<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 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)
<TABLE>
<CAPTION>
<S><C>
WEST VIRGINIA
(STATE OR OTHER 6711 55-0641179
JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>
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
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:
<TABLE>
<S> <C> <C>
MARK J. MENTING, ESQ. CHRISTOPHER R. KELLY, P.C.
SULLIVAN & CROMWELL SILVER FREEDMAN & TAFF, L.L.P.
125 BROAD STREET 1100 NEW YORK AVENUE, N.W.
NEW YORK, NEW YORK 10004 WASHINGTON, D.C. 20005
(212) 558-4000 (202) 414-6141
</TABLE>
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. [ ]_____
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING
REGISTERED REGISTERED(1) OFFERING PRICE PER UNIT PRICE
<S> <C> <C> <C>
Common Stock............. 4,760,953 shares N/A N/A
<CAPTION>
TITLE OF EACH CLASS OF
SECURITIES TO BE AMOUNT OF
REGISTERED REGISTRATION FEE
<S> <C>
Common Stock............. $63,408.19(2)
-$39,414.10(3)
$23,994.09(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 $1.11 per share ("George Mason Common Stock"), of
George Mason Bankshares, Inc. ("George Mason") 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 0.85 shares of United
Common Stock for each share of George Mason Common Stock.
(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 George Mason Common Stock, as reported in the Nasdaq
National Market System on January 21, 1998 ($38.375), and computed based on
the estimated maximum number of such shares (5,601,121) that may be
exchanged for the United Common Stock being registered.
(3) A registration fee of $39,414.10 was previously paid in connection with the
joint filing by United and George Mason 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>
(George Mason Bankshares, Inc. logo)
GEORGE MASON BANKSHARES, INC.
11185 MAIN STREET
FAIRFAX, VIRGINIA 22030
(703) 352-1100
JANUARY 29, 1998
Dear Shareholders:
You are cordially invited to attend a Special Meeting of Shareholders (the
"Special Meeting") of George Mason Bankshares, Inc. ("George Mason") to be held
at the Washington Golf and Country Club located at 3017 North Glebe Road,
Arlington, Virginia at 10:00 a.m. on Monday, March 9, 1998.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve an Amended and Restated Agreement and Plan of Merger, dated
as of December 10, 1997, among George Mason, United Bankshares, Inc. ("United")
and George Mason Holding Company, a wholly owned subsidiary of United ("Merger
Sub"), and the related Plan of Merger (together, the "Merger Agreement"), under
which Merger Sub will be merged with and into George Mason and George Mason will
become a wholly owned subsidiary of United (the "Merger"). Upon consummation of
the Merger, each outstanding share of common stock of George Mason will be
converted into and exchanged for 0.85 of a share of common stock of United,
subject to adjustment as provided in the Merger Agreement (the "Exchange
Ratio"). Pursuant to the adjustments set forth in the Merger Agreement and in
light of a 100% stock dividend declared by United payable March 27, 1998 to
shareholders of record of United as of March 13, 1998, the Exchange Ratio is
expected to be adjusted to 1.7 shares of common stock of United. This
adjustment, the Merger and the United stock dividend are contingent upon the
shareholders of United approving an increase in the number of authorized shares
of common stock of United from 20,000,000 to 41,000,000 shares.
The Board of Directors of George Mason has unanimously approved the Merger.
THE BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF GEORGE MASON AND
ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL. George Mason's
financial adviser, Friedman, Billings, Ramsey & Co., has issued its opinion to
George Mason's Board of Directors that the Exchange Ratio is fair to George
Mason'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 more than two-thirds of
the outstanding shares of common stock of George Mason 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 Regan & Associates, Inc. ("Regan") 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 Regan at 1-800-737-3426.
We look forward to seeing you at the Special Meeting.
Sincerely,
/s/ Bernard H. Clineburg
Bernard H. Clineburg
President & Chief Executive Officer
<PAGE>
(George Mason Bankshares, Inc. logo)
GEORGE MASON BANKSHARES, INC.
11185 MAIN STREET
FAIRFAX, VIRGINIA 22030
(703) 352-1100
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 9, 1998
------------------------
To the Shareholders of George Mason Bankshares, Inc.:
Notice is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of George Mason Bankshares, Inc. ("George Mason") will be held at the
Washington Golf and Country Club, located at 3017 North Glebe Road, Arlington,
Virginia at 10:00 a.m., on Monday, March 9, 1998, for the following purposes:
(1) To consider and vote upon an Amended and Restated Agreement and
Plan of Merger, dated as of December 10, 1997, among George Mason, United
Bankshares, Inc. ("United") and George Mason 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,
Merger Sub would merge with and into George Mason and George Mason would
become a wholly owned subsidiary of United (the "Merger") and each share of
outstanding common stock, par value $1.11 per share, of George Mason
("George Mason Common Stock") on the effective date of the Merger will be
converted into 0.85 of a share of common stock, par value $2.50 per share,
of United, subject to adjustment as provided for in the Merger Agreement
(the "Exchange Ratio"). Pursuant to the adjustments set forth in the Merger
Agreement and in light of a 100% stock dividend declared by United payable
March 27, 1998 to shareholders of record of United as of March 13, 1998,
the Exchange Ratio is expected to be adjusted to 1.7 shares of common stock
of United. This adjustment, the Merger and the United stock dividend are
contingent upon the shareholders of United approving an increase in the
number of authorized shares of common stock of United from 20,000,000 to
41,000,000 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 January 29, 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 more than two-thirds of the outstanding shares of George
Mason Common Stock entitled to vote at the Special Meeting.
THE BOARD OF DIRECTORS OF GEORGE MASON 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,
/s/ Kevin F. DeCoste
Kevin F. DeCoste
Secretary
January 29, 1998
Fairfax, Virginia
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE
<PAGE>
(United Bankshares, Inc. logo)
UNITED BANKSHARES, INC.
300 UNITED CENTER
500 VIRGINIA STREET, EAST
CHARLESTON, WEST VIRGINIA 25301
(304) 424-8761
JANUARY 29, 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 at 10:00 a.m. on Monday, March 9, 1998.
At the Special Meeting, you will be asked to consider and vote upon two
proposals in connection with the proposed merger of George Mason Holding Company
("Merger Sub"), a wholly owned subsidiary of United, and George Mason
Bankshares, Inc. ("George Mason") pursuant to which George Mason would become a
wholly owned subsidiary of United (the "Merger"). The first is a proposal 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 20,000,000 to 41,000,000 shares.
The second is a proposal to approve the issuance of the shares of United Common
Stock to be issued in the merger (the "United Share Issuance"). If the Merger is
consummated, each outstanding share of common stock of George Mason will be
converted into and exchanged for 0.85 of a share of United Common Stock, subject
to adjustment as provided in the Merger Agreement (the "Exchange Ratio").
Pursuant to the adjustments set forth in the Merger Agreement and in light of a
100% stock dividend declared by United payable March 27, 1998 to shareholders of
record of United as of March 13, 1998, the Exchange Ratio is expected to be
adjusted to 1.7 shares of common stock of United. This adjustment, the Merger
and the United stock dividend are contingent upon the shareholders of United
approving the United Articles Amendment.
The Board of Directors of United has unanimously approved the United
Articles Amendment and the United Share Issuance and believes that they 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 proposals.
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. The approval of a majority of the votes present or
represented by proxy and entitled to vote on the matter at the Special Meeting
is required to approve the United Share Issuance. 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 their
representatives reminding you to send in your proxy.
We look forward to seeing you at the Special Meeting.
Sincerely,
/s/ Richard M. Adams
Richard M. Adams
Chairman of the Board & Chief Executive
Officer
<PAGE>
(United Bankshares, Inc. logo)
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 MARCH 9, 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
at 10:00 a.m., on Monday, March 9, 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 20,000,000 to 41,000,000 shares (the "United Articles Amendment").
(2) To consider and vote upon a proposal to approve the issuance of
shares of United Common Stock (the "United Share Issuance") in connection
with the proposed merger of George Mason Holding Company, a wholly owned
subsidiary of United ("Merger Sub"), with and into George Mason Bankshares,
Inc. ("George Mason"), which would become a wholly owned subsidiary of
United pursuant to an Amended and Restated Agreement and Plan of Merger,
dated as of December 10, 1997, among George Mason, United and Merger Sub
(the "Merger") and the related Plan of Merger (together, the "Merger
Agreement"). Pursuant to the Merger, each share of common stock, par value
$1.11 per share, of George Mason, outstanding on the effective date of the
Merger (excluding certain shares held by George Mason, United or their
subsidiaries, if any) shall be converted into 0.85 of a share of United
Common Stock, subject to adjustment as provided in the Merger Agreement
(the "Exchange Ratio"). Pursuant to the adjustments set forth in the Merger
Agreement and in light of a 100% stock dividend declared by United payable
March 27, 1998 to shareholders of record of United as of March 13, 1998,
the Exchange Ratio is expected to be adjusted to 1.7 shares of common stock
of United. This adjustment, the Merger and the United stock dividend are
contingent upon the shareholders of United approving the United Articles
Amendment. 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.
(3) 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 January 29, 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, and the affirmative vote
of a majority of the votes present or represented by proxy and entitled to vote
on the matter at the Special Meeting is required for approval of the United
Share Issuance.
THE BOARD OF DIRECTORS OF UNITED UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE UNITED ARTICLES AMENDMENT AND THE UNITED SHARE
ISSUANCE. ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE "FOR" THE
PROPOSALS.
By Order of the Board of Directors,
/s/ Richard M. Adams
Richard M. Adams
Chairman of the Board and
Chief Executive Officer
January 29, 1998
Charleston, West Virginia
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
<PAGE>
(A redherring appears on the left hand side of this page, rotated 90 degrees.
Text follows.)
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<TABLE>
<S> <C>
PROXY STATEMENT OF PROXY STATEMENT OF
GEORGE MASON BANKSHARES, INC. UNITED BANKSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 9, 1998 TO BE HELD ON MARCH 9, 1998
</TABLE>
PROSPECTUS
UNITED BANKSHARES, INC.
COMMON STOCK
$2.50 PAR VALUE PER SHARE
------------------------
This Joint Proxy Statement/Prospectus is being furnished by George Mason
Bankshares, Inc., a Virginia corporation ("George Mason"), to holders of common
stock, par value $1.11 per share ("George Mason Common Stock"), of George Mason,
as a proxy statement in connection with the solicitation of proxies by the Board
of Directors of George Mason (the "George Mason Board") for use at a Special
Meeting of Shareholders to be held at 10:00 a.m., on Monday, March 9, 1998, at
the Washington Golf and Country Club, located at 3017 North Glebe Road,
Arlington, Virginia, and at any adjournments or postponements thereof (the
"George Mason Special 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 ("United Common Stock"), of United 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, March 9, 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 George Mason 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 George Mason Special Meeting, the holders of George Mason Common
Stock will consider and vote upon a proposal to approve an Amended and Restated
Agreement and Plan of Merger, dated as of December 10, 1997, among George Mason,
United and George Mason Holding Company, a Virginia corporation and wholly owned
subsidiary of United ("Merger Sub"), and the related Plan of Merger (together,
the "Merger Agreement"), pursuant to which Merger Sub will merge with and into
George Mason and George Mason will become a wholly owned subsidiary of United
(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 have
the opportunity to consider and vote upon proposals to approve (i) the amendment
of the restated articles of incorporation of United (the "United Articles") to
increase the number of authorized shares of United Common Stock from 20,000,000
to 41,000,000 shares (the "United Articles Amendment") and (ii) the issuance of
the shares of United Common Stock to be issued in connection with the Merger,
which includes shares to be reserved for issuance in connection with the
conversion of certain George Mason Stock options into United stock options (the
"United Share Issuance"). See "Summary," "The Merger," "United Articles
Amendment" and Appendix A.
Upon consummation of the Merger, each share of George Mason Common Stock
issued and outstanding immediately prior to the Merger shall cease to be
outstanding and each such share (excluding certain shares held by George Mason,
United or their subsidiaries, if any) shall be converted into and exchanged for
0.85 of a share of United Common Stock (the "Exchange Ratio"), subject to
adjustment as provided in 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 a 100% stock dividend declared by United
payable March 27, 1998 to shareholders of record of United as of March 13, 1998
(the "United Stock Dividend"), the Exchange Ratio will be 1.7 shares of common
stock of United; PROVIDED that the effective date of the Merger occurs after
March 13, 1998 and that the shareholders of United approve the United Articles
Amendment. The Merger Agreement also provides for the conversion upon
consummation of the Merger of all stock options (the "George Mason Stock
Options") outstanding under the George Mason Stock Plans (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 shares of George Mason Common Stock outstanding on the
George Mason Record Date (as hereinafter defined), the shares issuable
upon exercise of outstanding George Mason Stock Options and shares
estimated to be issued under certain employee benefit plans of George Mason and
the Exchange Ratio of 0.85, up to approximately United Common Shares will
be issuable upon consummation of the Merger. Up to shares of United Common
Stock will be issuable upon consummation of the Merger if, as anticipated, the
effective date of the Merger occurs after March 13, 1998 in light of the United
Stock Dividend. The shares of George Mason Common Stock and United Common Stock
are listed and traded on The Nasdaq Stock Market Inc. (the "Nasdaq Stock
Market"). On September 10, 1997, the last business day prior to public
announcement of the execution of the Merger Agreement, the last reported sale
prices per share of George Mason Common Stock and of United Common Stock on the
Nasdaq Stock Market were $34 1/2 and $45 1/2, respectively, and on January 29,
1998, the last practicable date prior to the mailing of this Joint Proxy
Statement/Prospectus, the last reported sale prices per share were $______ and
$______, 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 , 1998, and
it is first being mailed or otherwise delivered to George Mason and United
shareholders on or about such date.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
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.............................................................. 8
Comparison of Certain Unaudited per Share Data....................................................................... 9
Selected Financial Data of United (Historical)....................................................................... 10
Selected Financial Data of George Mason (Historical)................................................................. 11
United and George Mason Unaudited Pro Forma Condensed Consolidated Financial Data.................................... 12
RECENT DEVELOPMENTS.................................................................................................... 13
United............................................................................................................... 13
George Mason......................................................................................................... 13
GENERAL INFORMATION.................................................................................................... 13
Special Meetings..................................................................................................... 13
Record Date, Solicitation and Revocability of Proxies................................................................ 14
General.............................................................................................................. 15
Votes Required....................................................................................................... 15
Recommendation of George Mason Board of Directors.................................................................... 16
Recommendation of United Board of Directors.......................................................................... 16
THE MERGER............................................................................................................. 16
General.............................................................................................................. 16
Background of the Merger............................................................................................. 17
Reasons of George Mason for the Merger............................................................................... 18
Opinion of George Mason Financial Advisor............................................................................ 18
Reasons of United for the Merger..................................................................................... 21
Effective Time....................................................................................................... 21
Distribution of United Certificates.................................................................................. 22
Fractional Shares.................................................................................................... 22
Stock Options........................................................................................................ 22
Certain Federal Income Tax Consequences.............................................................................. 22
Management and Operations After the Merger........................................................................... 24
Post-Acquisition Compensation and Benefits........................................................................... 24
Interests of Certain Persons in the Merger........................................................................... 24
Conditions to Consummation........................................................................................... 26
Regulatory Approvals................................................................................................. 27
Amendment, Waiver and Termination.................................................................................... 28
Conduct of Business Pending the Merger............................................................................... 28
Dividend Coordination................................................................................................ 30
Expenses and Fees.................................................................................................... 30
Accounting Treatment................................................................................................. 30
No Dissenters' Rights................................................................................................ 30
Nasdaq Listing of United Common Stock................................................................................ 30
Resales of United Common Stock....................................................................................... 30
Stock Option Agreement............................................................................................... 31
Termination Fee...................................................................................................... 33
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
UNITED ARTICLES AMENDMENT.............................................................................................. 34
UNITED AND GEORGE MASON UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION................................................................................... 34
DESCRIPTION OF UNITED CAPITAL STOCK.................................................................................... 43
General.............................................................................................................. 43
Voting Rights........................................................................................................ 43
Dividends............................................................................................................ 43
Preemptive Rights.................................................................................................... 43
Liquidation.......................................................................................................... 43
Issuance of Stock.................................................................................................... 43
CERTAIN DIFFERENCES IN THE RIGHTS OF UNITED SHAREHOLDERS
AND GEORGE MASON SHAREHOLDERS........................................................................................ 44
Authorized Capital Stock............................................................................................. 44
Voting Rights........................................................................................................ 44
Dividends and Other Distributions.................................................................................... 44
Director Conflict of Interest Transactions........................................................................... 44
Amendment of Articles of Incorporation and Bylaws.................................................................... 44
Special Meetings of Shareholders..................................................................................... 45
Number of Directors, Classified Board of Directors................................................................... 45
Director Vacancies and Removal of Directors.......................................................................... 45
Restrictions on Certain Business Combinations........................................................................ 45
Control Share Acquisitions........................................................................................... 46
Indemnification, Limitation on Liability............................................................................. 47
Dissenters' Rights................................................................................................... 47
Shareholder Inspection Rights; Shareholder Lists..................................................................... 48
COMPARATIVE MARKET PRICES AND DIVIDENDS................................................................................ 49
United............................................................................................................... 49
George Mason......................................................................................................... 50
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF GEORGE MASON........................................................... 51
Principal Beneficial Owners.......................................................................................... 51
Shares Beneficially Owned by Directors and Executive Officers........................................................ 51
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF UNITED................................................................. 53
Principal Beneficial Owners.......................................................................................... 53
Shares Beneficially Owned by Directors and Executive Officers........................................................ 53
EXPERTS................................................................................................................ 55
VALIDITY OF UNITED COMMON STOCK........................................................................................ 55
OTHER MATTERS.......................................................................................................... 55
SHAREHOLDER PROPOSALS.................................................................................................. 55
George Mason......................................................................................................... 55
United............................................................................................................... 55
APPENDICES:
APPENDIX A -- Amended and Restated Agreement and Plan of Merger, dated as of December 10, 1997, by and among United,
George Mason Holding Company and George Mason, and the related Plan of Merger
APPENDIX B -- Stock Option Agreement, dated as of September 11, 1997, by and between United and George Mason
APPENDIX C -- Opinion of Friedman, Billings, Ramsey & Co.
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
United and George Mason 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
George Mason 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 George Mason
Common Stock are traded on the Nasdaq Stock Market. Reports, proxy statements
and other information concerning United and George Mason 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
George Mason and its subsidiaries has been supplied by George Mason.
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 GEORGE MASON.
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, GEORGE MASON, 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.
1
<PAGE>
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, 1996 (the
"1996 United 10-K"); the portions of United's Proxy Statement for the Annual
Meeting of shareholders held on May 19, 1997 (the "1997 United Proxy Statement")
that have been incorporated by reference into the 1996 United 10-K; United's
Quarterly Reports on Form 10-Q for the three months ended March 31, 1997, the
six months ended June 30, 1997 and the nine months ended September 30, 1997; and
United's Current Reports on Form 8-K, dated September 10, 1997, November 7,
1997, November 25, 1997 and January 21, 1998.
The following documents filed by George Mason with the Commission (File No.
0-13833) under Section 13(a) or 15(d) of the Exchange Act are hereby
incorporated by reference into this Joint Proxy Statement/Prospectus: George
Mason's Annual Report on Form 10-K for the year ended December 31, 1996 (the
"1996 George Mason 10-K"), the portions of George Mason's Proxy Statement for
the Annual Meeting of shareholders held on May 16, 1997 that have been
incorporated by reference into the 1996 George Mason 10-K; George Mason's
Quarterly Reports on Form 10-Q for the three months ended March 31, 1997, the
six months ended June 30, 1997 and the nine months ended September 30, 1997; and
George Mason's Current Reports on Form 8-K, dated September 17, 1997 and January
22, 1998.
All documents filed by United and George Mason 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: SECRETARY, AS TO UNITED DOCUMENTS; AND GEORGE MASON
BANKSHARES, INC., 11185 MAIN STREET, FAIRFAX, VIRGINIA 22030, (703) 352-1100,
ATTENTION: KEVIN F. DECOSTE, SECRETARY, AS TO GEORGE MASON DOCUMENTS. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH
2, 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 GEORGE MASON. 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 GEORGE MASON 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.
2
<PAGE>
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 "GEORGE MASON" 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. United operates through its subsidiaries, United National Bank ("UNB")
which operates in West Virginia through 42 offices, and United Bank, a Virginia
state chartered commercial bank headquartered in Arlington, Virginia and
operating principally in Northern Virginia through 10 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 September 30, 1997, United had
consolidated assets of $2.58 billion, consolidated deposits of $2.02 billion and
stockholders' equity of $272.49 million. See " -- Recent Developments,"
" -- Comparison of Certain Unaudited Per Share Data," " -- Selected Financial
Data of United,", "Incorporation of Certain Information By Reference" and
"Recent Developments -- United."
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 over book and market
values, and therefore, some dilution of United's book value and net income per
common share may occur in connection with any future transactions.
GEORGE MASON. George Mason is a Virginia corporation and a registered bank
holding company under the BHCA with its principal executive offices located at
11185 Main Street, Fairfax, Virginia 22030, and its telephone number is (703)
352-1100. George Mason operates through its principal subsidiaries, George Mason
Bank, a Virginia state chartered bank ("GMB"), and George Mason Mortgage Company
("GMMC"). GMB provides a wide range of financial services principally to
individuals and to small and medium-sized businesses, is community-oriented and
offers services customarily provided by full-service banks, including individual
and commercial checking, savings and time deposit accounts, commercial loans,
real estate and consumer loans, travelers' checks and safe deposit facilities.
GMB operates through 21 offices in the Washington metropolitan area. George
Mason Mortgage Company, a wholly-owned subsidiary of GMB, is engaged in the
operation of a general mortgage and agency business. It currently operates
through 7 offices. As of September 30, 1997, George Mason had consolidated
assets of $969.6 million, consolidated deposits of $760.3 million and
shareholders' equity of $70.7 million. See " -- Comparison of Certain Unaudited
Per Share Data," " -- Selected Financial Data of George Mason," "Incorporation
of Certain Information By Reference" and "Recent Developments -- George Mason."
SPECIAL MEETINGS; RECORD DATE
GEORGE MASON. The George Mason Special Meeting will be held at 10:00 a.m.,
on Monday, March 9, 1998, at the Washington Golf and Country Club, located at
3017 North Glebe Road, Arlington, Virginia. At the George Mason Special Meeting,
George Mason shareholders will consider and vote upon approval of the Merger
Agreement. The George Mason Board has fixed the close of business on January 29,
1998, as the record date for determining the George Mason shareholders entitled
to receive notice of and to vote at the George Mason Special Meeting (the
"George Mason Record Date"). As of the George Mason Record Date, there were
shares of George Mason Common Stock issued and outstanding and entitled to be
voted at the Special Meeting.
