One as
a result of the consummation of the Merger;
(ii) no gain or loss will be recognized by a U.S. Holder who
receives shares of United Common Stock in exchange for shares of Fed One Common
Stock, except as described below with respect to a U.S. Holder who receives cash
in lieu of a fractional share interest in United Common Stock;
(iii) the aggregate adjusted tax basis of shares of United
Common Stock (including a fractional share interest in United Common Stock
deemed received and redeemed as described below) received by a U.S. Holder will
be the same as the aggregate adjusted tax basis of the shares of Fed One Common
Stock exchanged therefor;
(iv) the holding period of shares of United Common Stock
(including a fractional share interest in United Common Stock deemed received
and redeemed as described below) received by a U.S. Holder will include the
holding period of the Fed One Common Stock exchanged therefor, provided such
shares of Fed One Common Stock were held as capital assets at the Effective
Time; and
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(v) a U.S. Holder who receives cash in lieu of a fractional
share interest in United Common Stock will be treated as having received such
fractional share interest and then as having received the cash in redemption of
such fractional share interest. Under Section 302 of the Code, if such deemed
distribution were "substantially disproportionate" with respect to the U.S.
Holder or were "not essentially equivalent to a dividend" after giving effect to
the constructive ownership rules of the Code, the U.S. Holder would generally
recognize capital gain or loss equal to the difference between the amount of
cash received and the U.S. Holder's adjusted tax basis in the fractional share
interest (determined as described in (iii) above). Such capital gain or loss
would be long-term capital gain or loss if the U.S. Holder's holding period in
the fractional share interest (determined as described in (iv) above) is more
than one year. Long-term capital gain of a non-corporate U.S. Holder is
generally subject to a maximum tax rate of 28% if the holding period exceeds one
year but does not exceed 18 months and to a maximum tax rate of 20% if the
holding period exceeds 18 months.
Under the terms of the Merger Agreement, the conditions to the
Merger, including receipt by each party of opinions of counsel relating to tax
matters, may generally be waived by United or Fed One, as applicable. As of the
date of this Joint Proxy Statement/Prospectus, neither United nor Fed One
intends to waive the conditions as to the receipt of opinions of counsel on tax
matters. See "The Merger -- Conditions to Consummation" and " -- Amendment,
Waiver and Termination."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF FED ONE COMMON STOCK AND OTHER
FACTORS, EACH SUCH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISER AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER (INCLUDING THE
APPLICATION AND EFFECT OF FOREIGN, STATE AND LOCAL INCOME AND OTHER TAX LAWS).
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Merger Sub will be the surviving corporation resulting from
the Merger and a wholly owned subsidiary of United. Following the Merger, Merger
Sub will be governed by the laws of West Virginia and will operate in accordance
with its articles of incorporation and bylaws as in effect immediately prior to
the Effective Time until otherwise amended or repealed after the Effective Time.
Under the Merger Agreement, United has agreed to cause Mr. Alan E. Groover, to
be elected or appointed as a director of United. The directors and officers of
United in office immediately prior to the Effective Time, together with Mr.
Groover and such additional persons as may thereafter be elected, will serve as
the directors and officers of United from and after the Effective Time in
accordance with the United Articles and the United Bylaws (the "United Bylaws").
See "--Interests of Certain Persons in the Merger."
In connection with the Bank Merger, United has also agreed to
cause four members of the Fed One Board (selected by Fed One after consultation
with United), who are members of the Fed One Board immediately prior to the
Effective Time, to be elected or appointed to the Northern West Virginia Board
Regional Advisory Board of Directors of UNB.
POST-ACQUISITION COMPENSATION AND BENEFITS
The Merger Agreement provides that it is United's intention
that within a reasonable period of time following the Effective Time, it will
(i) provide employees of Fed One and its subsidiaries who remain as employees of
United with employee benefit plans substantially similar in the aggregate to
those provided to similarly situated employees of United, (ii) provide employees
of Fed One and its subsidiaries who remain as employees of United or its
subsidiaries credit for years of service with Fed One or any of its subsidiaries
prior to the Effective Time for the purpose of eligibility and vesting, and
(iii) cause any and all pre-existing condition limitations (to the extent such
limitations did not apply to a pre-existing condition under the Fed One
compensation and benefit plans) and eligibility waiting periods under group
health plans of United to be waived with respect to former employees of Fed One
and its subsidiaries who remain as employees of United or its subsidiaries (and
their eligible dependents) and who become participants in such group health
plans.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Fed One's management and the Fed One Board
may be deemed to have certain interests in the Merger that are in addition to
their interests as Fed One shareholders. The Fed One Board was aware of these
interests in approving the Merger Agreement.
Fed One Board of Directors. As described above, the Merger
Agreement provides that United will cause Mr. Alan E. Groover to be elected or
appointed as a director of United at, or as promptly as practicable after, the
Effective Time. In addition, in connection with the Bank merger, United has also
agreed to cause four members of the Fed One Board (selected by Fed One after
consultation with United), who are members of the Fed One Board immediately
prior to the Effective Time, to be elected or appointed to the Northern West
Virginia Regional Advisory Board of Directors of UNB.
In connection with the Merger Agreement, United and Alan E.
Groover, Chairman, President and Chief Executive Officer of Fed One, entered
into a consulting agreement which generally provides, among other things, that
Mr. Groover shall provide consulting services to United during the 18 months
following the Merger and that United shall (i) pay to Mr. Groover $1,000 per
month during such period and (ii) permit Mr. Groover and his spouse to
participate in all group insurance, life insurance, health and accident, and
disability plans, programs and arrangements offered by United to its executive
employees and their spouses for a period commencing on the date that United is
no longer entitled to provide employee benefits to Mr. Groover pursuant to his
existing employment agreements with Fed One and Fed One Bank and ending on the
earlier of Mr. Groover's 65th birthday and the date of Mr. Groover's full-time
employment by an employer (provided that Mr. Groover is entitled to and accepts,
under the terms of such employment, benefits substantially similar to those to
be provided pursuant to the consulting agreement). In addition, following the
Effective Time, United has agreed to honor in accordance with their terms Fed
One's existing employment agreements, severance agreements, severance policies,
consulting agreements and excess benefit plan as well as the existing consulting
arrangement between Fed One Bank and Louis Salvatori, a director of Fed One and
Fed One Bank, until Mr. Salvatori's death.
Under Fed One's stock benefit plans, all outstanding stock
options and recognition share awards held by employees and directors which are
not yet vested will accelerate at the Effective Time pursuant to the provisions
in the plans related to a change in control of Fed One.
CONDITIONS TO CONSUMMATION
The obligations of Fed One and United to consummate the Merger
are subject to the satisfaction or written waiver of the following conditions:
(i) the Merger Agreement shall have been approved by requisite vote of the
shareholders of Fed One and the United Articles Amendment shall have been
approved by the requisite vote of the shareholders of United; (ii) the required
regulatory approvals described under "Regulatory Approvals" below shall have
been received, generally without any conditions, restrictions or requirements
which the United Board reasonably determines in good faith would (A) either
before or following the Effective Time, have a material adverse effect on United
and its subsidiaries taken as a whole or (B) any conditions, restrictions or
requirements that are not customary and usual for approvals of such type and
which the United Board reasonably determines would either before or after the
Effective Date be unduly burdensome; (iii) no court or regulatory authority
shall have taken any action prohibiting restricting or making illegal the
consummation of the transactions contemplated by the Merger Agreement; (iv) the
Registration Statement of which this Joint Proxy Statement/Prospectus is a part
shall have been declared effective by the Commission and shall not be subject to
a stop order or any threatened stop order; (v) the shares of United Common Stock
issuable in connection with the Merger shall have been qualified, registered or
otherwise approved for exchange under the securities laws of the various states
in which such qualification, registration or approval is required; (vi) the
shares of United Common Stock issuable pursuant to the Merger shall have been
approved for listing on the Nasdaq Stock Market; (vii) the United Articles
Amendment shall have been filed and effective under the WVCA; (viii) Fed One
shall have received an opinion of Elias, Matz, Tiernan & Herrick L.L.P., special
counsel to Fed One, dated the Effective Date, to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion, (a) the
Merger constitutes a "reorganization" within the meaning of Section 368 of the
Code and (b) no gain or loss will be recognized by shareholders of Fed One who
receive shares of United Common Stock in exchange for shares of Fed One Common
Stock, except the gain or loss may be recognized as to cash received in lieu of
fractional share interests (in rendering its opinion, Elias, Matz, Tiernan and
Herrick, L.L.P. may require and rely upon representations contained in letters
from Fed One and others); (ix) United shall have received an opinion of Bowles
Rice McDavid Graff & Love, PLLC, special counsel to United, dated the Effective
Date, to the effect that, on the basis of facts, representations
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and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code (in rendering its opinion, Bowles
Rice McDavid Graff & Love, PLLC may require and rely upon representations
contained in letters from United and others); (x) each party's representations
and warranties shall remain accurate and each party shall have performed in all
material respects all of the obligations required to be performed by it pursuant
to the Merger Agreement, and shall have delivered certificates confirming
satisfaction of the foregoing requirements; and (xi) each of Fed One and United
shall have received from KPMG Peat Marwick LLP and Ernst & Young LLP, their
respective independent auditors letters dated the Effective Date, stating their
opinions that the Merger shall qualify for pooling-of-interests accounting
treatment.
No assurances can be provided as to when or if all of the
conditions precedent to the Merger can or will be satisfied or waived by the
appropriate party. As of the date of this Joint Proxy Statement/Prospectus, the
parties have no reason to believe that any of the conditions set forth above
will not be satisfied.
The conditions to consummation of the Merger may generally be
waived, in whole or in part, to the extent permissible under applicable law, by
the party for whose benefit the condition has been imposed, without the approval
of the United or Fed One shareholders. See " -- Amendment, Waiver and
Termination."
REGULATORY APPROVALS
Federal Reserve. The Merger is subject to prior approval by
the Federal Reserve under Section 3 of the BHCA. The BHCA requires the Federal
Reserve, when considering a transaction such as the Merger, to take into
consideration the financial and managerial resources (including the competence,
experience and integrity of the officers, directors and principal shareholders)
and future prospects of the institutions and the convenience and needs of the
communities to be served. In addition, under the Community Reinvestment Act of
1977, as amended (the "CRA"), the Federal Reserve must take into account the
record of performance of the acquiring institution in meeting the credit needs
of the entire community, including low- and moderate-income neighborhoods,
served by such institution.
The BHCA also prohibits the Federal Reserve from approving a
merger if it would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or if its effect in any section of the country
would be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner result in a restraint of trade, unless the
Federal Reserve finds that the anticompetitive effects of the merger are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the communities to be served.
Assuming Federal Reserve approval, the Merger may not be
consummated until 30 days after such approval, during which time the United
States Department of Justice may challenge the Merger on antitrust grounds. The
commencement of an antitrust action would stay the effectiveness of the Federal
Reserve's approval unless a court specifically ordered otherwise. With the
approval of the Federal Reserve and the concurrence of the Department of
Justice, the waiting period may be reduced to no less than 15 days.
OCC. The Bank Merger is subject to the prior approval of the
OCC under the Bank Merger Act provisions of the Federal Deposit Insurance Act.
The OCC must consider the financial and managerial resources of the acquiring
bank will be adequate. The OCC will also review capitalization of the resulting
bank and compliance with the CRA.
OTS. The Office of Thrift Supervision ("OTS") must be notified
of the Bank Merger at least thirty days prior to the Effective Date, but no
later than the date on which the OCC application is filed.
Status of Regulatory Approvals and Other Information. United
and Fed One have filed all applications and notices and have taken other
appropriate action with respect to any requisite approvals or other action of
any governmental authority. The Merger Agreement provides that the obligation of
each of United and Fed One to consummate the Merger is conditioned upon, among
other things, (i) the receipt of all requisite regulatory approvals, including
the approvals of the Federal Reserve and the OCC, (ii) the termination or
expiration of all statutory or regulatory waiting periods in respect thereof and
(iii) no such approvals containing conditions, restrictions or requirements
which the United Board reasonably determines in good faith would, after the
Effective Time, have a material adverse effect on United and its subsidiaries
taken as a whole or any conditions, restrictions or requirements that are not
customary and usual for approvals
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of such type and which the United Board reasonably determines would either
before or after the Effective Date be unduly burdensome.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY APPROVALS.
THERE CAN BE NO ASSURANCES THAT ALL SUCH REGULATORY APPROVALS WILL BE OBTAINED
OR AS TO THE DATES OF SUCH APPROVALS. THERE CAN ALSO BE NO ASSURANCE THAT SUCH
APPROVALS WILL NOT CONTAIN A CONDITION, RESTRICTION OR REQUIREMENT THAT CAUSES
SUCH APPROVALS TO FAIL TO SATISFY THE CONDITIONS SET FORTH IN THE MERGER
AGREEMENT. SEE " -- THE EFFECTIVE TIME," " -- CONDITIONS TO CONSUMMATION" AND "
- -- AMENDMENT, WAIVER AND TERMINATION."
AMENDMENT, WAIVER AND TERMINATION
To the extent permitted by law, Fed One and United may amend
the Merger Agreement by written agreement at any time, provided, however, (i)
after the meeting of Fed One's shareholders, the Merger Agreement cannot be
amended if such amendment would violate the DGCL or (ii) after the meeting of
United's shareholders, the Merger Agreement cannot be amended if such amendment
would violate the WVCA. Prior to or at the Effective Time, either Fed One or
United, acting through its respective board of directors, chief executive
officer or other authorized officer, may waive any default in the performance of
any term of the Merger Agreement by the other party, may waive or extend the
time for the fulfillment by the other party of any of its obligations under the
Merger Agreement, and may waive any of the conditions precedent to the
obligations of such party under the Merger Agreement, except any condition that,
if not satisfied, would result in the violation of an applicable law or
governmental regulation.
The Merger Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time by mutual consent of the
boards of directors of United and Fed One. In addition, the Merger Agreement may
be terminated, and the Merger abandoned, prior to the Effective Time by either
United or Fed One if: (i) the other party breaches, and does not timely cure any
breach of, a representation, warranty, covenant or other agreement contained in
the Merger Agreement and such breach, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect (as defined in the Merger
Agreement); (ii) any consent or approval of certain regulatory authorities is
denied by final nonappealable action of such authority; (iii) the Fed One
shareholders fail to approve the Merger Agreement, or the United shareholders
fail to approve the United Articles Amendment; (iv) the Merger has not been
consummated by December 31, 1998; or (v) the other party's board of directors
has failed to recommend approval of the Merger, or the United Articles
Amendment, as the case may be, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the interests
of the other party.
The Merger Agreement may be terminated by Fed One, if the Fed
One Board so determines by a vote of a majority of the members of its entire
board, at any time during the five-day period commencing with the Determination
Date (as defined below), if both of the following conditions are satisfied:
(i) the number obtained by dividing the Average Closing Price
by the Starting Price (each as defined below) (the "United Ratio") shall be less
than .80; and
(ii) (x) the United Ratio shall be less than (y) the number
obtained by dividing the Final Index Price by the Index Price on the Starting
Date (each as defined below) and subtracting 0.20 from the quotient in this
clause (ii) (y) (such number in this clause (ii) (y) being referred to herein as
the "Index Ratio"); subject, however, to the following three sentences: If Fed
One elects to exercise this termination right pursuant to the terms of the
Merger Agreement, it shall give written notice to United (provided that such
notice of election to terminate may be withdrawn at any time within the
aforementioned five-day period). During the five-day period commencing with its
receipt of such notice, United shall have the option to increase the
consideration to be received by the holders of Fed One Common Stock hereunder,
by adjusting the Exchange Ratio (calculated to the nearest one one-thousandth)
to equal the lesser of (x) a number (rounded to the nearest one one-thousandth)
obtained by dividing (A) the product of the Starting Price, 0.80 and the
Exchange Ratio (as then in effect) by (B) the Average Closing Price and (y) a
number (rounded to the nearest one one-thousandth) obtained by dividing (A) the
product of the Index Ratio and the Exchange Ratio (as then in effect) by (B) the
United Ratio. If United so elects
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within such five-day period, it shall give prompt written notice to Fed One of
such election and the revised Exchange Ratio, whereupon no termination shall
have occurred and the Merger Agreement shall remain in effect in accordance with
its terms (except as the Exchange Ratio shall have been so modified).
The following terms shall have the meanings indicated:
"Average Closing Price" shall mean the average of the closing
prices of a share of United Common Stock on the Nasdaq reporting system (as
reported in THE WALL STREET JOURNAL, or if not reported therein, in another
authoritative source) during the period of 20 consecutive full trading days
ending on the trading day prior to the Determination Date, rounded to the
nearest whole cent.
"Determination Date" shall mean the date on which the last
required approval of a Governmental Entity is obtained with respect to the
Merger, and if requested by United pursuant to Section 6.18 of the Merger
Agreement, the Bank Merger, without regard to any requisite waiting period in
respect thereof.
"Final Index Price" shall mean the average of the Index Prices
for the 20 consecutive full trading days ending on the trading day prior to the
Determination Date.
"Index Group" shall mean the 19 financial institutions or
financial institution holding companies listed below, the common stock of which
shall be publicly traded and as to which there shall not have been a publicly
announced proposal since the Starting Date and before the Determination Date for
any such company to be acquired. In the event that the common stock of any such
company ceases to be publicly traded or a proposal to acquire any such company
is announced after the Starting Date and before the Determination Date, such
company shall be removed from the Index Group, and the weights (which have been
determined based on the number of outstanding shares of common stock and the
market prices of such stock) attributed to the remaining companies shall be
adjusted proportionately for purposes of determining the Final Index Price. Two
companies have announced that they have entered into agreements to be acquired
subsequent to the date of the Merger Agreement and were deleted from the Index
Group. The 19 financial institutions or financial institution holding companies
and the weights attributed to them are as follows:
Company Weight
------- ------
Keystone Financial Inc. 12.76%
FirstMerit Corp. 10.70%
Valley National Bancorp 9.51%
Fulton Financial Corp. 7.62%
One Valley Bancorp Inc. 5.72%
Park National Corp. 4.98%
Riggs National Corp. 4.89%
Susquehanna Bancshares Inc. 4.86%
First Financial Bancorp. 4.84%
HUBCO Inc. 4.82%
Commerce Bancorp Inc. 4.74%
Provident Bankshares Corp. 4.52%
F & M National Corp. 4.04%
First Commonwealth Financial 3.77%
F.N.B. Corp. 3.17%
Trust Co. of New Jersey 2.88%
Carolina First Corp. 2.28%
USBANCORP Inc. 2.05%
First Citizens Bancorp. of SC 1.85%
-------
100.00%
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"Index Price," on a given date, shall mean the weighted
average (weighted in accordance with the factors listed above) of the closing
prices on such date of the common stocks of the companies comprising the Index
Group, as such prices are reported on the consolidated transactions reporting
system for the market or exchange on which such common stock is principally
traded on such date.
"Starting Date" shall mean the last trading day immediately
preceding the date of the first public announcement of entry into this
Agreement.
"Starting Price" shall mean the closing price of a share of
United Common Stock on the Nasdaq reporting system (as reported in THE WALL
STREET JOURNAL, or if not reported therein, in another authoritative source) on
the Starting Date.
If any company belonging to the Index Group or United declares
or effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between and including the
Starting Date and the Determination Date, the prices for the common stock of
such company or United and the Exchange Ratio shall be appropriately adjusted.
CONDUCT OF BUSINESS PENDING THE MERGER
Fed One. Fed One has agreed in the Merger Agreement, unless
the prior written consent of United is obtained and except as otherwise
contemplated by the Merger Agreement, not to, and to cause each of its
subsidiaries not to:
(a) conduct the business of Fed One 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 effect upon Fed One's ability to
perform any of its material obligations under the Merger Agreement;
(b) other than pursuant to Fed One's Dividend Reinvestment
Plan or previously disclosed agreements to issue shares of existing as
of the date of the Merger Agreement, issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares
of, or rights to acquire, Fed One Common Stock, enter into any
agreement with respect to the foregoing, or permit any additional
shares of Fed One Common Stock to become subject to new grants of
employee or director stock options, other stock rights or similar
stock-based employee rights;
(c) (i) make, declare, pay or set aside for payment any
dividend (other than quarterly cash dividends in an amount not to
exceed $.155 per share and dividends from wholly owned subsidiaries) on
or in respect of, or declare or make any distribution on, any shares of
Fed One stock or (ii) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of
capital stock;
(d) enter into or amend or renew any employment, consulting,
severance or similar agreements with any director, officer or employee
of Fed One or its subsidiaries, or grant any salary or wage increase or
increase any employee benefit, except (i) for normal individual
increases in compensation to employees, (ii) for other changes that are
required by applicable law, (iii) to satisfy previously disclosed
contractual obligations or (iv) for grants of awards to newly hired
employees consistent with past practice;
(e) enter into, establish, adopt or amend (except as may be
required by applicable law or to satisfy previously disclosed
contractual obligations) any benefit plan, stock or otherwise in
respect of any director, officer or employee of Fed One 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) 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;
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(g) except as previously disclosed, acquire all or any portion
of, the assets, business, deposits or properties of any other entity
except in the ordinary course of business and in a transaction that is
not material;
(h) amend its or any subsidiary's articles or certificate of
incorporation or bylaws;
(i) implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by
generally accepted accounting principles;
(j) except in the ordinary course of business consistent with
past practice, enter into or terminate any material contract or amend
or modify in any material respect any of its existing material
contracts;
(k) except in the ordinary course of business consistent with
past practice, generally settle any material claim, action or
proceeding which does not involve precedent for other material claims,
actions or proceedings and which involves solely money damages in an
amount, individually or in the aggregate for all such settlement that
is not material to Fed One and its subsidiaries, taken as a whole;
(l)(i) take any action reasonably likely to prevent or impede
the Merger from qualifying (A) for "pooling-of-interests" accounting
treatment or (B) as a reorganization for tax purposes; or (ii)
knowingly take any action that is intended or is reasonably likely to
result in (A) any of its representations and warranties set forth in
the Merger Agreement being or becoming untrue, (B) any of the
conditions to the Merger not being satisfied or (C) a material
violation of any provision of the Merger Agreement except, in each
case, as may be required by applicable law or regulation;
(m) 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) incur any indebtedness for borrowed money other than in
the ordinary course of business; or
(o) agree or commit to do any of the foregoing.
In addition, Fed One has agreed in the Merger Agreement that
it shall not, and shall cause its subsidiaries and its subsidiaries' officers,
directors, agents, advisers and affiliates not to, solicit or encourage
inquiries or proposals with respect to, or except to the extent that the Fed One
Board has determined, after consulting with and considering the advice of
outside counsel, that the failure to do so would constitute a breach of the
fiduciary duties of the Fed One Board's directors under applicable law, engage
in any negotiations concerning, or provide any confidential information to, or
have any discussions with, any person relating to, any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving Fed
One 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, Fed One or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement (an "Acquisition Proposal"). In the Merger
Agreement, Fed One agreed to cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of the Merger Agreement
with any parties other than United with respect to any of the foregoing and
agreed to use its reasonable best efforts to enforce any confidentiality or
similar agreement relating to an Acquisition Proposal. Fed One has agreed to
promptly (within 24 hours) advise United following the receipt by Fed One of any
Acquisition Proposal and the substance thereof, and immediately advise United of
any developments with respect to any Acquisition Proposal.