UNITED. The United Special Meeting will be held at 10:00 a.m., on Monday,
March 9, 1998, at the 10th floor of United Square, located at Fifth and Avery
Streets, Parkersburg, West Virginia. At the United Special Meeting, United
shareholders
3
<PAGE>
will consider and vote upon (i) the United Articles Amendment and (ii) the
United Share Issuance. The United Board has fixed the close of business on
January 29, 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 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 Merger Sub will merge with and into
George Mason, which will be the surviving corporation in the Merger and will be
governed by the laws of the Commonwealth of Virginia. If the Merger Agreement is
approved at the George Mason Special Meeting and the United Articles Amendment
and United Share Issuance are 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 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 20,000,000 to 41,000,000 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 effect the United Stock Dividend. Over 99% of the increase in
authorized United Common Stock will be used for such purpose. Approval of the
United Articles Amendment is a condition precedent to consummation of the
Merger. See "The Merger -- Conditions to Consummation" and "United Articles
Amendment."
CONSIDERATION; EXCHANGE RATIO
Upon consummation of the Merger, all of the outstanding shares of George
Mason Common Stock (excluding certain shares held by George Mason, 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 George Mason 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
GEORGE MASON. Approval of the Merger Agreement requires the affirmative
vote of the holders of more than two-thirds of the outstanding shares of the
George Mason Common Stock entitled to vote at the Special Meeting. As of the
George Mason Record Date, the directors and executive officers of George Mason
and their affiliates held _______ shares (or approximately ____% of the
outstanding shares) of George Mason Common Stock so entitled to vote. As of the
George Mason Record Date, United held no shares of George Mason Common Stock and
directors and executive officers of United and their affiliates held no shares
of George Mason Common Stock. As of the George Mason Record Date, George Mason
held _______ shares and United held no shares of George Mason Common Stock in a
fiduciary capacity for others. See "General Information -- Vote Required" and
"The Merger -- Interests of Certain Persons in the Merger."
The George Mason Board believes that the Merger is in the best interests of
George Mason 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 George Mason Board considered a number of factors,
including the financial condition, results of operations and future prospects of
George Mason and United and the opinion referred to below. See "The
Merger -- Background of the Merger" and "The Merger -- Reasons of George Mason
for the Merger."
THE GEORGE MASON BOARD UNANIMOUSLY RECOMMENDS THAT GEORGE MASON
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
Friedman, Billings, Ramsey & Co., Inc. ("FBR") has served as financial
adviser to George Mason in connection with the Merger and has rendered an
opinion to the George Mason Board that the Exchange Ratio is fair from a
financial point of view
4
<PAGE>
to George Mason shareholders. For additional information concerning FBR and its
opinion, see "The Merger -- Opinion of George Mason'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 20,000,000 to 41,000,000 and the affirmative vote of a majority of
the votes present or represented by proxy and entitled to vote on the matter at
the United Special Meeting is required for approval of the United Share
Issuance. As of the United Record Date, the directors and executive officers of
United and their affiliates held _______ shares (or approximately ____% of the
outstanding shares) of United Common Stock. As of the United Record Date, George
Mason held ______ shares of United Common Stock and directors and executive
officers of George Mason and their affiliates held no shares of United Common
Stock. As of the United Record Date, United held _______ shares and George Mason
held ___ 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 and United
Share Issuance in connection with the Merger are in the best interests of United
and its shareholders and unanimously recommends that you vote for the United
Articles Amendment and United Share Issuance. 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 AND THE UNITED SHARE ISSUANCE.
GENERAL
EFFECTIVE TIME. If the Merger Agreement is approved by the requisite votes
of the George Mason shareholders, the United Articles Amendment and United Share
Issuance are approved by the requisite votes 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 Virginia State
Corporation Commission (the "Corporation Commission") and a certificate of
merger is issued by the Corporation Commission. 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); PROVIDED, HOWEVER, that in no event shall the Effective
Date occur on or prior to January 1, 1998. United and George Mason each has the
right, acting unilaterally, to terminate the Merger Agreement should the Merger
not be consummated by July 15, 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 George Mason 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 George Mason 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 George Mason 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 SHAREHOLDERS. As a result of the Merger,
holders of George Mason Common Stock who receive shares of United Common Stock
will become shareholders of United. For a comparison of the charter and bylaw
5
<PAGE>
provisions of United and George Mason governing the rights of United and George
Mason shareholders, see "Certain Differences in the Rights of United and George
Mason Shareholders."
MANAGEMENT AFTER THE MERGER. United has agreed to cause at least five
members of the George Mason Board (selected by United after consultation with
George Mason), including Bernard H. Clineburg, the Chief Executive Officer and
President of George Mason, who are still members of the George Mason Board
immediately prior to the Effective Time and willing and eligible to serve to be
elected or appointed as directors of United at the Effective Time and shall
cause Mr. Clineburg to also be elected or appointed as a member of the Executive
Committee of the United Board. In addition, United has advised George Mason that
it will, by no later than the first meeting of the United Board held after the
later to occur of (i) United's shareholders approving the United Share Issuance
and United Articles Amendment and (ii) United's 1998 Annual Meeting of
Stockholders, reduce the size of the United Board (or agree to increase the
number of members of the George Mason Board to join the United Board) such that
the former members of the George Mason Board will constitute at least 23% of the
United Board. United has agreed to cause Mr. Clineburg to be elected or
appointed as the President of United at the Effective Time and as the Chairman
and Chief Executive Officer of United Bank. 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 George Mason have interests in the Merger in addition to their
interests generally as shareholders of George Mason. Mr. Clineburg has
commitments regarding the positions described above with United and has entered
into an employment agreement with United and United's Virginia bank subsidiary,
United Bank. In addition, at the time of the execution of the Merger Agreement
on September 10, 1997, United advised George Mason that it intended that the
existing management of GMMC be retained and its chief executive officer report
directly to the chief executive officer of the bank resulting from the merger of
GMB and United Bank. 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 George Mason for all acts and omissions
occurring at or prior to the Effective Time to the same extent as such persons
could be indemnified by George Mason 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 George Mason for a period
of four years following the Effective Time.
The Merger Agreement provides that all options to acquire George Mason
Common Stock outstanding at the Effective Time under the George Mason 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 George Mason 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 George Mason shareholders and approval of the United Articles
Amendment and United Share Issuance 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 may generally be
waived by United or George Mason, 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
Corporation Commission, 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 Corporation Commission 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 George Mason and United, or by action of the board of
directors of either company under certain circumstances, including if the Merger
is not consummated by July 15, 1998, unless the failure to consummate by such
time is due to knowing action or inaction of the party seeking to terminate. See
"The Merger -- Amendment, Waiver and Termination."
ACCOUNTING TREATMENT. The Merger is intended to be accounted for under the
pooling-of-interests accounting method. It is a condition to closing that George
Mason and United shall each have received from Ernst & Young LLP, their
independent
6
<PAGE>
auditors, letters, dated the date of or shortly prior to the Effective Date,
stating its opinion that the Merger qualifies for pooling-of-interests
accounting treatment. See "The Merger -- Accounting Treatment."
BANK MERGER. Each of George Mason and United have agreed to use reasonable
best efforts to cause and effect the merger of United Bank into GMB (the "Bank
Merger") as promptly as reasonably practicable following the Effective Date.
NO DISSENTERS' RIGHTS. Under the Virginia Stock Corporation Act (the
"VSCA"), holders of George Mason 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 and the United Share Issuance. See "The Merger -- No
Dissenters' Rights."
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 George Mason 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 an inducement to the willingness of United to
continue to pursue the transactions contemplated by the Merger Agreement, on
September 11, 1997, George Mason, as issuer, entered into a stock option
agreement with United, as grantee, dated as of September 11, 1997 (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, George Mason 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 George Mason's knowledge), to purchase up to 1,018,000 shares of
George Mason Common Stock, subject to adjustment in certain cases as described
below but in no event exceeding 19.9% of the number of shares of George Mason
Common Stock outstanding immediately before exercise of the Option, for a
purchase price of $32.375 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 George Mason at a price
generally reflecting the price offered or paid by a third-party acquirer for
other shares of George Mason. Alternatively, under certain circumstances, United
could surrender the Option for a cash payment from George Mason of $9 million.
In the event that George Mason shareholders fail to approve the Merger
Agreement or the United shareholders fail to approve the United Articles
Amendment and the United Share Issuance, either George Mason or United may
terminate the Merger Agreement in accordance with its terms. Under certain
circumstances, the Stock Option Agreement will survive until 18 months after
such termination. United will be entitled to exercise its rights under the Stock
Option Agreement if both an Initial Triggering Event (as defined herein) and a
Subsequent Triggering Event (as defined herein) occur within such 18-month
period. The purchase of any shares of George Mason 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 George Mason prior to the Merger, even if such persons might
have been prepared to offer to pay consideration to George Mason 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 George Mason 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.
TERMINATION FEE. If (i) the United Board fails to recommend the United
Articles Amendment or the United Share Issuance or withdraws such recommendation
or modifies or changes such recommendation in a manner adverse in any respect to
the interests of George Mason, (ii) United is in material and willful breach of
any of its covenants contained in the Merger Agreement such that George Mason is
entitled to terminate the Merger Agreement, or (iii) the shareholders of United
do not approve the United Articles Amendment or the United Share Issuance at the
United Special Meeting, in each case after there
7
<PAGE>
has been proposed by a third party a United Acquisition Transaction, as defined
herein (the "Proposal"), then, in any such event, upon the actual consummation
of a United Acquisition Transaction with such third party within 18 months after
the Proposal, United is obligated to pay George Mason a fee of $9 million. This
fee is not payable if United has terminated, or has or had the right to
terminate, the Merger Agreement in the event of a breach or failure to obtain
required approvals as a result of the George Mason shareholders not approving
the Merger Agreement or the George Mason Board failing to recommend the Merger
Agreement.
RECENT DEVELOPMENTS
UNITED. United recorded net income of $40.9 million for the year ended
December 31, 1997. Net income per share of $2.70 for 1997 was up 35 percent over
$2.00 for 1996. United's return on average assets of 1.68 percent and return on
average shareholders' equity of 15.28 percent both exceeded peer group ratios of
1.31 percent and 14.78 percent, respectively, according to the September 30,
1997 Bank Holding Company Performance Report. See "Recent Developments --
United."
GEORGE MASON. George Mason reported 1997 net income of $8.08 million
compared to $6.88 million for 1996, representing an increase of 17.4 percent and
marking George Mason's sixth consecutive year of record earnings. Basic earnings
per share for 1997 were $1.58 compared to $1.38 for 1996, representing an
increase of 14.5 percent. Diluted earnings per share increased to $1.54 for 1997
from $1.35 in 1996, representing a 14.1 percent increase. George Mason's return
on average assets and equity for 1997 were 0.90 percent and 11.76 percent
respectively, compared to 0.92 percent and 11.21 percent for 1996.
Net income for the fourth quarter of 1997 totaled $2.15 million compared to
$2.03 million for the same period last year, representing an increase of 5.6
percent. Basic earnings per share and diluted earnings per share for the fourth
quarter of 1997 were $0.41 and $0.40, respectively, compared to $0.40 and $0.40
for 1996. See "Recent Developments -- George Mason."
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
United Common Stock and George Mason 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 George Mason Common Stock, and the
equivalent price per share (as explained below) of George Mason Common Stock at
(i) the close of business on September 10, 1997, the last trading day
immediately preceding public announcement of the Merger, and (ii) __________,
1998, the last practicable date prior to the mailing of this Joint Proxy
Statement/Prospectus:
<TABLE>
<CAPTION>
MARKET PRICE PER SHARE
--------------------------------------------------
<S> <C> <C> <C>
UNITED GEORGE MASON EQUIVALENT PER
COMMON STOCK COMMON STOCK PRICE SHARE(1)
------------ ------------ --------------
September 10, 1997 $ 45.50 $ 34.50 $ 38.675
, 1998 $ $ $
</TABLE>
- ---------------
(1) The equivalent price per share of George Mason 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 0.85.
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 George Mason Common Stock in the Merger. The number of shares of
United Common Stock to be received for each share of George Mason 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."
8
<PAGE>
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following summary presents selected comparative unaudited per share
data for United and George Mason 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. Pro forma data is derived accordingly.
The information shown below should be read in conjunction with the historical
financial data and statements of United and George Mason incorporated by
reference herein, including the respective notes thereto. See "Available
Information," "Incorporation of Certain Information by Reference," " -- Selected
Financial Data of United (Historical)," " -- Selected Financial Data of George
Mason (Historical)" 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 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 George Mason 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.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
1997 1996 1995 1994
----------------- ------ ------ ------
<S> <C> <C> <C> <C>
UNITED BANKSHARES, INC.
Net income per common share
Historical(3)............................................................. $ 2.04 $ 2.02 $ 2.19 $ 2.02
George Mason pro forma combined(1)........................................ $ 1.89 $ 1.93 $ 2.05 $ 1.86
Net income per diluted common share
Historical(3)............................................................. $ 2.02 $ 2.00 $ 2.18 $ 2.01
George Mason pro forma combined(1)........................................ $ 1.86 $ 1.91 $ 2.03 $ 1.84
Dividends per common share
Historical................................................................ $ 1.00 $ 1.24 $ 1.17 $ 1.06
George Mason pro forma combined(1)........................................ $ 0.89 $ 1.09 $ 1.01 $ 0.91
Book value per common share
Historical................................................................ $ 18.23 $17.13 $16.45 $15.09
George Mason pro forma combined(1)........................................ $ 17.77 $16.67 $16.00 $14.44
GEORGE MASON BANKSHARES, INC.
Net income per common share
Historical(3)............................................................. $ 1.17 $ 1.38 $ 1.30 $ 1.05
Equivalent George Mason pro forma combined(2)............................. $ 1.61 $ 1.64 $ 1.74 $ 1.58
Net income per diluted common share
Historical(3)............................................................. $ 1.13 $ 1.35 $ 1.28 $ 1.04
Equivalent George Mason pro forma combined(2)............................. $ 1.58 $ 1.62 $ 1.73 $ 1.56
Dividends per common share
Historical................................................................ $ 0.42 $ 0.46 $ 0.38 $ 0.29
Equivalent George Mason pro forma combined(2)............................. $ 0.75 $ 0.93 $ 0.86 $ 0.77
Book value per common share
Historical................................................................ $ 13.76 $12.80 $12.18 $10.18
Equivalent George Mason pro forma combined(2)............................. $ 15.10 $14.17 $13.60 $12.27
</TABLE>
- ---------------
(1) Assumes receipt of 100% of the outstanding shares of George Mason Common
Stock in exchange for United Common Stock at the Exchange Ratio.
(2) 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.
(3) The earnings per share amounts for all periods presented have been restated
to reflect the adoption of Statement of Financial Accounting Standards No.
128, Earnings per Share.
9
<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.
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>
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Total interest income.............. $ 138,470 $ 128,324 $ 172,358 $ 165,815 $ 147,637 $ 140,624 $ 136,429
Total interest expense............. 61,059 53,998 73,185 70,167 55,672 55,037 60,819
Net interest income................ 77,411 74,326 99,173 95,648 91,965 85,587 75,610
Provision for loan losses.......... 2,150 2,160 2,610 2,320 2,202 4,830 4,808
Other income....................... 14,468 9,864 14,189 14,752 12,238 14,300 11,889
Other expenses..................... 43,432 49,544 63,549 57,481 55,908 56,107 52,626
Income taxes....................... 15,784 11,910 16,691 17,782 15,709 12,482 9,280
Income before cumulative effect of
accounting change................ 30,513 20,576 30,512 32,817 30,384 26,468 20,785
Net income......................... 30,513 20,576 30,512 32,817 30,384 27,797 20,785
Cash dividends (1)................. 14,980 12,997 17,847 13,817 12,604 10,918 7,914
PER COMMON SHARE:
Income before cumulative effect of
accounting change:(2)
Basic............................ $ 2.04 $ 1.36 $ 2.02 $ 2.19 $ 2.02 $ 1.76 $ 1.51
Diluted.......................... 2.02 1.35 2.00 2.18 2.01 1.75 1.51
Net income:(2)
Basic............................ 2.04 1.36 2.02 2.19 2.02 1.85 1.51
Diluted.......................... 2.02 1.35 2.00 2.18 2.01 1.84 1.51
Cash dividends..................... 1.00 0.92 1.24 1.17 1.06 0.95 0.85
Book value......................... 18.23 16.82 17.13 16.45 15.09 14.21 13.22
SELECTED RATIOS:
Return on average shareholders'
equity........................... 15.41% 10.85% 11.98% 13.86% 13.67% 13.41% 11.80%
Return on average assets........... 1.72% 1.23% 1.35% 1.52% 1.44% 1.39% 1.18%
SELECTED BALANCE SHEET DATA:
Average assets..................... $2,373,061 $2,241,745 $2,263,428 $2,162,760 $2,107,476 $2,006,875 $1,762,981
Investment securities.............. 449,354 345,360 332,331 321,019 372,069 439,699 402,652
Total loans........................ 1,954,573 1,801,483 1,847,604 1,732,986 1,652,275 1,462,574 1,363,583
Total assets....................... 2,581,025 2,299,270 2,326,877 2,210,230 2,170,340 2,035,452 1,968,276
Total deposits..................... 2,017,597 1,772,585 1,827,554 1,774,599 1,714,190 1,699,131 1,694,713
Long-term borrowings............... 3,867 25,584 25,621 34,497 84,374 32,564 28,691
Total borrowings and other
liabilities...................... 290,941 271,776 240,809 186,397 230,516 122,274 120,272
Shareholders' equity............... 272,487 254,909 258,514 249,234 225,634 214,047 198,291
</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) Earnings per share amounts have been restated to reflect United's adoption
of Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE.
10
<PAGE>
SELECTED FINANCIAL DATA OF GEORGE MASON (HISTORICAL)
The following table sets forth selected historical financial data of George
Mason and has been derived from its financial statements. Such selected
historical financial data should be read in conjunction with George Mason'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 George Mason, 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>
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Total interest income......................... $ 47,254 $ 38,888 $ 53,727 $ 44,119 $ 33,659 $ 28,734 $ 27,215
Total interest expense........................ 23,950 18,510 26,264 19,949 11,627 9,840 11,143
Net interest income........................... 23,304 20,378 27,463 24,170 22,032 18,894 16,072
Provision for loan losses..................... 23 181 181 18 167 620 5,050
Other income.................................. 12,375 11,095 14,852 10,359 5,390 3,611 3,578
Other expenses................................ 26,967 24,324 32,179 26,124 20,453 16,600 12,635
Income taxes.................................. 2,755 2,118 3,072 2,095 1,830 1,279 966
Income before cumulative effect of accounting
change...................................... 5,934 4,850 6,883 6,292 4,972 4,006 999
Net income.................................... 5,934 4,850 6,883 6,292 4,972 4,223 999
Cash dividends................................ 2,136 1,574 2,205 1,492 1,114 787 425
PER COMMON SHARE:
Income before cumulative effect of accounting
change:(1)
Basic....................................... $ 1.17 $ 0.98 $ 1.38 $ 1.30 $ 1.05 $ 0.94 $ 0.26
Diluted..................................... 1.13 0.95 1.35 1.28 1.04 0.92 0.26
Net income:(1)
Basic....................................... 1.17 0.98 1.38 1.30 1.05 0.99 0.26
Diluted..................................... 1.13 0.95 1.35 1.28 1.04 0.97 0.26
Cash dividends................................ 0.42 0.33 0.46 0.38 0.29 0.23 0.15
Book value.................................... 13.76 12.09 12.80 12.18 10.18 10.21 9.03
SELECTED RATIOS:
Return on average shareholders' equity........ 11.70% 10.60% 11.21% 11.75% 10.21% 10.62% 2.98%
Return on average assets...................... 0.90% 0.90% 0.92% 1.05% 1.02% 0.99% 0.27%
SELECTED BALANCE SHEET DATA:
Average assets................................ $879,686 $716,709 $750,083 $595,091 $484,121 $426,390 $364,605
Investment securities......................... 391,839 343,886 345,433 261,934 222,914 180,353 146,138
Total loans................................... 525,752 420,927 446,596 355,040 264,962 242,785 195,331
Total assets.................................. 969,578 847,506 872,470 679,596 550,799 461,184 406,781
Total deposits................................ 760,327 663,076 693,594 554,464 460,802 372,889 346,898
Long-term borrowings.......................... 3,500 4,500 4,000 5,000
Total borrowings and other liabilities........ 138,597 123,776 114,532 67,205 43,221 41,462 26,578
Shareholders' equity.......................... 70,654 60,654 64,344 57,927 46,776 46,833 33,305
</TABLE>
- ---------------
(1) Earnings per share amounts have been restated to reflect George Mason's
adoption of Statement of Financial Accounting Standards No. 128, EARNINGS
PER SHARE.
11
<PAGE>
UNITED AND GEORGE MASON UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
DATA
The following table sets forth selected unaudited pro forma financial data
of United giving effect to the Merger as if it occurred as of the beginning of
the periods indicated below, after giving effect to the pro forma adjustments
described in the Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements contained elsewhere in this Joint Proxy Statement/Prospectus. 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 George Mason Unaudited Pro Forma Condensed Consolidated Financial
Information, 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
been consummated on the date indicated or that may be achieved in the future.
See "Incorporation of Certain Information by Reference" and "United and George
Mason Unaudited Pro Forma Condensed Consolidated Financial Information."
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Total interest income.............. $ 185,724 $ 167,212 $ 226,085 $ 209,934 $ 181,296 $ 169,358 $ 163,644
Total interest expense............. 85,009 72,508 99,449 90,116 67,299 64,877 71,962
Net interest income................ 100,715 94,704 126,636 119,818 113,997 104,481 91,682
Provision for loan losses.......... 2,173 2,341 2,791 2,338 2,369 5,450 9,858
Other income....................... 26,843 20,959 29,041 25,111 17,628 17,911 15,467
Other expenses..................... 70,399 73,868 95,728 83,605 76,361 72,707 65,261
Income taxes....................... 18,539 14,028 19,763 19,877 17,539 13,761 10,246
Income before cumulative effect of
accounting change................ 36,447 25,426 37,395 39,109 35,356 30,474 21,784
Net income......................... 36,447 25,426 37,395 39,109 35,356 32,020 21,784
Cash dividends..................... 17,116 14,571 20,052 15,309 13,718 11,705 8,339
PER COMMON SHARE:
Income before cumulative effect of
accounting change:(1)
Basic............................ $ 1.89 $ 1.31 $ 1.93 $ 2.05 $ 1.86 $ 1.63 $ 1.28
Diluted.......................... 1.86 1.30 1.91 2.03 1.84 1.62 1.28
Net income:(1)
Basic............................ 1.89 1.31 1.93 2.05 1.86 1.71 1.28
Diluted.......................... 1.86 1.30 1.91 2.03 1.84 1.70 1.28
Cash dividends..................... 0.89 0.80 1.09 1.01 0.91 0.81 0.71
Book value......................... 17.77 16.25 16.67 16.00 14.44 13.76 12.77
SELECTED RATIOS:
Return on average shareholders'
equity........................... 14.65% 10.80% 11.83% 13.47% 13.05% 12.96% 10.39%
Return on average assets........... 1.12% 0.86% 1.24% 1.42% 1.36% 1.32% 1.02%
SELECTED BALANCE SHEET DATA:
Average assets..................... $3,252,747 $2,958,454 $3,013,511 $2,757,851 $2,591,597 $2,433,265 $2,127,586
Investment securities.............. 841,193 689,246 677,764 582,953 594,983 620,052 548,790
Total loans........................ 2,480,325 2,222,410 2,294,200 2,088,026 1,917,237 1,705,359 1,558,914
Total assets....................... 3,550,603 3,146,776 3,199,347 2,889,826 2,721,139 2,496,636 2,375,057
Total deposits..................... 2,777,924 2,435,661 2,521,148 2,329,063 2,174,992 2,072,020 1,996,611
Long-term borrowings............... 7,367 30,084 29,621 39,497 84,374 32,564 28,691
Total borrowings and other
liabilities...................... 429,538 395,552 355,341 253,602 273,737 163,736 146,850
Shareholders' equity............... 343,141 315,563 322,858 307,161 272,410 260,880 231,596
</TABLE>
- ---------------
(1) Earnings per share amounts have been restated to reflect the adoption of
Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE.
12
<PAGE>
RECENT DEVELOPMENTS
UNITED
For the year ended December 31, 1997, net income increased 34.2 percent to
a record $40.9 million. Net income per share of $2.70 for 1997 was up 35 percent
over $2.00 for 1996. United's return on average assets of 1.68 percent and
return on average shareholders' equity of 15.28 percent both exceed peer group
ratios of 1.31 percent and 14.78 percent, respectively, according to the
September 30, 1997 Bank Holding Company Performance Report.
On a tax-equivalent basis, the net interest margin declined slightly to
4.76 percent for 1997 as compared to 4.85 percent for 1996. Higher average loan
volumes of $119.3 million for 1997 was the primary reason for the $6.6 million
increase in net interest income over 1996. Other income, excluding security
transactions, was up $5.4 million or 38.1 percent when comparing 1997 to 1996
primarily from increased income from mortgage banking operations. United
continued to control costs as other expense decreased $3.6 million or 5.7
percent when comparing 1997 to 1996. For the year ended December 31, 1997,
income taxes approximated $21.5 million compared to $16.7 million for 1996. This
increase is principally the result of lower levels of tax-exempt income and
higher levels of pretax income. For the years ended December 31, 1997 and 1996,
the provision for loan losses was $3.1 million and $2.6 million, respectively.
The $0.5 million increase in the provision for possible loan losses in 1997 was
commensurate with the level of nonperforming loans during the year.
GEORGE MASON
George Mason reported 1997 net income of $8.08 million compared to $6.88
million for 1996, representing an increase of 17.4 percent and marking George
Mason's sixth consecutive year of record earnings. Basic earnings per share for
1997 were $1.58 compared to $1.38 for 1996, representing an increase of 14.5
percent. Diluted earnings per share increased to $1.54 for 1997 from $1.35 in
1996, representing a 14.1 percent increase. George Mason's return on average
assets and equity for 1997 were 0.90 percent and 11.76 percent respectively,
compared to 0.92 percent and 11.21 percent for 1996.
Net income for the fourth quarter of 1997 totaled $2.15 million compared to
$2.03 million for the same period last year, representing an increase of 5.6
percent. Basic earnings per share and diluted earnings per share for the fourth
quarter of 1997 were $0.41 and $0.40, respectively, compared to $0.40 and $0.40
for 1996.
The improvement in net income for 1997 was primarily attributable to
increases in net interest income and noninterest income. The increase in net
interest income was due to a higher level of average earning assets. On a tax
equivalent basis, the net interest margin was 3.95 percent for both 1997 and
1996. The increase in noninterest income was led by a substantial increase in
gains on sales of mortgage loans. The improvements in revenues were partially
offset by an increase in noninterest expenses, which included $368,000 in
nonrecurring merger expenses.
Total assets increased to $1.0 billion at December 31, 1997, compared to
$872 million at December 31, 1996. The growth in assets for 1997 represented an
increase of $154 million, or 17.6 percent over total assets at year-end 1996,
Loans, net of unearned income, increased by $83 million, or 22.1 percent, to
$456 million at December 31, 1997, compared to $374 million at December 31,
1996. Mortgage loans held for resale totaled $91 million at year-end 1997,
compared to $73 million at year-end 1996. Total deposits were $819 million at
year-end compared to $694 million on December 31, 1996.
Shareholders' equity at December 31, 1997 totaled $76 million compared to
$64 million on December 31, 1996. George Mason recently announced a cash
dividend of $0.14 per share for the fourth quarter of 1997. Dividends for 1997
totaled $0.56 per share compared to $0.46 per share for 1996, an increase of
21.7 percent.
Non-performing assets, consisting of nonaccrual loans, restructured loans
and other real estate, declined 46.5 percent to $1.1 million at December 31,
1997 compared to $2.0 million at year end 1996. Non-performing assets amounted
to 0.10 percent of total assets at December 31, 1997, compared with 0.23 percent
at year-end 1996.
GENERAL INFORMATION
SPECIAL MEETINGS
This Joint Proxy Statement/Prospectus is being furnished to the
shareholders of George Mason and United in connection with the solicitation of
proxies by the George Mason Board and United Board for use at the George Mason
Special Meeting and the United Special Meeting, respectively.
13
<PAGE>
GEORGE MASON
The George Mason Special Meeting will be held at the Washington Golf and
Country Club, located at 3017 North Glebe Road, Arlington, Virginia at 10:00
a.m., on Monday, March 9, 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 at 10:00 a.m., on
Monday, March 9, 1998, and at any adjournments and postponements thereof to
consider and vote upon proposals to approve (i) the United Articles Amendment
increasing the number of authorized shares of United Common Stock from
20,000,000 to 41,000,000 shares and (ii) the United Share Issuance.
RECORD DATE, SOLICITATION AND REVOCABILITY OF PROXIES
GEORGE MASON
The George Mason Board has fixed the close of business on January 29, 1998
as the record date for determining the George Mason shareholders entitled to
receive notice of and to vote at the George Mason Special Meeting. Only holders
of record of George Mason Common Stock as of the George Mason Record Date are
entitled to notice of and to vote at the Special Meeting. As of the George Mason
Record Date, _______ shares of George Mason Common Stock were issued and
outstanding and held by ___ record holders. Holders of George Mason Common Stock
are entitled to one vote on each matter considered and voted on at the Special
Meeting for each share of George Mason Common Stock held of record at the close
of business on the George Mason Record Date. The presence, in person or by
properly executed proxy, of the holders of a majority of the shares of George
Mason Common Stock entitled to vote at the George Mason Special Meeting is
necessary to constitute a quorum at the George Mason Special Meeting. For
purposes of determining the presence of a quorum, abstentions and shares
represented by a proxy from a broker or nominee indicating that such person has
not received instructions from the beneficial owner or other person entitled to
vote shares ("broker non-votes") will be counted as shares present. Neither
abstentions nor broker non-votes will be counted as votes cast for purposes of
determining whether a proposal has received sufficient votes for approval.
However, because approval of the Merger Agreement requires the affirmative vote
of more than two-thirds of the outstanding shares of George Mason Common Stock,
abstentions and broker non-votes will have the effect of votes against the
Merger Agreement.
Proxies in the form delivered to George Mason Shareholders with this Joint
Proxy Statement/Prospectus are being solicited by the George Mason Board. Shares
of George Mason 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 George Mason Board as to any other matter
that may come before the George Mason Special Meeting or any adjournment or
postponement thereof including, among other things, a motion to adjourn or
postpone the George Mason 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 George Mason shareholder who has given a proxy may revoke it at any time
prior to its exercise at the George Mason Special Meeting by (i) giving written
notice of revocation to the Secretary of George Mason, (ii) properly submitting
to George Mason a duly executed proxy bearing a later date, or (iii) voting in
person at the George Mason Special Meeting. All written notices of revocation
and other communications with respect to revocation of proxies should be
addressed to George Mason as follows: George Mason Bankshares, Inc., P.O. Box
600, Fairfax, VA 22030, Attention: Kevin F. DeCoste, 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 George Mason's Secretary or other person
responsible for tabulating votes on behalf of George Mason.
George Mason has retained Regan & Associates, Inc. ("Regan") to assist
George Mason in connection with its communications with its shareholders with
respect to, and to provide other services to George Mason in connection with,
the Special Meeting. Regan will receive a fee of $5,000 for its services and
reimbursement of out-of-pocket expenses not to exceed $2,500 in connection
therewith.
14
<PAGE>
UNITED
The United Board has fixed the close of business on January 29, 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, _______
shares of United Common Stock were issued and outstanding and held by ___ 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 but broker non-votes will not be counted as shares
present. Neither abstentions nor broker non-votes will be counted as votes cast
for purposes of determining whether a proposal has received sufficient votes for
approval.
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 (i) the United Articles Amendment to
increase the number of authorized shares of United Common Stock from 20,000,000
to 41,000,000 shares and (ii) the United Share Issuance, 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 26101,
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
Special Meeting. CIC will receive a fee of $3,000 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 George Mason Special Meeting and
the United Special Meeting will be paid for by George Mason and United,
respectively. Pursuant to the Merger Agreement, United has agreed to share
equally with George Mason 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, George Mason 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 George
Mason and United Common Stock, respectively; such holders, after inquiry by
George Mason and United, respectively, will provide information concerning
quantity of proxy and other materials needed to supply such materials to
beneficial owners, and George Mason and United, respectively, will reimburse
them for the expense of mailing the proxy materials to such persons.
VOTES REQUIRED
GEORGE MASON
Approval of the Merger Agreement requires the affirmative vote of the
holders of more than two-thirds of the shares of George Mason Common Stock
outstanding as of the George Mason Record Date.
As of the George Mason Record Date, George Mason directors and executive
officers and their affiliates held approximately ____% of the outstanding shares
of George Mason Common Stock entitled to vote at the George Mason Special
15
<PAGE>
Meeting. As of the George Mason Record Date, United held no shares of George
Mason Common Stock and none of its directors and executive officers or their
affiliates held any shares of George Mason 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 and
approval of the United Share Issuance requires the affirmative vote of a
majority of the votes present or represented by proxy and 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 ____%
of the outstanding shares of United Common Stock entitled to vote at the United
Special Meeting. As of the United Record Date, George Mason held ____ shares of
United Common Stock and none of its directors and executive officers or their
affiliates held any shares of United Common Stock.
RECOMMENDATION OF GEORGE MASON BOARD OF DIRECTORS
For the reasons described in the section of this Joint Proxy
Statement/Prospectus entitled "The Merger -- Reasons of George Mason for the
Merger," the George Mason Board has unanimously adopted the Merger Agreement,
believes that the Merger is in the best interests of George Mason and its
shareholders and unanimously recommends that shareholders of George Mason vote
"FOR" approval of the Merger Agreement. See "The Merger -- Background of the
Merger," " -- Reasons of George Mason 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
United Share Issuance and believes that such proposals are in the best interests
of United and its shareholders and unanimously recommends that shareholders of
United vote "FOR" approval of the United Articles Amendment and the United Share
Issuance. See "The Merger -- Background of the Merger," " -- Reasons of United
for the Merger" and "United Articles Amendment."
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 Merger Sub will
merge with and into George Mason. George Mason will be the surviving corporation
of the Merger. At the Effective Time, each share of issued and outstanding
George Mason Common Stock will cease to be outstanding and each such share
(other than certain shares held by George Mason, United or their subsidiaries,
if any) will be converted into and exchanged for 0.85 of a share 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. United has declared a 100% stock dividend payable March 27, 1998 to
shareholders of record as of March 13, 1998, subject to approval of the United
Articles Amendment. If the United Articles Amendment is approved and the
Effective Date occurs after March 13, 1998, the Exchange Ratio will adjust to
1.7 (subject to further adjustment as provided in the Merger Agreement and
described above).
The Merger Agreement provides that United may change the method of
effecting the combination with George Mason at any time prior to the Effective
Time, provided that it cannot alter the consideration to be received by George
Mason shareholders, adversely affect the tax treatment for George Mason
shareholders or materially delay the transactions contemplated by the Merger
Agreement.
16
<PAGE>
BACKGROUND OF THE MERGER
George Mason's business strategy has been to provide its customers with the
financial sophistication and range of products typically offered by large,
regional banks, while maintaining the quick response and services of a community
bank. Throughout most of its operating history, George Mason believed this
strategy could best be effected by remaining an independent entity.
In early 1996, consistent with its fiduciary responsibilities to
shareholders, the George Mason Board requested and was presented with a
preliminary analysis by an independent investment banking firm regarding whether
George Mason's business strategy could still best be effected by remaining
independent. Following the presentation, the George Mason Board authorized
Bernard H. Clineburg, President and Chief Executive Officer, to explore with the
investment banking firm ways to enhance shareholder value.
In June 1996, George Mason retained the investment banking firm for
assistance in determining whether its business strategy could best be effected
by independent growth or by joining forces with a strategic partner interested
in regional growth. At the September 1996 meeting of the George Mason Board, the
investment banking firm reported that it had contacted a number of bank holding
companies to ascertain whether any of such companies would be interested in a
strategic alliance with George Mason. Three of such companies, including United,
expressed a potential interest in a possible transaction with George Mason. At
the October 1996 meeting of the George Mason Board, the investment banking firm
provided additional information on each of the three indications of interest.
The George Mason Board then further discussed the indications at length,
considering, among other things, the quality of each other party, whether the
projected cost savings of each possible transaction were achievable and whether
each of the other parties could provide greater value to George Mason's
shareholders than the shareholders would receive if George Mason remained
independent. The George Mason Board decided not to further pursue any of the
indications and directed management and the investment banking firm to terminate
discussions with the three interested parties.
In mid-1997, Mr. Clineburg was approached by representatives of a large
regional bank holding company regarding the acquisition of George Mason and was
provided with an indication of interest. On August 12, 1997, Mr. Clineburg
contacted Richard M. Adams, Chairman of the Board and Chief Executive Officer of
United, and requested a meeting. On August 15, 1997, Mr. Adams and Mr. Clineburg
met and discussed a possible strategic transaction, including preliminary terms
of an agreement and a proposed exchange ratio of 0.85 of a share of United
Common Stock for each share of George Mason Common Stock. On August 26, 1997,
the Mergers and Acquisitions Committee of the George Mason Board met to discuss
the potential value of George Mason under various earnings and asset growth
scenarios, and determined that the value of United's indication of 0.85 of a
share of United Common Stock for each share of George Mason Common Stock was
significantly greater than the then present value of George Mason Common Stock.
At a special meeting on September 4, 1997, the George Mason Board met to assess
and consider, among other things, the preliminary indications of interest
provided by United and the other institution to Mr. Clineburg and the time frame
within which the two institutions were prepared to act. In connection with these
preliminary indications of interest, United contemplated a strategic stock
transaction with an indicated value of approximately $38 per share and the other
institution contemplated a stock transaction with an indicated value of
approximately $36 per share. After extensive discussion and a full evaluation of
the propriety of remaining independent, it was determined that a business
combination with either of the interested parties would provide better
shareholder value than continuing as an independent banking organization. The
stock currencies of United and the other interested party were considered
attractive with the potential for both short term and long term growth
opportunity. The George Mason Board considered the transaction with United to be
the most attractive to shareholders from a strategic point of view based upon,
among other factors, the indicated value of approximately $38 per share, the
resulting value to the combined entity of the addition of George Mason's
significant banking franchise in the Washington, D.C. metropolitan area to
United, the utilization by United of the George Mason banking franchise as a
platform for future growth and expansion (both internally and through
acquisitions) in the Washington, D.C. metropolitan area, and the unique
partnership opportunity offered by the United transaction including George Mason
receiving multiple directorships on the United Board and continuity of
management at GMB and GMCC. The George Mason Board authorized Mr. Clineburg to
further pursue a transaction with United.
During the following week, George Mason engaged FBR as its financial
advisor for a possible transaction with United and engaged Ernst & Young LLP,
George Mason's independent auditors, to assist George Mason management in
conducting a due diligence investigation of United. George Mason and United and
their respective financial and legal advisors engaged in negotiations concerning
the terms of a transaction (including negotiations relating to definitive
transaction agreements), and each institution performed due diligence on the
other. The due diligence review was based on publicly available information, as
well as on-site inspections of property.
17
<PAGE>
On September 10, 1997, the George Mason Board held a special meeting to
consider the due diligence findings of George Mason's management and advisors
and the negotiated terms of the definitive transaction agreements. Following
presentations by management, FBR and George Mason's legal advisor, including
summaries of financial and valuation analyses, the terms of the proposed
acquisition, regulatory matters and the due diligence findings of George Mason's
management and advisors, and after extensive discussion among the members of the
George Mason Board, the George Mason Board voted unanimously to authorize the
execution of the Merger Agreement and the Stock Option Agreement for the reasons
described below.
REASONS OF GEORGE MASON FOR THE MERGER
The terms of the Merger Agreement, including the consideration to be paid
to George Mason's shareholders, were the result of arm's-length negotiations
between representatives of United and George Mason. In the course of reaching
its determination to approve the Merger Agreement and recommend it to the
shareholders of George Mason, the George Mason Board, without assigning any
relative or specific weights, considered a number of factors, including, among
other things: (i) the George Mason Board's familiarity with and review of George
Mason's business, financial condition, results of operations and prospects; (ii)
the financial and valuation analyses prepared by FBR; (iii) the fairness opinion
rendered by FBR, a copy of which is attached hereto as Appendix C; (iv) the
financial terms of the Merger, including the Exchange Ratio and the value of the
consideration to be received by George Mason shareholders as a multiple of per
share book value and earnings; (v) the George Mason Board's review, based in
part on presentations by George Mason management and advisors, of United's
business, financial condition, results of operations and management and the
performance of the United Common Stock on a historical basis, the prospects of
positive long-term performance of United Common Stock, the strategic fit between
the parties, the enhanced opportunities for operating efficiencies that could
result from the Merger and the respective contributions the parties would bring
to a combined institution; (vi) the anticipated effect of the Merger to United
as the resulting entity, including but not limited to, a significantly enhanced
banking platform for future growth and expansion in the Washington, D.C.
metropolitan area; (vii) the treatment of the Merger as a tax free exchange of
George Mason Common Stock for United Common Stock for federal income tax
purposes; (viii) the increased investment liquidity available to holders of
George Mason Common Stock as a result of United's larger market capitalization
and the greater trading volume in its common stock; (ix) industry and economic
factors; (x) the nature and compatibility of United's management and business
philosophy; (xi) the anticipated impact on employees, customers and communities
serviced by George Mason; and (xii) regulatory and other factors.
The Board of Directors of George Mason unanimously recommends that the
holders of George Mason Common Stock vote FOR approval of the Merger Agreement
and Plan of Merger.
OPINION OF GEORGE MASON FINANCIAL ADVISOR
Pursuant to a letter agreement dated as of September 5, 1997 (the "FBR
Agreement"), Friedman, Billings, Ramsey & Co., Inc. ("FBR") was retained by
George Mason to act as its financial advisor in connection with the Merger. At
the meeting of the George Mason Board held on September 10, 1997, FBR delivered
its written opinion to the George Mason Board to the effect that as of such
date, a fixed exchange ratio of 0.85 of a share of United Common Stock for each
share of George Mason Common Stock pursuant to the Merger Agreement was fair,
from a financial point of view, to the holders of George Mason Common Stock. FBR
has reconfirmed its September 10, 1997 opinion by delivery of its written
opinion (the "FBR Opinion") to the George Mason Board, dated the date of this
Joint Proxy Statement/Prospectus, stating that as of the date hereof, based on
the matters set forth in such opinion and pursuant to the Merger Agreement, the
proposed fixed exchange ratio of 0.85 of a share of United Common Stock for each
share of George Mason Common Stock to be received by the holders of shares of
George Mason Common Stock is fair to such holders from a financial point of
view.
THE FULL TEXT OF THE FBR OPINION, WHICH SETS FORTH THE ASSUMPTIONS MADE,
PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS
ATTACHED AS APPENDIX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION OF THE FBR OPINION SET FORTH
HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX C. GEORGE MASON'S
SHAREHOLDERS ARE URGED TO READ THE FBR OPINION IN ITS ENTIRETY. FBR'S OPINION IS
ADDRESSED ONLY TO GEORGE MASON'S BOARD OF DIRECTORS AND DIRECTED ONLY TO THE
EXCHANGE RATIO TO BE RECEIVED IN THE MERGER BY THE HOLDERS OF GEORGE MASON
COMMON STOCK, AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO
HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING.
18
<PAGE>
FBR is a nationally recognized investment banking firm and was selected by
George Mason based on the firm's reputation and experience in investment banking
in general, its recognized expertise in the valuation of banking businesses and
because of its familiarity with George Mason. FBR, as part of its investment
banking business, is frequently engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes.
In connection with rendering the opinions dated September 10, 1997 and the
date hereof, FBR, among other things: (i) reviewed the Merger Agreement; (ii)
reviewed the Annual Reports to Stockholders of George Mason for the fiscal years
ended December 31, 1995 and 1996 and Annual Reports of George Mason on Form 10-K
filed with the Commission for the fiscal years ended December 31, 1995 and 1996,
as well as Quarterly Reports of George Mason on Form 10-Q filed with the
Commission for the interim periods ended March 31, 1997, June 30, 1997 and
September 30, 1997; (iii) reviewed the Annual Report to Stockholders of United
for the fiscal year ended December 31, 1996 and Annual Reports of United on Form
10-K filed with the Commission for the fiscal years ended December 31, 1994
through 1996, as well as Quarterly Reports of United on Form 10-Q filed with the
Commission for the interim periods ended March 31, 1997, June 30, 1997 and
September 30, 1997; (iv) reviewed both United's and George Mason's unaudited
financial statements for the seven months ended July 31, 1997; (v) reviewed the
reported market prices and trading activity for United common stock for the
period January 1994 through January , 1998 and reviewed the reported market
prices and trading activity for George Mason common stock for the period January
1994 through September 10, 1997; (vi) discussed the financial condition, results
of operations, business and prospects of George Mason and United with the
managements of George Mason and United; (vii) compared the results of operations
and financial condition of George Mason and United with those of certain
publicly-traded financial institutions (or their holding companies) that FBR
deemed to be reasonably comparable to George Mason or United, as the case may
be; (viii) reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions that FBR deemed to be reasonably comparable to
the Merger; (ix) reviewed the financial terms, to the extent publicly available,
of certain acquisition transactions previously entered into by United; and (x)
performed such other analyses and reviewed and analyzed such other information
as FBR deemed appropriate.