United. United has agreed in the Merger Agreement, unless the
prior written consent of Fed One is obtained, and except as otherwise
contemplated by the Merger Agreement, not to, and cause each of its subsidiaries
not to:
(a) 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) make, declare, pay or set aside for payment any
extraordinary dividend;
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(c)(i) take any action reasonably likely to prevent or impede
the Merger from qualifying (A) for "pooling-of-interests" accounting
treatment or (B) as a reorganization for tax purposes; or (ii)
knowingly take any action that is intended or is reasonably likely to
result in (A) any of its representations and warranties set forth in
the Merger Agreement being or becoming untrue, (B) any of the
conditions to the Merger not being satisfied or (C) a material
violation of any provision of the Merger Agreement except, in each
case, as may be required by applicable law or regulation; provided,
however, that nothing contained in the Merger Agreement limits the
ability of United to exercise its rights under the Stock Option
Agreement; or
(d) agree or commit to do any of the foregoing.
DIVIDEND COORDINATION
Fed One is obligated under the Merger Agreement to cause its
regular quarterly dividend record dates and payment dates for Fed One Common
Stock to be the same as United's regular quarterly dividend record dates and
payment dates for United Common Stock and may not thereafter change its regular
dividend payment dates and record dates.
EXPENSES AND FEES
The Merger Agreement provides that each party shall be
responsible for all expenses incurred by it in connection with the negotiation
and consummation of the transactions contemplated by the Merger Agreement,
except that United and Fed One have agreed to share equally all Commission
filing fees and all printing expenses payable in connection with the
Registration Statement and this Joint Proxy Statement/Prospectus.
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the receipt by
each of United and Fed One of a letter from their respective independent
auditors indicating their concurrence that the Merger qualifies for
"pooling-of-interests" accounting treatment if consummated in accordance with
the terms of the Merger Agreement. Under the pooling-of-interests method of
accounting, the historical financial statements of United and Fed One will be
restated retroactively to reflect the consolidated financial statements of
United and Fed One as if the Merger had taken place prior to the periods covered
by such financial statements. United and Fed One have no reason to believe that
the Merger will not qualify as a pooling of interests for financial accounting
and financial reporting purposes, provided that Fed One reissue approximately
224,000 shares of Fed One Common Stock at fair value to individuals or entities
unaffiliated with Fed One and United prior to the Effective Time. Fed One has
agreed in the Merger Agreement to use its reasonable best efforts to effect such
a sale of Fed One Common Stock prior to the Effective Time after the Merger has
been approved by the Fed One shareholders, the United Articles Amendment has
been approved by the United shareholders and all required regulatory approvals
have been obtained. No assurances can be provided as to when or if all of the
conditions precedent to the Merger can or will be satisfied or waived by the
appropriate party. As of the date of this Joint Proxy Statement/Prospectus, the
parties have no reason to believe that any of the conditions set forth above
will not be satisfied. See "Summary" and "United and Fed One Unaudited Pro Forma
Condensed Consolidated Financial Information."
NO DISSENTERS' RIGHTS
Under the DGCL, holders of Fed One Common Stock have no
dissenters' rights in connection with the Merger.
Under the WVCA, holders of United Common Stock have no
dissenters' rights in connection with the proposal to approve the United
Articles Amendment.
NASDAQ LISTING OF UNITED COMMON STOCK
United has agreed to use its reasonable best efforts to list,
prior to the Effective Date, on the Nasdaq Stock Market, subject to official
notice of issuance, the shares of United Common Stock to be issued to the
holders of Fed One Common Stock in the Merger.
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RESALES OF UNITED COMMON STOCK
The shares of United Common Stock issued in connection with
the Merger will be freely transferable under the Securities Act, except for
shares issued to any shareholder who may be deemed to be an "affiliate"
(generally including, without limitation, directors, certain executive officers,
and beneficial owners of 10% or more of any class of capital stock) of Fed One
for purposes of Rule 145 under the Securities Act as of the date of the Fed One
Special Meeting. Such affiliates may not sell their shares of United Common
Stock acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act or other applicable exemption
from the registration requirements of the Securities Act. Commission guidelines
regarding qualifying for the pooling-of-interests method of accounting also
limit sales of shares of the acquiring and acquired company by affiliates of
either company in a business combination. Commission guidelines also indicate
that the pooling-of-interests method of accounting will generally not be
challenged on the basis of sales by affiliates of the acquiring or acquired
company if they do not dispose of any of the shares of the corporation they own
or shares of a corporation they receive in connection with a merger during the
period beginning 30 days before the merger and ending when financial results
covering at least 30 days of post-merger operations of the combined operations
have been published.
Each of United and Fed One has agreed in the Merger Agreement
to use its reasonable best efforts to cause each person who may be deemed to be
an "affiliate" of such party to execute and deliver to United and Fed One,
respectively, an agreement pursuant to which such person agrees, among other
things, not to offer to sell, transfer or otherwise dispose of any of the shares
of United Common Stock distributed to them pursuant to the Merger except (i)
with respect to affiliates of Fed One, in compliance with Rule 145 under the
Securities Act, or in a transaction that, in the opinion of counsel reasonably
satisfactory to United, is otherwise exempt from the registration requirements
of the Securities Act, or in an offering which is registered under the
Securities Act and (ii) with respect to affiliates of each of Fed One and
United, in compliance with Commission guidelines regarding qualifying for
pooling-of-interests accounting treatment.
United may place restrictive legends on certificates
representing United Common Stock issued to all persons who are deemed to be
"affiliates" of Fed One under Rule 145. This Joint Proxy Statement/Prospectus
does not cover resales of United Common Stock received by any person who may be
deemed to be an affiliate of Fed One.
STOCK OPTION AGREEMENT
As an inducement to United's willingness to continue to pursue
the transactions contemplated by the Merger Agreement, on February 18, 1998, Fed
One entered into the Stock Option Agreement with United. The following
description of the Stock Option Agreement is qualified in its entirety by
reference to the text of such Stock Option Agreement, a copy of which is
attached as Appendix B and which is incorporated herein by reference.
Pursuant to the Stock Option Agreement, Fed One granted United
the Option, which permits United to purchase up to 474,800 shares of Fed One
Common Stock (the "Option Shares"), subject to adjustment in certain cases as
described below but in no event exceeding 19.9% of the number of shares of Fed
One Common Stock outstanding immediately before exercise of the Option. The
exercise price of the Option is $33.50 per share, subject to adjustment under
specified circumstances (such exercise price, as so adjusted, being referred to
herein as the "Option Price").
The Option will become exercisable in whole or in part if both
an "Initial Triggering Event" and a "Subsequent Triggering Event" occur with
respect to Fed One prior to the occurrence of an "Exercise Termination Event,"
as such terms are defined below. The purchase of any shares of Fed One Common
Stock pursuant to the Option is subject to compliance with applicable law,
including the receipt of necessary approvals under the BHCA. If United were to
exercise its right to acquire the full 19.9% of the number of shares outstanding
of Fed One Common Stock subject to the Option, United would hold approximately
16.6% of the outstanding shares of Fed One Common Stock immediately after such
exercise.
The Stock Option Agreement generally defines the term "Initial
Triggering Event" to mean any of the following events or transactions:
(i) Fed One or Fed One Bank, without United's prior written
consent, enters into an agreement to engage in an "Acquisition Transaction" (as
defined below) with a third party or the Fed One Board recommends that the
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shareholders of Fed One approve or accept any Acquisition Transaction, other
than as contemplated by the Merger Agreement;
(ii) A third party shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 10% or more of the outstanding
shares of Fed One Common Stock;
(iii) The shareholders of Fed One shall have voted and failed
to adopt and approve the Merger Agreement at Fed One's shareholder meeting or
such meeting has not been held in violation of the Merger Agreement or has been
canceled prior to termination of the Merger Agreement if, prior to such
shareholder meeting (or if such shareholder meeting shall not have been held or
shall have been canceled, prior to such termination), it shall have been
publicly announced that any third party shall have made, or publicly disclosed
an intention to make, a proposal to engage in a bona fide Acquisition
Transaction with respect to Fed One;
(iv) The Fed One Board withdraws or modifies (or publicly
announces its intention to withdraw or modify) in any manner adverse to United,
its recommendation that the shareholders of Fed One approve the Merger Agreement
at Fed One's shareholder meeting, or Fed One, without United's prior written
consent, authorizes, recommends or proposes (or publicly announces its intention
to authorize, recommend or propose) an agreement to engage in an Acquisition
Transaction with a third party;
(v) A third party shall have filed with the Commission a
registration statement with respect to a potential exchange offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy statement
with the Commission with respect to a potential vote by its shareholders to
approve the issuance of shares to be offered in such an exchange offer);
(vi) After an overture is made by a third party to Fed One to
engage in an Acquisition Transaction, Fed One willfully breaches 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
(vii) A third party files an application or notice with the
Federal Reserve 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 used in the Stock Option Agreement, the term "Acquisition
Transaction" means (x) a merger or consolidation or any similar transaction,
involving Fed One or Fed One Bank (other than mergers, consolidations or similar
transactions (i) involving solely Fed One and/or one or more of its wholly-owned
(except for directors' qualifying shares and a de minimis number of other
shares) 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 Fed One immediately prior to the completion of such transaction own at least
50% of the Fed One Common Stock (or the common stock of 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 substantially all of the assets or deposits of Fed One or Fed One Bank
or (z) a purchase or other acquisition (including by merger, consolidation,
share exchange or otherwise) of securities representing 10% or more of the
voting power of Fed One or Fed One Bank.
The Stock Option Agreement generally defines the term
"Subsequent Triggering Event" to mean any of the following events or
transactions: (i) the acquisition by a third party of beneficial ownership of
25% or more of the then outstanding Fed One Common Stock or (ii) Fed One or Fed
One Bank, without having received the prior written consent of United, enters
into an agreement to engage in an Acquisition Transaction with a third party or
the Fed One Board recommends that the shareholders of Fed One approve or accept
any Acquisition Transaction, other than as contemplated by the Merger Agreement;
provided, that for purposes of the definition of "Subsequent Triggering Event,"
the percentage referred to in clause (z) of the definition of "Acquisition
Transaction" above shall be 25% rather than 10%.
The Stock Option Agreement defines the term "Exercise
Termination Event" to mean any of (i) the Effective Time; (ii) termination of
the Merger Agreement in accordance with its terms, if such termination occurs
prior to the occurrence of an Initial Triggering Event, except a termination by
United if Fed One breaches, and does not timely cure any breach of, a
representation, warranty, covenant or other agreement contained in the Merger
Agreement and such breach
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(but only if the breach giving rise to the termination was willful),
individually or in the aggregate, has a Material Adverse Effect (as defined in
the Merger Agreement) or if the Fed One Board has failed to recommend approval
of the Merger or has modified or changed such recommendation (see " --
Amendment, Waiver and Termination"); or (iii) the passage of 14 months, subject
to extension in order to obtain required regulatory approvals, to comply with
applicable regulatory waiting periods or to avoid liability under Section 16(b)
of the Exchange Act, after termination of the Merger Agreement if such
termination is concurrent with or follows the occurrence of an Initial
Triggering Event or is a termination by United if Fed One breaches, and does not
timely cure any breach of, a representation, warranty, covenant or other
agreement contained in the Merger Agreement and such breach, individually or in
the aggregate, has a Material Adverse Effect or if the United Board has failed
to recommend approval of the Merger, or has modified or changed such
recommendation (see " -- Amendment, Waiver and Termination"). Notwithstanding
anything to the contrary contained in the Stock Option Agreement, the Option may
not be exercised at any time when United is in breach of any of its covenants or
agreements contained in the Merger Agreement such that Fed One shall be entitled
to terminate the Merger Agreement pursuant to the terms thereof as a result of a
material breach, and the Stock Option Agreement shall automatically terminate
(x) upon the termination of the Merger Agreement by Fed One pursuant to the
terms thereof as a result of a breach by United of its covenants or agreements
contained therein, (y) by Fed One or United if United's shareholders do not
approve the Merger Agreement, or (z) by Fed One or United if necessary
governmental approvals are denied.
If the Option becomes exercisable, it may be exercised in
whole or in part within six months following the applicable Subsequent
Triggering Event. United's right to exercise the Option and certain other rights
under the Stock Option Agreement are subject to an extension in order to obtain
required regulatory approvals and comply with applicable regulatory waiting
periods and to avoid liability under Section 16(b) of the Exchange Act. The
Option Price and the number of shares issuable under the Option are subject to
adjustment in the event of specified changes in the capital stock of Fed One.
Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, United will have certain
registration rights with respect to the shares of Fed One Common Stock issued or
issuable pursuant to the Option.
The Stock Option Agreement also provides that at any time
after the occurrence of a "Repurchase Event" (as defined below), upon request,
Fed One shall be obligated to repurchase the Option and all or any part of the
Option Shares. Such repurchase of the Option shall be at a price per share equal
to the amount by which the "Market/Offer Price" (as defined below) exceeds the
Option Price (as adjusted). A repurchase of Option Shares shall be at a price
per share equal to the Market/Offer Price. The term "Market/Offer Price" means
the highest of (i) the price per share at which a tender or exchange offer has
been made for Fed One Common Stock, (ii) the price per share of Fed One Common
Stock that any third party is to pay pursuant to an agreement with Fed One,
(iii) the highest closing price per share of Fed One Common Stock within the
six-month period immediately preceding the date that notice to repurchase is
given or (iv) in the event of a sale of all or substantially all of Fed One's
assets or deposits, the sum of the price paid for such assets or deposits and
the current market value of the remaining assets (as determined by a nationally
recognized investment banking firm), divided by the number of shares of Fed One
Common Stock outstanding at the time of such sale. The term "Repurchase Event"
is defined to mean (i) the acquisition by any third party of beneficial
ownership of 50% or more of the outstanding shares of Fed One Common Stock or
(ii) the consummation of an Acquisition Transaction; provided, that for purposes
of the definition of "Repurchase Event," the percentage referred to in clause
(z) of the definition of "Acquisition Transaction" above shall be 50% rather
than 10%.
The Stock Option Agreement also provides that United may, at
any time following a Repurchase Event and prior to an Exercise Termination
Event, surrender the Option (and any Option Shares obtained upon the exercise
thereof and still held by United) for a cash surrender fee (the "Surrender Fee")
equal to $4 million (i) plus, if applicable, United's purchase price with
respect to any Option Shares and (ii) minus, if applicable, any net cash
received pursuant to the sale of Option Shares to any third party (less the
purchase price of such Option Shares). United may not exercise its right to
surrender the Option and receive the Surrender Fee if Fed One has previously
repurchased the Option (or any portion thereof) or any Option Shares as
described in the preceding paragraph.
The Stock Option Agreement includes limits on United's Total
Profits under any of its alternatives, of $6 million, to be determined as set
forth in the Stock Option Agreement.
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Pursuant to the terms of the Stock Option Agreement, in the
event that, prior to an Exercise Termination Event, Fed One enters into certain
transactions in which Fed One is not the surviving corporation, certain
fundamental changes in the capital stock of Fed One occur or Fed One sells all
or substantially all of its or certain of its subsidiaries' assets, the Option
will be converted into a substitute option, with terms similar to those of the
Option, to purchase capital stock of the entity that is the effective successor
to Fed One.
The Stock Option Agreement provides that neither United nor
Fed One may assign any of its rights or obligations thereunder without the
written consent of the other party, except that in the event an Initial
Triggering Event occurs prior to an Exercise Termination Event, United may,
subject to certain limitations, assign its rights and obligations thereunder in
whole or in part (subject to extension in certain cases).
Arrangements such as the Stock Option Agreement are
customarily entered into in connection with corporate mergers and acquisitions
in an effort to increase the likelihood that the transactions will be
consummated in accordance with their terms, and to compensate the grantee for
the efforts undertaken and the expenses, losses and opportunity costs incurred
by it in connection with the transactions if they are not consummated under
certain circumstances involving an acquisition or potential acquisition of the
option issuer by a third party. The Stock Option Agreement was entered into to
accomplish these objectives. The Stock Option Agreement may have the effect of
discouraging offers by third parties to acquire Fed One prior to the Merger,
even if such persons were prepared to offer to pay consideration to Fed One
shareholders which has a higher current market price than the shares of United
Common Stock to be received by such holders pursuant to the Merger Agreement.
To the best knowledge of United and Fed One, no event giving
rise to the right to exercise the Option has occurred as of the date of this
Joint Proxy Statement/Prospectus.
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UNITED ARTICLES AMENDMENT
In connection with the Merger and the United Stock Dividend,
the United Board approved the United Articles Amendment to increase the number
of authorized shares of United Common Stock from 41,000,000 to 100,000,000
shares. Approval of the United Articles Amendment requires the approval of a
majority of the outstanding shares of United Common Stock entitled to vote on
the matter. The purpose of the United Articles Amendment is to provide United
with a sufficient number of authorized shares of United Common Stock to
consummate the Merger and to create additional shares for other appropriate
purposes.
The proposed increase above that necessary for the Merger in
the authorized common stock has been recommended by the Board of Directors to
assure that an adequate supply of authorized, unissued shares is available for
general corporate needs, such as future stock dividends or stock splits,
acquisitions (such as the one described in this Joint Proxy
Statement/Prospectus), the dividend reinvestment plan, employee benefit plans,
and for other general corporate purposes, without the expense and delay
incidental to obtaining shareholder approval of an amendment to the Articles
increasing the number of authorized shares at the time of such action, except as
may be required for a particular issuance by applicable law or by the rules of
any stock exchange on which United's securities may then be listed.
If the proposed amendment is approved by the shareholders, the
additional shares of common stock so authorized could be issued, in the
discretion of the Board, for any proper corporate purpose, without further
action by the shareholders other than, as may be required by applicable law or
by the rules of any stock exchange on which United's securities may then be
listed. Existing shareholders do not have preemptive rights with respect to
future issuances of common stock by United and their interest in United could be
diluted by such issuance with respect to any of the following: earnings per
share, voting, and book and market value. Accordingly, the Board of Directors
will, in the exercise of their fiduciary duties to the shareholders, weigh all
the factors carefully, together with the needs and prospects of United, before
committing to the issuance of further shares not requiring shareholder approval.
The proposed increase in the number of authorized shares of
common stock could enable the Board of Directors to render more difficult or
discourage an attempt by another person or entity to obtain control of United.
Such additional shares could be issued by the Board in a public or private sale,
merger or similar transaction, increasing the number of outstanding shares and
thereby diluting the equity interest and voting power of a party attempting to
obtain control of United.
The increase of the authorized shares, if approved, will take
effect on the date the Amended Articles of Incorporation are filed with the
Secretary of State of West Virginia.
Authorized but unissued shares of United Common Stock are
available for issuance in future mergers or acquisitions, in a future public
offering or private placement or for other general corporate purposes. United
has not proposed an increase in the number of authorized shares of United Common
Stock since the Special Meeting of Shareholders to approve the George Mason
transaction on March 9, 1998, when United had approximately $2.8 billion in
total assets.
Section 2.02 of the Merger Agreement provides that at the
Effective Time of the Merger, Article VI of the United Articles shall be amended
to read as follows:
VI. The amount of the authorized capital stock of the
corporation is $250,000,000 which shall be divided into 100,000,000 shares of a
par value of $2.50 per share.
THE UNITED BOARD UNANIMOUSLY RECOMMENDS THAT UNITED SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE UNITED ARTICLES AMENDMENT.
40
<PAGE>
UNITED AND FED ONE UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated
Financial Statements present the historical Consolidated Financial Statements of
United and Fed One, as though they had been combined during all periods
presented. It is intended that the Merger be accounted for as a
pooling-of-interests. This information should be read in conjunction with the
historical Consolidated Financial Statements of United and Fed One, including
the respective notes thereto, which are incorporated by reference into this
Joint Proxy Statement/Prospectus. See "Incorporation of Certain Information By
Reference." The Unaudited Pro Forma Condensed Consolidated Balance Sheet is not
necessarily indicative of the actual financial position that would have existed
had the Merger been consummated during the periods indicated below or that may
exist in the future. The Unaudited Pro Forma Condensed Consolidated Statements
of Income are not necessarily indicative of the results that would have occurred
had the Merger been consummated on the dates indicated or that may be achieved
in the future.
To conform with pooling of interests criteria and as discussed
elsewhere herein, Fed One has agreed in the Merger Agreement to use its
reasonable best efforts to effect a sale of Fed One Common Stock prior to the
Effective Time after the Merger has been approved by the Fed One shareholders,
the United Articles Amendment has been approved by the United shareholders and
all required regulatory approvals have been obtained. The impact of such sale on
the Unaudited Condensed Consolidated Financial Statements is not material.