In connection with rendering the FBR Opinion, as set forth herein, FBR
assumed and relied upon, without independent verification, the accuracy and
completeness of all the financial information, analyses and other information
reviewed by and discussed with it, and did not make an independent evaluation or
appraisal of the specific assets, the collateral securing assets or the
liabilities of United, George Mason or any of their respective subsidiaries, or
the collectibility of any such assets (relying, where relevant, on the analyses
and estimates of United and George Mason). With respect to the financial
projections reviewed with each company's management, FBR assumed that they
reflect the best currently available estimates and judgments of the respective
managements of the respective future financial performances of each of United
and George Mason and of the combined company, and that such performances will be
achieved. FBR also assumed that there has been no material change in United's or
George Mason's assets, financial condition, results of operations, business or
prospects since the date of the last financial statements noted above. Finally,
FBR assumed without independent verification that the aggregate consolidated
allowances for loan losses for George Mason and United were adequate to cover
such losses, and that the conditions precedent in the Merger Agreement are not
waived.
The forecasts and projections furnished to FBR for George Mason were
prepared by the management of George Mason. As a matter of policy, George Mason
does not publicly disclose internal management forecasts, projections or
estimates of the type furnished to FBR in connection with its analysis of the
Merger, and such forecasts, projections and estimates were not prepared with a
view towards public disclosure. These forecasts, projections and estimates were
based on numerous variables and assumptions which are inherently uncertain and
which may not be within the control of management including, without limitation,
general economic, regulatory and competitive conditions. Accordingly, actual
results could vary materially from those set forth in such forecasts,
projections and estimates.
The George Mason Board imposed no limitations on FBR with respect to the
investigation made or procedures followed by FBR in rendering the FBR Opinion.
In connection with rendering such fairness opinion to the George Mason Board,
FBR performed a variety of financial analyses. The following is a summary of the
material financial analyses performed by FBR, but does not purport to be a
complete description of FBR's analyses or presentation at the September 10, 1997
meeting of the George Mason Board. FBR believes that its analyses must be
considered as a whole and that selecting portions of such analyses and the
factors considered therein, without considering all factors and analyses, could
create an incomplete view of the analyses and the processes underlying the FBR
Opinion. The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to partial analyses or
summary description. In its analyses, FBR made numerous assumptions with respect
to industry performance, business and economic conditions and various other
19
<PAGE>
matters, many of which are beyond the control of George Mason and United. Any
estimates contained in FBR'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 or
necessarily reflect the prices at which the companies or their securities may
actually be sold.
SUMMARY OF TERMS OF PROPOSED TRANSACTIONS. FBR reviewed the terms of the
proposed Merger, including the exchange ratio, the form of consideration, and
the percentage of premium to George Mason's market price at September 10, 1997.
Based on a fixed exchange ratio of 0.85 of a share of United Common Stock for
each share of George Mason Common Stock and a price per share of $45.50 for
United Common Stock (the closing price for such stock on September 10, 1997),
the amount of consideration on September 10, 1997 was $38.675 per share of
George Mason Common Stock (the "Exchange Ratio"). As of September 10, 1997, the
Exchange Ratio represented a percentage of premium to the current market price
per share of $34.50 for George Mason Common Stock (the closing price for such
stock on September 10, 1997) of 12.10%.
Based on the closing share price of United Common Stock as of September 10,
1997, the Exchange Ratio represented a multiple of (i) 27.16x George Mason's
earnings per share for the twelve months ended June 30, 1997; (ii) 26.43x IBES
analysts' estimate of George Mason's 1997 earnings per share; (iii) 3.08x George
Mason's book value per share as of June 30, 1997 and (iv) 3.09x George Mason's
tangible book value per share as of June 30, 1997. The Exchange Ratio also
represented a tangible book premium to core deposits of 20.60% based on George
Mason's tangible book value at June 30, 1997.
COMPARABLE TRANSACTION ANALYSIS. FBR reviewed certain information relating
to transactions announced since January 1, 1997 involving the acquisition of
banks nationwide ("Nationwide Transactions"); banks in Virginia ("Virginia
Transactions"); banks in the Mid Atlantic Region including the District of
Columbia, Maryland, Ohio, Pennsylvania, Virginia, and West Virginia ("Mid
Atlantic Region Transactions"); banks nationwide in which the seller's return on
average equity ("ROAE") is between 11% and 13% ("Seller's ROAE Comparable
Transactions"); and banks nationwide with assets between $500 million and $1.5
billion (the "Asset Comparable Transactions" and collectively, the "Comparable
Groups"). In conjunction with its analysis, FBR reviewed valuation multiples
based on price to book value, price to tangible book value, price to latest
twelve months earnings per share and the premium over tangible book value as a
percentage of core deposits. FBR compared United's pending acquisition of George
Mason to transactions involving the Comparable Groups over the period from
January 1, 1997 through November 10, 1997. FBR computed the foregoing ratios for
the Merger based on the Exchange Ratio and a price per share of $45.50 for
United Common Stock (the closing price for such stock on September 10, 1997),
indicating a price per share of George Mason Common Stock at announcement of the
Merger of $38.675. The Comparable Groups included the following numbers of
transactions: Nationwide Transactions (338); the Virginia Transactions (12); the
Mid Atlantic Region Transactions (41); Seller's ROAE Comparable Transactions
(47); and Asset Comparable Transactions (30). FBR's computations yielded the
following median multiples at announcement for the Nationwide Transactions, the
Virginia Transactions, the Mid Atlantic Region Transactions, the Seller's ROAE
Comparable Transactions and the Asset Comparable Transactions, respectively, as
compared with the following indicated multiples for George Mason at announcement
of the Merger: (i) price to book value multiples of 2.00x, 2.29x, 2.05x, 2.23
and 2.25x, compared with 3.08x for the Merger; (ii) price to tangible book value
multiples of 2.08x, 2.35x, 2.11x, 2.28 and 2.29x, compared with 3.09x for the
Merger; (iii) price to latest twelve months earnings multiples of 19.7x, 20.3x,
21.7x, 20.1x and 22.3x, compared with 27.16x for the Merger; and (iv) core
deposit premiums of 12.67%, 19.50%, 16.29%, 17.40x and 16.89%, compared with an
indicated deposit premium in the Merger of 20.60%.
DISCOUNTED EARNINGS STREAM AND TERMINAL VALUE ANALYSIS. Using a discounted
earnings stream and terminal value analysis, FBR estimated the future stream of
earnings flows that George Mason could be expected to produce through the year
2000, under various circumstances, assuming George Mason performed in accordance
with the earnings forecasts of George Mason management. To approximate the
terminal value of the George Mason Common Stock at the end of a three-year
period (December 31, 2000), FBR applied price to earnings multiples ranging from
20.0 to 22.5, applied multiples of tangible book value ranging from 300 percent
to 325 percent and applied premiums over tangible book value as a percentage of
core deposits of 15.0 percent to 20.0 percent. The net income streams, dividend
streams and terminal values were then discounted to present values using a
discount rate of 12 percent. When a 12 percent discount rate was applied to
median merger multiples based on the price to tangible book value multiples of
300 to 325 percent, the analysis indicated a reference range between $32.63 and
$38.51 per share of George Mason Common Stock. When the same discount rate of 12
percent was applied to merger market multiples based on price to earnings per
share multiples of 20.0 times to 22.5 times, the analysis indicated a reference
range between $28.93 and $35.18 per share of George Mason Common Stock. When the
same discount rate of 12 percent was applied to merger market multiples based on
tangible book premium to core deposits of 15.0 percent to 20.0 percent, the
analysis indicated a reference range between $32.30 and $40.27 per share of
George Mason Common Stock.
20
<PAGE>
PRO FORMA MERGER ANALYSIS. FBR performed pro forma merger analyses that
combined George Mason's and United's current and projected income statements and
balance sheets based on earnings forecasts of George Mason and United,
respectively. Assumptions and analyses of the accounting treatment, acquisition
adjustments, operating efficiencies and other adjustments were made to arrive at
a base case pro forma analysis to determine the effect of the Merger on United.
FBR noted that, based on a fixed exchange ratio of 0.85 of a share of United
Common Stock for each share of George Mason Common Stock, and net of the impact
of merger related charges and other one-time expenses, the impact of the Merger
on United's earnings per share and tangible book value per share based on such
earnings forecasts did not appear to be material. The actual results achieved by
the combined company will vary from the projected results and such variations
may be material.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES. In preparing its
presentation, FBR used publicly available information to compare selected
financial and market trading information, including book value, tangible book
value, earnings, asset quality ratios, loan loss reserve levels, profitability
and capital adequacy, for United and selected other publicly traded regional
commercial banks located in the Mid Atlantic Region of the United States. This
peer group consisted of commercial bank holding companies with total assets
between $1 billion and $5 billion. FBR reviewed the historical financial
information for United and each member of the peer group between December 31,
1991 and June 30, 1997.
In connection with rendering the FBR Opinion, FBR confirmed the
appropriateness of its reliance on the analyses used to render its September 10,
1997 opinion by performing procedures to update certain of such analyses and by
reviewing the assumptions upon which such analyses were based and the factors
considered in connection therewith. The FBR Opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to it as of, the date of such opinion. Events occurring after the date
of the FBR Opinion could materially affect the assumptions used in preparing
such opinion.
Pursuant to the FBR Agreement, George Mason retained FBR to act as its
independent financial advisor in connection with the Merger. For its services as
financial advisor to George Mason in connection with the Merger, FBR will
receive a fee equal to $300,000 (the "Transaction Fee"). Twenty-five percent
(25%), or $75,000, of the Transaction Fee was paid upon the execution of the
Merger Agreement and the remaining portion is payable at the closing of the
Merger. The remaining portion of the Transaction Fee payable to FBR at the
Effective Time would be $225,000. George Mason also has agreed to reimburse FBR
for its reasonable out-of-pocket expenses in connection with its engagement and
to indemnify FBR and its affiliates and their respective partners, directors,
officers, employees, agents and controlling persons against certain expenses and
liabilities, including liabilities under applicable securities laws.
FBR has advised George Mason that, in the ordinary course of its business
as a full-service securities firm, FBR may, subject to certain restrictions,
actively trade the equity securities of George Mason and/or United for its own
account or for the accounts of its customers, and, accordingly, may at any time
hold a long or short position in such securities.
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 very attractive
Virginia markets, the Merger provides an opportunity to enhance United's
shareholder value by eliminating redundant or unnecessary costs and enhancing
revenue growth prospects.
EFFECTIVE TIME
If the Merger Agreement is approved by the requisite vote of the George
Mason shareholders, the United Articles Amendment and United Share Issuance are
approved by 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 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 George Mason each has the right, acting unilaterally, to
terminate the Merger Agreement should the Merger not be consummated by July 15,
1998, except to the extent that the failure of the Merger to be consummated
arises out of or results from the knowing
21
<PAGE>
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 George Mason 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. GEORGE MASON
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
George Mason Common Stock will be entitled to receive to be delivered upon
surrender to Chase Mellon Shareholder Services, as exchange agent (the "Exchange
Agent"), of certificates representing such shares of George Mason Common Stock
owned by such shareholder. No party will be liable to a holder of George Mason
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 George Mason 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 George
Mason Common Stock on George Mason's stock transfer books. If certificates
representing shares of George Mason 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
George Mason 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 George Mason 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 George Mason's 1986
Incentive Stock Option Plan, 1992 Employee Stock Option Plan, 1993 Employee
Stock Option Plan, and 1994 Employee Stock Option Plan (collectively, the
"George Mason Stock Plans"), as the case may be, shares of United Common Stock,
with the exercise price and shares purchasable thereunder being adjusted to
reflect the Exchange Ratio.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER TO HOLDERS WHO HOLD SHARES OF GEORGE MASON 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 GEORGE MASON
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 GEORGE MASON COMMON STOCK PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND PERSONS WHO
HOLD SHARES OF GEORGE MASON 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.
22
<PAGE>
This summary is based on current law and represents the opinion of Sullivan
& Cromwell, special counsel to United, and the opinion of Silver, Freedman &
Taff L.L.P., special counsel to George Mason. 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 George Mason. Neither United nor George Mason 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 George Mason 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 Sullivan & Cromwell, dated the
Effective Date, to the effect that the Merger constitutes a reorganization
within the meaning of Section 368 (a) of the Code. George Mason's obligation to
consummate the Merger is conditioned upon, among other things, the receipt of an
opinion of Silver, Freedman & Taff 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
George Mason 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 George Mason, United and shareholders of George Mason.
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, George Mason and U.S. Holders who exchange shares of
George Mason 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 George Mason 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 George Mason 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 George Mason
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 George Mason Common Stock exchanged therefor,
provided such shares of George Mason Common Stock were held as capital
assets at the Effective Time; and
(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 George Mason, as applicable. As of the date
of this Joint Proxy Statement/Prospectus, neither United nor George Mason
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 GEORGE MASON COMMON STOCK AND OTHER
23
<PAGE>
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
George Mason will be the surviving corporation resulting from the Merger
and a wholly owned subsidiary of United. Following the Merger, George Mason will
continue to be governed by the laws of the Commonwealth of 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
five members of the George Mason Board, selected by United after consultation
with George Mason, including Bernard H. Clineburg, who are still members of the
George Mason Board immediately prior to the Effective Time and who are willing
and eligible to serve, to be elected or appointed as directors of United and
shall cause Mr. Clineburg to also be elected or appointed as a member of the
Executive Committee of the United Board. In addition, United has advised George
Mason that it will, by no later than the first meeting of the United Board held
after the later to occur of (i) United's shareholders approving the United Share
Issuance and United Articles Amendment and (ii) United's 1998 Annual Meeting of
Stockholders, reduce the size of the United Board (or agree to increase the
number of members of the George Mason Board to join the United Board) such that
the former members of the George Mason Board will constitute at least 23% of the
United Board. The directors and officers of United in office immediately prior
to the Effective Time, together with such additional directors selected from the
George Mason Board 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 addition,
United has also agreed to cause Mr. Clineburg to be elected or appointed as the
President of United and as the Chairman and Chief Executive Officer of United's
Virginia bank subsidiary, United Bank. In addition, each of George Mason and
United has agreed that it will use its reasonable best efforts to cause and
effect the merger of United Bank into GMB as promptly as reasonably practicable
after the Effective Date. At the time of the execution of the Merger Agreement
on September 10, 1997, United also advised George Mason of its intention that
the existing management of GMMC be retained and its chief executive officer
report directly to the chief executive officer of the bank resulting from the
merger of GMB and United Bank.
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 George Mason 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
George Mason and its subsidiaries who remain as employees of United or its
subsidiaries credit for years of service with George Mason 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
George Mason compensation and benefit plans) and eligibility waiting periods
under group health plans of United to be waived with respect to former employees
of George Mason 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.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of George Mason's management and the George Mason Board may
be deemed to have certain interests in the Merger that are in addition to their
interests as George Mason shareholders. The George Mason Board was aware of
these interests in approving the Merger Agreement.
GEORGE MASON BOARD OF DIRECTORS. As described above, the Merger Agreement
provides that United will cause five members of the George Mason Board to be
elected or appointed as directors of United at, or as promptly as practicable
after, the Effective Time. In addition, United has advised George Mason that it
will, by no later than the first meeting of the United Board held after the
later to occur of (i) United's shareholders approving the United Share Issuance
and United Articles Amendment and (ii) United's 1998 Annual Meeting of
Stockholders, reduce the size of the United Board (or agree to increase the
number of members of the George Mason Board to join the United Board) such that
the former members of the George Mason Board will constitute at least 23% of the
United Board.
24
<PAGE>
EMPLOYMENT AGREEMENT OF BERNARD H. CLINEBURG. On September 10, 1997,
Bernard H. Clineburg, President and Chief Executive Officer of George Mason,
entered into an employment agreement with United and United's Virginia bank
subsidiary, United Bank (the "Employment Agreement"). Under the Employment
Agreement, Mr. Clineburg will serve as President of United and Chairman and
Chief Executive Officer of United Bank. The Employment Agreement is for a term
of three years, commencing on the Effective Date (the "Commencement Date"), and
is automatically extended by one day every day so that on any particular day,
the remaining term shall be three years, PROVIDED that the term of the
Employment Agreement may not be extended beyond the anniversary of the
Commencement Date which occurs in the year 2004 and that the United Board and
the Board of Directors of United Bank may by written notice advise Mr. Clineburg
that the term will not be extended beyond three years from the date of such
notice.
The Employment Agreement provides for payment of an annual base salary of
$285,000, subject to increase from time to time, and the possibility of an
annual bonus up to an amount equal to 40% of Mr. Clineburg's then current base
salary. Mr. Clineburg will also be entitled to participate in other employee
benefit plans maintained for the senior executive officers of United Bank and to
receive certain fringe benefits. In addition, in consideration for Mr.
Clineburg's entering into the Employment Agreement and waiving all rights to
which he may otherwise have been entitled under his current employment agreement
with George Mason and GMB (which will terminate as of the Commencement Date),
Mr. Clineburg is entitled to receive in a lump sum, within seven days following
the Effective Date, an amount equal to 299% of his "base amount" (as determined
under Section 280G of the Code) (the "Special Payment"), assuming certain
conditions under the Code are met and provided that the Special Payment may not
exceed $1,750,000. The Employment Agreement provides that if the Special Payment
or any other payment to Mr. Clineburg would not be deductible in full by United
and United Bank by reason of Section 280G of the Code, the Special Payment or
other payments or both shall be reduced until no portion of such payments are
not deductible by reason of Section 280G of the Code, or the Special Payment is
reduced to zero, whichever occurs first.
The Employment Agreement provides that in the event Mr. Clineburg's
employment is terminated without cause, United and United Bank shall continue to
pay to Mr. Clineburg his monthly base salary in effect as of the date of
termination for the lesser of (i) the number of months remaining in the term of
the Employment Agreement and (ii) 18 months. United and United Bank may not
terminate Mr. Clineburg's employment without cause during the first 18 months of
his employment. United and United Bank may, however, during such period place
Mr. Clineburg on leave of absence while continuing to pay Mr. Clineburg his base
salary. In the event Mr. Clineburg is terminated without cause, the number of
months used to determine the duration of United's and United Bank's obligation
to pay Mr. Clineburg his monthly base salary will be reduced by the number of
months, if any, Mr. Clineburg was on a leave of absence.
Under the Employment Agreement, if Mr. Clineburg's employment is terminated
other than (i) by United and United Bank for cause, (ii) by certain regulatory
or judicial authorities or (iii) by Mr. Clineburg during the first two years of
the Employment Agreement (with certain exceptions), United and United Bank will
maintain health care coverage for Mr. Clineburg and his wife, for the lifetime
of Mr. Clineburg and his wife, with the same deductibles and co-payments
applicable to Mr. Clineburg and his wife as of the date of termination. In
addition, with certain exceptions, if (i) Mr. Clineburg's employment is
terminated during the term of the Employment Agreement (including, but not
limited to, termination by Mr. Clineburg in the event his annual bonus for any
year is less than 40% of his then current base salary) or (ii) at the expiration
of the term of the Employment Agreement, Mr. Clineburg and United and United
Bank are unable to reach agreement on a new employment agreement, a
"Constructive Termination" shall be deemed to have occurred under the
Supplemental Retirement Benefits Agreement, dated as of July 21, 1997, between
Mr. Clineburg and George Mason and GMB (the "SERP"). Under the SERP, upon a
"Constructive Termination" of Mr. Clineburg's employment, he shall be entitled
to receive, commencing on or after the later of the termination of his
employment or attainment of age 55, 180 equal monthly payments in the amount of
$20,160.75 each. The Employment Agreement also contains a covenant not to
compete with United and United Bank during Mr. Clineburg's employment with
United and United Bank and for a period of six months following the termination
of his employment for any reason.
INDEMNIFICATION AND INSURANCE. Under the Merger Agreement, United has
agreed for a period of six years following the Effective Date, to indemnify,
defend and hold harmless the present directors, officers and employees of George
Mason and its subsidiaries for all acts or omissions occurring at or prior to
the Effective Time to the same extent George Mason was permitted to indemnify
its directors and officers under Virginia law and under the George Mason
Articles of Incorporation (the "George Mason Articles") and Bylaws (the "George
Mason Bylaws") as of the date of the Merger Agreement. In addition, United has
agreed for a period of four years after the Effective Time, to provide
directors' and officers' liability insurance for the present and former officers
and directors of George Mason and its subsidiaries for claims arising from
events which occurred before the Effective Time, which insurance contains at
least the same amount of coverage as and terms and conditions no less
advantageous than the coverage provided for such persons by George Mason as of
the date of the Merger
25
<PAGE>
Agreement. However, in providing such coverage, United is not required to expend
more than twice the amount currently expended by George Mason for such coverage.
STOCK OPTIONS. At the Effective Time, each George Mason Stock Option,
whether vested or unvested, will be converted into an option to acquire, on the
same terms and conditions as were applicable under such George Mason Stock
Option, the number of shares of United Common Stock equal to (i) the number of
shares of George Mason Common Stock subject to the George Mason Stock Option,
multiplied by (ii) the Exchange Ratio, at an exercise price per share equal to
(x) the aggregate exercise price per share under the George Mason Stock Option
divided by (y) the number of full shares of United Common Stock subject to the
replacement option, rounded down to the nearest whole cent.
OTHER CONSIDERATIONS. On September 10, 1997, United advised George Mason of
its confirmation of the following mutual understandings between United and
George Mason: (i) that the number of directors of George Mason joining the
United Board represent at least 23% of the United Board (to be accomplished
either through decreasing the size of the United Board or increasing the number
of directors of George Mason joining the United Board above the five provided
for in the Merger Agreement); (ii) that, following the merger of GMB and United
Bank, the board of the resulting entity will have majority representation from
the existing GMB board of directors; (iii) that it is United's current intention
to have all future Virginia-based acquisitions merged into GMB, so long as the
target of any such acquisition is smaller than the combined bank resulting from
the merger of GMB and United Bank; (iv) that, pending the closing of the Merger,
United would consult with George Mason regarding other possible acquisitions by
United in George Mason's existing service areas; and (v) that it is United's
current intention that the existing management of GMMC be retained, its chief
executive officer report directly to the chief executive officer of the bank
resulting from that merger of GMB and United Bank and that GMMC retain its name.
CONDITIONS TO CONSUMMATION
The obligations of George Mason 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 George Mason and the United Articles Amendment and United Share
Issuance 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) 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 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) George
Mason shall have received an opinion of Silver, Freedman & Taff, L.L.P., special
counsel to George Mason, 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 George
Mason who receive shares of United Common Stock in exchange for shares of George
Mason Common Stock, except the gain or loss may be recognized as to cash
received in lieu of fractional share interests (in rendering its opinion,
Silver, Freedman & Taff, L.L.P. may require and rely upon representations
contained in letters from George Mason and others); (ix) United shall have
received an opinion of Sullivan & Cromwell, special counsel to United, dated the
Effective Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a reorganization
under Section 368 of the Code (in rendering its opinion, Sullivan & Cromwell may
require and rely upon representations contained in letters from United and
others); (x) the other 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 George Mason and United shall have received from
Ernst & Young LLP, their independent auditors, letters, dated the date of or
shortly prior to the Effective Date, stating its opinion that the Merger shall
qualify for pooling-of-interests accounting treatment.
26
<PAGE>
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 George Mason 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.
STATE AUTHORITIES. Consummation of the Merger is subject to the prior
approval of the Corporation Commission. The Corporation Commission will
consider: (i) the safety and soundness of George Mason and GMB; the
qualification and experience of United and its directors and officers; (ii)
whether the Merger would be prejudicial to depositors, creditors, beneficiaries
of fiduciary accounts or shareholders of United, George Mason or their banking
subsidiaries; and (iii) whether the Merger would be in the public interest. The
Merger may also be subject to the approval of, or notice to, other state
authorities under various state bank, insurance and securities regulatory
statutes.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. United and George
Mason 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 George Mason 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, to the extent necessary, the
state authorities, (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 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."
27
<PAGE>
AMENDMENT, WAIVER AND TERMINATION
To the extent permitted by law, George Mason and United may amend the
Merger Agreement by written agreement at any time. Prior to or at the Effective
Time, either George Mason 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 George Mason. In addition, the Merger Agreement may be terminated,
and the Merger abandoned, prior to the Effective Time by either United or George
Mason 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, has 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 George Mason shareholders fail to approve
the Merger Agreement, or the United shareholders fail to approve the United
Articles Amendment or the United Share Issuance; (iv) the Merger has not been
consummated by July 15, 1998; or (v) the other party's board of directors has
failed to recommend approval of the Merger, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any respect to
the interests of the other party.
CONDUCT OF BUSINESS PENDING THE MERGER
GEORGE MASON. George Mason 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 George Mason and its subsidiaries other
than in the ordinary and usual course or fail to use reasonable efforts to
preserve intact their business organizations and assets and maintain their
rights, franchises and existing relations with customers, suppliers,
employees and business associates, or take any action reasonably likely to
have an adverse effect upon George Mason's ability to perform any of its
material obligations under the Merger Agreement;
(b) issue, sell or otherwise permit to become outstanding, or
authorize the creation of, any additional shares of, or rights to acquire,
George Mason Common Stock, enter into any agreement with respect to the
foregoing, or permit any additional shares of George Mason 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 $0.14 per share
and dividends from wholly owned subsidiaries) on or in respect of, or
declare or make any distribution on, any shares of George Mason 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 George
Mason 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 in respect of any director, officer or
employee of George Mason or its subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder;
(f) 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;
(g) 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;
28
<PAGE>
(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 George Mason 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, George Mason 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 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 George Mason or any of its subsidiaries
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets or deposits of, George Mason or any
of its subsidiaries, other than the transactions contemplated by the Merger
Agreement (an "Acquisition Proposal"). In the Merger Agreement, George Mason
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. George Mason has agreed to promptly (within
24 hours) advise United following the receipt by George Mason 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 George Mason 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;
(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
George Mason is obligated under the Merger Agreement after November 1, 1997
to cause its regular quarterly dividend record dates and payment dates for
George Mason Common Stock to be the same as United's regular quarterly dividend
29
<PAGE>
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
George Mason 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 George Mason of a letter from their respective independent public
accountants 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 basis of the assets and liabilities of United and
George Mason will be combined at the Effective Date and carried forward at their
previously recorded amounts and the shareholders' equity accounts of George
Mason and United will be combined on United's consolidated balance sheet. Income
and other financial statements of United issued after consummation of the Merger
will be restated retroactively to reflect the consolidated operations of United
and George Mason as if the Merger had taken place prior to the periods covered
by such financial statements. See "Summary" and "United and George Mason
Unaudited Pro Forma Condensed Consolidated Financial Information."
NO DISSENTERS' RIGHTS
Under the VSCA, holders of George Mason 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 proposals to approve the United Articles Amendment and
the United Share Issuance.
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
George Mason Common Stock in the Merger.
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 George Mason for purposes of Rule 145
under the Securities Act as of the date of the George Mason 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 George Mason 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 George Mason,
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 George Mason, 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 George Mason
and United, in compliance with Commission guidelines regarding qualifying for
pooling-of-interests accounting treatment.
30
<PAGE>
United may place restrictive legends on certificates representing United Common
Stock issued to all persons who are deemed to be "affiliates" of George Mason
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 George Mason.
STOCK OPTION AGREEMENT
As an inducement to United's willingness to continue to pursue the
transactions contemplated by the Merger Agreement, on September 11, 1997, George
Mason 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, George Mason granted United the
Option, which permits United to purchase up to 1,018,000 shares of George Mason
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
George Mason Common Stock outstanding immediately before exercise of the Option.
The exercise price of the Option is $32.375 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
George Mason prior to the occurrence of an "Exercise Termination Event," as such
terms are defined below. The purchase of any shares of George Mason 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
George Mason Common Stock subject to the Option, United would hold approximately
16.6% of the outstanding shares of George Mason 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) George Mason or GMB, 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 George Mason Board recommends that
the shareholders of George Mason 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 George Mason Common Stock;
(iii) The shareholders of George Mason shall have voted and failed to
approve the Merger Agreement at George Mason'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 an Acquisition
Transaction with respect to George Mason;
(iv) The George Mason 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 George Mason approve the
Merger Agreement at George Mason's shareholder meeting, or George Mason,
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 makes a proposal to George Mason or its shareholders
to engage in an Acquisition Transaction and such proposal shall have been
publicly announced;
(vi) 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);
(vii) George Mason 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
31
<PAGE>
(viii) 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 George
Mason or GMB (other than mergers, consolidations or similar transactions (i)
involving solely George Mason 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 George Mason immediately prior to the completion of such transaction own at
least 50% of the George Mason 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 George Mason or GMB 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 George Mason or GMB.
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 George Mason Common Stock or (ii) George Mason or GMB, 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 George Mason
Board recommends that the shareholders of George Mason 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 George Mason
breaches, and does not timely cure any breach of, a representation, warranty,
covenant or other agreement contained in the Merger Agreement and such breach
(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 George Mason 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 18 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 George Mason 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 George Mason 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 George Mason
pursuant to the terms thereof as a result of a breach by United of its covenants
or agreements contained therein, (y) by George Mason or United if United's
shareholders do not approve the Merger Agreement, or (z) by George Mason 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 George Mason.
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 George Mason 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, George
Mason 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
32
<PAGE>
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 George
Mason Common Stock, (ii) the price per share of George Mason Common Stock that
any third party is to pay pursuant to an agreement with George Mason, (iii) the
highest closing price per share of George Mason 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 George
Mason'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 George Mason 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 George
Mason 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 $9 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 George Mason has previously repurchased the Option
(or any portion thereof) or any Option Shares as described in the preceding
paragraph.
Pursuant to the terms of the Stock Option Agreement, in the event that,
prior to an Exercise Termination Event, George Mason enters into certain
transactions in which George Mason is not the surviving corporation, certain
fundamental changes in the capital stock of George Mason occur or George Mason
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 George Mason.
The Stock Option Agreement provides that neither United nor George Mason
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 George Mason prior to the Merger, even if such persons were
prepared to offer to pay consideration to George Mason 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 George Mason, no event giving rise to
the right to exercise the Option has occurred as of the date of this Joint Proxy
Statement/Prospectus.
TERMINATION FEE
If (i) the United Board fails to recommend the United Articles Amendment or
the United Share Issuance or withdraws such recommendation or modifies or
changes such recommendation in a manner adverse in any respect to the interests
of George Mason, (ii) United is in material and willful breach of any of its
covenants contained in the Merger Agreement such that George Mason is entitled
to terminate the Merger Agreement, or (iii) the shareholders of United do not
approve the United Articles Amendment or the United Share Issuance at the United
Special Meeting, in each case after there has been proposed by a third party a
United Acquisition Transaction, as defined herein (the "Proposal"), then, in any
such event, upon the actual consummation of a United Acquisition Transaction
with such third party within 18 months after the Proposal, United is obligated
to pay George Mason a fee of $9 million. This fee is not payable if United has
terminated, or has or had the right to terminate, the Merger Agreement in the
event of a breach or failure to obtain required approvals or as a result of the
George Mason shareholders not approving the Merger Agreement or the George Mason
Board failing to recommend the Merger Agreement.
"United Acquisition Transaction" has the same the meaning as "Acquisition
Transaction" under the Stock Option Agreement except that it applies to United
and the percentage in clause (z) is 25% instead of 10%. See "Stock Option
Agreement."
33
<PAGE>
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 20,000,000 to 41,000,000 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 effect the United Stock Dividend. Assuming that the United Articles
Amendment is approved and the Effective Date of the Merger occurs after March
13, 1998, over 99% of the increase in authorized United Common Stock will be
used for such purpose. Approval of the United Articles Amendment is a condition
precedent to consummation of the Merger. See "The Merger -- Conditions to
Consummation." Pursuant to the United Stock Dividend, United has declared a 100%
stock dividend payable March 27, 1998 to shareholders of record as of March 13,
1998, subject to approval of the United Articles Amendment.
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 Annual Meeting of Shareholders in 1988, when United had approximately
$1.03 billion in total assets. United has increased in size significantly since
that time to approximately $2.58 billion of assets as of September 30, 1997.
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
$100,000,000 which shall be divided into 40,000,000 shares of a par value
of $2.50 per share.
Notwithstanding such provision of the Merger Agreement, United and George
Mason have agreed in a letter agreement that at the Effective Time of the
Merger, Article VI of the United Articles will be amended to read as follows:
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 per share.
THE UNITED BOARD UNANIMOUSLY RECOMMENDS THAT UNITED SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE UNITED ARTICLES AMENDMENT.
UNITED AND GEORGE MASON UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Consolidated Financial
Information combines the historical Consolidated Financial Statements of United
and George Mason, giving effect to the Merger as if it had been effective on
September 30, 1997, with respect to the Unaudited Pro Forma Condensed
Consolidated Balance Sheet, and as of the beginning of the periods indicated
herein, with respect to the Unaudited Pro Forma Condensed Consolidated
Statements of Income. It is intended that the Merger will be accounted for as a
pooling-of-interests. Under the pooling-of-interests method of accounting, the
historical book values of the assets, liabilities and shareholders' equity of
George Mason as reported in its Consolidated Balance Sheet will be carried over
onto the Consolidated Balance Sheet of United after addressing conformity
issues, and no goodwill or other intangible assets will be created. United will
include in its Consolidated Statement of Income the consolidated results of
operations of George Mason for the entire fiscal year in which the Merger occurs
after addressing conformity issues and will combine and restate its results of
operations for prior periods to include the reported consolidated results of
operations of George Mason for prior periods after addressing conformity issues.
This information should be read in conjunction with the historical Consolidated
Financial Statements of United and George Mason, including their 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 on the date indicated, 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.
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 over book and market
values, and, therefore, some dilution of United's book value and net income per
common share may occur in connection with any future transactions.
34
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF SEPTEMBER 30, 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
AS REPORTED UNITED &
---------------------- GEORGE MASON
GEORGE PRO FORMA PRO FORMA
UNITED MASON ADJUSTMENTS CONSOLIDATED
---------- -------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from bank.............................................. $ 80,712 $ 27,995 $ -- $ 108,707
Interest-bearing deposits with other banks.......................... 50 45 -- 95
Federal funds sold.................................................. -- 8,200 -- 8,200
Investment securities............................................... 449,354 391,839 -- 841,193
Loans (net of unearned income)...................................... 1,954,573 525,752 -- 2,480,325
Less: allowance for loan losses..................................... (24,941) (5,699) -- (30,640)
---------- -------- ----------- ------------
Net loans........................................................... 1,929,632 520,053 -- 2,449,685
Bank premises and equipment......................................... 40,138 9,764 -- 49,902
Other assets........................................................ 81,139 11,682 -- 92,821
---------- -------- ----------- ------------
Total Assets..................................................... $2,581,025 $969,578 $ 0 $3,550,603
---------- -------- ----------- ------------
---------- -------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits..................................................... $ 269,645 $154,322 $ -- $ 423,967
Interest-bearing deposits........................................... 1,747,952 606,005 -- 2,353,957
---------- -------- ----------- ------------
Total deposits...................................................... 2,017,597 760,327 -- 2,777,924
Short-term borrowings............................................... 140,846 106,503 -- 247,349
Federal Home Loan Bank borrowings................................... 108,889 23,500 -- 132,389
Other liabilities................................................... 41,206 8,594 -- 49,800
---------- -------- ----------- ------------
Total Liabilities................................................ 2,308,538 898,924 -- 3,207,462
STOCKHOLDERS' EQUITY:
Common stock........................................................ 38,238 5,698 5,212(1) 49,148
Surplus............................................................. 41,239 39,932 (14,277)(1) 66,894
Retained earnings................................................... 199,072 24,892 223,964
Net unrealized holding gain on AFS securities....................... 4,497 171 4,668
Treasury stock...................................................... (10,559) (39) 9,065(1) (1,533)
---------- -------- ----------- ------------
Total Stockholders' Equity....................................... 272,487 70,654 0 343,141
---------- -------- ----------- ------------
Total Liabilities and Stockholders' Equity....................... $2,581,025 $969,578 $ 0 $3,550,603
---------- -------- ----------- ------------
---------- -------- ----------- ------------
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements."
35
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
AS REPORTED UNITED &
------------------- GEORGE MASON
GEORGE PRO FORMA PRO FORMA
UNITED MASON ADJUSTMENTS CONSOLIDATED
-------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income.......................................................... $138,470 $47,254 $ -- $185,724
Interest expense......................................................... 61,059 23,950 -- 85,009
-------- ------- ----------- ------------
Net interest income...................................................... 77,411 23,304 -- 100,715
Provision for loan losses................................................ 2,150 23 -- 2,173
-------- ------- ----------- ------------
Net interest income after provision for loan losses...................... 75,261 23,281 -- 98,542
Other income............................................................. 14,468 12,375 -- 26,843
Other expenses........................................................... 43,432 26,967 -- 70,399
-------- ------- ----------- ------------
Income before income taxes............................................... 46,297 8,689 -- 54,986
Income taxes............................................................. 15,784 2,755 -- 18,539
-------- ------- ----------- ------------
Net income............................................................. $ 30,513 $ 5,934 $ -- $ 36,447
-------- ------- ----------- ------------
-------- ------- ----------- ------------
Earnings per common share:(2)
Basic.................................................................. $2.04 $1.17 $ -- $1.89
Diluted................................................................ $2.02 $1.13 $ -- $1.86
Average outstanding shares............................................... 15,134,004 5,252,000 -- 19,595,946
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements."
36
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
AS REPORTED UNITED &
------------------- GEORGE MASON
GEORGE PRO FORMA PRO FORMA
UNITED MASON ADJUSTMENTS CONSOLIDATED
-------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income.......................................................... $128,324 $38,888 $ -- $167,212
Interest expense......................................................... 53,998 18,510 -- 72,508
-------- ------- ----------- ------------
Net interest income...................................................... 74,326 20,378 -- 94,704
Provision for loan losses................................................ 2,160 181 -- 2,341
-------- ------- ----------- ------------
Net interest income after provision for loan losses...................... 72,166 20,197 -- 92,363
Other income............................................................. 9,864 11,095 -- 20,959
Other expenses........................................................... 49,544 24,324 -- 73,868
-------- ------- ----------- ------------
Income before income taxes............................................... 32,486 6,968 -- 39,454
Income taxes............................................................. 11,910 2,118 -- 14,028
-------- ------- ----------- ------------
Net income............................................................. $ 20,576 $ 4,850 $ -- $ 25,426
-------- ------- ----------- ------------
-------- ------- ----------- ------------
Earnings per common share:(2)
Basic.................................................................. $1.36 $0.98 $ -- $1.31
Diluted................................................................ $1.35 $0.95 $ -- $1.30
Average outstanding shares............................................... 15,227,962 5,116,000 -- 19,576,562
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements".
37
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
AS REPORTED UNITED &
------------------- GEORGE MASON
GEORGE PRO FORMA PRO FORMA
UNITED MASON ADJUSTMENTS CONSOLIDATED
-------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income.......................................................... $172,358 $53,727 $ -- $226,085
Interest expense......................................................... 73,185 26,264 -- 99,449
-------- ------- ----------- ------------
Net interest income...................................................... 99,173 27,463 -- 126,636
Provision for loan losses................................................ 2,610 181 -- 2,791
-------- ------- ----------- ------------
Net interest income after provision for loan losses...................... 96,563 27,282 -- 123,845
Other income............................................................. 14,189 14,852 -- 29,041
Other expenses........................................................... 63,549 32,179 -- 95,728
-------- ------- ----------- ------------
Income before income taxes............................................... 47,203 9,955 -- 57,158
Income taxes............................................................. 16,691 3,072 -- 19,763
-------- ------- ----------- ------------
Net income............................................................... $ 30,512 $ 6,883 $ -- $ 37,395
-------- ------- ----------- ------------
-------- ------- ----------- ------------
Earnings per common share:(2)
Basic.................................................................. $2.02 $1.38 $ -- $1.93
Diluted................................................................ $2.00 $1.35 $ -- $1.91
Average outstanding shares............................................... 15,135,996 5,088,000 -- 19,542,637
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements."
38
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
AS REPORTED UNITED &
------------------- GEORGE MASON
GEORGE PRO FORMA PRO FORMA
UNITED MASON ADJUSTMENTS CONSOLIDATED
-------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income.......................................................... $165,815 $44,119 $ -- $209,934
Interest expense......................................................... 70,167 19,949 -- 90,116
-------- ------- ----------- ------------
Net interest income...................................................... 95,648 24,170 -- 119,818
Provision for loan losses................................................ 2,320 18 -- 2,338
-------- ------- ----------- ------------
Net interest income after provision for loan losses...................... 93,328 24,152 -- 117,480
Other income............................................................. 14,752 10,359 -- 25,111
Other expenses........................................................... 57,481 26,124 -- 83,605
-------- ------- ----------- ------------
Income before income taxes............................................... 50,599 8,387 -- 58,986
Income taxes............................................................. 17,782 2,095 -- 19,877
-------- ------- ----------- ------------
Net income............................................................. $ 32,817 $ 6,292 $ -- $ 39,109
-------- ------- ----------- ------------
-------- ------- ----------- ------------
Earnings per common share:(2)
Basic.................................................................. $2.19 $1.30 $ -- $2.05
Diluted................................................................ $2.18 $1.28 $ -- $2.03
Average outstanding shares............................................... 15,067,286 4,904,000 -- 19,235,686
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements."
39
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
AS REPORTED UNITED &
------------------- GEORGE MASON
GEORGE PRO FORMA PRO FORMA
UNITED MASON ADJUSTMENTS CONSOLIDATED
-------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income.......................................................... $147,637 $33,659 $ -- $181,296
Interest expense......................................................... 55,672 11,627 -- 67,299
-------- ------- ----------- ------------
Net interest income...................................................... 99,173 22,032 -- 113,997
Provision for loan losses................................................ 2,202 167 -- 2,369
-------- ------- ----------- ------------
Net interest income after provision for loan losses...................... 89,763 21,865 -- 111,628
Other income............................................................. 12,238 5,390 -- 17,628
Other expenses........................................................... 55,908 20,453 -- 76,361
-------- ------- ----------- ------------
Income before income taxes............................................... 46,093 6,802 -- 52,895
Income taxes............................................................. 15,709 1,830 -- 17,539
-------- ------- ----------- ------------
Net income............................................................. $ 30,384 $ 4,972 $ -- $ 35,356
-------- ------- ----------- ------------
-------- ------- ----------- ------------
Earnings per common share:(2)
Basic.................................................................. $2.02 $1.05 $ -- $1.86
Diluted................................................................ $2.01 $1.04 $ -- $1.84
Average outstanding shares............................................... 15,131,766 4,793,000 -- 19,205,816
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements."
40
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(1) The stockholders' equity accounts have been adjusted to reflect the issuance
of 0.85 of a share of United Common Stock for each of the outstanding shares
of George Mason Common Stock. Treasury stock has been adjusted for the
reissuance of all but 50,000 shares at each respective date which are
presumed to be retained for United's incentive stock option programs and
other employee benefit plans.
The effect of United's acquisition of First Patriot Bankshares Corporation,
Reston, Virginia on August 1, 1997, has not been reflected in the accompanying
unaudited pro forma condensed consolidated financial statements. If the effect
had been included in the accompanying unaudited pro forma condensed consolidated
financial statements, the results would not be materially different than those
presented herein.
(2) The earnings per share amounts for all periods presented have been restated
to reflect the adoption of Statement of Financial Accounting Standards No.
128, EARNINGS PER SHARE.
41
<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 20,000,000 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 41,000,000. 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 September 30,
1997, there were 14,950,712 shares of United Common Stock outstanding. In
addition, United estimates that approximately 4,415,360 shares 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 George Mason 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, including the transactions
contemplated by the Merger Agreement.
42
<PAGE>
CERTAIN DIFFERENCES IN THE RIGHTS OF UNITED
SHAREHOLDERS AND GEORGE MASON SHAREHOLDERS
At the Effective Time, George Mason 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 articles
of incorporation and bylaws of George Mason (the "George Mason Articles" and the
"George Mason Bylaws") and the VSCA. The following is a summary of the material
differences in the rights of shareholders of United and George Mason. 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 VSCA, the WVCA and the
articles of incorporation and bylaws of each corporation.