41
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
As of March 31, 1998
(in thousands)
<TABLE>
<CAPTION>
United &
As Reported Fed One
--------------------- Pro Forma Pro Forma
United Fed One Adjustments Consolidated
------ ------- ----------- ------------
<S><C>
ASSETS
Cash and due from banks $ 112,069 $ 1,585 $ $ 113,654
Interest-bearing deposits with other banks 154 13,269 13,423
Federal funds sold 12,116 12,116
Investment securities 801,070 174,174 975,244
Loans (net of unearned income) 2,781,391 168,895 2,950,286
Less: allowance for loan losses (31,163) (1,512) (32,675)
---------- -------- -------- ----------
Net loans 2,750,228 167,383 2,917,611
Bank premises and equipment 48,741 6,454 55,195
Other assets 80,580 4,802 85,382
---------- -------- -------- ----------
TOTAL ASSETS $3,804,958 $367,667 $ $4,172,625
========== ======== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits $ 478,607 $ 9,910 $ $ 488,517
Interest-bearing deposits 2,471,407 254,186 2,725,593
---------- -------- -------- ----------
Total deposits 2,950,014 264,096 3,214,110
Short-term borrowings 251,730 251,730
Federal Home Loan Bank borrowings 188,808 59,784 248,592
Other liabilities 50,763 2,459 53,222
---------- -------- -------- ----------
TOTAL LIABILITIES 3,441,315 326,339 3,767,654
---------- -------- -------- ----------
SHAREHOLDERS' EQUITY:
Common stock 97,884 28 8,697(1) 106,863
Surplus 73,009 19,694 (15,464)(1) 77,239
Retained earnings 189,347 27,950 217,297
Accumulated other comprehensive income 4,882 169 5,051
Treasury stock (1,479) (6,767) 6,767(1) (1,479)
---------- -------- -------- ----------
TOTAL SHAREHOLDERS' EQUITY 363,643 41,328 404,971
---------- -------- -------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS $3,804,958 $367,667 $ $4,172,625
========== ======== ======== ==========
</TABLE>
42
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
UNITED &
AS REPORTED FED ONE
------------------------ PRO FORMA PRO FORMA
UNITED FED ONE ADJUSTMENTS CONSOLIDATED
------ ------- ----------- ------------
<S><C>
INTEREST INCOME $69,666 $6,593 $ $76,259
INTEREST EXPENSE 32,480 3,755 36,235
------- ------ --------- -------
NET INTEREST INCOME 37,186 2,838 40,024
PROVISION FOR LOAN LOSS 2,050 30 2,080
------- ------ --------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 35,136 2,808 37,944
OTHER INCOME 13,850 162 14,012
OTHER EXPENSES 27,809 1,886 29,695
------- ------ --------- -------
INCOME BEFORE INCOME TAXES 21,177 1,084 22,261
INCOME TAXES 7,431 409 7,840
------- ------ --------- -------
NET INCOME $13,746 $ 675 $ $14,421
======= ====== ========= =======
EARNINGS PER COMMON SHARE:
BASIC $0.35 $0.30 $0.34
DILUTED $0.35 $0.28 $0.33
AVERAGE OUTSTANDING SHARES 39,006,301 2,260,654 42,397,282
AVERAGE DILUTED OUTSTANDING SHARES 39,633,450 2,424,548 43,270,272
</TABLE>
43
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
UNITED &
AS REPORTED FED ONE
------------------------ PRO FORMA PRO FORMA
UNITED FED ONE ADJUSTMENTS CONSOLIDATED
------ ------- ----------- ------------
<S><C>
INTEREST INCOME $59,062 $6,190 $ $65,252
INTEREST EXPENSE 26,566 3,240 29,806
------- ------ --------- -------
NET INTEREST INCOME 32,496 2,950 35,446
PROVISION FOR LOAN LOSS 603 30 633
------- ------ --------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 31,893 2,920 34,813
OTHER INCOME 7,719 150 7,869
OTHER EXPENSES 21,979 1,733 23,712
------- ------ --------- -------
INCOME BEFORE INCOME TAXES 17,633 1,337 18,970
INCOME TAXES 5,769 516 6,285
------- ------ --------- -------
NET INCOME $11,864 $ 821 $ $12,685
======= ====== ========= =======
EARNINGS PER COMMON SHARE:
BASIC $0.31 $0.36 $0.30
DILUTED $0.30 $0.34 $0.30
AVERAGE OUTSTANDING SHARES 38,645,708 2,308,620 42,108,638
AVERAGE DILUTED OUTSTANDING SHARES 39,170,480 2,410,387 42,786,061
</TABLE>
44
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
UNITED &
AS REPORTED FED ONE
------------------------ PRO FORMA PRO FORMA
UNITED FED ONE ADJUSTMENTS CONSOLIDATED
------ ------- ----------- ------------
<S><C>
INTEREST INCOME $254,758 $25,694 $ $280,452
INTEREST EXPENSE 117,060 14,062 131,122
-------- ------- --------- --------
NET INTEREST INCOME 137,698 11,632 149,330
PROVISION FOR LOAN LOSS 3,120 160 3,280
-------- ------- --------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 134,578 11,472 146,050
OTHER INCOME 36,376 692 37,068
OTHER EXPENSES 96,757 7,095 103,852
-------- ------- --------- --------
INCOME BEFORE INCOME TAXES 74,197 5,069 79,266
INCOME TAXES 25,178 1,827 27,005
-------- ------- --------- --------
NET INCOME $ 49,019 $ 3,242 $ $ 52,261
======== ======= ========= ========
EARNINGS PER COMMON SHARE:
BASIC $1.27 $1.43 $1.24
DILUTED $1.25 $1.36 $1.22
AVERAGE OUTSTANDING SHARES 38,632,616 2,266,633 42,032,566
AVERAGE DILUTED OUTSTANDING SHARES 39,191,892 2,384,379 42,768,461
</TABLE>
45
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
UNITED &
AS REPORTED FED ONE
------------------------ PRO FORMA PRO FORMA
UNITED FED ONE ADJUSTMENTS CONSOLIDATED
------ ------- ----------- ------------
<S><C>
INTEREST INCOME $226,085 $24,556 $ $250,641
INTEREST EXPENSE 99,449 12,807 112,256
-------- ------- --------- --------
NET INTEREST INCOME 126,636 11,749 138,385
PROVISION FOR LOAN LOSS 2,791 90 2,881
-------- ------- --------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 123,845 11,659 135,504
OTHER INCOME 29,041 613 29,654
OTHER EXPENSES 95,728 8,657 104,385
-------- ------- --------- --------
INCOME BEFORE INCOME TAXES 57,158 3,615 60,773
INCOME TAXES 19,763 1,291 21,054
-------- ------- --------- --------
NET INCOME $ 37,395 $ 2,324 $ $ 39,719
======== ======= ========= ========
EARNINGS PER COMMON SHARE:
BASIC $0.97 $0.97 $0.94
DILUTED $0.96 $0.94 $0.93
AVERAGE OUTSTANDING SHARES 38,747,260 2,402,868 42,351,562
AVERAGE DILUTED OUTSTANDING SHARES 39,085,274 2,485,427 42,813,415
</TABLE>
46
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
UNITED &
AS REPORTED FED ONE
------------------------ PRO FORMA PRO FORMA
UNITED FED ONE ADJUSTMENTS CONSOLIDATED
------ ------- ----------- ------------
<S><C>
INTEREST INCOME $209,934 $23,022 $ $232,956
INTEREST EXPENSE 90,116 11,325 101,441
-------- ------- --------- --------
NET INTEREST INCOME 119,818 11,697 131,515
PROVISION FOR LOAN LOSS 2,338 120 2,458
-------- ------- --------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 117,480 11,577 129,057
OTHER INCOME 25,111 624 25,735
OTHER EXPENSES 83,605 7,127 90,732
-------- ------- --------- --------
INCOME BEFORE INCOME TAXES 58,986 5,074 64,060
INCOME TAXES 19,877 1,824 21,701
-------- ------- --------- --------
NET INCOME $ 39,109 $ 3,250 $ $ 42,359
======== ======= ========= ========
EARNINGS PER COMMON SHARE:
BASIC $1.02 $1.24 $1.01
DILUTED $1.02 $1.20 $1.00
AVERAGE OUTSTANDING SHARES 38,182,408 2,628,095 42,124,550
AVERAGE DILUTED OUTSTANDING SHARES 38,471,372 2,710,219 42,536,700
</TABLE>
47
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME
1) United is offering to exchange 1.50 shares of United Common Stock for each
outstanding share of Fed One Common Stock. The pro forma financial statements
assume that this transaction will be accounted for under the pooling of
interests method of accounting. The shareholders' equity accounts have been
adjusted to reflect the issuance of approximately 3,600,000 shares of United
Common Stock, $2.50 par value, for all of the outstanding shares of Fed One
Common Stock.
48
<PAGE>
DESCRIPTION OF UNITED CAPITAL STOCK
The descriptive information below outlines certain provisions
of the United Articles and United Bylaws and the WVCA. The information does not
purport to be complete and is qualified in all respects by reference to the
provisions of the United Articles and United Bylaws, which are incorporated by
reference as exhibits to the Registration Statement, and the WVCA. See
"Available Information."
GENERAL
The authorized capital stock of United consists of 41,000,000
shares of United Common Stock, par value $2.50 per share. In connection with the
Merger, United has proposed to its shareholders an increase in the number of
authorized shares of United Common Stock to 100,000,000. See "United Articles
Amendment." The United Common Stock does not represent or constitute a deposit
account and is not insured by the FDIC or any other government agency. As of the
United Record Date, there were 39,135,251 shares of United Common Stock
outstanding. In addition, United estimates that approximately 3,938,310 shares
(excluding shares issuable upon exercise of outstanding stock options) of United
Common Stock will be issued in connection with the Merger.
Because United is a holding company, the rights of United to
participate in any distribution of assets of any subsidiary upon its liquidation
or reorganization or otherwise (and thus the ability of United's shareholders to
benefit indirectly from such distribution) would be subject to the prior claims
of creditors of that subsidiary, except to the extent that United itself may be
a creditor of that subsidiary with recognized claims. Claims on United's
subsidiaries by creditors other than United will include substantial obligations
with respect to deposit liabilities, borrowed funds and purchased funds.
Each share of United Common Stock has the same relative rights
and is identical in all respects with each other share of United Common Stock.
The United Common Stock is not subject to call for redemption and, upon receipt
by United of the shares of Fed One Common Stock surrendered in exchange for
United Common Stock, each share of United Common Stock offered hereby will be
fully paid and non-assessable.
VOTING RIGHTS
The holders of United Common Stock possess exclusive voting
rights in United. Each holder of United Common Stock is entitled to one vote for
each share held on all matters voted upon by shareholders, and shareholders are
permitted to cumulate votes in elections of directors.
DIVIDENDS
The holders of the United Common Stock are entitled to such
dividends as may be declared from time to time by the United Board out of funds
legally available therefor.
PREEMPTIVE RIGHTS
Holders of United Common Stock do not have any preemptive
rights with respect to any shares which may be issued by United in the future.
Thus, United may sell shares of United Common Stock without first offering them
to the then holders of the United Common Stock.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of
United, the holders of the United Common Stock would be entitled to receive,
after payment of all debts and liabilities of United, all assets of United
available for distribution.
ISSUANCE OF STOCK
The United Articles authorize the United Board to issue
authorized shares of United Common Stock and any other securities without
shareholder approval. However, United Common Stock is listed on the Nasdaq Stock
Market, which requires shareholder approval of the issuance of additional shares
of United Common Stock under certain circumstances.
49
<PAGE>
CERTAIN DIFFERENCES IN THE RIGHTS OF UNITED
SHAREHOLDERS AND FED ONE SHAREHOLDERS
At the Effective Time, Fed One shareholders automatically will
become shareholders of United, and their rights as shareholders will be
determined by the United Articles, the United Bylaws and the WVCA, instead of by
the certificate of incorporation and bylaws of Fed One (the "Fed One
Certificate" and the "Fed One Bylaws") and the DGCL. The following is a summary
of the material differences in the rights of shareholders of United and Fed One.
This summary is necessarily general and does not purport to be a complete
discussion of, and is qualified in its entirety by reference to, the DGCL, the
WVCA and the articles of incorporation and bylaws of each corporation.
AUTHORIZED CAPITAL STOCK
Fed One. The Fed One Certificate authorizes the issuance of up
to 15,000,000 shares of common stock, par value $0.10 per share, and up to
5,000,000 shares of preferred stock, par value $0.10 per share (the "Fed One
Preferred Stock"). As of the Fed One Record Date, there were 2,401,540 shares of
Fed One Common Stock and no shares of Fed One Preferred Stock issued and
outstanding.
United. United's authorized capital stock is set forth under
"Description of United Capital Stock -- General."
VOTING RIGHTS
Fed One. The holders of Fed One Common Stock are entitled to
one vote per share on all matters submitted to a vote of the shareholders and
may not cumulate their votes for the election of directors. Subject to the
voting rights of the holders of Fed One Preferred Stock, if any, the exclusive
voting power for all purposes is vested in the holders of the Fed One Common
Stock.
United. Each share of United Common Stock is entitled to one
vote per share on all matters properly presented at meetings of shareholders of
United. Pursuant to the WVCA and the West Virginia Constitution, holders of
United Common Stock have cumulative voting rights in elections of directors.
Cumulative voting enables each shareholder to give one nominee for director as
many votes as is equal to the total number of nominees multiplied by the number
of shares voted, or to distribute such votes on the same basis among two or more
nominees.
DIVIDENDS AND OTHER DISTRIBUTIONS
Fed One. The holders of Fed One Common Stock are entitled to
receive dividends when and as declared by the Fed One Board out of funds legally
available therefor. The DGCL generally provides that dividends may be declared
from a corporation's surplus or, if there is no surplus, from its net profits
for the fiscal year in which the dividend is declared and/or the preceding
fiscal year.
United. The WVCA generally provides that United may pay
dividends in cash or property out of unreserved and unrestricted earned surplus.
Only under certain very limited circumstances may United distribute from capital
surplus.
DIRECTOR CONFLICT OF INTEREST TRANSACTIONS
Fed One. Director conflicts of interest are governed by the
DGLA, which provides that no contract or other transaction between Fed One and
one or more of its directors, or between Fed One and (i) an entity in which one
or more of its directors are financially interested or (ii) an entity in which
one or more of its directors serves as director, officer or trustee, will be
voidable simply because of the relationship, as long as (i) certain disclosures
as to the relationships have been made to those voting on the contract or
transactions, or (ii) the contract or transaction is fair to Fed One.
United. Director conflicts of interest are governed by the
WVCA, which provides that no contract or other transaction between United and
one or more of its directors, or between United and an entity in which one or
more of its directors are financially interested, will be void and voidable
simply because of the relationship or because such directors may be present at a
meeting of the United Board which authorizes such contract or transaction, as
long as (i) certain disclosures as to the relationships have been made to those
voting on the contract or transactions and there is a sufficient vote
50
<PAGE>
to approve the same without the vote of the interested director or directors, or
(ii) the contract or transaction is fair and reasonable to United.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
Fed One. The DGCL and the Fed One Certificate provide that no
amendment of the Fed One Certificate may be made unless it is first approved by
the Board of Directors of Fed One and thereafter is approved by the holders of a
majority of the shares of Fed One entitled to vote generally in an election of
directors, voting together as a single class. The Fed One Bylaws may be amended
by a majority vote of the Fed One Board of Directors or by the affirmative vote
of the holders of a majority of the votes cast by shareholders of Fed One at a
meeting of shareholders.
United. Pursuant to the WVCA, the United Articles may be
amended, following approval of the amendment by the United Board, by the
affirmative vote of the holders of a majority of the United Common Stock
entitled to vote thereon. The United Bylaws may be amended by the majority of
the United Board voting at a duly called meeting at which a quorum is present.
Such amendment is subject to repeal or change by the affirmative vote of the
holders of a majority of the outstanding United Common Stock.
SPECIAL MEETINGS OF SHAREHOLDERS
Fed One. A special meeting of the shareholders of Fed One may
be called by the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of the directors then in office.
United. The United Bylaws provide that special meetings of
United shareholders may be called by the United Board, the Chairman, the
President, or the holders of not less than 10% of the United Common Stock
outstanding.
NUMBER OF DIRECTORS, CLASSIFIED BOARD OF DIRECTORS
Fed One. The Fed One Certificate and Bylaws provide for a
classified board of directors of seven (7) to fifteen (15) directors. The Fed
One Board currently has ten directors. The Fed One Bylaws state that the Fed One
Board shall be divided into three classes to serve staggered three-year terms.
The effect of Fed One's having a classified board of directors is that
approximately only one-third of the members of the Fed One Board are elected
each year. Consequently, two annual meetings are effectively required for Fed
One's shareholders to change a majority of the members of the Fed One Board.
United. The United Bylaws provide that the number of directors
shall be not less than five nor more than 35. The United Bylaws also provide
that the number may be increased or decreased by an amendment to the bylaws. The
United Board has fixed the number at 21 directors. The United Board is not a
classified board, meaning that all members of the United Board are elected
annually. Consequently, a majority of the members of the United Board could be
changed at one annual meeting.
DIRECTOR VACANCIES AND REMOVAL OF DIRECTORS
Fed One. Any vacancy occurring on the Fed One Board, including
a vacancy resulting from an increase in the number of directors, must be filled
by the affirmative vote of a majority of the remaining directors, though less
than a quorum of the Fed One Board. A director elected to fill a vacancy is
elected for the unexpired term of his predecessor in office.
The Fed One Certificate provides that any director may be
removed for cause by the holders of a majority of the outstanding voting shares
of Fed One.
United. The United Bylaws provide that any vacancy occurring
in the board of directors, including any vacancy created by reason of an
increase in the number of directors, shall be filled by a majority vote of the
directors then in office, whether or not a quorum is present, and any director
so chosen shall hold office for the remainder of the term to which the director
has been selected and until his or her successor shall have been elected and
qualified.
Removal of directors is governed by the WVCA, which provides
that one or more directors, or the entire board, may be removed, with or without
cause, by the shareholders at a meeting called for that purpose by a vote of the
holders of a majority of the shares then entitled to vote at an election of
directors.
51
<PAGE>
RESTRICTIONS ON CERTAIN BUSINESS COMBINATIONS
Fed One. The DGCL requires the approval of the Board of
Directors and the holders of a majority of the outstanding stock of Fed One
entitled to vote thereon for mergers or consolidations, and for sales, leases or
exchanges of all or substantially all of Fed One's assets. The DGCL permits Fed
One to merge with another corporation without obtaining the approval of Fed
One's shareholders if: (i) Fed One is the surviving corporation of the merger;
(ii) the merger agreement does not amend the Fed One Certificate; (iii) each
share of Fed One's stock outstanding immediately prior to the effective date of
the merger is to be an identical outstanding or treasury share of Fed One after
the merger; and (iv) any authorized but unissued shares or treasury shares of
common stock to be issued or delivered under the plan of merger plus those
initially issuable upon conversion of any other securities or obligations to be
issued or delivered under such plan do not exceed 20% of the shares of the
common stock outstanding immediately prior to the effective date of the merger.
Section 203 of the of the DGCL prohibits certain "business
combinations" (including a merger, consolidation, share exchange or, in certain
circumstances, an asset transfer, guaranty or issuance or reclassification of
equity securities) between a Delaware corporation and certain "Interested
Shareholders" (generally beneficial owners of 15% or more of the voting stock.
Such business combinations are prohibited for three years after the date on
which the Interested Shareholder became an Interested Shareholder unless such
transaction is approved by the affirmative vote of a majority of the
disinterested directors; or upon such transaction, the Interested Shareholder
owned at least 85% of the voting stock; or subsequent to such transaction the
business combination is approved by the board of directors and by the holders of
a least two thirds of the voting stock not owned by the Interested Shareholder.
A Delaware corporation may adopt an amendment to its charter
or bylaws electing not to be subject to the special voting requirements of the
foregoing legislation. Any such amendment would have to be approved at the
affirmative vote of the holders of at least a majority of the shares entitled to
vote that are not owned by an Interested Shareholder. Fed One has not adopted
such an amendment.
United. The WVCA requires the approval of the board of
directors and the holders of a majority of the outstanding stock of United
entitled to vote thereon for mergers, consolidations, and sales, leases,
exchanges, or other dispositions of all or substantially all the assets of
United.
INDEMNIFICATION, LIMITATION ON LIABILITY
Fed One. The Fed One Certificate provides that the personal
liability of the directors and officers of Fed One for monetary damages shall be
eliminated to the fullest extent permitted by the DGCL as it exists on the
effective date of the Fed One Certificate or as such law may be thereafter in
effect. Section 102(b)(7) of the DGCL currently provides that directors (but not
officers) of corporations that have adopted such a provision will not be so
liable, except (i) for any breach of the director's duty of loyalty to the
corporation or its shareholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) for the
payment of certain unlawful dividends and the making of certain stock purchases
or redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. This provision would absolve directors of personal
liability for negligence in the performance of their duties, including gross
negligence. It would not permit a director to be exculpated, however, for
liability for actions involving conflicts of interest or breaches of the
traditional "duty of loyalty" to Fed One and its shareholders, and it would not
affect the availability of injunctive or other equitable relief as a remedy.
The Fed One Bylaws provide that Fed One shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer or employee of Fed One or any predecessor
of the company, or is or was serving at the request of Fed One or any
predecessor of the company as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines, excise taxes and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding to the fullest extent authorized by Section
145(a)-(d) of the DGCL, provided that Fed One shall not be liable for any
amounts which may be due in connection with a settlement of any action, suit or
proceeding effected without its prior written consent or any action, suit or
proceeding initiated by any person seeking indemnification thereunder without
its prior written consent. Under Section 145(a)-(d) of the DGCL as currently in
effect, other than in actions brought by or in the right of Fed One, such
indemnification would apply if it was determined in the specific case that the
proposed indemnitee acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of Fed One and, with
respect to any criminal proceeding, if he or she had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of Fed One,
52
<PAGE>
such indemnification would probably be limited to reasonable expenses (including
attorneys' fees), and would apply if it were determined in the specific case
that the proposed indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of Fed One,
except that no indemnification may be made with respect to any claim, issue or
matter as to which such person is adjudged liable to Fed One unless, and only to
the extent that, the Delaware Court of Chancery or the court in which that
action was brought determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper. To the extent
that any director, officer, employee or agent of Fed One has been successful on
the merits or otherwise in defense of any proceeding, he or she must be
indemnified against reasonable expenses incurred by him or her in connection
therewith. The Fed One Bylaws also provide that reasonable expenses (including
attorneys' fees) incurred by a director, officer or employee of Fed One in
defending any civil, criminal, administrative or investigative action, suit or
proceeding described above shall be paid by Fed One in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors upon receipt of an undertaking by or on behalf of such person to repay
such amount if it shall ultimately be determined that the person is not entitled
to be indemnified by Fed One.
United. The United Articles provide that, in addition to any
other rights to which a director may be entitled by law, a director or officer
of United shall be indemnified by United for liabilities and expenses, except
such liabilities and expenses incurred because of such person's gross negligence
or willful misconduct in the performance of a duty to United.
DISSENTERS' RIGHTS
Fed One. Pursuant to the DGCL, a shareholder of a Delaware
corporation generally has the right to dissent from any merger or consolidation
involving the corporation or sale of all or substantially all of the
corporation's assets, subject to specified procedural requirements. However, no
such appraisal rights are available for the shares of any class or series of a
corporation's capital stock if (i) as of the record date fixed to determine the
shareholders entitled to receive notice of and to vote at the meeting of
shareholders to act upon the agreement of merger or consolidation, such shares
were either listed on a national securities exchange or held of record by more
than 2,000 shareholders, or (ii) the corporation is the surviving corporation of
a merger and the merger did not require the approval of the corporation's
shareholders, unless in either case, the holders of such stock are required by
an agreement of merger or consolidation to accept for that stock something other
than: (a) shares of stock of the corporation surviving or resulting from the
merger or consolidation; (b) shares of stock of any other corporation that, at
the effective date of the merger, will be listed on a national securities
exchange or held of record by more than 2,000 shareholders; (c) cash in lieu of
fractional shares of a corporation described in clause (a) or (b) above; or (d)
any combination of the shares of stock and cash in lieu of fractional shares
described in clauses (a) through (c) above.
United. Under the WVCA, a shareholder of a West Virginia
corporation has the right to dissent from any merger, consolidation or sale of
substantially all of the corporation's assets to which the corporation is a
party.
SHAREHOLDER INSPECTION RIGHTS; SHAREHOLDER LISTS
FED ONE. The DGCL permits any Fed One shareholder, upon
written demand under oath to inspect and copy certain listed materials,
including the articles of incorporation, the bylaws and, stock ledger,
shareholder lists. Legal reminders are available if a demand for such inspection
is denied or not replied to within five business days.
United. The United Bylaws provide that its books and records
may be examined at any time by any director, any committee of the shareholders
appointed by the shareholders for that purpose or by the holders of one-tenth of
the United Common Stock outstanding. The WVCA provides that any shareholder,
after having been a shareholder for six months, or the owner of five percent of
United Common Stock, without regard to the length of ownership, may, upon
written demand, for any proper purpose, inspect the relevant books and records
and make extracts therefrom. The WVCA also affords legal remedies to a
shareholder improperly denied access, including a penalty equal to ten percent
of the value of the shares held by the shareholder.