AUTHORIZED CAPITAL STOCK
GEORGE MASON. The George Mason Articles authorize the issuance of up to
9,000,000 shares of common stock, par value $1.11 per share, and up to 1,000,000
shares of preferred stock, par value $.01 per share (the "George Mason Preferred
Stock"). As of the George Mason Record Date, there were ___ shares of George
Mason Common Stock and no shares of George Mason Preferred Stock issued and
outstanding.
UNITED. United's authorized capital stock is set forth under "Description
of United Capital Stock -- General."
VOTING RIGHTS
GEORGE MASON. The holders of George Mason 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 George Mason Preferred Stock, if any, the exclusive
voting power for all purposes is vested in the holders of the George Mason
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
GEORGE MASON. The holders of George Mason Common Stock are entitled to
receive dividends when and as declared by the George Mason Board out of funds
legally available therefor.
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
GEORGE MASON. Director conflicts of interest are governed by the VSCA,
which provides that no contract or other transaction between George Mason and
one or more of its directors, or between George Mason 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 George
Mason.
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 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
GEORGE MASON. The VSCA generally requires approval of amendments to
articles of incorporation by a vote of two-thirds of the outstanding shares
entitled to vote thereon. The George Mason Articles specifically require
approval of amendments to its Articles 6 through 9, regarding the classification
of the George Mason Board, shareholder approval of certain
43
<PAGE>
actions, George Mason Board responsibility in certain matters and
indemnification, respectively, and certain transactions with affiliates, by the
affirmative vote of 80% of the outstanding shares entitled to vote thereon. The
George Mason Bylaws may be altered, amended, repealed, or new Bylaws adopted by
a majority of the entire George Mason Board at any regular meeting of the George
Mason Board, or at any special meeting of the George Mason Board called for that
purpose; however, any Bylaws adopted by the George Mason Board may be altered,
amended, or repealed, and new Bylaws made, by the shareholders of George Mason
at any annual meeting of the shareholders or at a special meeting of the
shareholders called for that purpose.
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
GEORGE MASON. A special meeting of the shareholders of George Mason may be
called by the George Mason Board, the Chairman, the President or by the holders
of 10% or more of all the shares entitled to vote at such a meeting.
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
GEORGE MASON. The George Mason Articles and bylaws provide for a classified
board of directors of five to 18 directors, with the exact number of directors
to be fixed by the shareholders or George Mason Board. The George Mason Board
currently has 16 directors. The George Mason Articles and the George Mason
Bylaws state that the George Mason Board shall be divided into three classes to
serve staggered three-year terms. The effect of George Mason's having a
classified board of directors is that approximately only one-third of the
members of the George Mason Board are elected each year. Consequently, two
annual meetings are effectively required for George Mason's shareholders to
change a majority of the members of the George Mason 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 24 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
GEORGE MASON. Any vacancy occurring on the George Mason Board, including a
vacancy resulting from an increase by not more than two 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 George Mason Board. A director
elected to fill a vacancy is elected for the unexpired term of his predecessor
in office. The George Mason Articles provide directors may be removed by a vote
of shareholders holding 80% of the shares entitled to vote for the election of
directors.
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.
RESTRICTIONS ON CERTAIN BUSINESS COMBINATIONS
GEORGE MASON. The VSCA generally requires approval of certain mergers,
consolidations, dissolutions or a sale of substantially all of a company's
assets by a vote of more than two-thirds of the outstanding shares entitled to
vote thereon. The George Mason Articles require the affirmative vote of more
than two-thirds of the shares entitled to vote for any merger, consolidation,
certain share exchanges and issuances, sale of all or substantially all of the
company's assets, liquidation,
44
<PAGE>
dissolution, certain reclassification and reorganizations, and similar
transactions with any other corporation. In addition, the George Mason Articles
require the affirmative vote of holder of 80% of the shares of the voting stock
of George Mason to approve extraordinary transactions with corporations,
individuals or entities which own more than 5% of the issued and outstanding
shares of George Mason capital stock, including, among others, mergers, share
exchanges, acquisitions of control, sale of substantially all of the assets of
George Mason, liquidation and dissolution. This requirement does not apply to
transactions which are approved in advance by both (i) a majority of the members
of George Mason Board and (ii) a majority of those directors who were directors
before the corporation, individual or entity acquired ownership of 5% or more of
the shares of George Mason capital stock and who are not affiliates of such
entity.
The VSCA prohibits certain "affiliated transactions" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer,
guaranty or issuance or reclassification of equity securities) between a
Virginia corporation and an "Interested Shareholder." An Interested Shareholder
is (a) a person who beneficially owns 10% or more of the voting power of any
class of the corporation's shares or (b) an affiliate or associate of the
corporation who, at any time within the three-year period prior to the date in
question, was an Interested Shareholder. Such affiliated transactions 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 and by the
affirmative vote of the holders of more than two-thirds of the voting shares
other than those owned by the Interested Shareholder. Thereafter, any such
affiliated transactions must be approved by the affirmative vote of the holders
of more than two-thirds of the voting shares of the corporation other than
voting shares held by the Interested Shareholder with whom the affiliated
transaction is to be effected, unless, among other things, the transaction was
approved by a majority of the disinterested directors or the corporation's
shareholders receive a minimum price (as defined in Virginia law) for their
shares and the consideration is received in cash or in the same form as
previously paid by the Interested Shareholder for its shares. These provisions
of Virginia law do not apply, however, to affiliated transactions with an
Interested Shareholder whose acquisition of voting shares making such person an
Interested Shareholder was approved by a majority of the disinterested
directors.
A Virginia 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. George Mason 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.
CONTROL SHARE ACQUISITIONS
GEORGE MASON. Virginia law provides that shares of a Virginia corporation,
with 300 or more shareholders, acquired in a "control share acquisition" have no
voting rights except to the extent approved by a vote of a majority of the votes
entitled to be cast on the matter, excluding shares of stock owned by the
acquirer or by officers or directors who are employees of the corporation. A
control share acquisition means, subject to certain exceptions, the acquisition
of beneficial ownership of voting shares of stock which, if aggregated with all
other shares of stock which then have voting rights and are beneficially owned
by such a person, would entitle the acquirer to exercise voting power in
electing directors within one of the following ranges of voting power: (a) 20%
or more but less than 33 1/3%; (b) 33 1/3% or more but less than a majority; or
(c) a majority of all voting power. The acquisition of shares of stock in
addition to shares which an acquiring person is entitled to vote as a result of
having previously obtained shareholder approval does not constitute a control
share acquisition, unless as a result of such acquisition, the voting power of
the shares beneficially owned by the acquirer would exceed the range in respect
of which voting rights had previously been granted.
A person who has made, or proposes to make, a "control share acquisition,"
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the board of directors to call a special meeting of
shareholders to be held within 50 days of demand therefor to consider the voting
rights of the shares.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as permitted by statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the shares acquired in the control share acquisition. The redemption
price for such shares is the number of such shares multiplied by the dollar
amount (rounded to the nearest cent) equal to the average per share price,
including any brokerage commissions, transfer taxes and soliciting dealer's
fees, paid by the acquiring person for such shares. If voting rights for such
shares are approved at a shareholders' meeting and the acquirer becomes entitled
to vote a majority of the shares entitled to vote, all
45
<PAGE>
other shareholders may exercise appraisal rights. The fair value of the stock as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid in the control share acquisition, and certain
limitations and restrictions otherwise applicable to the exercise of dissenters'
rights do not apply in the context of a "control share acquisition."
The control share acquisition statute does not apply (i) to shares acquired
pursuant to a merger, plan of share exchange, or tender or exchange offer, if
the corporation is a party to such transaction or agreement therefor, (ii) to
shares acquired directly from the corporation, from a wholly owned subsidiary of
the corporation, or from a corporation having beneficial ownership of shares
representing at least a majority of the voting power in electing directors, or
(iii) to acquisitions previously approved or exempted by a provision in the
charter or bylaws of the corporation. George Mason has not adopted such a
provision in its articles of incorporation or bylaws.
UNITED. The WVCA contains no provision relating to control share
acquisitions similar to those described with respect to George Mason.
INDEMNIFICATION, LIMITATION ON LIABILITY
GEORGE MASON. The George Mason Articles require it to indemnify its
directors and officers against liabilities, fines, penalties, settlements,
claims and reasonable expenses incurred by them in connection with any
proceeding to which they may be made a party by reason of their service in those
capacities, unless such director or officer is found to be guilty of gross
negligence or willful misconduct in the performance of his duties. In addition,
the George Mason Articles require it to indemnify its directors and officers to
the extent provided by the general laws of the Commonwealth of Virginia and to
the extent not in conflict with the George Mason Articles, including the advance
of expenses under the procedures provided by law. Virginia law permits a
corporation to indemnify its present and former directors and officers unless it
is established that (i) the director or officer failed to conduct himself in
good faith and he did not believe (a) in the case of conduct in his official
capacity with the corporation, that his conduct was in the corporation's best
interests or (b) in all other cases, that his conduct was not at least opposed
to its best interests; (ii) the director or officer actually received an
improper personal benefit; or (iii) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission was
unlawful. Virginia law requires a corporation, unless its articles of
incorporation provide otherwise, to indemnify a director who entirely prevails
in the defense of any proceeding to which he was a party against reasonable
expenses incurred by him in connection with the proceeding. The George Mason
Articles do not provide otherwise.
As permitted by Virginia law, the George Mason Articles limit the personal
liability of directors and officers to George Mason or its shareholders for
money damages to the fullest extent permitted by Virginia law. Virginia law does
not permit such charter provisions to limit liability for willful misconduct or
a knowing violation of the criminal law or of any federal or state securities
law, including without limitation, any claim or unlawful insider trading or
manipulation of the market for any security.
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. The United Articles
have no similar provision limiting director's liability.
DISSENTERS' RIGHTS
GEORGE MASON. Virginia law generally provides for dissenters' rights in
connection with mergers and share exchanges that would require shareholder
approval, and for sales of substantially all of the assets of a corporation
(other than in the usual and regular course of business and other than certain
liquidations and court-ordered sales) except in certain circumstances. The VSCA
provides that no holder of any class or series of shares which is (x) listed on
a national securities exchange or on the National Association of Securities
Dealers Automated Quotation System or (y) held by at least 2,000 holders of
record is entitled to dissent with respect to such a transaction unless, among
other things: (i) the articles of incorporation of the corporation issuing such
shares provide otherwise; (ii) in the case of a plan of merger or share
exchange, the holders of that class or series of shares are required to accept
for such shares anything other than (a) cash, (b) shares, or shares and cash in
lieu of fractional shares, of the surviving or acquiring corporation or of any
other corporation that at the record date fixed for determining shareholders
entitled to receive notice of and to vote at the meeting at which the merger or
share exchange will be acted on, were either listed subject to notice of
issuance on a national securities exchange or the National Association of
Securities Dealers Automated Quotations System or held of record by at least
2,000 stockholders or
46
<PAGE>
(c) a combination of cash and shares as set forth in (a) and (b) above; or (iii)
the transaction to be voted on is an "affiliated transaction" and is not
approved by a majority of disinterested directors as required by the VSCA.
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 involving the corporation.
SHAREHOLDER INSPECTION RIGHTS; SHAREHOLDER LISTS
GEORGE MASON. The VSCA permits any George Mason shareholder, upon written
demand submitted at least five business days in advance, to inspect and copy
certain listed materials, including the articles of incorporation, the bylaws
and certain George Mason board resolutions and minutes of shareholders'
meetings. The VSCA further permits a George Mason shareholder who has held his
shares for six months or more or who owns five percent or more of the
outstanding stock of George Mason, upon five business days' prior written demand
made in good faith and for a proper purpose, to inspect and copy the accounting
records, excerpts from minutes of meeting of the George Mason Board and its
committees, the minutes of any shareholders' meetings and the list of
shareholders. In addition, George Mason is required to prepare a shareholder
list with respect to any shareholders' meeting and to make such list available
at George Mason's principal office to any shareholder for a period of ten days
prior to the meeting and during such meeting and any adjournments thereof.
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.
47
<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.
<TABLE>
<CAPTION>
PRICE RANGE CASH DIVIDENDS
----------------- DECLARED PER
QUARTER HIGH LOW SHARE
- ----------------------------------------------------------------------------------------------- ------- ------- --------------
<S> <C> <C> <C> <C>
1995:
First............................................................................. $ 26.00 $ 23.25 $ 0.29
Second............................................................................ $ 27.75 $ 25.25 $ 0.29
Third............................................................................. $ 30.50 $ 26.25 $ 0.29
Fourth............................................................................ $ 31.00 $ 29.00 $ 0.30
1996:
First............................................................................. $ 28.50 $ 30.00 $ 0.30
Second............................................................................ $ 29.75 $ 26.75 $ 0.31
Third............................................................................. $ 30.25 $ 26.25 $ 0.31
Fourth............................................................................ $ 33.00 $ 29.25 $ 0.32
1997:
First............................................................................. $ 34.75 $ 32.25 $ 0.33
Second............................................................................ $ 42.25 $ 34.38 $ 0.33
Third............................................................................. $ 46.94 $ 41.38 $ 0.34
Fourth............................................................................ $ 48.75 $ 43.59 $ 0.35
1998:
First (through January , 1998).................................................. $ $ N/A
</TABLE>
On September 10, 1997, the last trading day before public announcement of
the Merger, the closing price per share of United Common Stock on the Nasdaq
Stock Market was $45.50. Past price performance is not necessarily indicative of
likely future price performance. Shareholders are urged to obtain current market
quotations for shares of United Common Stock.
The holders of United Common Stock are entitled to receive dividends when
and if declared by the United Board out of funds legally available therefor.
Although United currently intends to continue paying quarterly cash dividends on
the United Common Stock, there can be no assurance that United's dividend policy
will remain unchanged after completion of the Merger. The declaration and
payment of dividends thereafter will depend upon business conditions, operating
results, capital and reserve requirements, and the United Board's consideration
of other relevant factors.
48
<PAGE>
GEORGE MASON
George Mason Common Stock is traded on the Nasdaq Stock Market under the
symbol "GMBS." The following table sets forth, for the indicated periods, the
high and low closing sale prices for George Mason Common Stock as reported in
the Nasdaq Stock Market, and the cash dividends declared per share of George
Mason Common Stock for the indicated periods.
<TABLE>
<CAPTION>
PRICE RANGE
-----------------
QUARTER HIGH LOW
- ------------------------------------------------------------------------------------------------- ------- -------
<S> <C> <C> <C>
1995(1):
First............................................................................ $ 13.17 $ 11.33
Second........................................................................... $ 13.67 $ 12.33
Third............................................................................ $ 15.83 $ 13.17
Fourth........................................................................... $ 19.33 $ 15.33
1996:
First............................................................................ $ 23.25 $ 17.83
Second........................................................................... $ 22.25 $ 19.00
Third............................................................................ $ 20.63 $ 18.50
Fourth........................................................................... $ 23.25 $ 18.50
1997:
First............................................................................ $ 23.00 $ 20.50
Second........................................................................... $ 29.25 $ 20.00
Third............................................................................ $ 37.13 $ 26.25
Fourth........................................................................... $ 40.00 $ 35.50
1998
First (through January 21, 1998)................................................. $ 40.50 $ 37.00
<CAPTION>
CASH DIVIDENDS
DECLARED PER
SHARE
- -------------- --------------
<S> <C>
1995(1):
$ 0.09
$ 0.09
$ 0.09
$ 0.10
1996:
$ 0.10
$ 0.11
$ 0.12
$ 0.13
1997:
$ 0.14
$ 0.14
$ 0.14
$ 0.14
1998
N/A
</TABLE>
- ---------------
(1) The 1995 data has been adjusted to reflect a three for two stock split
effective February 9, 1996.
On September 10, 1997, the last trading day before public announcement of
the Merger, the closing price per share of George Mason Common Stock on the
Nasdaq Stock Market was $34.50. Past price performance is not necessarily
indicative of likely future price performance. Shareholders are urged to obtain
current market quotations for shares of George Mason Common Stock.
49
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF GEORGE MASON
PRINCIPAL BENEFICIAL OWNERS
As of January 21, 1998, there was no person who owned of record or was
known by management to own beneficially more than 5% of the outstanding shares
of George Mason Common Stock other than United, which, by holding the Option
granted pursuant to the Stock Option Agreement, may be deemed to beneficially
own approximately 16.6% of the outstanding shares of George Mason Common Stock.
See "The Merger -- Stock Option Agreement."
SHARES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
Share ownership of George Mason directors and executive officers is set
forth below as of December 31, 1997. 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 pursuant to incentive stock
option plans. For the two directors who are executive officers, direct ownership
includes options to purchase shares as follows: Bernard H. Clineburg, 27,425
shares; and Webb C. Hayes, IV, 10,000 shares. The options to purchase shares
included in the direct ownership of all executive officers as a group total
114,425. Indirect shares for each individual director include those owned by
spouses and immediate family members, unless otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
DIRECTORS AND EXECUTIVE OFFICERS BENEFICIAL OWNERSHIP(1) OF CLASS
- --------------------------------------------- ----------------------- ----------
<S> <C> <C>
Alan L. Box 24,928(2) *
William G. Buck 6,087(3) *
Randolph W. Church, Jr. 9,891(4) *
Bernard H. Clineburg 103,378(5) 1.96%
James J. Consagra, Jr. 32,170(6) *
C. Barrie Cook, M.D. 51,411(7) *
Elizabeth C. Dahlin 4,391 *
Edward S. DeBolt 31,080(8) *
Kevin F. DeCoste 48,308(9) *
Lawrence K. Doll 2,449 *
William H. Gordon 9,676(10) *
Webb C. Hayes, IV 90,421(11) 1.72%
William A. Hazel 35,580(12) *
Barnard F. Jennings 37,314(13) *
Edward H. Kaplan 101,987(14) 1.94%
Arthur Kellar 59,236(15) 1.13%
Paul E. Kyle 11,998(16) *
John M. McMahon 140,603 2.67%
Directors and Executive Officers as a group 800,914 14.86%(1)
----------------------- ----------
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of George Mason Common
Stock.
(1) In calculating the number of shares of George Mason Common Stock which are
beneficially owned (and thus the percentage of George Mason Common Stock
beneficially owned), a person is deemed to own George Mason Common Stock if
that person has the right to acquire beneficial ownership of George Mason
Common Stock within sixty (60) days through the exercise of any option,
warrant or right, or through the conversion of any security.
(2) Includes 12,327 shares held by Judy Box, Mr. Box's wife and 274 phantom
shares pursuant to the George Mason Directors' Stock Investment and
Deferred Fees Plan.
(3) Includes 600 shares held as custodian for Mr. Buck's children and 2,206
phantom shares pursuant to the George Mason Directors' Stock Investment and
Deferred Fees Plan.
(4) Includes 8,225 shares owned jointly with Lucy C. Church, Mr. Church's wife.
(5) Includes 67,239 shares owned jointly with Cheryl L. Clineburg, Mr.
Clineburg's wife and 27,425 shares which may be acquired upon exercise of
options within 60 days.
(6) Includes 31,000 shares which may be acquired upon exercise of options
within 60 days.
50
<PAGE>
(7) Includes 10,005 shares held jointly with Jean C. Cook, Dr. Cook's wife,
16,875 shares held by Mrs. Cook individually, 234 shares held by Fairfax
Pathology Assoc. Ltd. Retirement Account for the benefit of Dr. Cook and
2,499 phantom shares pursuant to the George Mason Directors' Stock
Investment and Deferred Fees Plan.
(8) Includes 1,079 shares held in an individual retirement arrangement by
Sharron DeBolt, Mr. DeBolt's wife.
(9) Includes 46,000 shares which may be acquired upon exercise of options
within 60 days.
(10) Includes 5,269 shares held jointly with Anne P. Gordon, Mr. Gordon's wife
and 2,921 phantom shares pursuant to the George Mason Directors' Stock
Investment and Deferred Fees Plan.
(11) Includes 2,250 shares held by Sara F. Hayes, Mr. Hayes' wife.
(12) Includes 1,014 phantom shares pursuant to the George Mason Directors' Stock
Investment and Deferred Fees Plan.
(13) Includes 5,427 shares held by Nancy Lee Jennings, Judge Jennings' wife and
1,371 phantom shares pursuant to the George Mason Directors' Stock
Investment and Deferred Fees Plan.
(14) Includes 240 phantom shares pursuant to the George Mason Directors' Stock
Investment and Deferred Fees Plan.
(15) Includes 19,855 shares held by Elizabeth Kellar, Mr. Kellar's wife.
(16) Includes 2,432 phantom shares pursuant to the George Mason Directors' Stock
Investment and Deferred Fees Plan.
51
<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 Common Stock, the only class of stock of United
outstanding, as of December 31, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- --------------------------------------------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock United National Bank Trust Department (1) 1,103,772 7.37%
514 Market Street, Parkersburg, WV 26101
(1,103,772 Shares or 7.37% are registered
under the nominee name of Parbanc Co.)
</TABLE>
- ---------------
(1) UNB is a wholly owned subsidiary of United and its Trust Department holds in
fiduciary capacity or agency capacity 1,238,812 shares of United 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 directors is set forth below as of December 31,
1997. 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 pursuant to incentive stock option plans. For three of the
directors who are executive officers, direct ownership includes options to
purchase shares as follows: Richard M. Adams, 104,491 shares; Douglass H. Adams,
14,566 shares; and I. N. Smith, 10,506 shares. The options to purchase shares
included in the direct ownership of all executive officers as a group total
248,451. 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 17.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF
DIRECTORS AND EXECUTIVE OFFICERS BENEFICIAL OWNERSHIP(1) CLASS
- --------------------------------------------- ----------------------- -------
<S> <C> <C>
Richard M. Adams 355,809(2) 2.37%
I. N. Smith, Jr. 235,507(3) 1.57%
Douglass H. Adams 55,430(4) *
Robert G. Astorg 13,258(5) *
Thomas J. Blair, III 125,215(6) *
Harry L. Buch 6,063 *
R. Terry Butcher 24,000(7) *
W. Gaston Caperton 11,542 *
John W. Dudley 8,703 *
H. Smoot Fahlgren 149,950 1.00
Theodore J. Georgelas 43,957 *
C. E. Goodwin 16,892(8) *
F. T. Graff 5,000(9) *
Andrew J. Houvouras 27,076(10) *
Russell L. Isaacs 20,958 *
Robert P. McLean 6,869(11) *
G. Ogden Nutting 326,328 2.18%
William C. Pitt 5,000(12) *
Charles E. Stealey 78,630(13) *
William A. Thornhill, III 224,727(14) 1.50%
William W. Wagner 267,038 1.78%
Harold L. Wilkes 2,156 *
P. Clinton Winter, Jr. 187,477(15) 1.25%
James W. Word, Jr. 61,551 *
Directors and Executive Officers as a group
(28 persons) 2,453,046 16.37%
----------------------- -------
</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
52
<PAGE>
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 263,739 shares of United Common Stock directly and 92,070
indirectly. Of the 92,070 shares indirectly owned by Mr. Adams, 25,590
shares are held by the Stevenson Trust over which he exercises voting
power, 35,814 shares are owned by the members of his immediate family and
30,666 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 are brothers.