53
<PAGE>
COMPARATIVE MARKET PRICES AND DIVIDENDS
UNITED
United Common Stock is traded on the Nasdaq Stock Market under
the symbol "UBSI." The following table sets forth, for the indicated periods,
the high and low closing sale prices for United Common Stock as reported by the
Nasdaq Stock Market, and the cash dividends declared per share of United Common
Stock for the indicated periods.
PRICE RANGE
----------- CASH DIVIDENDS
QUARTER HIGH LOW DECLARED PER SHARE
- ------- ---- --- ------------------
1995:
First..............................$13.00 $11.63 $0.145
Second.............................$13.88 $12.63 $0.145
Third..............................$15.25 $13.13 $0.145
Fourth.............................$15.50 $14.50 $0.150
1996:
First..............................$15.00 $14.25 $0.150
Second.............................$14.88 $13.38 $0.155
Third..............................$15.13 $13.13 $0.155
Fourth.............................$16.50 $14.63 $0.160
1997:
First..............................$17.44 $16.13 $0.165
Second.............................$21.25 $17.19 $0.165
Third..............................$23.63 $19.13 $0.170
Fourth.............................$24.38 $21.80 $0.175
1998:
First..............................$26.19 $22.75 $0.175
Second.............................$34.13 $23.38 $0.180
Third (through July 29, 1998)......$31.00 $28.63 --
- -----------
(1) In November 1997, United declared a two-for-one stock split effected in the
form of a 100% stock dividend, distributed March 27, 1998, to shareholders of
record as of March 13, 1998.
On February 17, 1998, the last business day prior to the
public announcement of the Merger, the closing price per share of United Common
Stock on the Nasdaq Stock Market was $24.31. Past price performance is not
necessarily indicative of likely future stock performance. Shareholders are
urged to obtain current market quotations for shares of United Common Stock.
54
<PAGE>
COMPARATIVE MARKET PRICES AND DIVIDENDS
FED ONE
Fed One Common Stock is traded on the Nasdaq Stock Market
under the symbol "FOBC" The following table sets forth, for the indicated
periods, the high and low closing sale prices for Fed One Common Stock as
reported in the Nasdaq Stock Market, and the cash dividends declared per share
of Fed One Common Stock for the indicated periods.
PRICE RANGE
----------- CASH DIVIDENDS
QUARTER HIGH LOW DECLARED PER SHARE
- ------- ---- --- ------------------
1995:
First............................$13.00 $10.50 $0.125
Second...........................$14.50 $12.50 $0.125
Third............................$15.75 $13.13 $0.135
Fourth...........................$15.75 $14.25 $0.135
1996:
First............................$16.25 $14.25 $0.135
Second...........................$15.63 $14.50 $0.135
Third............................$16.00 $13.00 $0.145
Fourth...........................$16.63 $15.38 $0.145
1997:
First............................$20.00 $15.75 $0.145
Second...........................$21.25 $17.50 $0.145
Third............................$27.25 $20.00 $0.155
Fourth...........................$28.00 $24.00 $0.155
1998:
First............................$37.50 $27.75 $0.155
Second...........................$45.50 $36.00 $0.155
Third (through July 29, 1998)....$45.25 $41.50 --
On February 17, 1998, the last business day prior to the
public announcement of the Merger, the closing price per share of Fed One Common
Stock on the Nasdaq Stock Market was $33.50. Past price performance is not
necessarily indicative of likely future stock performance. Shareholders are
urged to obtain current market quotations for shares of Fed One Common Stock.
55
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF FED ONE
The following table includes, as of the Fed One Record Date,
certain information as to the Fed One Common Stock beneficially owned by (i) the
only persons or entities, including any "group" as that term is used in Section
13(d)(3) of the Exchange Act, who or which was known to Fed One to be the
beneficial owner of more than 5% of the issued and outstanding Fed One Common
Stock, (ii) the directors of Fed One and (iii) all directors and executive
officers of Fed One and Fed One Bank as a group.
Fed One Common Stock
Name of Beneficially Owned as of
Beneficial Owner August 4, 1998(1)
- ---------------- ------------------------
No. %
--- -
United Bankshares, Inc. 493,800(2) 17.2%
300 United Center
500 Virginia Street, East
Charleston, West Virginia 25301
Directors:
Danny C. Aderholt 24,905(3) 1.0%
George J. Anetakis 21,767(4) 0.9%
Dudley E. Beck 22,188(5) 0.9%
Alan E. Groover 103,001(6) 4.2%
Gilbert R. Haller 36,660(7) 1.5%
George Margaretes 7,174(8) 0.3%
Louis Salvatori 43,632(9) 1.8%
William Salvatori 44,324(10) 1.8%
Paul R. Turner 1,677(11) 0.1%
Gareth F. Vorhees 4,662(12) 0.2%
All directors and executive officers 375,384(13) 15.0%
of Fed One and Fed One Bank as a
group (12 persons)
- ----------------
(1) For purposes of this table, pursuant to rules promulgated under the
1934 Act, an individual is considered to beneficially own shares of
Common Stock if he or she directly or indirectly has or shares (1)
voting power, which includes the power to vote or to direct the voting
of the shares; or (2) investment power, which includes the power to
dispose or direct the disposition of the shares. Unless otherwise
indicated, a director has sole voting power and sole investment power
with respect to the indicated shares. Shares which are subject to stock
options which are exercisable within 60 days of the Fed One Record Date
are deemed to be outstanding for the purpose of computing the
percentages of Fed One Common Stock beneficially owned by the
respective individuals and group.
(2) Includes 474,800 shares which may be acquired upon the occurrence of
certain triggering events pursuant a Stock Option Agreement dated
February 18, 1998 entered into between United and Fed One in connection
with an Agreement and Plan of Merger dated February 18, 1998 entered
into by the parties pursuant to which Fed One will be acquired by
United.
(3) Includes 3,224 shares which may be acquired upon the exercise of stock
options exercisable within 60 days of the Fed One Record Date.
56
<PAGE>
(4) Includes 2,177 shares held jointly with Mr. Anetakis' wife, with whom
voting and dispositive power is shared, and 3,868 shares which may be
acquired upon the exercise of stock options exercisable within 60 days
of the Fed One Record Date. Also includes 1,661 shares held by Mr.
Anetakis' wife; Mr. Anetakis disclaims beneficial ownership of such
shares.
(5) Includes 4,192 shares which may be acquired upon the exercise of stock
options exercisable within 60 days of the Fed One Record Date. Also
includes 4,406 shares held by Mr. Beck's wife; Mr. Beck disclaims
beneficial ownership of such shares.
(6) Includes 46,300 shares held jointly with Mr. Groover's wife, with whom
voting and dispositive power is shared, 31,351 shares which may be
acquired upon the exercise of stock options exercisable within 60 days
of the Fed One Record Date, 6,449 shares held in a Recognition and
Retention Plan and Trust of Fed One ("RRP"), which may be voted by him
pending vesting and distribution and 1,947 shares allocated to Mr.
Groover's account in Fed One's Employee Stock Ownership Plan ("ESOP").
Also includes 7,314 shares held by Mr. Groover's wife, who is an
employee of the Bank, exercisable stock options held by Ms. Groover to
purchase 2,288 shares, 645 shares held for Ms. Groover's account in the
RRP and 392 shares allocated to Ms. Groover's account in the ESOP. Mr.
Groover disclaims beneficial ownership of the shares held by his wife.
(7) Includes 21,607 shares held jointly with Mr. Haller's wife, with whom
voting and dispositive power is shared and 6,769 shares which may be
acquired upon the exercise of stock options exercisable within 60 days
of the Fed One Record Date. Also includes 4,132 shares held by Mr.
Haller's wife; Mr. Haller disclaims beneficial ownership of such
shares.
(8) Includes 1,161 shares which may be acquired upon the exercise of stock
options exercisable within 60 days of the Fed One Record Date.
(9) Includes 38,484 shares held jointly with Mr. Salvatori's wife and
children, with whom voting and dispositive power is shared, and 5,148
shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Fed One Record Date.
(10) Includes 13,416 shares held jointly with Mr. Salvatori's father, spouse
or brother, with whom voting and dispositive power is shared, 2,692
shares held in a partnership that Mr. Salvatori is a partner, 15,455
shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Fed One Record Date, 2,960 shares
held in the RRP, which may be voted by him pending vesting and
distribution, 1,162 shares allocated to Mr. Salvatori's account in the
ESOP and 832 shares held by Mr. Salvatori's children.
(11) Includes 1,177 shares held jointly with Mr. Turner's wife, with whom
voting and dispositive power is shared, and 500 shares which may be
acquired upon the exercise of stock options exercisable within 60 days
of the Fed One Record Date.
(12) Includes 1,423 shares which may be acquired upon the exercise of stock
options exercisable within 60 days of the Fed One Record Date.
(13) Includes 115,037 shares which may be acquired by all directors and
executive officers as a group upon the exercise of stock options
exercisable within 60 days of the Fed One Record Date, 15,974 shares
held in the RRP on behalf of all directors and executive officers as a
group, which may be voted by such individuals pending vesting and
distribution and 6,131 shares held in the ESOP for the account of all
directors and executive officers as a group.
57
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF UNITED
PRINCIPAL BENEFICIAL OWNERS
The following table lists each shareholder of United who is the
beneficial owner of more than 5% of United's common stock, the only class of
stock outstanding, as of June 1, 1998.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Title of Class Name and Address of Beneficial Owner Beneficial Ownership Class
- ------------------ ------------------------------------ -------------------- ----------
<S><C>
Common Stock United National Bank Trust Department (1) 3,473,382 8.78%
514 Market Street, Parkersburg, WV 26101
(3,473,382 Shares or 8.78% are registered
under the nominee name of Parbanc Co.)
</TABLE>
(1) United National Bank ("UNB") is a wholly-owned subsidiary of United
and its Trust Department holds in fiduciary capacity or agency capacity,
3,473,382 shares of United's common stock. The voting and investment authority
for the shares held by the Trust Department is exercised by UNB's Board of
Directors.
SHARES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
Share ownership of United's directors is set forth below as of June 1,
1998. Directors have sole voting and investment authority of directly owned
shares. The total of directly owned shares also includes stock options granted
to executive officers and certain directors pursuant to incentive stock option
plans. For two of the directors who are executive officers, direct ownership
includes options to purchase shares as follows: Richard M. Adams, 192,856
shares; and Bernard H. Clineburg, 46,623 shares. For three of the directors who
are not executive officers, direct ownership includes options to purchase shares
as follows: C. Barrie Cook, 4,294 shares; William A. Hazel; 1,742 shares; and
I.N. Smith, Jr., 21,012 shares. The options to purchase shares included in the
direct ownership of all executive officers and directors as a group total
526,035. Indirect shares for each individual director include those owned by
spouses and immediate family members, unless otherwise indicated. These shares
do not include the Trust Shares defined below in footnote 16.
58
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent
Directors and Executive Officers Beneficial Ownership (1) of Class
-------------------------------- ------------------------ --------
<S><C>
Richard M. Adams 696,763 (2) 1.76%
Robert G. Astorg 26,620 (3) *
Thomas J. Blair, III 245,830 (4) *
Harry L. Buch 12,126 *
W. Gaston Caperton 23,084 (5) *
Bernard H. Clineburg 129,227 (6) *
C. Barrie Cook 91,737 (7) *
H. Smoot Fahlgren 303,984 *
Theodore J. Georgelas 87,914 *
F. T. Graff 10,000 (8) *
William A. Hazel 62,244 *
Russell L. Isaacs 41,916 *
Arthur Kellar 100,700 (9) *
John M. McMahon 239,025 *
G. Ogden Nutting 652,656 (10) 1.65%
William C. Pitt 10,000 *
I.N. Smith, Jr. 471,014 (11) 1.19%
William A. Thornhill, III 449,454 (12) 1.14%
William W. Wagner 504,000 (13) 1.27%
P. Clinton Winter, Jr. 374,954 (14) *
James W. Word, Jr. 123,102 (15) *
Directors and Executive Officers
as a group (26 persons) 5,153,503 13.03%
</TABLE>
- ----------------
* Represents less than 1% of the outstanding shares of United Common Stock.
(1) In calculating the number of shares of United Common Stock which are
beneficially owned (and thus the percentage of United Common Stock
beneficially owned), a person is deemed to own United Common Stock if
that person has the right to acquire beneficial ownership of United
Common Stock within sixty (60) days through the exercise of any option,
warrant or right, or through the conversion of any security.
(2) Mr. R. Adams owns 512,590 shares of United Common Stock directly and
184,173 indirectly. Of the 184,173 shares indirectly owned by Mr.
Adams, 51,180 shares in the Stevenson Trust over which he exercises
voting power, 71,661 shares owned by the members of his immediate
family and 61,322 shares are held in two family trusts over which he
exercises voting power but no investment authority. Messrs. Richard M.
Adams and Douglass H. Adams, who is an executive officer of United, are
brothers.
(3) Mr. Astorg owns 25,149 of United Common Stock directly and 1,471 shares
indirectly.
(4) Mr. Blair owns 234,490 shares of United Common Stock directly and
11,340 shares indirectly.
(5) Mr. Caperton owns 23,084 shares of United Common Stock indirectly in
shares owned by members of his immediate family over which he exercises
voting power.
(6) Mr. Clineburg owns 129,227 shares of United Common Stock directly of
which 82,604 shares are owned jointly with Mr. Clineburg's wife.
(7) Mr. Cook owns 62,653 shares of United Common Stock directly and 29,084
indirectly. Of the 29,084 shares indirectly owned by Mr. Cook, 28,687
shares are held individually by Mr. Cook's wife and 397 shares are held
by Fairfax Pathology Associates, Ltd. Retirement Account for the
benefit of Mr. Cook.
59
<PAGE>
(8) Mr. Graff owns 4,000 shares of United Common Stock directly and 6,000
shares indirectly. The indirectly owned shares are held by a bank in a
trustee account for Mr. Graff over which he exercises voting and
dispositive power.
(9) Mr. Kellar owns 66,947 shares of United Common Stock directly and
33,753 shares indirectly. The indirect shares are held individually by
Mr. Kellar's wife.
(10) Mr. Nutting owns 652,656 shares of United Common Stock indirectly. The
voting and investment authority for the indirectly owned shares of Mr.
Nutting are as follows: he has beneficial ownership, through shared
investment or voting authority of 652,656 shares consisting of 41,904
shares held by Mr. Nutting as co-trustee, and 554,752 shares registered
in the name of The Ogden Newspapers, Inc. of which Mr. Nutting is
President. He is also a settlor and sole beneficiary of a trust which
contains 56,000 shares.
(11) Mr. Smith owns 28,314 shares of United Common Stock directly and
442,700 indirectly. Of the 442,700 indirectly owned beneficially by Mr.
Smith, 10,550 shares are owned by members of his immediate family and
29,150 shares are owned by the mother of Mr. Smith over which he has
the power of attorney. The following shares owned of record by others
may be deemed to be owned by Mr. Smith under the rules and regulations
of the Commission: Kanawha City Company 30,000 shares; Kanawha Company
112,000 shares; Roane Land Company, 1,000 shares; Roxalana Land Company
150,000 shares; and West Virginia Coal Land Company 110,000 shares.
(12) Mr. Thornhill owns 263,394 shares of United Common Stock directly and
186,060 shares indirectly.
(13) Mr. Wagner owns 504,000 shares of United Common Stock directly. Mr.
Wagner is a director of three companies, W.W. McDonald Land Company,
Bruce McDonald Holding Company and Triadelphia Land Company, that have
common boards of directors and common management officials. These
entities own a total of approximately 383,796 shares which represents
less than one percent of the outstanding shares of United Common Stock.
(14) Mr. Winter owns 251,930 shares of United Common Stock directly and
123,024 shares indirectly. Of the 123,024 shares indirectly owned by
Mr. Winter, 86,224 shares are held in trusts for Mr. Winter's mother
and children for which Mr. Winter acts as executor and 36,800 shares
are held by a company which Mr. Winter serves as President. Mr. Winter
is a director of three companies, W.W. McDonald Land Company, Bruce
McDonald Holding Company and Triadelphia Land Company, that have common
boards of directors and common management officials. These entities own
a total of approximately 383,796 shares which represents less than one
percent of the outstanding shares of United Common Stock.
(15) Mr. Word owns 63,486 shares of United Common Stock directly and 59,616
shares indirectly.
(16) All directors and executive officers of United as a group, 26 persons,
own 3,344,885 shares of United Common Stock directly and 1,808,618
shares indirectly. Not included in indirect owned shares are 3,473,382
shares of United Common Stock held by UNB's Trust Department serving in
a fiduciary or agency capacity (the "Trust Shares"). The voting and
investment authority for the Trust Shares held by the Trust Department
is exercised by UNB's Board of Directors. The members of UNB's Board of
Directors who are also directors or executive officers of United are:
Richard M. Adams, and Gary L. Ellis.
60
<PAGE>
EXPERTS
The consolidated financial statements of United as of December
31, 1997 and 1996 and for each of the three years and the period ended December
31, 1997, included in Form 8-K dated August 3, 1998, and incorporated by
reference in this Joint Proxy Statement/Prospectus and in the Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon, included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Fed One and
subsidiary as of December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997, appearing in the 1997 Annual Report
of Fed One to its shareholders and incorporated by reference in the Annual
Report on Form 10-K for the year ended December 31, 1997 have been incorporated
by reference in the Joint Proxy Statement/Prospectus and in the Registration
Statement of which this Joint Proxy Statement/Prospectus forms a part, in
reliance upon the report of KPMG Peat Marwick LLP, independent public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
VALIDITY OF UNITED COMMON STOCK
The validity of the shares of United Common Stock being
offered hereby will be passed upon for United by Bowles Rice McDavid Graff &
Love, Charleston, West Virginia. F. Thomas Graff, Jr., a member of Bowles Rice
McDavid Graff & Love, is a director of United.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, the
Fed One Board knows of no matters that will be presented for consideration at
the Special Meeting other than as described in this Joint Proxy
Statement/Prospectus. However, if any other matter shall properly come before
the Special Meeting or any adjournments or postponements thereof and shall be
voted upon, the proposed proxy will be deemed to confer authority to the
individuals named as authorized therein to vote the shares represented by such
proxy as to any such matters that fall within the purposes set forth in the
Notice of Special Meeting as determined by a majority of the Fed One Board,
provided, however, that no proxy which is voted against the proposal to approve
the Merger Agreement will be voted in favor of any adjournment or postponement.
As of the date of this Joint Proxy Statement/Prospectus, the
United Board knows of no matters that will be presented for consideration at the
Special Meeting other than as described in this Joint Proxy Statement/
Prospectus. However, if any other matter shall properly come before the Special
Meeting or any adjournments or postponements thereof and shall be voted upon,
the proposed proxy will be deemed to confer authority to the individuals named
as authorized therein to vote the shares represented by such proxy as to any
such matters that fall within the purposes set forth in the Notice of Special
Meeting as determined by a majority of the United Board, provided, however, that
no proxy which is voted against the proposal to approve the amendment of the
United Articles to increase the number of authorized shares of United Common
Stock from 41,000,000 to 100,000,000 shares will be voted in favor of any
adjournment or postponement.
SHAREHOLDER PROPOSALS
FED ONE
In the event that the Merger with United is not consummated,
any proposal which a shareholder wishes to have included in the proxy materials
of Fed One relating to the next annual meeting of shareholders of Fed One, which
is scheduled to be held in April, 1999, must be received at the principal
executive offices of Fed One, 21 Twelfth Street, Wheeling, West Virginia 26003,
Attention: Jean E. Huff, Corporate Secretary, no later than November 25, 1998.
If such proposal is in compliance with all of the requirements of Rule 14a-8
under the Exchange Act, it will be included in the proxy statement and set forth
on the form of proxy issued for such annual meeting of shareholders. It is urged
that any such proposals be sent certified mail, return receipt requested.
UNITED
United expects to hold its next annual meeting of shareholders
during May 1999. The deadline for any proposals of shareholders intended to be
presented at such meeting is November 14, 1998.
61
<PAGE>
[ Conformed Copy ] Appendix A
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
dated as of February 18, 1998
by and between
UNITED BANKSHARES, INC.
and
FED ONE BANCORP, INC.
- -------------------------------------------------------------------------------
A-1
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Certain Definitions
1.01 Certain Definitions..................................................1
ARTICLE II
The Merger
2.01 The Merger...........................................................7
2.02 Articles Amendment...................................................7
2.03 Effective Date and Effective Time....................................8
2.04 Closing..............................................................8
ARTICLE III
Consideration; Exchange Procedures
3.01 Merger Consideration.................................................8
3.02 Rights as Stockholders; Stock Transfers..............................9
3.03 Fractional Shares....................................................9
3.04 Exchange Procedures..................................................9
3.05 Anti-Dilution Provisions............................................10
3.06 Options.............................................................10
ARTICLE IV
Actions Pending Acquisition
4.01 Forebearances of Fed One............................................11
4.02 Forebearances of United.............................................14
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules................................................14
5.02 Standard............................................................15
A-i
<PAGE>
Page
----
5.03 Representations and Warranties of Fed One...........................15
5.04 Representations and Warranties of United............................25
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts.............................................32
6.02 Stockholder Approvals...............................................32
6.03 Registration Statement..............................................33
6.04 Press Releases......................................................34
6.05 Access; Information.................................................34
6.06 Acquisition Proposals...............................................35
6.07 Affiliate Agreements................................................35
6.08 Takeover Laws.......................................................35
6.09 Certain Policies....................................................36
6.10 NASDAQ Listing......................................................36
6.11 Regulatory Applications.............................................36
6.12 Indemnification.....................................................37
6.13 Benefit Plans and Arrangements......................................38
6.14 Notification of Certain Matters.....................................39
6.15 Dividend Coordination...............................................40
6.16 Directorship of United and Advisory Board of Directors..............40
6.17 Fed One Stock Issuance..............................................40
6.18 Bank Merger.........................................................40
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger..........41
7.02 Conditions to Obligation of Fed One.................................42
7.03 Conditions to Obligation of United..................................43
ARTICLE VIII
Termination
8.01 Termination.........................................................43
8.02 Effect of Termination and Abandonment...............................47
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ARTICLE IX
Miscellaneous
9.01 Survival............................................................47
9.02 Waiver; Amendment...................................................47
9.03 Counterparts........................................................47
9.04 Governing Law.......................................................47
9.05 Expenses............................................................48
9.06 Notices.............................................................48
9.07 Entire Understanding; No Third Party Beneficiaries..................49
9.08 Interpretation; Effect; Assignment; Successors......................49
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Fed One Affiliate Agreement
EXHIBIT C Form of United Affiliate Agreement
ANNEX A Form of Supplement for Merger Sub
Accession to Merger Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of February 18, 1998 (this
"Agreement"), by and between United Bankshares, Inc. ("United") and Fed One
Bancorp, Inc. ("Fed One").
RECITALS
A. United. United is a West Virginia corporation, having its principal
place of business in Charleston, West Virginia.
B. Fed One. Fed One is a Delaware corporation, having its principal
place of business in Wheeling, West Virginia.
C. Stock Option Agreement. As a condition and an inducement to United's
entering into this Agreement , Fed One has granted 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 Fed One 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 Fed One 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, Fed One or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
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"Articles Amendment" has the meaning set forth in Section 2.02.