(3) Mr. Smith owns 14,157 shares of United Common Stock directly and 221,350
indirectly. Of the 221,350 indirectly owned beneficially by Mr. Smith,
5,275 shares are owned by members of his immediate family and 14,575 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 15,000 shares; Kanawha Company 56,000 shares; Roane
Land Company, 500 shares; Roxalana Land Company 75,000 shares; and West
Virginia Coal Land Company 55,000 shares.
(4) Mr. D. Adams owns 51,154 shares of United Common Stock directly and 4,276
shares indirectly. Messrs. Richard M. Adams and Douglass H. Adams are
brothers.
(5) Mr. Astorg owns 12,533 shares of United Common Stock directly and 725
shares indirectly.
(6) Mr. Blair owns 119,545 shares of United Common Stock directly and 5,670
shares indirectly.
(7) Mr. Butcher owns 23,500 shares of United Common Stock directly and 500
shares indirectly.
(8) Mr. Goodwin owns 15,620 shares of United Common Stock directly and 1,272
shares indirectly.
(9) Mr. Graff owns 2,000 shares of United Common Stock directly and 3,000
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.
(10) Mr. Houvouras owns 478 shares of United Common Stock directly and 26,598
shares indirectly. The indirect shares are owned by a company in which Mr.
Houvouras is a partner.
(11) Mr. McLean owns 6,293 shares of United Common Stock directly and 576 shares
indirectly.
(12) Mr. Nutting owns 326,328 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 326,328 shares consisting of 20,952
shares held by Mr. Nutting as co-trustee, and 277,376 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 28,000
shares.
(13) Mr. Stealey owns 15,668 shares of United Common Stock directly and 62,962
shares indirectly. Mr. Stealey's mother holds 22,354 shares of the indirect
shares over which Mr. Stealey has power of attorney and the other 40,608
indirect shares are held in a trustee account for Mr. Stealey over which he
exercises voting and investment authority.
(14) Mr. Thornhill owns 131,697 shares of United Common Stock directly and
93,030 shares indirectly.
(15) Mr. Winter owns 125,965 shares of United Common Stock directly and 61,512
shares indirectly. Of the 61,094 shares indirectly owned by Mr. Winter,
41,774 shares are held in trusts for Mr. Winter's mother and children for
which Mr. Winter acts as executor and 18,400 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 191,898
shares or 1.28% of United Common Stock.
(16) Mr. Word owns 31,743 shares of United Common Stock directly and 29,808
shares indirectly.
(17) All directors and executive officers of United as a group, 28 persons, own
1,445,661 shares of United Common Stock directly and 955,201 shares
indirectly. Not included in indirect owned shares are 1,238,812 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 Director. The members of UNB's Board of Directors who are
also directors or executive officers of United are: Richard M. Adams, I. N.
Smith, Jr. and Gary L. Ellis.
53
<PAGE>
EXPERTS
The consolidated financial statements of United incorporated by reference
in the 1996 United 10-K 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 George Mason incorporated by
reference in the 1996 George Mason 10-K 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 The Palmer National Bancorp, Inc.,
which statements reflect total assets constituting 15 percent of George Mason's
consolidated total assets as of December 31, 1995, and net interest income
constituting 16 percent and 17 percent of George Mason's consolidated net
interest income for the years ended December 31, 1995 and 1994, respectively,
have been audited by Arthur Andersen LLP, independent auditors, as set forth in
their report thereon, which report is incorporated by reference into the 1996
George Mason 10-K and incorporated by reference herein in reliance upon such
report given upon the authority of such 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 George Mason
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 George Mason 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 (i) the amendment of the United
Articles to increase the number of authorized shares of United Common Stock from
20,000,000 to 41,000,000 shares and (ii) the issuance of the shares of United
Common Stock to be issued in the Merger will be voted in favor of any
adjournment or postponement.
SHAREHOLDER PROPOSALS
GEORGE MASON
If the Merger is not consummated, George Mason expects to hold its next
annual meeting of shareholders during May, 1998. The deadline for any proposals
of shareholders intended to be presented at such meeting has passed.
UNITED
United expects to hold its next annual meeting of shareholders during May,
1998. The deadline for any proposals of shareholders intended to be presented at
such meeting has passed.
54
<PAGE>
APPENDIX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 10, 1997
BY AND BETWEEN
UNITED BANKSHARES, INC.
AND
GEORGE MASON BANKSHARES, INC.
<PAGE>
CONFORMED COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
dated as of December 10, 1997
by and between
UNITED BANKSHARES, INC.
and
GEORGE MASON BANKSHARES, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
RECITALS................................................................................................................. A-1
ARTICLE I
Certain Definitions...................................................................................................... A-1
1.01 CERTAIN DEFINITIONS...................................................................................... A-1
ARTICLE II
The Merger............................................................................................................... A-3
2.01 THE MERGER............................................................................................... A-3
2.02 ARTICLES AMENDMENT....................................................................................... A-4
2.03 EFFECTIVE DATE AND EFFECTIVE TIME........................................................................ A-4
2.04 PLAN OF MERGER........................................................................................... A-4
ARTICLE III
Consideration; Exchange Procedures....................................................................................... A-4
3.01 MERGER CONSIDERATION..................................................................................... A-4
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS.................................................................. A-4
3.03 FRACTIONAL SHARES........................................................................................ A-5
3.04 EXCHANGE PROCEDURES...................................................................................... A-5
3.05 ANTI-DILUTION PROVISIONS................................................................................. A-5
3.06 OPTIONS.................................................................................................. A-5
ARTICLE IV
Actions Pending Acquisition.............................................................................................. A-6
4.01 FOREBEARANCES OF MASON................................................................................... A-6
4.02 FOREBEARANCES OF UNITED.................................................................................. A-7
ARTICLE V
Representations and Warranties........................................................................................... A-8
5.01 DISCLOSURE SCHEDULES..................................................................................... A-8
5.02 STANDARD................................................................................................. A-8
5.03 REPRESENTATIONS AND WARRANTIES OF MASON.................................................................. A-8
5.04 REPRESENTATIONS AND WARRANTIES OF UNITED................................................................. A-13
ARTICLE VI
Covenants................................................................................................................ A-17
6.01 REASONABLE BEST EFFORTS.................................................................................. A-17
6.02 STOCKHOLDER APPROVALS.................................................................................... A-17
6.03 REGISTRATION STATEMENT................................................................................... A-17
6.04 PRESS RELEASES........................................................................................... A-18
6.05 ACCESS; INFORMATION...................................................................................... A-18
6.06 ACQUISITION PROPOSALS.................................................................................... A-18
6.07 AFFILIATE AGREEMENTS..................................................................................... A-18
6.08 TAKEOVER LAWS............................................................................................ A-18
6.09 CERTAIN POLICIES......................................................................................... A-19
6.10 NASDAQ LISTING........................................................................................... A-19
6.11 REGULATORY APPLICATIONS.................................................................................. A-19
6.12 INDEMNIFICATION.......................................................................................... A-19
6.13 BENEFIT PLANS............................................................................................ A-20
6.14 NOTIFICATION OF CERTAIN MATTERS.......................................................................... A-20
6.15 DIRECTORS AND OFFICERS................................................................................... A-20
6.16 DIVIDEND COORDINATION.................................................................................... A-20
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
6.17 BANK MERGER.............................................................................................. A-20
6.18 MASON FEE................................................................................................ A-20
ARTICLE VII
Conditions to Consummation of the Merger................................................................................. A-21
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER............................................... A-21
7.02 CONDITIONS TO OBLIGATION OF MASON........................................................................ A-21
7.03 CONDITIONS TO OBLIGATION OF UNITED....................................................................... A-22
ARTICLE VIII
Termination.............................................................................................................. A-22
8.01 TERMINATION.............................................................................................. A-22
8.02 EFFECT OF TERMINATION AND ABANDONMENT.................................................................... A-23
ARTICLE IX
Miscellaneous............................................................................................................ A-23
9.01 SURVIVAL................................................................................................. A-23
9.02 WAIVER; AMENDMENT........................................................................................ A-23
9.03 COUNTERPARTS............................................................................................. A-23
9.04 GOVERNING LAW............................................................................................ A-23
9.05 EXPENSES................................................................................................. A-23
9.06 NOTICES.................................................................................................. A-23
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES....................................................... A-24
9.08 INTERPRETATION; EFFECT................................................................................... A-24
EXHIBIT A Form of Stock Option Agreement (See Appendix B of this Proxy Statement)
EXHIBIT A-1 Plan of Merger
EXHIBIT B Form of Mason Affiliate Agreement
EXHIBIT C Form of United Affiliate Agreement
ANNEX A Form of Supplement for Merger Sub
Accession to Acquisition Agreement
</TABLE>
A-ii
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of December 10,
1997 (this "AGREEMENT"), by and between George Mason Bankshares, Inc. ("MASON")
and, United Bankshares, Inc. ("UNITED").
RECITALS
A. MASON. Mason is a Virginia corporation, having its principal place of
business in Fairfax, Virginia.
B. UNITED. United is a West Virginia corporation, having its principal
place of business in Charleston, West Virginia.
C. STOCK OPTION AGREEMENT. As an inducement to the willingness of United to
continue to pursue the transactions contemplated by this Agreement , Mason
expects (but is not obligated) to grant to United an option pursuant to a stock
option agreement, in substantially the form of EXHIBIT A.
D. INTENTIONS OF THE PARTIES. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 (the
"CODE").
E. BOARD ACTION. The respective Boards of Directors of each of United and
Mason have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving Mason or any of
its Subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets or deposits of, Mason
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement.
"AGREEMENT" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in Section
5.03(m).
"CORPORATION COMMISSION" has the meaning set forth in Section 2.01(b).
"COSTS" has the meaning set forth in Section 6.12(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"EFFECTIVE TIME" means the effective time of the Merger, as provided for in
Section 2.03.
"ENVIRONMENTAL LAWS" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01.
A-1
<PAGE>
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE AMOUNT" has the meaning set forth in Section 6.12(b).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(t).
"LIEN" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"MASON" has the meaning set forth in the preamble to this Agreement.
"MASON AFFILIATE" has the meaning set forth in Section 6.07(a).
"MASON BOARD" means the Board of Directors of Mason.
"MASON BY-LAWS" means the By-laws of Mason.
"MASON CERTIFICATE" means the Amended Articles of Incorporation of Mason.
"MASON COMMON STOCK" means the common stock, par value $1.11 per share, of
Mason.
"MASON MEETING" has the meaning set forth in Section 6.02.
"MASON PREFERRED STOCK" means the preferred stock, par value $0.01 per
share, of Mason.
"MASON STOCK" means, collectively, Mason Common Stock and Mason Preferred
Stock.
"MASON STOCK PLANS" has the meaning set forth in Section 3.06.
"MATERIAL ADVERSE EFFECT" means, with respect to United or Mason, any
effect that (i) is material and adverse to the financial position, results of
operations or business of United and its Subsidiaries taken as a whole or Mason
and its Subsidiaries taken as a whole, respectively, or (ii) would materially
impair the ability of either United or Mason to perform its obligations under
this Agreement or otherwise materially threaten or materially impede the
consummation of the Merger and the other transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that Material Adverse Effect shall not be deemed
to include the impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory accounting
requirements applicable to banks and their holding companies generally and (c)
any modifications or changes to valuation policies and practices in connection
with the Merger or restructuring charges taken in connection with the Merger, in
each case in accordance with generally accepted accounting principles.
"MERGER" has the meaning set forth in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 3.01.
"MERGER SUB" means George Mason Holding Company, a Virginia corporation,
and/or one or more other corporations or limited liability companies to be
organized under the corporate laws of a State 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 and into a Virginia 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).
A-2
<PAGE>
"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.
"TAX RETURNS" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of Mason Stock held by Mason or any of
its Subsidiaries or by United or any of its Subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously contracted in
good faith.
"UNITED" has the meaning set forth in the preamble to this Agreement.
"UNITED BOARD" means the Board of Directors of United.
"UNITED COMMON STOCK" means the common stock, par value $2.50 per share, of
United.
"UNITED MEETING" has the meaning set forth in Section 6.02.
"VSCA" means the Virginia Stock Corporation Act.
"WEST VIRGINIA SECRETARY" 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) duly to organize one or more Merger Subs for the
purpose of consummating the Merger; (ii) to cause each Merger Sub to become a
party to this Agreement, to be evidenced by the execution by each Merger Sub of
a supplement to this Agreement in substantially the
A-3
<PAGE>
form of Annex A , and delivery thereof to Mason; and (iii) to cause each Merger
Sub to take all actions necessary or proper to comply with the obligations of
United and each such Merger Sub to consummate the transactions contemplated
hereby.
(b) At the Effective Time, Merger Sub shall merge with and into Mason (the
"MERGER"), the separate corporate existence of Merger Sub shall cease and Mason
shall survive and continue to exist as a Virginia corporation (Mason, as the
surviving corporation in the Merger, sometimes being referred to herein as the
"SURVIVING CORPORATION"). United may at any time prior to the Effective Time
change the method of effecting the combination with Mason (including, without
limitation, the provisions of this Article II) if and to the extent it deems
such change to be necessary, appropriate or desirable; PROVIDED, HOWEVER, that
no such change shall (i) alter or change the amount or kind of consideration to
be issued to holders of Mason Stock as provided for in this Agreement (the
"MERGER CONSIDERATION"), (ii) adversely affect the tax treatment of Mason's
stockholders as a result of receiving the Merger Consideration or the Merger
qualifying for "pooling of interests" accounting treatment or (iii) materially
impede or delay consummation of the transactions contemplated by this Agreement;
and PROVIDED FURTHER, that United shall provide Mason written notice of such
change.
(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
in the office of the Virginia State Corporation Commission (the "CORPORATION
COMMISSION") of articles of merger in accordance with Section 13.1-720 of the
VSCA or such later date and time as may be set forth in such articles and the
issuance of a certificate of merger by the Corporation Commission under the
VSCA. The Merger shall have the effects prescribed in the VSCA.
2.02 ARTICLES AMENDMENT. At the Effective Time, Article VI of the United
Restated Articles of Incorporation shall be amended to read as follows (the
"Articles Amendment"):
"VI. The amount of the authorized capital stock of the corporation is
$100,000,000 which shall be divided into 40,000,000 shares of a par value of
$2.50 per share."
2.03 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Merger (the "EFFECTIVE DATE") to occur on (i) the fifth
business day to occur after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (or, at the election of United, on the last business day of the month
in which such fifth business day occurs or, if such fifth business day occurs
within the last five business days of such month, on the last business day of
the succeeding month) or (ii) such other date to which the parties may agree in
writing; PROVIDED, HOWEVER, that in no event shall the Effective Date occur on
or prior to January 1, 1998. The time on the Effective Date when the Merger
shall become effective is referred to as the "EFFECTIVE TIME."
2.04 PLAN OF MERGER. The plan of merger included in this Agreement is
separately stated in the Plan of Merger (the "PLAN OF MERGER") attached hereto
as Exhibit A-1. The parties agree that subject to the provisions of this
Agreement, including the approval of the Plan of Merger by the requisite vote of
stockholders of Mason, the Plan of Merger shall be incorporated into the
articles of merger to be filed with the Corporation Commission to effect the
merger.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any action
on the part of any Person:
(a) OUTSTANDING MASON COMMON STOCK AND MASON RIGHTS. Each share,
excluding Treasury Stock, of Mason Common Stock issued and outstanding
immediately prior to the Effective Time shall become and be converted into
0.85 of a share of United Common Stock (the "Exchange Ratio"). The Exchange
Ratio shall be subject to adjustment as set forth in Section 3.05.
(b) OUTSTANDING UNITED STOCK. Each share of United Common Stock issued
and outstanding immediately prior to the Effective Time shall remain issued
and outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of Mason Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Mason Stock shall cease to be, and shall have no rights as,
stockholders of Mason, other than to receive any dividend or other distribution
with respect to such
A-4
<PAGE>
Mason 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 Mason or the Surviving
Corporation of shares of Mason Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of United Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
United shall pay to each holder of Mason Common Stock who would otherwise be
entitled to a fractional share of United Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the last
sale prices of United Common Stock, as reported by NASDAQ reporting system (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
authoritative source), for the five NASDAQ trading days immediately preceding
the Effective Date.
3.04 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, United
shall deposit, or shall cause to be deposited, with United Bank (in such
capacity, the "EXCHANGE AGENT"), for the benefit of the holders of certificates
formerly representing shares of Mason Common Stock ("OLD CERTIFICATES"), for
exchange in accordance with this Article III, certificates representing the
shares of United Common Stock ("NEW CERTIFICATES") and an estimated amount of
cash (such cash and New Certificates, together with any dividends or
distributions with a record date occurring after the Effective Date with respect
thereto (without any interest on any such cash, dividends or distributions),
being hereinafter referred to as the "EXCHANGE FUND") to be paid pursuant to
this Article III in exchange for outstanding shares of Mason Common Stock.
(b) As promptly as practicable after the Effective Date, United shall send
or cause to be sent to each former holder of record of shares of Mason Common
Stock immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the consideration set forth
in this Article III. United shall cause the New Certificates into which shares
of a stockholder's Mason Common Stock are converted on the Effective Date and/or
any check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Mason Common Stock (or indemnity reasonably
satisfactory to United and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, if any, nor
any party hereto shall be liable to any former holder of Mason Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions with respect to United Common Stock
with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Mason Common
Stock converted in the Merger into the right to receive shares of such United
Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.04, and, following 90 days after the Effective Date, no such
shares of Mason Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
United Common Stock such holder had the right to receive upon surrender of the
Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Mason for six months after the Effective Time shall be paid to
United. Any stockholders of Mason who have not theretofore complied with this
Article III shall thereafter look only to United for payment of the shares of
United Common Stock, cash in lieu of any fractional shares and unpaid dividends
and distributions on United Common Stock deliverable in respect of each share of
Mason Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
3.05 ANTI-DILUTION PROVISIONS. In the event United changes (or establishes
a record date for changing) the number of shares of United Common Stock issued
and outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding United Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be proportionately adjusted.
3.06 OPTIONS. (a) At the Effective Time, each outstanding option to
purchase shares of Mason Common Stock under the Mason Stock Plans (each, a
"MASON STOCK OPTION"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such Mason Stock Option, the number of shares of United
A-5
<PAGE>
Common Stock equal to (a) the number of shares of Mason Common Stock subject to
the Mason Stock Option, multiplied by (b) the Exchange Ratio (such product
rounded to the nearest whole number) (a "REPLACEMENT OPTION"), at an exercise
price per share (rounded to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of Mason Common Stock which were purchasable
pursuant to such Mason Stock Option divided by (z) the number of full shares of
United Common Stock subject to such Replacement Option in accordance with the
foregoing. Notwithstanding the foregoing, each Mason Stock Option which is
intended to be an "incentive stock option" (as defined in Section 422 of the
Code) shall be adjusted in accordance with the requirements of Section 424 of
the Code. At or prior to the Effective Time, Mason shall use its best efforts,
including using its best efforts to obtain any necessary consents from
optionees, with respect to the Mason Stock Plans to permit the replacement of
the outstanding Mason Stock Options by United pursuant to this Section and to
permit United to assume the Mason Stock Plans. Mason shall further take all
action necessary to amend the Mason Stock Plans to eliminate automatic grants or
awards thereunder following the Effective Time. At the Effective Time, United
shall assume the Mason Stock Plans; PROVIDED, that such assumption shall be only
in respect of the Replacement Options and that United shall have no obligation
with respect to any awards under the Mason Stock Plans other than the
Replacement Options and shall have no obligation to make any additional grants
or awards under such assumed Mason Stock Plans.
(b) At all times after the Effective Time, United shall reserve for
issuance such number of shares of United Common Stock as necessary so as to
permit the exercise of options granted under the Mason Stock Plans in the manner
contemplated by this Agreement and the instruments pursuant to which such
options were granted. United shall make all filings required under federal and
state securities laws no later than the Effective Time so as to permit the
exercise of such options and the sale of the shares received by the optionee
upon such exercise at and after the Effective Time and United shall continue to
make such filings thereafter as may be necessary to permit the continued
exercise of options and sale of such shares.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF MASON. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, without the prior written
consent of United, Mason will not, and will cause each of its Subsidiaries not
to:
(a) ORDINARY COURSE. Conduct the business of Mason and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse affect upon Mason's ability to perform
any of its material obligations under this Agreement.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Mason Stock or any Rights, (ii) enter into any agreement with respect to
the foregoing, or (iii) permit any additional shares of Mason Stock to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for payment
any dividend, other than (A) quarterly cash dividends on Mason Stock in an
amount not to exceed $0.14 per share with record and payment dates
consistent with past practice, and (B) dividends from wholly owned
Subsidiaries to Mason or another wholly owned Subsidiary of Mason) on or in
respect of, or declare or make any distribution on any shares of Mason
Stock or (b) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Mason or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit, (including incentive or bonus payments) except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related
A-6
<PAGE>
thereto, in respect of any director, officer or employee of Mason or its
Subsidiaries, or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity.
(h) GOVERNING DOCUMENTS. Amend the Mason Certificate, Mason By-laws or
the certificate of incorporation or by-laws (or similar governing
documents) of any of Mason's Subsidiaries.
(i) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(k) CLAIMS. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other
material claims, actions or proceedings and which involve solely money
damages in an amount, individually or in the aggregate for all such
settlements, that is not material to Mason and its Subsidiaries, taken as a
whole.
(l) ADVERSE ACTIONS. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
(m) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(n) INDEBTEDNESS. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) COMMITMENTS. Agree or commit to do any of the foregoing.
4.02 FOREBEARANCES OF UNITED. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Mason, United will not, and will cause each of its
Subsidiaries not to:
(a) PRESERVATION. Fail to use reasonable efforts to preserve intact in
any material respect their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates.
(b) EXTRAORDINARY DIVIDENDS. Make, declare, pay or set aside for
payment any extraordinary dividend.
(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.
A-7
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, United has
delivered to Mason a schedule and Mason has delivered to United a schedule
(respectively, its "DISCLOSURE SCHEDULE") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04 or to one or more of its covenants contained in Article IV; PROVIDED,
that (a) no such item is required to be set forth in a Disclosure Schedule as an
exception to a representation or warranty if its absence would not be reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under the standard established by Section 5.02, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect on the party
making the representation. Mason's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached as a
result of effects arising solely from actions taken in compliance with a written
request of United.