"Bank Merger" has the meaning set forth in Section 6.18.
"Closing" has the meaning set forth in Section 2.04.
"Code" means the Internal Revenue Code of 1986, as amended.
"Costs" has the meaning set forth in Section 6.12(a).
"Delaware Secretary" means the Office of the Secretary of State of the
State of Delaware.
"DGCL" means the Delaware General Corporation Law.
"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.
"Fed One" has the meaning set forth in the preamble to this Agreement.
"Fed One Affiliate" has the meaning set forth in Section 6.07(a).
"Fed One Bank" means Fed One Bank, a federal savings bank.
"Fed One Board" means the Board of Directors of Fed One.
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"Fed One Bylaws" means the Bylaws of Fed One.
"Fed One Certificate" means the Certificate of Incorporation of Fed
One.
"Fed One Common Stock" means the common stock, par value $0.10 per
share, of Fed One.
"Fed One Compensation and Benefit Plans" has the meaning set forth in
Section 5.03(m).
"Fed One ESOP" means the Fed One Employee Stock Ownership Plan, as
amended.
"Fed One Meeting" has the meaning set forth in Section 6.02.
"Fed One Preferred Stock" means the preferred stock, par value $0.10
per share, of Fed One.
"Fed One Stock" means, collectively, Fed One Common Stock and Fed One
Preferred Stock.
"Fed One Stock Option" has the meaning set forth in Section 3.06(a).
"Fed One Stock Option Plans" means the following plans of Fed One: the
1995 Stock Option Plan, the 1992 Stock Option Plan for Officers and
Employees and the 1992 Stock Option Plan for Outside Directors.
"Fed One Stock Plans"means the following plans of Fed One: the Fed One
ESOP, the 1995 Recognition and Retention Plan and Trust, the 1992
Recognition and Retention Plan and Trust, the 1995 Stock Option Plan, the
1992 Stock Option Plan for Officers and Employees, the 1992 Stock Option
Plan for Outside Directors and the Dividend Reinvestment Plan.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"H-S-R Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Amount" has the meaning set forth in Section 6.12(b).
"Insurance Policy" has the meaning set forth in Section 5.03(t).
"IRS" means the Internal Revenue Service.
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
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"Material Adverse Effect" means, with respect to United or Fed One, 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 Fed One and its Subsidiaries taken as a whole, respectively, or (ii)
would materially impair the ability of either United or Fed One 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 or savings associations and their holding companies generally, (c)
actions or omissions of United or Fed One taken with the prior written
consent of Fed One and United, respectively, in contemplation of the
transaction contemplated hereby, (d) circumstances affecting banks or
savings associations or their holding companies generally and (e) the
effects of the Merger and compliance by either party with the provisions of
this Agreement on the financial position, results of operations or business
of such party and its Subsidiaries, or the other party and its
Subsidiaries, as the case may be.
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Merger Sub" means UBC Holding Company, Inc., or one or more
corporations or limited liability companies to be organized under the corporate
laws of a state of the United States by United prior to the Effective Time;
provided that the laws of the state of incorporation thereof shall permit the
merger of corporations or limited liability companies organized thereunder with
a Delaware corporation.
"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).
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"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.
"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.
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"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 Fed One Stock held by Fed One 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 Affiliates" has the meaning set forth in Section 6.07(a).
"United Articles" means the Restated Articles of Incorporation of
United.
"United Bank" means United National Bank, a national bank.
"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 Compensation and Benefit Plans" has the meaning set forth in
Section 5.04(m).
"United Meeting" has the meaning set forth in Section 6.02.
"United Stock Dividend" means the 100% stock dividend declared by
United payable March 27, 1998 to shareholders of record of United as of
March 13, 1998, subject to approval of an amendment to the United Articles
at a special meeting of United's shareholders to be held on March 9, 1998.
"West Virginia Secretary" means the Office of the Secretary of State of
the State of West Virginia.
"WVCA" means the West Virginia Corporation Act.
ARTICLE II
The Merger
2.01 The Merger. (a) Prior to the Effective Time, United shall take any
and all action necessary (i) to cause the Merger Sub to become a party to this
Agreement, to be evidenced by the execution by the Merger Sub of a supplement to
this Agreement in substantially the form of Annex A, and delivery thereof to Fed
One; and (ii) to cause the Merger Sub to take all actions necessary or
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proper to comply with the obligations of United and the Merger Sub to consummate
the transactions contemplated hereby.
(b) At the Effective Time, Fed One shall merge with and into Merger Sub
(the "Merger"), the separate corporate existence of Fed One shall cease and
Merger Sub shall survive and continue to be governed by the laws of its state of
incorporation (Merger Sub, 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 (i) change the method of effecting the combination
with Fed One (including, without limitation, the provisions of this Article II)
or (ii) change the method of effecting, or not consummate, the Bank Merger
pursuant to Section 6.18, in each case 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 Fed One Stock as provided for in this Agreement (the
"Merger Consider ation"), (ii) adversely affect the tax treatment of Fed One'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 Fed One written notice of such
change.
(c) 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 (i) in the office of the Delaware Secretary of a certificate of merger in
accordance with the DGCL and (ii) in the office of the West Virginia Secretary
of articles of merger in accordance with the WVCA or such later date and time as
may be set forth in such certificate of merger and articles of merger. The
Merger shall have the effects prescribed in the DGCL and the WVCA.
2.02 Articles Amendment. At or prior to the Effective Time, Article VI
of the United Articles shall be amended to read as follows (the "Articles
Amendment"):
"VI. The amount of the authorized capital stock of the
corporation is $250,000,000 which shall be divided into 100,000,000
shares of a par value of $2.50 per share."
2.03 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing), 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. The time on the Effective Date when
the Merger shall become effective is referred to as the "Effective Time."
2.04 Closing. A closing of the Merger (the "Closing") shall take place
at such place, at such time and on such date as is determined by the parties
pursuant to Section 2.03 hereof. At the
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Closing, there shall be delivered to United and Fed One the opinions,
certificates and other documents required to be delivered under Sections 7.02
and 7.03 hereof.
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 Fed One Common Stock. Each share, excluding Treasury
Stock, of Fed One Common Stock issued and outstanding immediately prior to
the Effective Time shall become and be converted into 0.75 of a share of
United Common Stock (subject to adjustment as set forth herein, the
"Exchange Ratio"). The Exchange Ratio shall be subject to adjustment as set
forth in Sections 3.05 and 8.01(f).
(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.
(c) Treasury Shares. Each share of Fed One 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 Fed One Stock shall cease to be, and shall have no rights as,
stockholders of Fed One, other than to receive any dividend or other
distribution with respect to such Fed One Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of Fed One or the Surviving Corporation of shares of Fed One 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 Fed One 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
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benefit of the holders of certificates formerly representing shares of Fed One
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 Fed One 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 Fed One
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 Fed One 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 Fed One 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 nor any
party hereto shall be liable to any former holder of Fed One Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(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 Fed One
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. 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 Fed One for six months after the Effective Time shall be paid to
United. Any stockholders of Fed One 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
Fed One Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
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3.05 Anti-Dilution Provisions. In the event United changes (or a record
date for any such change occurs prior to the Effective Date) the number of, or
provides for the exchange 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, including without limitation pursuant to the United Stock
Dividend (which shall result in an adjustment of the Exchange Ratio as of the
date hereof to 1.5), the Exchange Ratio shall be proportionately adjusted.
3.06 Options. (a) At the Effective Time, each outstanding option to
purchase shares of Fed One Common Stock under the Fed One Stock Option Plans
(each, a "Fed One 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 Fed One Stock Option, the number of shares of United Common Stock
equal to (a) the number of shares of Fed One Common Stock subject to the Fed One
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 down to the nearest whole cent) equal to (y) the per share exercise
price pursuant to such Fed One Stock Option divided by the Exchange Ratio.
Notwithstanding the foregoing, each Fed One 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.
Accordingly, with respect to "incentive stock options," fractional shares shall
be rounded down to the nearest whole number of shares and where necessary the
per share exercise price shall be rounded up to the nearest cent. At or prior to
the Effective Time, Fed One shall use its best efforts, including using its
reasonable best efforts to obtain any necessary consents from optionees, with
respect to the Fed One Stock Option Plans to permit the replacement of the
outstanding Fed One Stock Options by United pursuant to this Section and to
permit United to assume the Fed One Stock Option Plans. Fed One shall further
take all action necessary to amend the Fed One Stock Option Plans to eliminate
automatic grants or awards thereunder following the Effective Time. At the
Effective Time, United shall assume the Fed One Stock Option 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 Fed
One Stock Option Plans other than the Replacement Options and shall have no
obligation to make any additional grants or awards under such assumed Fed One
Stock Option 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 Fed One Stock Option Plans in
the manner contemplated by this Agreement and the instruments pursuant to which
such options were granted. United shall file with the SEC a registration
statement on an appropriate form under the Securities Act with respect to the
shares of United Common Stock subject to options to acquire United Common Stock
issued pursuant to Section 3.06(a) hereof, and shall use its reasonable best
efforts to maintain the current status of the prospectus contained therein, as
well as comply with any applicable state securities or "blue sky" laws, for so
long as such options remain outstanding.
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ARTICLE IV
Actions Pending Acquisition
4.01 Forebearances of Fed One. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of United, Fed One will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Fed One 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 Fed One'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 or pursuant to Fed One's Dividend
Reinvestment Plan (but only with respect to open market, non-discounted
purchases), (i) issue, sell or otherwise permit to become outstanding, or
authorize the creation of, any additional shares of Fed One Stock or any
Rights, (ii) enter into any agreement with respect to the foregoing, or
(iii) permit any additional shares of Fed One 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 Fed One Stock in an
amount not to exceed $0.155 per share with record and payment dates
consistent with past practice, and (B) dividends from wholly owned
Subsidiaries to Fed One or another wholly owned Subsidiary of Fed One) on
or in respect of, or declare or make any distribution on any shares of Fed
One 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 Fed One 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 as may
be required by applicable law) 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
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thereto, in respect of any director, officer or employee of Fed One 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 Fed One Certificate, Fed One Bylaws
or the certificate of incorporation or by-laws (or similar governing
documents) of any of Fed One'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.
(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 Fed One 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
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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 Fed One, 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.
(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 Fed One a schedule and Fed One has delivered to United a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate in relation to any or
all of its representations and 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
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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. Fed One'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 Fed One 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 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 Fed One. 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, Fed One
hereby represents and warrants to United:
(a) Organization, Standing and Authority. Fed One is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Fed One 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) Fed One Stock. As of the date hereof, the authorized capital stock
of Fed One consists solely of (i) 15,000,000 shares of Fed One Common
Stock, of which 2,375,556 shares were outstanding as of the date hereof,
and (ii) 5,000,000 shares of Fed One Preferred Stock, of which no shares
are outstanding. As of the date hereof, 443,206 shares of Fed One Common
Stock and no shares of Fed One Preferred Stock were held in treasury by Fed
One or otherwise owned by Fed One or its Subsidiaries ("Treasury Stock").
The outstanding shares of Fed One 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 Fed One Stock authorized and
reserved for issuance, Fed One does not have any Rights issued or
outstanding with respect to Fed One Stock, and Fed One does not have any
commitment to authorize, issue or sell any Fed One Stock or Rights, except
pursuant to this Agreement and the Stock Option Agreement. The number of
shares of Fed One Common Stock which are issuable and reserved for issuance
upon exercise of Fed One Stock Options as of the date hereof are Previously
Disclosed in Fed One's Disclosure Schedule. Fed One has Previously
Disclosed all purchases of Fed One Stock in the prior two years.
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(c) Subsidiaries. (i)(A) Fed One 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 Fed
One or its Subsidiaries are fully paid and nonassessable and are owned by
Fed One or its Subsidiaries free and clear of any Liens.
(ii) Fed One 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 Fed One'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 Fed One 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 Fed One 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 and adoption of this Agreement (including
the agreement of merger set forth herein) by the holders of more than a
majority of the outstanding shares of Fed One Common Stock entitled to vote
thereon pursuant to the DGCL (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 Fed One and the Fed One Board prior to the date hereof.
This Agreement is a valid and legally binding obligation of Fed One,
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). The
actions leading up to the entering into of this Agreement and the Stock
Option Agreement, the entering into of this Agreement and the Stock Option
Agreement, and the consummation of the transactions contemplated hereby and
thereby are not prohibited or in any way affected by the provisions of
Article 10 of the Fed One Certificate. The Fed One Board of Directors has
received the written opinion of Ryan, Beck & Co. to the effect that as of
the date
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hereof the consideration to be received by the holders of Fed One Common
Stock in the Merger is fair to the holders of Fed One 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 Fed One or any of its
Subsidiaries in connection with the execution, delivery or performance by
Fed One of this Agreement or the Stock Option Agreement or to consummate
the Merger except for (A) filings of applications or notices with federal
and state banking and thrift authorities, (B) filings with the SEC and
state securities authorities, (C) filings of applications or notices with
the U.S. Department of Justice and Federal Trade Commission pursuant to the
H-S-R Act, (D) the filing of the certificate of merger with the Delaware
Secretary pursuant to the DGCL and the filing of articles of merger with
the West Virginia Secretary pursuant to the WVCA, and (E) the adoption and
approval of this Agreement by the stockholders of Fed One. As of the date
hereof, Fed One 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 Fed One or of any of its Subsidiaries or to which Fed One or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Fed One Certificate or the
Fed One Bylaws 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)
Fed One'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, Fed One'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 Fed One and its
Subsidiaries as of its date, and each of the statements of income and
changes in stockholders'
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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 Fed One 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. Fed One's press release announcing its 1997 year
end results fairly presents the financial condition of Fed One as of
December 31, 1997 and the results of its operations for the year ended
December 31, 1997, in each case as determined in accordance with generally
accepted accounting principles.
(ii) Since December 31, 1997, Fed One and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice (excluding expenses incurred in connection
with this Agreement and the transactions contemplated hereby).
(iii) Since December 31, 1997, (A) Fed One 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 Fed One.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Fed One or any of its
Subsidiaries and, to Fed One's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Fed One 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 Thrift Supervision, the Board of Governors of the
Federal Reserve System and the Federal Deposit Insurance Corporation) or the
supervision or regulation of it or any of its Subsidiaries (collectively, the
"Regulatory Authorities").
(ii) Neither Fed One 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.
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<PAGE>
(j) Compliance with Laws. Each of Fed One 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
Fed One's 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 Fed
One or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces, (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to Fed One's knowledge, do any grounds
for any of the foregoing exist) or (C) as of the date hereof, failing
to approve any proposed acquisition, or stating its intention not to
approve acquisitions proposed to be effected by it within a certain
time period or indefinitely.
(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 Fed One 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 Fed One 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 Ryan, Beck & Co.
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(m) Employee Benefit Plans. (i) Fed One'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 Fed One or any of its Subsidiaries participates or to which
any such Employees, Consultants or Directors are a party (the "Fed One
Compensation and Benefit Plans"). Neither Fed One 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 Fed One 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,
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 Fed One 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 Fed One Compensation and Benefit Plan is exempt from tax under
Section 501(a) of the Code) from the IRS, and Fed One 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
Fed One, threatened legal action, suit or claim relating to the Fed One
Compensation and Benefit Plans. Neither Fed One nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action, with respect
to any Fed One Compensation and Benefit Plan that would reasonably be
expected to subject Fed One 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 Fed One 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 Fed One under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA Affiliate Plan"). None of Fed One, 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 Fed One Compensation and Benefit Plan or by any ERISA Affiliate
Plan within the 12-month period
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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 Fed One's knowledge, no condition exists that
presents a material risk that such proceedings will be instituted. To the
knowledge of Fed One, there is no pending investigation or enforcement
action by the PBGC, the U.S. Department of Labor (the "DOL") or IRS or any
other governmental agency with respect to any Fed One 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 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 Fed
One Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which Fed
One or any of its Subsidiaries is a party have been timely made or have
been reflected on Fed One'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 Fed One, 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 Fed One nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death benefits
under any Fed One Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code, and each such Fed One Compensation
and Benefit Plan may be amended or terminated without incurring liability
thereunder. There has been no communication to Employees by Fed One 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) Fed One and its Subsidiaries do not maintain any Fed One
Compensation and Benefit Plans covering foreign Employees.
(vii) With respect to each Fed One Compensation and Benefit Plan, if
applicable, Fed One has provided or made available to United, true and
complete copies of existing: (A) Fed One
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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) 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 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 Fed One Compensation and Benefit
Plan or (C) result in any material increase in benefits payable under any
Fed One Compensation and Benefit Plan.
(ix) Neither Fed One 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) 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, Fed One 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 Fed One 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 Fed One 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 Fed One 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 Fed One's knowledge, threatened, nor is Fed One 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. Fed One 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 (the "Covered Transactions") are exempt
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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 State of Delaware and Section 203 of the DGCL,
applicable to Fed One. Assuming the United Common Stock meets the
requirements set forth in Section 262(b)(2) of the DGCL, holders of Fed One
Common Stock do not have dissenters' rights in connection with the Merger.
(p) Environmental Matters. To Fed One's knowledge, neither the conduct
nor operation of Fed One 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 Fed One'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 Fed One's knowledge, neither Fed One nor any of its
Subsidiaries has received any notice from any person or entity that Fed One
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 Fed One 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 IRS 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 Fed One or its Subsidiaries. Fed One has made
available to United true and correct copies of the United States federal
income Tax Returns filed by Fed One and its Subsidiaries for each of the
three most recent fiscal years ended on or before December 31, 1996.
Neither Fed One 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 Fed One'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 Fed One's SEC
Documents filed on or prior to the date hereof. As of the date hereof,
neither Fed One nor any of its Subsidiaries has any 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.
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(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 Fed One's own account, or
for the account of one or more of Fed One's Subsidiaries or their customers
(all of which are listed on Fed One's Disclosure Schedule), were entered
into (i) in accordance with 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 Fed One 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 Fed One nor its Subsidiaries, nor to Fed One'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 Fed One 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. Fed One's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Fed One or its
Subsidiaries. Fed One and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Fed
One reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; Fed
One 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, assuming compliance by Fed One and United with the
requirements of Section 6.17 hereof.
(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 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 Fed One 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.
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(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 15,004,661 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 Fed One 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 by the holders of a majority of the
outstanding shares of United Common Stock entitled to vote thereon of the
Articles Amendment (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 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 and thrift authorities; (B) the adoption and approval by the
shareholders of United of the Articles Amendment as contemplated hereby;
(C) the filing and declaration of effectiveness of the Registration
Statement; (D) the filing of applications or notices with the U.S.
Department of Justice and Federal Trade Commission pursuant to the H-S-R
Act; (E) the filing of a certificate of merger with the Delaware
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Secretary pursuant to the DGCL and the filing of articles of merger
and the Articles Amendment with the West Virginia Secretary; (F) 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 (G) 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
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. United's press release announcing its
1997 year end results fairly presents the financial condition of United as
of December 31, 1997 and the results of its operations for the year ended
December 31, 1997, in each case as determined in accordance with generally
accepted accounting principles.
(ii) Since December 31, 1997, 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.
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(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 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, (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) or (C) as of the date hereof, failing
to approve any proposed acquisition, or stating its intention not to
approve acquisitions proposed to be effected by it within a certain
time period or indefinitely.
(j) Defaults. Neither United 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.
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(k) 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.
(l) Takeover Laws; Dissenters' Rights. 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. Holders of United Common Stock do not
have dissenters' rights in connection with the Articles Amendment.
(m) Employee Benefit Plans. (i) Each 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 Employees, Consultants or Directors of United or
any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (each, a "United 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, 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
United Compensation and Benefit Plan which is 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 United Compensation and Benefit Plan is exempt from tax
under Section 501(a) of the Code) from the IRS, and United 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
United, threatened legal action, suit or claim relating to the United
Compensation and Benefit Plans. Neither United nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action, with respect
to any United Compensation and Benefit Plan that would reasonably be
expected to subject United 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.
(ii) 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 United 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 ERISA Affiliate Plan. None of United, 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 United Compensation and Benefit Plan or by any ERISA
Affiliate Plan within the 12-month period
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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 United's knowledge, no condition exists that
presents a material risk that such proceedings will be instituted. To the
knowledge of United, there is no pending investigation or enforcement
action by the PBGC, the DOL or IRS or any other governmental agency with
respect to any United 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 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.
(iii) All contributions required to be made under the terms of any
United Compensation and Benefit Plan or ERISA Affiliate Plan or any
employee benefit arrangements under any collective bargaining agreement to
which United or any of its Subsidiaries is a party have been timely made or
have been reflected on United'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 United, 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.
(n) 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 Fed One'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.
(o) 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
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referred to in clause (i) have been paid in full, (iii) the Tax Returns
referred to in clause (i) have been examined by the IRS 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 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. As of the date hereof, neither United
nor any of its Subsidiaries has any 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.
(p) 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.
(q) Insurance. 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.
(r) 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.
(s) 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.
(t) Representations and Warranties of United with Respect to Merger
Subs. United represents and warrants to Fed One with respect to any Merger
Sub that executes the supplement attached to this Agreement as Annex A
that, at the time of such execution and as of the Effective Date:
(i) Organization, Standing and Authority. Each Merger Sub has been
duly organized and is validly existing in good standing under the laws of
the State 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.
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(ii) Power. Each Merger Sub has the power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby.
(iii) Authority. This Agreement and the transactions contemplated
hereby have been authorized by all requisite action on the part of each
Merger Sub and its respective shareholders or members. This Agreement is a
valid and legally binding agreement of each Merger Sub 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).
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Fed One 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, United agrees to use its reasonable
best efforts prior to the Effective Time to file the Articles Amendment and, if
necessary, organize one or more Merger Subs.
6.02 Stockholder Approvals. United and Fed One agree to take, in
accordance with applicable law or NASDAQ rules and its articles of incorporation
and bylaws, all action necessary to convene an appropriate meeting of its
stockholders (which in the case of United or Fed One may be its regular annual
meeting or a special meeting) to consider and vote upon, in the case of United,
the approval and adoption of the Articles Amendment as contemplated hereby
(including any adjournment or postponement, the "United Meeting") and, in the
case of Fed One, the approval and adoption of this Agreement (including any
adjournment or postponement, the "Fed One Meeting"), in each case as promptly as
practicable after the Registration Statement is declared effective. The United
Board will recommend that the United shareholders approve the Articles
Amendment. The Fed One Board will recommend that the Fed One stockholders
approve and adopt the Agreement and the transactions contemplated hereby,
provided that the Fed One Board may fail to make such recommendation, or
withdraw, modify or change any such recommendation, if the Fed One Board, after
having consulted with and considered the advice of outside counsel, has
determined that the making of such recommendation, or the failure to withdraw,
modify or change such recommendation, would constitute a breach of the fiduciary
duties of the members of the Fed One Board under applicable law.
6.03 Registration Statement. (a) Each of United and Fed One agrees to
cooperate in the preparation of 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
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(including the joint proxy statement and prospectus and other proxy solicitation
materials of United and Fed One constituting a part thereof (the "Proxy
Statement") and all related documents). Provided that Fed One has 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 Fed One
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.
Fed One agrees to furnish to United all information concerning Fed One, its
Subsidiaries, officers, directors and stockholders as may be reasonably
requested in connection with the foregoing.
(b) Each of Fed One 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 Fed One
Meeting, as the case may be, 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 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 Fed One 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 Fed One, 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 Fed One, each in consultation with the other, shall
employ professional proxy solicitors to assist it in contacting stockholders in
connection with soliciting votes on the Agreement and the Articles Amendment.
6.04 Press Releases. Each of Fed One 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
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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 Fed One 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
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. Fed One 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, except to the extent that the Fed One Board has
determined, after consulting with and considering the advice of outside counsel,
that the failure to do so would constitute a breach of the fiduciary duties of
the Fed One Board's directors under applicable law, 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
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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. Fed
One shall promptly (within 24 hours) advise United following the receipt by Fed
One 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 Fed One 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) Fed One 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 Fed One Meeting, deemed to be an "affiliate" of Fed
One (each, a "Fed One Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Each of Fed One and United shall use its respective reasonable best
efforts to cause each person who may be deemed to be a Fed One Affiliate or a
United Affiliate, as the case may be, to execute and deliver to Fed One 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, Fed One 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 Fed One shall not be obligated to take any
such action pursuant to this Section 6.09 (i) if such action is not in
accordance with generally accepted accounting principles, is not consistent with
the "pooling-of-interests" accounting method for the Merger or is prohibited by
applicable law, and (ii) unless and until United acknowledges that all
conditions to its obligation to consummate the Merger have been satisfied and
certifies to Fed One that United's representations and warranties, subject to
Section 5.02, are true and correct as of such date and that United is otherwise
in material in compliance with this Agreement. Fed One'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
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shares of United Common Stock to be issued to the holders of Fed One Common
Stock in the Merger.
6.11 Regulatory Applications. (a) United and Fed One 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, and to comply with the terms and conditions of such permits,
consents, approvals and authorizations. Each of United and Fed One 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.
(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 and former directors, officers and employees of Fed One or a Fed One
Subsidiary, determined as of the Effective Date (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 and the Stock Option
Agreement) to the fullest extent that Fed One or the relevant Fed One Subsidiary
is permitted to indemnify (and advance expenses to) its directors, officers and
employees under the DGCL or other applicable state law, as in effect from time
to time, or any of the Fed One Certificate, the Fed One Bylaws, the charter (or
similar governing instrument) of any Fed One Subsidiary or the bylaws of any Fed
One Subsidiary, in each case as in effect on the date hereof. United agrees that
all limitations on liability existing in favor of the Indemnified Parties as
provided in the Fed One Certificate as in effect on the date hereof shall
survive the Merger and shall continue in full force and effect.
(b) For a period of six years from the Effective Time, United shall use
its reasonable best efforts to maintain Fed One's existing director's and
officer's liability insurance with respect to claims against such directors and
officers arising from facts or events which occurred before the Effective Time,
(or substitute insurance which shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that coverage
currently provided by Fed One);
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provided, however, that in no event shall United be required to expend on an
annual basis more than 200 percent of the current annual amount expended by Fed
One (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 Fed
One or any Fed One 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 materially
prejudiced as a result of such failure.
(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.
(e) The provisions of this Section 6.12 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.13 Benefit Plans and Arrangements. (a) It is the intention of United
that within a reasonable period of time following the Effective Time (i) 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, (ii) any such employees will receive credit for years of
service with Fed One or any of its Subsidiaries prior to the Effective Time for
the purpose of eligibility and vesting and (iii) 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.
(b) Following the Effective Time, United shall, and shall cause its
appropriate Subsidiaries to, honor in accordance with their terms the employment
agreements, severance agreements, severance policies, consulting agreement and
excess benefit plan which have been Previously Disclosed by Fed One to United
pursuant to this Agreement. United shall take no action that would adversely
affect the rights of holders of awards granted under the Fed One Stock Plans
which are outstanding as of the date hereof.
(c) United agrees to maintain the terms of the existing consulting
arrangement between Fed One Bank and Louis Salvatori, as Previously Disclosed by
Fed One to United pursuant to this Agreement, until Mr. Salvatori's death.
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(d) As soon as practicable after the execution of this Agreement, Fed
One and United will use their reasonable best efforts to take such actions as
may be necessary or advisable to provide that the Fed One ESOP will terminate on
the Effective Date. Between the date hereof and the Effective Date, the existing
Fed One ESOP indebtedness shall be paid in the ordinary course of business and
Fed One or Fed One Bank shall make such contributions to the Fed One ESOP as is
necessary to fund such payments. Any indebtedness of the Fed One ESOP remaining
as of the Effective Date shall be repaid from the related Trust, provided,
however, that (i) any related sale or distribution of shares by the Fed One ESOP
shall be effected in accordance with the requirements of federal and any
applicable state securities laws and regulations, (ii) any related sale or
distribution of shares by the Fed One ESOP and any participant shall be effected
in such a manner (and with such safeguards as may be necessary or appropriate)
so as not to jeopardize "pooling-of-interests" accounting treatment for the
Merger, and (iii) all distributions from the Fed One ESOP after the Effective
Date shall be in shares of United Common Stock. Upon the repayment of the Fed
One ESOP loan, the remaining funds in the Fed One ESOP suspense account will be
allocated (to the extent permitted by Sections 401(a), 415 and 4975 of the Code
and the applicable provisions of ERISA) to Fed One ESOP participants, as
determined under the terms of the Fed One ESOP. Fed One and United agree that,
subject to the conditions described herein, as soon as practicable after the
Effective Date and repayment of the Fed One ESOP loan, participants in the Fed
One ESOP shall be entitled at their election to have the amounts in their Fed
One ESOP accounts either distributed to them in a lump sum or rolled over to
another tax-qualified plan (including United plans to the extent permitted by
United) or individual retirement account. The actions relating to termination of
the Fed One ESOP will be adopted conditioned upon the consummation of the Merger
and upon receiving a favorable determination letter from the IRS with regard to
the continued qualification of the Fed One ESOP. Fed One and United will
cooperate in submitting appropriate requests for such a determination letter to
the IRS and will use their reasonable best efforts to seek the issuance of such
letter as soon as practicable after the date hereof. As of and following the
Effective Date, United shall cause the Fed One ESOP to be maintained for the
exclusive benefit of employees and other persons who are participants or
beneficiaries therein prior to the Effective Date and proceed with termination
of the Fed One ESOP through distribution of its assets in accordance with this
Section 6.13(d) and as otherwise may be required to comply with applicable law
or to obtain a favorable determination from the IRS as to the continuing
qualified status of the Fed One ESOP, provided, however, that no such
termination distributions of the Fed One ESOP shall occur after the Effective
Date until a favorable determination letter has been received from the IRS.
(e) United shall have the right to merge the Fed One defined benefit
retirement plan (the "Fed One Retirement Plan") into the United defined benefit
retirement plan (the "United Retirement Plan"), provided that upon consummation
of such merger the United Retirement Plan shall be deemed, in the reasonable
opinion of United and Fed One, to be a "qualified successor plan," as defined in
the Fed One Retirement Plan. In the event that the United Retirement Plan would
not qualify as such upon consummation of such merger, United shall either
maintain the Fed One Retirement Plan for the benefit of participating Fed One
employees or amend the Fed One Retirement Plan in order to maximize the use of
the excess funding or future employer contribution offset. The effectiveness of
such amendments shall be conditioned upon the receipt of a favorable
determination letter from the IRS with regard to the continued qualification of
the Fed One Retirement Plan.
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(f) The Excess Benefit Plan for the benefit of Mr. and Mrs. Alan
Groover, effective as of January 1, 1995, shall be terminated as of the
Effective Date and shall not apply to the final distribution or allocation of
the Fed One ESOP expense account.
6.14 Notification of Certain Matters. Each of Fed One 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 Dividend Coordination. The Fed One Board shall cause its regular
quarterly dividend record dates and payment dates for Fed One Common Stock to be
the same as United's regular quarterly dividend record dates and payment dates
for United Common Stock (e.g., Fed One shall move its next dividend record and
payment dates to the next dividend record and payment date for United Common
Stock), and Fed One shall not thereafter change its regular dividend payment
dates and record dates (it being the intention of the parties that the
stockholders of Fed One shall not receive two dividends, or fail to receive one
dividend, for any single calendar quarter with respect to their shares of Fed
One Common Stock or the United Common Stock exchanged therefor in the Merger).
Notwithstanding the foregoing, nothing contained in this Section 6.15 shall
require either of the parties to take any action that would materially impair
their ability to satisfy the conditions set forth in Sections 7.02(d) and
7.03(d) hereof.
6.16 Directorship of United and Advisory Board of Directors.
(a) United agrees to cause Mr. Groover to be elected or appointed as a
director of United as of the Effective Time.
(b) United agrees to cause four members of the Fed One Board on the
date hereof (selected by Fed One after consultation with United), who are
members of the Fed One Board immediately prior to the Effective Time and willing
and eligible to serve, to be elected or appointed to the Northern West Virginia
Regional Advisory Board of Directors of United Bank.
6.17 Fed One Stock Issuance. After the stockholder approvals
contemplated by Section 6.02 hereof and the regulatory approvals contemplated by
Section 7.01(b) hereof have been obtained and prior to the Effective Date, Fed
One shall use its reasonable best efforts to offer and sell for fair value to
individuals or entities unaffiliated with Fed One and United such number of
shares of Treasury Stock held by Fed One as shall be sufficient in the opinion
of Fed One's and United's respective independent auditors to permit them to
issue the letters referenced in Section 7.02(d) and 7.03(d) hereof, respectively
(the "Fed One Stock Issuance"). Fed One and United shall cooperate with each
other in connection with the Fed One Stock Issuance and shall enter into such
placement or underwriting agreements as may be necessary or advisable in
connection therewith.
6.18 Bank Merger. Upon the request of United, United and Fed One shall
use their reasonable best efforts to cause, including causing the entering into
of a merger agreement, their respective subsidiaries, Fed One Bank and United
Bank, to merge (the "Bank Merger") immediately
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after the consummation of the Merger, with United Bank being the surviving bank
("Surviving Bank") thereof pursuant to the provisions of applicable law. At the
effective time of the Bank Merger, the articles of association and by-laws of
the Surviving Bank shall be the articles of association and by-laws of United
Bank in effect immediately prior to the effective time of the Bank Merger. At
the effective time of the Bank Merger, the directors and officers of the
Surviving Bank shall be the directors and officers of United Bank immediately
prior to the effective time of the Bank Merger.
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 Fed One to consummate the Merger is
subject to the fulfillment or written waiver by United and Fed One prior to the
Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement shall have been duly approved
and adopted by the requisite vote of the stockholders of Fed One and the
Articles Amendment shall have been duly approved by the requisite vote of
the stockholders of United.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, including the Bank Merger
if requested by United pursuant to Section 6.18, 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 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,
restricts or makes illegal 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.
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(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.
7.02 Conditions to Obligation of Fed One. The obligation of Fed One to
consummate the Merger is also subject to the fulfillment or written waiver by
Fed One 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 Fed One
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 Fed One 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.
(c) Opinion of Fed One's Counsel. Fed One shall have received an
opinion of Elias, Matz, Tiernan & Herrick L.L.P., counsel to Fed One, 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 Fed One
who receive shares of United Common Stock in exchange for shares of Fed One
Common Stock, except that gain or loss may be recognized as to cash
received in lieu of fractional share interests. In rendering its opinion,
Elias, Matz, Tiernan & Herrick L.L.P. may require and rely upon
representations contained in letters from Fed One, United and others.
(d) Accounting Treatment. Fed One shall have received from KPMG Peat
Marwick LLP, Fed One's independent auditors, a letter, dated 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 Fed One set forth in this Agreement shall be true and correct, subject
to Section 5.02, as of the date of this
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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 Fed One by the
Chief Executive Officer and the Chief Financial Officer of Fed One to such
effect.
(b) Performance of Obligations of Fed One. Fed One 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
Fed One by the Chief Executive Officer and the Chief Financial Officer of
Fed One 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, Fed One and others.
(d) Accounting Treatment. United shall have received from Ernst & Young
LLP, United's independent auditors, a letter, dated 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 Fed One, 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 Fed
One, 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.
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(c) Delay. At any time prior to the Effective Time, by United or Fed
One, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not
consummated by December 31, 1998, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the willful
failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth herein.
(d) No Approval. By Fed One 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 Fed One Meeting or the United
Meeting, except in the case of clause (i) or clause (ii) that the failure
of an action specified therein arises out of or results from the willful
failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth herein.
(e) Failure to Recommend, Etc. At any time prior to the Fed One
Meeting, by United if the Fed One 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 Fed One, 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 Fed One.
(f) Decline in United Common Stock Price. By Fed One, if the Fed One
Board so determines by a vote of a majority of the members of its entire
board, at any time during the five-day period commencing with the
Determination Date (as defined below), if both of the following conditions
are satisfied:
(i) the number obtained by dividing the Average Closing Price by the
Starting Price (each as defined below) (the "United Ratio") shall be less
than .80; and
(ii) (x) the United Ratio shall be less than (y) the number obtained by
dividing the Final Index Price by the Index Price on the Starting Date
(each as defined below) and subtracting 0.20 from the quotient in this
clause (ii)(y) (such number in this clause (ii)(y) being referred to herein
as the "Index Ratio");
subject, however, to the following three sentences. If Fed One elects to
exercise its termination right pursuant to this Section 8.01(f), it shall give
written notice to United (provided that such notice of election to terminate may
be withdrawn at any time within the aforementioned five-day period). During the
five-day period commencing with its receipt of such notice, United shall have
the option to increase the consideration to be received by the holders of Fed
One Common Stock hereunder, by adjusting the Exchange Ratio (calculated to the
nearest one one-thousandth) to equal the lesser of (x) a number (rounded to the
nearest one one-thousandth) obtained by dividing (A) the product of
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the Starting Price, 0.80 and the Exchange Ratio (as then in effect) by (B) the
Average Closing Price and (y) a number (rounded to the nearest one
one-thousandth) obtained by dividing (A) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (B) the United Ratio. If United so elects
within such five-day period, it shall give prompt written notice to Fed One of
such election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 8.01(f) and this Agreement shall remain
in effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified).
For purposes of this Section 8.01(f), the following terms shall have
the meanings indicated:
"Average Closing Price" shall mean the average of the closing prices of
a share of United Common Stock on the NASDAQ reporting system (as reported
in The Wall Street Journal, or if not reported therein, in another
authoritative source) during the period of 20 consecutive full trading days
ending on the trading day prior to the Determination Date, rounded to the
nearest whole cent.
"Determination Date" shall mean the date on which the last required
approval of a Governmental Entity is obtained with respect to the Merger,
and if requested by United pursuant to Section 6.18, the Bank Merger,
without regard to any requisite waiting period in respect thereof.
"Final Index Price" shall mean the average of the Index Prices for the
20 consecutive full trading days ending on the trading day prior to the
Determination Date.
"Index Group" shall mean the 21 financial institutions or financial
institution holding companies listed below, the common stock of which shall
be publicly traded and as to which there shall not have been a publicly
announced proposal since the Starting Date and before the Determination
Date for any such company to be acquired. In the event that the common
stock of any such company ceases to be publicly traded or a proposal to
acquire any such company is announced after the Starting Date and before
the Determination Date, such company shall be removed from the Index Group,
and the weights (which have been determined based on the number of
outstanding shares of common stock and the market prices of such stock)
attributed to the remaining companies shall be adjusted proportionately for
purposes of determining the Final Index Price. The 21 financial
institutions or financial institution holding companies and the weights
attributed to them are as follows:
Company Weighting
Keystone Financial Inc. 11.98%
FirstMerit Corp. 10.05
Valley National Bancorp 8.94
Fulton Financial Corp. 7.16
One Valley Bancorp Inc. 5.37
Park National Corp. 4.68
Riggs National Corp. 4.59
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Susquehanna Bancshares Inc.. 4.56
First Financial Bancorp. 4.55
HUBCO Inc. 4.52
Commerce Bancorp Inc. 4.45
Provident Bankshares Corp. 4.26
F&M National Corp. 3.80
Mid Am Inc. 3.61
First Commonwealth Financial 3.54
F.N.B. Corp. 2.98
Trust Co. of New Jersey 2.71
Trans Financial Inc. 2.46
Carolina First Corp. 2.14
USBANCORP Inc. 1.92
First Citizens Bancorp. of SC 1.74
------
100.00%
"Index Price," on a given date, shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices on such date of the common stocks of the companies comprising the
Index Group, as such prices are reported on the consolidated transactions
reporting system for the market or exchange on which such common stock is
principally traded on such date.
"Starting Date" shall mean the last trading day immediately preceding
the date of the first public announcement of entry into this Agreement.
"Starting Price" shall mean the closing price of a share of United
Common Stock on the NASDAQ reporting system (as reported in The Wall Street
Journal, or if not reported therein, in another authoritative source) on
the Starting Date.
If any company belonging to the Index Group or United declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between and including the
Starting Date and the Determination Date, the prices for the common stock of
such company or United and the Exchange Ratio shall be appropriately adjusted
for the purposes of applying this Section 8.01(f).
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.
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ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 3.04, 3.06, 6.12, 6.13, 6.16 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), 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, to
the extent permitted by applicable law, 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 Fed One Meeting, this
Agreement may not be amended if it would violate the DGCL 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 DGCL
are applicable).
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 expenses incurred in connection with the printing of the
Registration Statement and joint proxy statement and SEC fees shall be shared
equally between Fed One 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 Fed One, to:
Fed One Bancorp, Inc.
21 Twelfth Street
Wheeling, WV 26003-3295
Facsimile: (304) 234-3419
Attn: Alan E. Groover
Chairman, President and
Chief Executive Officer
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<PAGE>
With a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Facsimile: (202) 347-2172
Attn: Gerard L. Hawkins, Esq.
Raymond A. Tiernan, Esq.
If to United, to:
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Facsimile: (304) 424-8711
Attn: Richard M. Adams
Chairman of the Board and Chief Executive Officer
Steven Wilson
Chief Financial Officer
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Facsimile: (212) 558-3588
Attn: Mark J. Menting, Esq.
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
and the Stock Option Agreement 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 the Stock Option Agreement). Except for Sections
6.12, 6.13(c) and 6.16, 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; Assignment; Successors. (a) 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 Fed
One, 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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<PAGE>
(b) A party hereto may not assign any of its rights or obligations
under this Agreement to any other person without the prior written consent of
the other party (provided that any merger, consolidation, share exchange or
similar business combination involving United shall not be deemed to be an
assignment for purposes of this clause (b)). The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors.
* * *
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.
UNITED BANKSHARES, INC.
By: /s/ Steven E. Wilson
_______________________________________
Name: Steven E. Wilson
Title: Executive Vice President and
Chief Financial Officer
FED ONE BANCORP, INC.
By: /s/ Alan E. Groover
_______________________________________
Name: Alan E. Groover
Title: Chairman, President and
Chief Executive Officer
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<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 18, 1998, between United
Bankshares, Inc., a West Virginia corporation ("Grantee"), and Fed One Bancorp,
Inc., a Delaware 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 a condition to Grantee's entering into 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 474,800 fully paid and nonassessable shares of the common stock,
par value $0.10 per share, of Issuer ("Common Stock") at a price per share equal
to $33.50; 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 or restricted stock grants 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 either (i)
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) or (ii) redeemed, repurchased, retired or otherwise cease
to be outstanding after the date of this Agreement, the number of shares of
Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such event, such number equals 19.9% of the number
of shares of Common Stock then issued and outstanding without giving effect to
any shares subject or issued 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 of any provision of the Merger Agreement.
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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; (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 in each case if the breach giving rise to the termination was willful)
(each, a "Listed Termination"); or (iii) the passage of fourteen (14) 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 pursuant to this Agreement. Notwithstanding anything to
the contrary contained herein, (i) the Option may not be exercised (nor may
Grantee's rights under Sections 7, 8, 9, 12 or 14 hereof be exercised) at any
time when Grantee shall be in willful 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 such a willful 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 willful
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 Articles Amendment, 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")) of Issuer (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' 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
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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
adopt and 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 Grantee or
any of its Subsidiaries) shall have made, or publicly disclosed an
intention to make, a bona fide proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board (without having received Grantee's prior
written consent) 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 or 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 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);
(vi) After an overture is made by a third party to Issuer to engage
in an Acquisition Transaction, Issuer shall have willfully breached any
covenant or obligation contained in the Merger Agreement, and such breach
(x) would entitle Grantee to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or both) and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
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(vii) 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") of which it has notice, 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.
(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
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<PAGE>
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, and
the Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(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 February 18,
1998, 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 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
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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 Stock Option
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.
(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 adjusted 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
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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 nine (9) 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 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. 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.
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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 within 135 days of such occurrence (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.
(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
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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 either 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.
(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:
(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%;
, provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred.
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,
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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 the one year immediately preceding the
consolidation, merger, share exchange 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, share exchange or sale;
provided that if Issuer is the 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
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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 and reasonably acceptable to the Acquiring Corporation.
(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 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 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 following a request for
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repurchase pursuant to this Section 9 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, 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.
10. The 135-day, 6-month, 9-month or 14-month periods for exercise of
certain rights under Sections 2, 6, 7, 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, provided that any such
extension pursuant to this clause (ii) shall not exceed two months.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) 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.
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(ii) 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.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and deliver
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
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 whole or in part its rights and obligations hereunder within six (6) months
following such Subsequent Triggering Event (or such later period as is provided
in Section 10); 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
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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 (as defined
below); 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
$4,000,000, (i) plus, if applicable, Grantee's purchase price with respect to
any Option Shares and (ii) minus, if applicable, the sum of (A) the excess of
(1) 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 (2)
Grantee's purchase price of such Option Shares and (B) the net cash amounts, if
any, received by Grantee pursuant to an arm's length sale of a portion of the
Option to an unaffiliated party.
(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 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. (a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Profit (as hereinafter defined) exceed $6,000,000 and,
if it otherwise would exceed such amount, the Grantee, at its sole election,
shall either (i) reduce the number of shares of Common Stock subject to this
Option, (ii) deliver to the Issuer for cancellation Option Shares previously
purchased by Grantee, (iii) pay cash to the Issuer or (iv) any combination
thereof, so that Grantee's actually realized Total Profit shall not exceed
$6,000,000 after taking into account the foregoing actions. As used herein, the
term "Total Profit" shall mean the aggregate amount (before taxes) of
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the following: (i) the amount received by Grantee pursuant to Issuer's
repurchase of the Option (or any portion thereof) pursuant to Section 7 hereof,
(ii) (x) the amount received by Grantee pursuant to Issuer's repurchase of the
Option Shares pursuant to Section 7 hereof, less (y) the Grantee's purchase
price for such Option Shares, (iii)(x) the net cash amounts received by Grantee
pursuant to the sale of Option Shares (or any other securities into which such
Option Shares are converted or exchanged) to any unaffiliated party, less (y)
the Grantee's purchase price of such Option Shares, (iv) any amounts received by
Grantee on the transfer of the Option (or any portion thereof) to any
unaffiliated party and (v) any equivalent amount with respect to the Substitute
Option.
(b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as hereinafter defined) of more than
$6,000,000, provided that nothing in this sentence shall restrict any exercise
of the Option permitted hereby on any subsequent date. As used herein, "Total
Notional Profit" with respect to any number of shares as to which Grantee may
propose to exercise this Option shall be the Total Profit determined as of the
date of such proposed exercise assuming that this Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Option Shares held by Grantee and its affiliates as of such date, were
sold for cash at the closing market price for the Common Stock as of the close
of business on the preceding trading day (less customary brokerage commissions).
16. 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.
17. 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.
18. 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.
19. 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 DGCL are applicable).
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20. 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.
21. 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 contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
22. 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.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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.
FED ONE BANCORP, INC.
By __________________________
Name:
Title:
UNITED BANKSHARES, INC.
By __________________________
Name:
Title:
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EXHIBIT B
FORM OF FED ONE AFFILIATE LETTER
____________, 1998
Fed One Bancorp, Inc.
21 Twelfth Street
Wheeling, WV 26003-3295
Attention:
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Facsimile: (304) 424-8711
Attn: Steven Wilson
Chief Financial Officer
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit
that I am, an "affiliate" of Fed One Bancorp, Inc., a Delaware corporation ("Fed
One"), as that term is defined in Rule 145 promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Securities Act"), and/or SEC Accounting Series Releases 130 and 135. I
understand that pursuant to the terms of the Agreement and Plan of Merger, dated
as of February 18, 1998 (the "Merger Agreement"), by and between United
Bankshares, Inc., a West Virginia corporation ("United"), and Fed One, Fed One
plans to merge with and into a wholly owned subsidiary of United (the "Merger")
and that the Merger is intended to be accounted for under the
"pooling-of-interests" accounting method.
I further understand that as a result of the Merger, I may receive
shares of common stock, par value $2.50 per share, of United ("United Stock")
(i) in exchange for shares of common stock, par value $0.10 per share, of Fed
One ("Fed One Stock") or (ii) as a result of the exercise of Rights (as defined
in the Merger Agreement).
I have carefully read this letter and reviewed the Merger Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of United Stock and Fed One
Stock, to the extent I felt necessary, with my counsel or counsel for Fed One.
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I represent, warrant and covenant with and to United that in the
event I receive any United Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such
United Stock unless (i) such sale, transfer or other disposition
has been registered under the Securities Act, (ii) such sale,
transfer or other disposition is made in conformity with the
provisions of Rule 145 under the Securities Act (as such rule may
be amended from time to time), or (iii) in the opinion of counsel
in form and substance reasonably satisfactory to United, or under
a "no-action" letter obtained by me from the staff of the SEC,
such sale, transfer or other disposition will not violate or is
otherwise exempt from registration under the Securities Act.
2. I understand that United is under no obligation to register the
sale, transfer or other disposition of shares of United Stock by
me or on my behalf under the Securities Act or to take any other
action necessary in order to make compliance with an exemption
from such registration available.
3. I understand that stop transfer instructions will be given to
United's transfer agent with respect to shares of United Stock
issued to me as a result of the Merger and that there will be
placed on the certificates for such shares, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares represented by this
certificate may be transferred only in accordance with the
terms of a letter agreement, dated __, 199_, between the
registered holder hereof and United, a copy of which agreement
is on file at the principal offices of United."
4. I understand that, unless transfer by me of the United Stock
issued to me as a result of the Merger has been registered under
the Securities Act or such transfer is made in conformity with the
provisions of Rule 145(d) under the Securities Act, United
reserves the right, in its sole discretion, to place the following
legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired
from a person who received such shares in a transaction to
which Rule 145 under the Securities Act of 1933 applies. The
shares have been acquired by the holder not with a view to, or
for resale in connection with, any distribution thereof within
the meaning of the Securities Act of 1933 and may not be
offered, sold,
A-65
<PAGE>
pledged or otherwise transferred except in accordance with an
exemption from the registration requirements of the Securities
Act of 1933."
It is understood and agreed that the legends set forth in
paragraphs (3) and (4) above shall be removed by delivery of substitute
certificates without such legends if I shall have delivered to United (i) a copy
of a "no action" letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to United, to the effect that such
legend is not required for purposes of the Act, or (ii) evidence or
representations satisfactory to United that the United Stock represented by such
certificates is being or has been sold in conformity with the provisions of Rule
145(d).
I further represent, warrant and covenant with and to United that
I will not sell, transfer or otherwise dispose of, or reduce my risk relative
to, any shares of Fed One Stock or United Stock (whether or not acquired by me
in the Merger) during the period commencing 30 days prior to effective date of
the Merger and ending at such time as United notifies me that results covering
at least 30 days of combined operations of Fed One and United after the Merger
have been published by United. I understand that United is not obligated to
publish such combined financial results except in accordance with its normal
financial reporting practice.
I further understand and agree that this letter agreement shall
apply to all shares of Fed One Stock and United Stock that I am deemed to
beneficially own pursuant to applicable federal securities law.
I also understand that the Merger is intended to be treated as a
"pooling of Interests" for accounting purposes, and I agree that if Fed One or
United advises me in writing that additional restrictions apply to my ability to
sell, transfer, or otherwise dispose of Fed One Stock or United Stock in order
for United to be entitled to use the pooling of interests accounting method, I
will abide by such restrictions.
Very truly yours,
By__________________________
Name:
Accepted this ____ day of
_______________, 1998.
Fed One Bancorp, Inc.
By________________________
Name:
Title:
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<PAGE>
United Bankshares, Inc.
By________________________
Name:
Title:
A-67
<PAGE>
EXHIBIT C
FORM OF UNITED AFFILIATE LETTER
____________, 1998
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Facsimile: (304) 424-8711
Attn: Steven Wilson
Chief Financial Officer
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit
that I am, an "affiliate" of United, a West Virginia corporation ("United"), as
that term is defined in the Securities and Exchange Commission's Accounting
Series Releases 130 and 135. I understand that pursuant to the terms of the
Agreement and Plan of Merger, dated as of February 18, 1998 (the "Merger
Agreement"), by and between United and Fed One Bancorp, Inc., a Delaware
corporation ("Fed One"), Fed One plans to merge with and into a wholly owned
subsidiary of United (the "Merger") and that the merger is intended to be
accounted for under the "pooling-of-interests" accounting method.
I have carefully read this letter and reviewed the Merger
Agreement and discussed their requirements and other applicable limitations upon
my ability to sell, transfer, or otherwise dispose of common stock of United and
Fed One, to the extent I felt necessary, with my counsel or counsel for United.
I hereby represent, warrant and covenant with and to United that:
1. I will not sell, transfer or otherwise dispose of, or reduce
my risk relative to, any shares of common stock of Fed One or
United(whether or not acquired by me in the Merger) during the
period commencing 30 days prior to the effective date of the
Merger and ending at such time as United notifies me that
results covering at least 30 days of combined operations of
Fed One and United after the Merger have been published by
United. I understand that United is not obligated to publish
such combined financial results except in accordance with its
normal financial reporting practice.
2. I further understand and agree that this letter agreement
shall apply to all shares of common stock of Fed One and
United that I am deemed to beneficially own pursuant to
applicable federal securities laws.
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<PAGE>
3. If United advises me in writing that additional restrictions
apply to my ability to sell, transfer, or otherwise dispose of
common stock of Fed One or United in order for United to be
entitled to use the "pooling-of-interests" accounting method,
I will abide by such restrictions.
Very truly yours,
By__________________________
Name:
Accepted this ____ day of
_______________, 1998.
United Bankshares, Inc.
By________________________
Name:
Title:
A-69
<PAGE>
ANNEX A
FORM OF SUPPLEMENT FOR MERGER SUB ACCESSION
TO MERGER AGREEMENT
SUPPLEMENT, dated as of the [ ] day of [ ], 1998 (this
"Supplement"), to the Agreement and Plan of Merger, dated as of February 18,
1998 (as amended from time to time in accordance with the terms thereof, the
"Merger Agreement"), by and between United Bankshares, Inc. ("United") and Fed
One Bancorp, Inc. ("Fed One") .
WHEREAS, terms used but not otherwise defined herein have the
meanings specified in the Merger Agreement; and
WHEREAS, pursuant to Section 2.01 of the Merger Agreement, United
has determined to consummate the Merger in part through the merger of Fed One
with and into [insert name(s) of Merger Sub(s)] ([each a][the] "Merger Sub").
NOW, THEREFORE, by its execution of this Supplement, as of the
date hereof, [each of] the undersigned (i) adopts and becomes a party to the
Acquisition Agreement, as required by Section 2.01 thereof and (ii) agrees to
perform all its obligations and agreements set forth therein.
IN WITNESS WHEREOF, this Supplement has been duly executed and
delivered by the undersigned, duly authorized thereunto as of the date first
hereinabove written.
[INSERT NAME OF MERGER SUB]
By:________________________________
Name:
Title:
A-70
<PAGE>
[ Conformed Copy ] Appendix B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 18, 1998, between United
Bankshares, Inc., a West Virginia corporation ("Grantee"), and Fed One Bancorp,
Inc., a Delaware 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 a condition to Grantee's entering into 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 474,800 fully paid and nonassessable shares of the common stock,
par value $0.10 per share, of Issuer ("Common Stock") at a price per share equal
to $33.50; 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 or restricted stock grants 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 either
(i) 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) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of this Agreement, the number
of shares of Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such event, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement
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<PAGE>
shall be deemed to authorize Issuer to issue shares in breach of 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; (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 in each case if the breach giving rise to the termination was willful)
(each, a "Listed Termination"); or (iii) the passage of fourteen (14) 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 pursuant to this Agreement. Notwithstanding anything to
the contrary contained herein, (i) the Option may not be exercised (nor may
Grantee's rights under Sections 7, 8, 9, 12 or 14 hereof be exercised) at any
time when Grantee shall be in willful 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 such a willful 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 willful
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 Articles Amendment, 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")) of Issuer (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,
B-2
<PAGE>
consolidations or similar transactions (i) involving solely Issuer and/or
one or more wholly-owned (except for directors' 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
adopt and 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 bona fide proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board (without having received Grantee's prior
written consent) 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 or 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 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);
B-3
<PAGE>
(vi) After an overture is made by a third party to Issuer to engage
in an Acquisition Transaction, Issuer shall have willfully breached any
covenant or obligation contained in the Merger Agreement, and such breach
(x) would entitle Grantee to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or both) and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vii) 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") of which it has notice, 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.
(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
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<PAGE>
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, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(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 February 18,
1998, 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
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<PAGE>
and 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 Stock Option
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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<PAGE>
(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 adjusted 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 nine (9) 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
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<PAGE>
Holder shall constitute at least 25% of the total number of shares to be sold by
the Holder and 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. 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 within 135 days of such occurrence (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.
(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
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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 either 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.
(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:
(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%;
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, provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred.
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 the one year immediately preceding the
consolidation, merger, share exchange 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, share exchange or sale;
provided that if Issuer is the 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
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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 and
reasonably acceptable to the Acquiring Corporation.
(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 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
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Substitute 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 following a request for repurchase pursuant
to this Section 9 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
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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, 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.
10. The 135-day, 6-month, 9-month or 14-month periods for exercise of
certain rights under Sections 2, 6, 7, 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, provided that any such
extension pursuant to this clause (ii) shall not exceed two months.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) 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.
(ii) 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.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and deliver
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions
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contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
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 whole or in part its rights and obligations hereunder within six (6) months
following such Subsequent Triggering Event (or such later period as is provided
in Section 10); 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 (as defined below); 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 $4,000,000, (i) plus, if applicable,
Grantee's purchase price with respect to any Option Shares and (ii) minus, if
applicable, the sum of (A) the excess of (1) 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 (2) Grantee's purchase price of such Option Shares
and (B) the net cash amounts, if
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any, received by Grantee pursuant to an arm's length sale of a portion of the
Option to an unaffiliated party.
(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 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. (a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Profit (as hereinafter defined) exceed $6,000,000 and,
if it otherwise would exceed such amount, the Grantee, at its sole election,
shall either (i) reduce the number of shares of Common Stock subject to this
Option, (ii) deliver to the Issuer for cancellation Option Shares previously
purchased by Grantee, (iii) pay cash to the Issuer or (iv) any combination
thereof, so that Grantee's actually realized Total Profit shall not exceed
$6,000,000 after taking into account the foregoing actions. As used herein, the
term "Total Profit" shall mean the aggregate amount (before taxes) of the
following: (i) the amount received by Grantee pursuant to Issuer's repurchase of
the Option (or any portion thereof) pursuant to Section 7 hereof, (ii) (x) the
amount received by Grantee pursuant to Issuer's repurchase of the Option Shares
pursuant to Section 7 hereof, less (y) the Grantee's purchase price for such
Option Shares, (iii)(x) the net cash amounts received by Grantee pursuant to the
sale of Option Shares (or any other securities into which such
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Option Shares are converted or exchanged) to any unaffiliated party, less (y)
the Grantee's purchase price of such Option Shares, (iv) any amounts received by
Grantee on the transfer of the Option (or any portion thereof) to any
unaffiliated party and (v) any equivalent amount with respect to the Substitute
Option.
(b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as hereinafter defined) of more than
$6,000,000, provided that nothing in this sentence shall restrict any exercise
of the Option permitted hereby on any subsequent date. As used herein, "Total
Notional Profit" with respect to any number of shares as to which Grantee may
propose to exercise this Option shall be the Total Profit determined as of the
date of such proposed exercise assuming that this Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Option Shares held by Grantee and its affiliates as of such date, were
sold for cash at the closing market price for the Common Stock as of the close
of business on the preceding trading day (less customary brokerage commissions).
16. 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.
17. 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.
18. 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.
19. 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 DGCL are applicable).
20. 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.
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21. 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 contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
22. 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.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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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.
FED ONE BANCORP, INC.
By /s/ Alan E. Groover
______________________________
Name: Alan E. Groover
Title: Chairman, President and
Chief Executive Officer
UNITED BANKSHARES, INC.
By /s/ Steven E. Wilson
______________________________
Name: Steven E. Wilson
Title: Executive Vice President
Chief Financial Officer
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Appendix C
August 12, 1998
The Board of Directors
Fed One Bancorp, Inc.
21 Twelfth Street
Wheeling, West Virginia 26003-3295
Members of the Board:
You have requested our opinion as investment bankers that the Exchange Ratio in
the Merger (the "Merger") between Fed One Bancorp, Inc. ("Fed One") and United
Bankshares, Inc., Charleston, West Virginia ("United") the holding company for
United National Bank, Parkersburg, West Virginia ("United National Bank") as
provided and described in the Merger Agreement is fair to the holders of Fed One
Common Stock from a financial point of view.
Pursuant to the Agreement and Plan of Merger (the "Agreement") dated February
18, 1998, Fed One shall merge with and into a subsidiary of United, and each
share of Fed One's issued and outstanding common stock will be converted into
and become the right to receive 1.5 shares (adjusted for United's 100% stock
dividend), subject to certain adjustments as set forth in the Agreement (the
"Exchange Ratio"), of common stock of United. We have assumed that the Merger
will be accounted for by United as a pooling-of-interests transaction.
Ryan, Beck & Co., as a customary part of its investment banking business, is
engaged in the valuation of banking and savings institutions and their
securities in connection with mergers and acquisitions. In conducting our
investigation and analysis of the Merger, we have met separately with members of
senior management of United and Fed One to discuss their respective operations,
historical financial statements, strategic plans and future prospects. We have
reviewed and analyzed material prepared in connection with the Merger, including
but not limited to the following: (i) the Agreement and related documents; (ii)
the Joint Proxy Statement/Prospectus; (iii) United's Annual Reports to
Shareholders and Annual Reports on Form 10-K for the years ended December 31,
1997, 1996, 1995, and 1994, and United's Quarterly Reports on Form 10-Q for the
periods ended June 30, 1998, March 31, 1998, September 30, 1997, June 30, 1997
and March 31, 1997; (iv) United's Registration Statement on Form S-4, dated
January 29, 1998, with respect to United's then pending acquisition of George
Mason Bankshares; (v) United's Current Report on Form 8-K dated August 3, 1998;
(vi) Fed One's Annual Reports to Shareholders and Annual Reports on Form 10-K
for the years ended December 31, 1997, 1996, 1995, and 1994, and Fed One's
Quarterly Reports on Form 10-Q for the periods ended June 30, 1998, March 31,
1998, September 30, 1997, June
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Fed One Bancorp, Inc.
August 12, 1998
Page 2
30, 1997 and March 31, 1997; (vii) the historical stock prices and trading
volume of United's common stock; (viii) the publicly available financial data of
commercial banking organizations which Ryan, Beck deemed generally comparable to
United; (ix) the publicly available financial data of thrift organizations which
Ryan, Beck deemed generally comparable to Fed One; (x) the historical stock
prices and trading volume of Fed One's common stock; (xi) the terms of recent
acquisitions of thrift organizations which Ryan, Beck deemed generally
comparable in whole or in part to Fed One; and (xii) the potential pro-forma
impact of the Merger on United's financial condition, operating results and per
share figures. We also conducted or reviewed such other studies, analyses,
inquiries and examinations as we deemed appropriate. Ryan, Beck as part of its
review of the Merger, also analyzed United's ability to consummate the Merger
and considered the future prospects of Fed One in the event it remained
independent.
While we have taken care in our investigation and analyses, we have relied upon
and assumed the accuracy, completeness and fairness of the financial and other
information provided to us by the respective institutions or which was publicly
available and have not assumed any responsibility for independently verifying
such information. We have also relied upon the managements of Fed One and United
as to the reasonableness and achievability of the financial and operating
forecasts and projections (and the assumptions and bases therefor) provided to
us and in certain instances we have made certain adjustments to such financial
and operating forecasts which in our judgment were appropriate under the
circumstances. In addition, we have assumed with your consent that such
forecasts and projections reflect the best currently available estimates and
judgments of the respective managements. We are not experts in the evaluation of
allowances for loan losses. Therefore, we have not assumed any responsibility
for making an independent valuation of the adequacy of the allowances for loan
losses set forth in the balance sheets of Fed One and United at June 30, 1998,
and we assumed such allowances were adequate and comply fully with applicable
law, regulatory policy and sound banking practice as of the date of such
financial statements. We also assumed that the Merger in all respects is, and
will be consummated in compliance with all laws and regulations applicable to
Fed One and United. We have not made or obtained any independent evaluations or
appraisals of the assets and liabilities of either Fed One or United or their
respective subsidiaries, nor have we reviewed any individual loan files of Fed
One or United or their respective subsidiaries.
In conducting our analysis and arriving at our opinion as expressed herein, we
have considered such financial and other factors as we have deemed appropriate
in the circumstances. In rendering our opinion, we have assumed that in the
course of obtaining the
C-2
<PAGE>
Fed One Bancorp, Inc.
August 12, 1998
Page 3
necessary regulatory approvals for the Merger, no conditions will be imposed
that will have a material adverse effect on the contemplated benefits of the
Merger to Fed One. Our opinion is necessarily based on economic, market and
other conditions and projections as they exist and can be evaluated on the date
hereof. Ryan, Beck did not express any opinion as to the price or range of
prices at which United Common Stock might trade subsequent to the Merger.
We have been retained by the Board of Directors of Fed One as an independent
contractor to act as financial advisor to Fed One with respect to the Merger and
will receive a fee for our services. Ryan, Beck became a market maker in United
stock subsequent to the announcement of the merger. Ryan, Beck had no prior
investment banking relationship with United and Ryan, Beck's research department
does not follow United. Ryan, Beck has had an investment banking relationship
with Fed One for a number of years. Ryan, Beck was the sole underwriter of Fed
One's "second step" conversion from a mutual holding company structure to a
stock holding company structure. Additionally, Ryan, Beck has also acted as
financial advisor to Fed One with respect to various other matters from time to
time and may provide certain investment banking services to Fed One in the
future, including in connection with the reissuance of certain shares of Fed One
common stock in connection with the merger. Ryan, Beck's research department has
issued research reports on Fed One and comments on Fed One in its periodic
commentaries. Ryan, Beck is also a market maker in Fed One's common stock and,
in such capacity, may from time to time own Fed One securities.
Our opinion is directed to the Board of Directors of Fed One and does not
constitute a recommendation to any shareholder of Fed One as to how such
shareholder should vote at any shareholder meeting held in connection with the
Merger.
Based upon and subject to the foregoing it is our opinion as investment bankers
that the Exchange Ratio in the Merger as provided and described in the Merger
Agreement is fair to the holders of Fed One common stock from a financial point
of view.
Very truly yours,
RYAN, BECK & CO., INC.
C-3
<PAGE>
Appendix D
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
OF UNITED BANKSHARES, INC.
Article VI of the Articles of Incorporation of United Bankshares, Inc. which
now reads:
VI. The amount of authorized capital stock of the corporation is
$102,500,000 which shall be divided into 41,000,000 shares of a par
value of $2.50.
would be amended to read as follows:
VI. The amount of the authorized capital stock of the corporation is
$250,000,000 which shall be divided into 100,000,000 shares of a par
value of $2.50 per share.
D-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 31-1-9 of the West Virginia Code of 1931, as amended,
permits indemnification of present or former officers or directors who are named
or threatened to be named as parties to a legal action arising out of their
activities as officers or directors under certain circumstances.
The Bylaws of United Bankshares, Inc., as amended, contain the
following provision with regard to the indemnification of its directors and
officers:
Each director and officer of this corporation, or former
director or officer of this corporation, or any person who may have served at
its request as a director or officer of another corporation, his heirs and
personal representative shall be indemnified by this corporation against costs
and expenses at any time reasonably incurred by him arising out of or in
connection with any claim, action, suite or proceeding, civil or criminal ,
against him or which he made apart for reason of his being or having been such
director or officer except in relation to matters to which he shall be adjudged
in such action, suit or proceeding to be liable for gross negligence or willful
misconduct in the performance of a duty to the corporation. If in the judgment
of the Board of Directors of this corporation a settlement of any claim, action,
suit or proceeding so arising be deemed in the best interest of the corporation,
any such director or officers shall be reimbursed for any amounts paid by him in
connection therewith. The foregoing right of indemnification shall be in
addition to any and all other rights to which any director or officer may be
entitled as a matter of law.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits (See exhibit index immediately preceding the exhibits for
the page number where each exhibit can be found).
Exhibit
Number Description of Exhibits
------- -----------------------
2.1 Agreement and Plan of Merger, dated as of February 18, 1998,
by and among United Bankshares, Inc., Fed One Bancorp, Inc.,
and UBC Holding Company (included as Appendix A to the Joint
Proxy Statement/Prospectus*).
2.2 Plan of Merger of Fed One Bancorp, Inc. and UBC Holding
Company (included as Appendix A to the Joint Proxy
Statement/Prospectus*).
2.3 Option Agreement, dated as of February 18, 1998, by and
between United Bankshares, Inc. and Fed One Bancorp, Inc.
(included as Appendix B to the Joint Proxy
Statement/Prospectus).
5.1 Opinion of Bowles Rice McDavid Graff & Love, including
consent.
8.1 Opinion of Bowles Rice McDavid Graff & Love, PLLC, including
consent.
21 Subsidiaries of Registrant (Incorporated herein by reference
to United Bankshares, Inc.'s Form 10-K for the year ended
December 31, 1997.)
23.1 Consent of Bowles Rice McDavid Graff & Love (appears in Legal
Opinion, Exhibit 5.1).
23.2 Consent of Ernst & Young LLP re: United Bankshares, Inc.
<PAGE>
23.3 Consent of KPMG Peat Marwick, LLP, re: Fed One Bancorp, Inc.
23.4 Consent of Ryan, Beck & Co., Inc.
24.1 Power of Attorney (included on pages II-4 and II-5).
99.1 Form of Proxy for United Bankshares, Inc.
99.2 Form of Proxy for Fed One Bancorp, Inc.
- ---------------
* Incorporated herein by reference
(b) Financial Statement Schedules
Schedules are omitted because they are not required or are not
applicable, or the required information is shown in the financial statements or
notes thereto.
Item 22. Undertakings.
1. The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters in addition to the
information called for by the other items of the applicable form.
2. The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415 (230.415), will be filed as a
part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
4. The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
5. The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration when it became effective.
2
<PAGE>
6. The undersigned registrant hereby undertakes:
a. To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration
statement;
(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
b. That for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
c. To remove from registration by means of
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
7. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Charleston,
State of West Virginia, on August 3, 1998.
UNITED BANKSHARES, INC.
By /s/ Richard M. Adams
____________________
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Know all men by these presents, that each
person whose signature appears below constitutes and appoints Richard M. Adams
and Steven E. Wilson, and each of them, his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for him or her
and in his name, place and stead, in any and all capacities, to sign any or all
amendments to this registration statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in the about the premises, as fully to all
intents and purposes as he or she might do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S><C>
/s/ Richard M. Adams Chairman of the Board, Director August 3, 1998
______________________________ Chief Executive Officer
Richard M. Adams
/s/ Steven E. Wilson Chief Financial Officer and Chief August 3, 1998
______________________________ Accounting Officer
Steven E. Wilson
/s/ Robert G. Astorg Director August 3, 1998
______________________________
Robert G. Astorg
/s/ Thomas J. Blair, III Director August 3, 1998
_____________________________
Thomas J. Blair, III
/s/ Harry L. Buch Director August 3, 1998
______________________________
Harry L. Buch
/s/ W. Gaston Caperton, III Director August 3, 1998
______________________________
W. Gaston Caperton, III
</TABLE>
4
<PAGE>
<TABLE>
<S><C>
/s/ Bernard H. Clineburg Director August 3, 1998
______________________________
Bernard H. Clineburg
/s/ C. Barrie Cook, M.D. Director August 3, 1998
______________________________
C. Barrie Cook, M.D.
/s/ H. Smoot Fahlgren Director August 3, 1998
______________________________
H. Smoot Fahlgren
/s/ Theodore J. Georgelas Director August 3, 1998
______________________________
Theodore J. Georgelas
/s/ F. T. Graff, Jr. Director August 3, 1998
______________________________
F. T. Graff, Jr.
/s/ William A. Hazel Director August 3, 1998
______________________________
William A. Hazel
/s/ Russell L. Isaacs Director August 3, 1998
______________________________
Russell L. Isaacs
/s/ Arthur Kellar Director August 3, 1998
______________________________
Arthur Kellar
/s/ John M. McMahon Director August 3, 1998
______________________________
John M. McMahon
/s/ G. Ogden Nutting Director August 3, 1998
______________________________
G. Ogden Nutting
/s/ William C. Pitt, III Director August 3, 1998
______________________________
William C. Pitt, III
/s/ I. N. Smith, Jr. Director August 3, 1998
______________________________
I. N. Smith, Jr.
/s/ Warren A. Thornhill Director August 3, 1998
______________________________
Warren A. Thornhill, III
</TABLE>
5
<PAGE>
<TABLE>
<S><C>
/s/ William W. Wagner Director August 3, 1998
______________________________
William W. Wagner
/s/ P. Clinton Winter, Jr. Director August 3, 1998
______________________________
P. Clinton Winter, Jr.
/s/ James W. Word, Jr. Director August 3, 1998
______________________________
James. W. Word, Jr.
</TABLE>
6
<PAGE>
UNITED BANKSHARES, INC.
FORM S-4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT LOCATION OF
NUMBER DESCRIPTION OF EXHIBITS EXHIBIT
------- ----------------------- -----------
<S><C>
2.1 Agreement and Plan of Merger, dated as of February 18, 1998, by and
among United Bankshares, Inc., Fed One Bancorp, Inc., and UBC Holding
Company (included as Appendix A to the Joint Proxy
Statement/Prospectus*).
2.2 Plan of Merger of Fed One Bancorp, Inc. and UBC Holding Company
(included as Appendix A to the Joint Proxy Statement/Prospectus*).
2.3 Stock Option Agreement, dated as of February 18, 1998, by and
between United Bankshares, Inc., and Fed One Bancorp, Inc.
(included as Appendix B to the Joint Proxy
Statement/Prospectus).
5.1 Opinion of Bowles Rice McDavid Graff & Love, including consent.
8.1 Opinion of Bowles Rice McDavid Graff & Love, PLLC, including consent.
21 Subsidiaries of Registrant (Incorporated herein by reference
to United Bankshares, Inc. Form 10-K for the year ended
December 31, 1997).
23.1 Consent of Bowles Rice McDavid Graff & Love (appears in Legal Opinion,
Exhibit 5.1).
23.2 Consent of Ernst & Young LLP re: United Bankshares, Inc.
23.3 Consent of KPMG Peat Marwick, LLP, re: Fed One Bancorp, Inc.
23.4 Consent of Ryan, Beck & Co., Inc.
24.1 Power of Attorney (included on pages II-4 and II-5).
99.1 Form of Proxy for United Bankshares, Inc.
99.2 Form of Proxy for Fed One Bancorp, Inc.
</TABLE>
- ------------
* Incorporated herein by reference
Exhibit 5.1
[LETTERHEAD OF BOWLES RICE MCDAVID GRAFF & LOVE]
August __, 1998
United Bankshares, Inc.
514 Market Street
Parkersburg, West Virginia 26102
Re: Form S-4 Registration Statement
-------------------------------
Ladies and Gentlemen:
This opinion is rendered in connection with the Form S-4
Registration Statement (the "Registration Statement") filed by United
Bankshares, Inc. (the "Registrant") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, with respect to the proposed
offering of up to 4,221,129 shares of common stock of Registrant, $2.50 par
value ("Common Stock") issuable in connection with the proposed acquisition of
Fed One Bancorp, Inc. ("Fed One"), Wheeling, West Virginia, by Registrant,
pursuant to the terms of the Agreement and Plan of Merger dated February 18,
1998.
We are of the opinion that if all the conditions set forth in
the Merger Agreement among Fed One, Registrant and UBC Holding Company, Inc., a
wholly-owned subsidiary of Registrant, and the related Plan of Merger (together
the "Merger Agreement") are satisfied, the Common Stock, when issued in
connection with the Merger Agreement in accordance with the terms set forth
therein, will be duly authorized, validly issued, fully paid and nonassessable
and will not be issued in violation of any preemptive rights of any shareholder
of Registrant.
We hereby consent to the use of this opinion as an exhibit to
the Registration Statement and to the reference to our firm therein.
Very truly yours,
BOWLES RICE MCDAVID GRAFF & LOVE, P.L.L.C.
/s/ Sandra M. Murphy
____________________
Sandra M. Murphy
SMM/jam
cc: Mr. Joseph Wm. Sowards
EXHIBIT 8.1
August __, 1998
Mr. Richard M. Adams
United Bankshares, Inc.
514 Market Street
Post Office Box 1508
Parkersburg, West Virginia 26102-1508
Dear Mr. Adams:
You have requested our opinion on certain federal income tax
consequences relating to the merger of Fed One Bancorp, Inc. ("Fed One") with
and into UBC Holding Company, Inc. ("UBC"), a wholly-owned subsidiary of United
Bankshares, Inc. ("United").
The relevant facts concerning the mergers are set forth in the
Agreement and Plan of Merger dated as of February 18, 1998, executed by the
above parties. A description of the transaction set forth therein (the
"Transaction") is incorporated herein by reference. We have assumed with your
consent that: (i) the merger will be effected in accordance with the Agreement
and Plan of Merger, and will qualify under applicable law, and (ii) the
representations contained in the letters from United and Fed One were true and
correct at all relevant times.
REPRESENTATIONS
---------------
In addition to the general statement of facts set forth in the
Registration Statement, and exhibits attached thereto, that the parties to the
Transaction have made the following representations concerning the proposed
merger of Fed One with and into UBC:
(1) The merger will constitute a valid statutory merger under
the applicable laws of West Virginia and Delaware.
(2) The fair market value of United common stock and other
consideration received by each Fed One shareholder will be approximately equal
to the fair market value of the Fed One common stock surrendered in the
exchange.
(3) There is no plan or intention by the shareholders of Fed
One who own 5% or more of the Fed One common stock, and, to the best of the
knowledge of the management of United and Fed One, there is no plan or intention
on the part of the remaining Fed One shareholders to sell, exchange or otherwise
dispose of a number of shares of United common stock received in the Transaction
that would reduce the Fed One shareholders' ownership of United common stock to
a number of shares having a value, as of the date of the transaction, of less
than 50% of the value of all of the formerly outstanding common stock of Fed One
as of the same date. For purposes of this representation, shares of Fed One
common stock exchanged for cash or other property, if any, or exchanged for cash
in lieu of fractional shares of United common stock will be treated as
outstanding Fed One common stock on the date of the transaction. Moreover,
shares of Fed One common stock
<PAGE>
Mr. Richard M. Adams
August __, 1998
Page 2
and shares of United common stock held by Fed One shareholders and otherwise
sold, redeemed or disposed of prior or subsequent to the Transaction will be
considered stock exchanged pursuant to the Transaction.
(4) UBC will acquire at least 90% of the fair market value of
the net assets and at least 70% of the fair market value of the gross assets
held by Fed One immediately prior to the Transaction. For purposes of this
representation, amounts paid by Fed One to shareholders who receive cash or
other property, Fed One assets used by Fed One to pay reorganization expenses,
and all redemptions and distributions (except for regular, normal dividends)
made by Fed One immediately preceding the transfer, will be included as assets
of Fed One immediately prior to the Transaction.
(5) Prior to the transaction, United will be in control of UBC
within the meaning of Section 368(c) of the Internal Revenue Code.
(6) Following the Transaction, UBC will not issue additional
shares of its stock that would result in United losing control of UBC within the
meaning of Section 368(c) of the Internal Revenue Code.
(7) United has no plan or intention to liquidate UBC; to merge
UBC with and into another corporation; to sell of otherwise dispose of the stock
of UBC; or to cause UBC to sell or otherwise dispose of any of the assets of Fed
One acquired in the Transaction, except for dispositions made in the ordinary
course of business or transfers described in Section 368(a)(2)(C) of the
Internal Revenue Code.
(8) Following the Transaction, UBC will continue the historic
business of Fed One or use a significant portion of Fed One's business assets in
a business.
(9) United has no plan or intention to reacquire any of its
stock issued in the merger.
(10) The liabilities of Fed One assumed by UBC and the
liabilities to which the transferred assets of Fed One are subject were incurred
by Fed One in the ordinary course of business.
(11) There is no intercorporate indebtedness existing between
United and Fed One or between UBC and Fed One that was issued, acquired or will
be settled at a discount.
(12) Fed One is not under the jurisdiction of a Court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A).
<PAGE>
Mr. Richard M. Adams
August __, 1998
Page 3
(13) The fair market value of the assets of Fed One
transferred to UBC will equal or exceed the sum of the liabilities assumed by
UBC, if any, plus the amount of liabilities, if any, to which the transferred
assets are subject.
(14) United, UBC, Fed One, and any shareholder thereof will
pay their respective expenses, if any, incurred in connection with the merger.
(15) No party to the Transaction is an investment company, as
defined in I.R.C. Section 368(a)(2)(F)(iii) and (iv).
(16) No stock of UBC will be issued in the transaction.
(17) The payment of cash to Fed One shareholders in lieu of
fractional shares of United common stock is not separately bargained for
consideration and is solely for the purpose of saving United the expense and
inconvenience of issuing fractional shares. The total cash consideration that
will be paid in the merger to the Fed One shareholders instead of issuing
fractional shares of United common stock will not exceed 1% of the total
consideration to be issued in the transaction to Fed One shareholders in
exchange for their shares of Fed One common stock. The fractional share
interests of each Fed One shareholder will be aggregated and no Fed One
shareholder will receive cash for fractional shares in an amount equal to or
greater than the value of one full share of United common stock.
(18) None of the compensation received by any
shareholder-employees of Fed One will be separate consideration for, or
allocable to, any of their shares of Fed One stock; none of the shares of United
Common Stock received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-employees will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's-length for similar services.
OPINION
-------
Based solely upon the information submitted and on the
representations set forth above, we are of the opinion that:
(a) The statutory merger of Fed One with and into UBC will
constitute tax-free reorganizations within the meaning of I.R.C. ss. 368;
<PAGE>
Mr. Richard M. Adams
August __, 1998
Page 4
(b) No gain or loss should be recognized by United or UBC as a
result of the consummation of the merger;
(c) No gain or loss should be recognized by a United
Stockholder who receives shares of United Common Stock in exchange for shares of
Fed One Common Stock, except as described below with respect to a United
Stockholder who receives cash in lieu of a fractional share interest in United
Common Stock;
(d) The aggregate adjusted tax basis of shares of United
Common Stock (including a fractional share interest in United Common Stock
deemed received and redeemed as described below) received by a United
Stockholder should be the same as the aggregate adjusted tax basis of the shares
of Fed One Common Stock exchanged therefor;
(e) The holding period of shares of United Common Stock
(including a fractional share interest in United Common Stock deemed received
and redeemed as described below) received by a U. S. Holder should include the
holding period of the Fed One Common Stock exchanged therefor, provided such
shares of Fed One Common Stock were held as capital assets at the Effective
Time; and
(f) A United Stockholder who received cash in lieu of a
fractional share interest in United Common Stock should be treated as having
received such fractional share interest and then as having received the cash in
redemption of such fractional share interest. Under Section 302 of the Code, if
such deemed distribution were "substantially disproportionate" with respect to
the United Stockholder or were "not essentially equivalent to a dividend" after
giving effect to the constructive ownership rules of the Code, the United
Stockholder would generally recognize capital gain or loss equal to the
difference between the amount of cash received and the United Stockholder's
adjusted tax basis in the fractional share interest (determined as described in
(d) above).
It should be noted that the opinions expressed in this letter
are based upon statutory, judicial and administrative authority as of the date
of this opinion. There can be no assurance that such authority will not be
changed in the future, or that such changes will not be made retroactively
applicable to the transactions considered herein. Moreover, the above-stated
opinions are based upon the facts as we understand them and upon the
representations provided to us. If the facts turn out to be different in any
material respect from the facts or representations stated herein, or if the laws
or regulations applicable to the proposed transactions are changed or
reinterpreted by competent tribunals, some or all of the opinions expressed in
this letter may become inapplicable.
<PAGE>
Mr. Richard M. Adams
August __, 1998
Page 5
Please note further that Treas. Reg. ss. 1.368-3 requires
certain records to be kept and information to be filed with the federal income
tax returns of each corporation which is a party to the reorganization.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an Exhibit to the Registration Statement
on Form S-4 and any Amendment thereto (the "Registration Statement") in respect
to the shares of United common stock to be issued in connection with the merger,
and to the reference to this opinion under the caption "The Merger Certain
Federal Income Tax Consequences" and elsewhere in the Prospectus/Joint Proxy
Statement included therein. In giving such consent, we do not hereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended.
Sincerely,
BOWLES RICE McDAVID GRAFF & LOVE
By __________________
Marc A. Monteleone
Its Member
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Joint Proxy Statement/Prospectus that is part of the United
Bankshares, Inc. Registration Statement (Form S-4) for the registration of
4,221,572 shares of its common stock and to the incorporation by reference
therein of our report dated February 27,1988 (except Note O, as to which the
date is March 27, 1998, and Note B, as to which the date is July 29, 1998) with
respect to the consolidated financial statements of United Bankshares, Inc. as
of December 31, 1997 and 1996, and for each of the three years in the period
ended December 31, 1997, included in its Current Report on Form 8-K dated August
3, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young, LLP
______________________
Charleston, West Virginia
July 29, 1998
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Fed One Bancorp, Inc.
We consent to the use of our report, incorporated herein by reference, and to
the reference to our firm under the heading "Experts" in the Joint Proxy
Statement/Prospectus, with respect to the consolidated financial statements of
Fed One Bancorp, Inc. and subsidiary as of December 31, 1997 and 1996, and for
each of the years in the three-year period ended December 31, 1997.
/s/ KPMG PEAT MARWICK LLP
_________________________
Pittsburgh, Pennsylvania
August 3, 1998
Exhibit 23.4
CONSENT OF RYAN, BECK & CO.
We hereby consent to the references in the Proxy Statement to our opinion, dated
August 12, 1998, with respect to the merger of United Bankshares, Inc. and Fed
One Bancorp, Inc., and to our firm, respectively, and to the inclusion of such
opinion as an annex to such Proxy Statement. By giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
RYAN, BECK & CO., INC.
By: /s/ David P. Downs
__________________
David P. Downs
Senior Vice President
Livingston, NJ
August 3, 1998
Exhibit 99.1
[Front of Proxy Card]
PROXY SOLICITED BY THE BOARD OF DIRECTORS
OF UNITED BANKSHARES, INC.
The undersigned, a holder of record of shares of common stock, par
value $2.50 per share ("United Common Stock"), of United Bankshares, Inc., a
West Virginia corporation ("United"), hereby appoints Steven E. Wilson and Gary
L. Ellis, or either one of them, the proxy or proxies of the undersigned (with
full power to act in the absence of the others, the act of a majority of those
present to be controlling, each with full power of substitution) to attend the
Special Meeting of United shareholders at 10:00 a.m., on Monday, September 21,
1998, at the 10th Floor of United Square, located at Fifth and Avery Streets,
Parkersburg, West Virginia 26102 (and any adjournments, postponements,
continuations or rescheduling thereof), at which holders of United Common Stock
will be voting on a proposal in connection with the proposed merger of UBC
Holding Company ("Merger Sub"), a wholly owned subsidiary of United, and Fed One
Bancorp, Inc. ("Fed One") pursuant to which Fed One would become a wholly owned
subsidiary of United (the "Merger"). The proposal is to amend the articles of
incorporation of United (the "United Articles Amendment") to increase the number
of authorized shares of United Common Stock from 41,000,000 to 100,000,000
shares. If the Merger is consummated, each outstanding share of common stock of
Fed One will be converted into and exchanged for 1.5 shares of United Common
Stock. Holders of United Common Stock will also be voting upon such other
business as may properly come before the Special Meeting or any adjournment or
postponement of the Special Meeting and to vote as specified in this proxy all
the shares of United Common Stock which the undersigned would otherwise be
entitled to vote if personally present. The undersigned hereby revokes any
previous proxies with respect to the matters covered in this proxy.
THE BOARD OF DIRECTORS OF UNITED UNANIMOUSLY RECOMMENDS A VOTE FOR THE
UNITED PROPOSAL.
IF RETURNED CARDS ARE SIGNED BUT NOT MARKED, THE UNDERSIGNED WILL BE
DEEMED TO HAVE VOTED FOR THE PROPOSAL AND TO HAVE ABSTAINED ON ALL OTHER
MATTERS.
<PAGE>
[Reverse of Proxy Card]
THE BOARD OF DIRECTORS OF UNITED UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL SET FORTH BELOW.
1. APPROVAL OF A PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
OF UNITED TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
UNITED COMMON STOCK FROM 41,000,000 TO 100,000,000.
FOR AGAINST ABSTAIN
| | | | | |
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENTS, POSTPONEMENTS, CONTINUATIONS OR RESCHEDULING
THEREOF.
Date: ___________________, 1998 Please sign your name exactly as it appears
hereon. When shares of United Common Stock
are held of record by joint tenants, both
should sign. When signing as an attorney-in-
fact, executor, administrator, trustee or
_________________________ guardian, please give full title as such. If
Signature (Title, if any) a corporation, please sign in full corporate
name by president or authorized officer. If
a partnership, please sign in partnership
name by authorized person.
_________________________
Signature (Title, if any)
THE NUMBER OF SHARES SHOWN ABOVE AND COVERED BY THIS PROXY INCLUDE, WHERE
APPLICABLE, SHARES HELD IN THE [NAMES OF THE SHARE PURCHASE PLANS].
<PAGE>
PLEASE MARK, DATE, SIGN AND RETURN IMMEDIATELY. ALL JOINT
OWNERS MUST SIGN.
___________________________________
___________________________________
Dated: __________________, 1998
When signing as attorney, executor, administrator, trustee or
guardian, please give full title. If more than one trustee, all should sign.
Exhibit 99.2
[Front of Proxy Card]
FED ONE BANCORP, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FED ONE
BANCORP, INC. FOR USE AT THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
SEPTEMBER 18, 1998 AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned hereby appoints the Board of Directors of Fed One
Bancorp, Inc. ("Fed One") as proxies, each with power to appoint his substitute,
and hereby authorizes them to represent and vote, as designated below, all the
shares of common stock, par value $.10 per share, of Fed One ("Fed One Common
Stock") held of record by the undersigned on August 4, 1998 at the Special
Meeting of Shareholders to be held at Fed One's corporate headquarters located
at 21 Twelfth Street, Wheeling, West Virginia 26003, on September 18, 1998, at
10:00 a.m., Eastern Time, and any adjournment or postponement thereof.
THE BOARD OF DIRECTORS OF FED ONE UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE MERGER AGREEMENT AND THE RELATED PLAN OF MERGER.
IF RETURNED CARDS ARE SIGNED BUT NOT MARKED, THE UNDERSIGNED WILL BE
DEEMED TO HAVE VOTED FOR THE PROPOSAL TO APPROVE THE MERGER AND THE RELATED PLAN
OF MERGER.
<PAGE>
[Reverse of Proxy Card]
THE BOARD OF DIRECTORS OF FED ONE UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL SET FORTH BELOW.
1. Approval of an Agreement and Plan of Merger, dated as of
February 18, 1998, among Fed One, United Bankshares, Inc.
("United"), and UBC Holding Company, Inc., a wholly owned
subsidiary of United, and the related Plan of Merger, under
which Fed One will be merged with and into UBC Holding Company
and Fed One will become a wholly owned subsidiary of United.
If the Merger is consummated, each outstanding share of Fed
One Common Stock will be converted into and exchanged for 1.5
shares of common stock of United.
FOR AGAINST ABSTAIN
| | | | | |
2. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournments, postponements, continuations or rescheduling
thereof.
Date: ___________________, 1998 Please sign your name exactly as it appears
hereon. When shares of Fed One Common Stock
are held of record by joint tenants, only
one holder need sign. When signing as an
attorney-in-fact, executor, administrator,
_________________________ trustee or guardian, please give full title
Signature (Title, if any) as such. If a corporation, please sign in
full corporate name by president or
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
_________________________
Signature (Title, if any)