5.02 STANDARD. No representation or warranty of Mason or United contained
in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no party hereto
shall be deemed to have breached a representation or warranty, as a consequence
of the existence of any fact, event or circumstance unless such fact,
circumstance or event, individually or taken together with all other facts,
events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect. For purposes of this Agreement, "knowledge" shall mean,
with respect to a party hereto, actual knowledge of any officer of that party
with the title, if any ranking not less than senior vice president and that
party's in-house counsel, if any.
5.03 REPRESENTATIONS AND WARRANTIES OF MASON. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Mason hereby represents
and warrants to United:
(a) ORGANIZATION, STANDING AND AUTHORITY. Mason is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Mason is duly qualified to do business and is in good
standing in the states of the United States and any foreign jurisdictions where
its ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) MASON STOCK. As of the date hereof, the authorized capital stock of
Mason consists solely of (i) 9,000,000 shares of Mason Common Stock, of which
5,117,405 shares were outstanding as of the date hereof, and (ii) 1,000,000
shares of Mason Preferred Stock, of which no shares are outstanding. As of the
date hereof, no shares of Mason Common Stock and no shares of Mason Preferred
Stock were held in treasury by Mason or otherwise owned by Mason or its
Subsidiaries ("TREASURY STOCK"). The outstanding shares of Mason Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, except as Previously
Disclosed in its Disclosure Schedule, there are no shares of Mason Stock
authorized and reserved for issuance, Mason does not have any Rights issued or
outstanding with respect to Mason Stock, and Mason does not have any commitment
to authorize, issue or sell any Mason Stock or Rights, except pursuant to this
Agreement and the Stock Option Agreement. The number of shares of Mason Common
Stock which are issuable and reserved for issuance upon exercise of Mason Stock
Options as of the date hereof are Previously Disclosed in Mason's Disclosure
Schedule.
(c) SUBSIDIARIES. (i)(A) Mason has Previously Disclosed a list of all of
its Subsidiaries together with the jurisdiction of organization of each such
Subsidiary, (B) except as Previously Disclosed, it owns, directly or indirectly,
all the issued and outstanding equity securities of each of its Subsidiaries,
(C) no equity securities of any of its Subsidiaries are or may become required
to be issued (other than to it or its wholly-owned Subsidiaries) by reason of
any Right or otherwise, (D) there are no contracts, commitments, understandings
or arrangements by which any of such Subsidiaries is or may be bound to sell or
otherwise transfer any equity securities of any such Subsidiaries (other than to
it or its wholly-owned Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to dispose of
such securities and (F) all the equity securities of each Subsidiary held by
Mason or its Subsidiaries are fully paid and nonassessable (except pursuant to
12 U.S.C. (section mark)55) and are owned by Mason or its Subsidiaries free and
clear of any Liens.
(ii) Mason does not own beneficially, directly or indirectly, any equity
securities or similar interests of any Person, or any interest in a partnership
or joint venture of any kind, other than its Subsidiaries.
A-8
<PAGE>
(iii) Each of Mason's Subsidiaries has been duly organized and is validly
existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified.
(d) CORPORATE POWER. Each of Mason and its Subsidiaries has the corporate
power and authority to carry on its business as it is now being conducted and to
own all its properties and assets; and Mason has the corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the Stock Option Agreement and to consummate the transactions contemplated
hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to receipt
of the requisite approval of this Agreement (including the agreement of merger
set forth herein) by the holders of more than two-thirds of the outstanding
shares of Mason Common Stock entitled to vote thereon (which is the only
shareholder vote required thereon), this Agreement, the Stock Option Agreement
and the transactions contemplated hereby and thereby have been authorized by all
necessary corporate action of Mason and the Mason Board prior to the date
hereof. This Agreement is a valid and legally binding obligation of Mason,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles). In approving this
Agreement and the Merger and the related transactions, the Board of Directors of
Mason has satisfied its obligations under Article 8 of the Mason Certificate.
The Mason Board of Directors has received the written opinion of Friedman,
Billings, Ramsey & Co., Inc. to the effect that as of the date hereof the
consideration to be received by the holders of Mason Common Stock in the Merger
is fair to the holders of Mason Common Stock from a financial point of view.
(f) REGULATORY FILINGS; NO DEFAULTS. (i) No consents or approvals of, or
filings or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by Mason or any of its Subsidiaries in
connection with the execution, delivery or performance by Mason of this
Agreement or the Stock Option Agreement or to consummate the Merger except for
(A) filings of applications or notices with federal and Virginia banking
authorities, (B) filings with the SEC and state securities authorities, and (C)
the filing of articles of merger with the Corporation Commission pursuant to the
VSCA and the issuance of a certificate of merger in connection therewith. As of
the date hereof, Mason is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and expiration of related waiting periods, and required
filings under federal and state securities laws, the execution, delivery and
performance of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not (A) constitute a breach or violation of, or a default under, or give rise to
any Lien, any acceleration of remedies or any right of termination under, any
law, rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Mason or of any of its
Subsidiaries or to which Mason or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default under,
the Mason Certificate or the Mason By-Laws, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS. (i) Mason's Annual Reports on Form
10-K for the fiscal years ended December 31, 1994, 1995 and 1996, and all other
reports, registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its Subsidiaries subsequent to
December 31, 1994 under the Securities Act, or under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, in the form filed or to be filed (collectively,
Mason's "SEC DOCUMENTS") with the SEC, as of the date filed, (A) complied or
will comply in all material respects with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (B) did not and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; and
each of the balance sheets or statements of condition contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly present, the
financial position of Mason and its Subsidiaries as of its date, and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in such SEC Documents (including any related notes and
schedules thereto) fairly presents, or will fairly present, the results of
operations, changes in stockholders' equity and cash flows, as the case may be,
of Mason and its Subsidiaries for the periods to which they relate, in each case
in accordance with generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments and the absence of footnotes in the
case of unaudited statements.
A-9
<PAGE>
(ii) Since December 31, 1996, Mason and its Subsidiaries have not incurred
any liability other than in the ordinary course of business consistent with past
practice.
(iii) Since December 31, 1996, (A) Mason and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to this Agreement and
the transactions contemplated hereby) and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.03 or
otherwise), is reasonably likely to have a Material Adverse Effect with respect
to Mason.
(h) LITIGATION. No litigation, claim or other proceeding before any court
or governmental agency is pending against Mason or any of its Subsidiaries and,
to Mason's knowledge, no such litigation, claim or other proceeding has been
threatened.
(i) REGULATORY MATTERS. (i) Neither Mason nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any federal
or state governmental agency or authority charged with the supervision or
regulation of financial institutions (or their holding companies) or issuers of
securities or engaged in the insurance of deposits (including, without
limitation, the Office of the Comptroller of the Currency, the Federal Reserve
System and the FDIC) or the supervision or regulation of it or any of its
Subsidiaries (collectively, the "REGULATORY AUTHORITIES").
(ii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. Each of Mason and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Mason's knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that Mason or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations, or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit, or governmental
authorization (nor, to Mason's knowledge, do any grounds for any of the
foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for this Agreement, the Stock
Option Agreement and those agreements and other documents filed as exhibits to
its SEC Documents, neither it nor any of its Subsidiaries is a party to, bound
by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material contract" within
the meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
restricts or limits in any way the conduct of business by it or any of its
Subsidiaries (including without limitation a non-compete or similar provision).
Neither it nor any of its Subsidiaries is in default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party, by which its respective assets, business, or operations
may be bound or affected, or under which it or its respective assets, business,
or operations receive benefits, and there has not occurred any event that, with
the lapse of time or the giving of notice or both, would constitute such a
default.
(l) NO BROKERS. No action has been taken by Mason that would give rise to
any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment with respect to the transactions contemplated by this
Agreement, excluding a Previously Disclosed fee to be paid to Friedman,
Billings, Ramsey & Co., Inc.
A-10
<PAGE>
(m) EMPLOYEE BENEFIT PLANS. (i) Section 5.03 (m)(i) of Mason's Disclosure
Schedule contains a complete and accurate list of all existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, severance, welfare and fringe benefit plans, employment or severance
agreements and all similar practices, policies and arrangements in which any
employee or former employee (the "EMPLOYEES"), consultant or former consultant
(the "CONSULTANTS") or director or former director (the "DIRECTORS") of Mason or
any of its Subsidiaries participates or to which any such Employees, Consultants
or Directors are a party (the "COMPENSATION AND BENEFIT PLANS"). Neither Mason
nor any of its Subsidiaries has any commitment to create any additional
Compensation and Benefit Plan or to modify or change any existing Compensation
and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and administered
in all material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, or any regulations or rules
promulgated thereunder, and all filings, disclosures and notices required by
ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made. Each
Compensation and Benefit Plan which is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and which is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter (including a determination that the related trust under
such Compensation and Benefit Plan is exempt from tax under Section 501(a) of
the Code) from the Internal Revenue Service ("IRS"), and Mason is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
Mason, threatened legal action, suit or claim relating to the Compensation and
Benefit Plans. Neither Mason nor any of its Subsidiaries has engaged in a
transaction, or omitted to take any action, with respect to any Compensation and
Benefit Plan that would reasonably be expected to subject Mason or any of its
Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA, assuming for purposes of Section 4975 of the Code that the
taxable period of any such transaction expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC which
have been made or will be made on a timely basis) under Title IV of ERISA has
been or is expected to be incurred by Mason or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or any single-employer plan of any entity (an "ERISA AFFILIATE") which
is considered one employer with Mason under Section 4001(a)(14) of ERISA or
Section 414(b) or (c) of the Code (an "ERISA AFFILIATE PLAN"). None of Mason,
any of its Subsidiaries or any ERISA Affiliate has contributed, or has been
obligated to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA at any time since September 26, 1980. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Compensation and Benefit Plan or by any ERISA Affiliate Plan within the 12-month
period ending on the date hereof, and no such notice will be required to be
filed as a result of the transactions contemplated by this Agreement. The PBGC
has not instituted proceedings to terminate any Pension Plan or ERISA Affiliate
Plan and, to Mason's knowledge, no condition exists that presents a material
risk that such proceedings will be instituted. To the knowledge of Mason, there
is no pending investigation or enforcement action by the PBGC, the Department of
Labor (the "DOL") or IRS or any other governmental agency with respect to any
Compensation and Benefit Plan. Under each Pension Plan and ERISA Affiliate Plan,
as of the date of the most recent actuarial valuation performed prior to the
date of this Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in such actuarial valuation
of such Pension Plan or ERISA Affiliate Plan), did not exceed the then current
value of the assets of such Pension Plan or ERISA Affiliate Plan and since such
date there has been neither an adverse change in the financial condition of such
Pension Plan or ERISA Affiliate Plan nor any amendment or other change to such
Pension Plan or ERISA Affiliate Plan that would increase the amount of benefits
thereunder which reasonably could be expected to change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit
arrangements under any collective bargaining agreement to which Mason or any of
its Subsidiaries is a party have been timely made or have been reflected on
Mason's financial statements. Neither any Pension Plan nor any ERISA Affiliate
Plan has an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and all required
payments to the PBGC with respect to each Pension Plan or ERISA Affiliate Plan
have been made on or before their due dates. None of Mason, any of its
Subsidiaries or any ERISA Affiliate (x) has provided, or would reasonably be
expected to be required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, and (y) has taken any
action, or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a lien under Section 412(n) of the Code
or pursuant to ERISA.
A-11
<PAGE>
(v) Neither Mason nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death benefits under
any Compensation and Benefit Plan, other than benefits mandated by Section 4980B
of the Code, and each such Compensation and Benefit Plan may be amended or
terminated without incurring liability thereunder. There has been no
communication to Employees by Mason or any of its Subsidiaries that would
reasonably be expected to promise or guarantee such Employees retiree health or
life insurance or other retiree death benefits on a permanent basis.
(vi) Mason and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign Employees.
(vii) With respect to each Compensation and Benefit Plan, if applicable,
Mason has provided or made available to United, true and complete copies of
existing: (A) Compensation and Benefit Plan documents and amendments thereto;
(B) trust instruments and insurance contracts; (C) two most recent Forms 5500
filed with the IRS; (D) most recent actuarial report and financial statement;
(E) the most recent summary plan description; (F) forms filed with the PBGC
(other than for premium payments); (G) most recent determination letter issued
by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; and (I) most
recent nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(viii) Except as disclosed on Section 5.03(m)(viii) of Mason's Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
would not, directly or indirectly (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time)
reasonably be expected to (A) entitle any Employee, Consultant or Director to
any payment (including severance pay or similar compensation) or any increase in
compensation, (B) result in the vesting or acceleration of any benefits under
any Compensation and Benefit Plan or (C) result in any material increase in
benefits payable under any Compensation and Benefit Plan.
(ix) Except as disclosed on Section 5.03(m)(ix) of Mason's Disclosure
Schedule, neither Mason nor any of its Subsidiaries maintains any compensation
plans, programs or arrangements the payments under which would not reasonably be
expected to be deductible as a result of the limitations under Section 162(m) of
the Code and the regulations issued thereunder.
(x) Except as disclosed on Section 5.03(m)(x) of Mason's Disclosure
Schedule, as a result, directly or indirectly, of the transactions contemplated
by this Agreement (including, without limitation, as a result of any termination
of employment prior to or following the Effective Time), none of United, Mason
or the Surviving Corporation, or any of their respective Subsidiaries will be
obligated to make a payment that would be characterized as an "excess parachute
payment" to an individual who is a "disqualified individual" (as such terms are
defined in Section 280G of the Code), without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
(n) LABOR MATTERS. Neither Mason nor any of its Subsidiaries is a party to
or is bound by any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor is Mason or any
of its Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel Mason or any such Subsidiary
to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other labor dispute involving it or any of its
Subsidiaries pending or, to Mason's knowledge, threatened, nor is Mason aware of
any activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) TAKEOVER LAWS; DISSENTERS RIGHTS. Mason has taken all action required
to be taken by it in order to exempt this Agreement, the Stock Option Agreement
and the transactions contemplated hereby and thereby from, and this Agreement,
the Stock Option Agreement and the transactions contemplated hereby and thereby
are exempt from, the requirements of any "moratorium", "control share", "fair
price", "affiliate transaction", "business combination" or other antitakeover
laws and regulations of any state (collectively, "TAKEOVER LAWS"), including,
without limitation, the Commonwealth of Virginia, and including, without
limitation, Sections 13.1-725 through 13.1-728 of the VSCA (because a majority
of Mason's disinterested directors approved such transactions for such purposes
prior to any "determination date" with respect to United) and Sections
13.1-728.1 through 13.1-728.9 of the VSCA. The provisions of Article 7 of the
Mason Certificate do not apply to the entering into of this Agreement, this
Agreement and the transactions contemplated hereby, including the Merger, as
they have been approved by the required majority votes of the directors referred
to therein. The provisions of Article 7 of the Mason Certificate do not apply to
the entering into of the Stock Option Agreement, the Stock Option Agreement and
the transactions contemplated thereby. Holders of Mason Common Stock do not have
dissenters' rights in connection with the Merger.
(p) ENVIRONMENTAL MATTERS. To Mason's knowledge, neither the conduct nor
operation of Mason or its Subsidiaries nor any condition of any property
presently or previously owned, leased or operated by any of them (including,
without limitation, in a fiduciary or agency capacity), or on which any of them
holds a Lien, violates or violated Environmental Laws and to Mason's knowledge,
no condition has existed or event has occurred with respect to any of them or
any such property that,
A-12
<PAGE>
with notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. To Mason's knowledge, neither Mason nor any
of its Subsidiaries has received any notice from any person or entity that Mason
or its Subsidiaries or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any of
them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from any such property.
(q) TAX MATTERS. (i) All Tax Returns that are required to be filed by or
with respect to Mason and its Subsidiaries have been duly filed, (ii) all Taxes
shown to be due on the Tax Returns referred to in clause (i) have been paid in
full, (iii) the Tax Returns referred to in clause (i) have been examined by the
Internal Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (iv) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (v) no
issues that have been raised by the relevant taxing authority in connection with
the examination of any of the Tax Returns referred to in clause (i) are
currently pending, and (vi) no waivers of statutes of limitation have been given
by or requested with respect to any Taxes of Mason or its Subsidiaries. Mason
has made available to United true and correct copies of the United States
federal income Tax Returns filed by Mason and its Subsidiaries for each of the
three most recent fiscal years ended on or before December 31, 1996. Neither
Mason nor any of its Subsidiaries has any liability with respect to income,
franchise or similar Taxes that accrued on or before the end of the most recent
period covered by Mason's SEC Documents filed prior to the date hereof in excess
of the amounts accrued with respect thereto that are reflected in the financial
statements included in Mason's SEC Documents filed on or prior to the date
hereof. As of the date hereof, neither Mason nor any of its Subsidiaries has any
reason to believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the Code
as a result of the transfer contemplated by this Agreement.
(iii) Mason and its Subsidiaries will not be liable for any taxes as a
result of any Covered Transaction.
(r) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Mason's own account, or for
the account of one or more of Mason's Subsidiaries or their customers (all of
which are listed on Mason's Disclosure Schedule), were entered into (i) in
accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (ii) with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of Mason or one of its Subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and is in full force and effect. Neither Mason
nor its Subsidiaries, nor to Mason's knowledge any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement.
(s) BOOKS AND RECORDS. The books and records of Mason and its Subsidiaries
have been fully, properly and accurately maintained in all material respects,
and there are no material inaccuracies or discrepancies of any kind contained or
reflected therein and they fairly reflect the substance of events and
transactions included therein.
(t) INSURANCE. Mason's Disclosure Schedule sets forth all of the insurance
policies, binders, or bonds maintained by Mason or its Subsidiaries. Mason and
its Subsidiaries are insured with reputable insurers against such risks and in
such amounts as the management of Mason reasonably has determined to be prudent
in accordance with industry practices. All such insurance policies are in full
force and effect; Mason and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely fashion.
(u) ACCOUNTING TREATMENT. As of the date hereof, it is aware of no reason
why the Merger will fail to qualify for "pooling of interests" accounting
treatment.
(v) DISCLOSURE. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
5.04 REPRESENTATIONS AND WARRANTIES OF UNITED. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, United hereby represents
and warrants to Mason as follows:
A-13
<PAGE>
(a) ORGANIZATION, STANDING AND AUTHORITY. United is a corporation duly
organized, validly existing and in good standing under the laws of the
State of West Virginia. United is duly qualified to do business and is in
good standing in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified.
(b) UNITED STOCK. (i) As of the date hereof, the authorized capital
stock of United consists solely of 20,000,000 shares of United Common
Stock, of which no more than 15,295,130 shares were outstanding as of the
date hereof. As of the date hereof, except as set forth in its Disclosure
Schedule, United does not have any Rights issued or outstanding with
respect to United Stock and United does not have any commitment to
authorize, issue or sell any United Stock or Rights, except pursuant to
this Agreement. The outstanding shares of United Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights).
(ii) The shares of United Common Stock to be issued in exchange for
shares of Mason Common Stock in the Merger, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and subject to no preemptive rights.
(c) SUBSIDIARIES. Each of United's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and
is in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and
it owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Significant Subsidiaries.
(d) CORPORATE POWER. Each of United and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and United has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval by (i) the holders of a majority of the
outstanding shares of United Common Stock entitled to vote thereon of the
Articles Amendment and (ii) the holders of a majority of the votes present
or represented by proxy at the United Meeting of the issuance of United
Common Stock as contemplated hereby (which are the only shareholder votes
required thereon), this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby have been authorized by all
necessary corporate action of United and the United Board prior to the date
hereof. This Agreement is a valid and legally binding agreement of United,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by United or any of its
Subsidiaries in connection with the execution, delivery or performance by
United of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) the adoption and approval by the
shareholders of United of the Articles Amendment and the issuance of United
Common Stock as contemplated hereby; (C) the filing and declaration of
effectiveness of the Registration Statement; (D) the filing of articles of
merger with the Corporation Commission pursuant to the VSCA and the
issuance of the related certificate of merger and the filing of the
Articles Amendment with the West Virginia Secretary; (E) such filings as
are required to be made or approvals as are required to be obtained under
the securities or "Blue Sky" laws of various states in connection with the
issuance of United Stock in the Merger; and (F) receipt of the approvals
set forth in Section 7.01(b). As of the date hereof, United is not aware of
any reason why the approvals set forth in Section 7.01(b) will not be
received without the imposition of a condition, restriction or requirement
of the type described in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred to in
the preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of United or of any of its
Subsidiaries or to which United or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of United or any of its Subsidiaries, or (C) require any consent
or approval
A-14
<PAGE>
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.
(ii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to United.
(h) LITIGATION; REGULATORY ACTION. (i) No litigation, claim or other
proceeding before any Governmental Authority is pending against United or
any of its Subsidiaries and, to the best of United's knowledge, no such
litigation, claim or other proceeding has been threatened.
(ii) Neither United nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has United or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) COMPLIANCE WITH LAWS. Each of United and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best of its
knowledge, no suspension or cancellation of any of them is threatened;
and
(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that United
or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to United's knowledge, do any grounds
for any of the foregoing exist).
(j) NO BROKERS. No action has been taken by United that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement.
(k) TAKEOVER LAWS. United has taken all action required to be taken by
it in order to exempt this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby
are exempt from, the requirements of any Takeover Laws applicable to
United.
A-15
<PAGE>
(l) ENVIRONMENTAL MATTERS. To United's knowledge, neither the conduct
nor operation of United or its Subsidiaries nor any condition of any
property presently or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, violates or violated Environmental Laws and
to Mason's knowledge no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To United's knowledge, neither United nor any of its
Subsidiaries has received any notice from any person or entity that United
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(m) TAX MATTERS. (i) All Tax Returns that are required to be filed by
or with respect to United and its Subsidiaries have been duly filed, (ii)
all Taxes shown to be due on the Tax Returns referred to in clause (i) have
been paid in full, (iii) the Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have been raised by
the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (i) are currently pending, and (vi)
no waivers of statutes of limitation have been given by or requested with
respect to any Taxes of United or its Subsidiaries. Neither United nor any
of its Subsidiaries has any liability with respect to income, franchise or
similar Taxes that accrued on or before the end of the most recent period
covered by United's SEC Documents filed prior to the date hereof in excess
of the amounts accrued with respect thereto that are reflected in the
financial statements included in United's SEC Documents filed on or prior
to the date hereof.
(n) BOOKS AND RECORDS. The books and records of United and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
(o) INSURANCE. United's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by United or its
Subsidiaries. United and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of United
reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; United
and its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(p) ACCOUNTING TREATMENT. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
(q) DISCLOSURE. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
(r) REPRESENTATIONS AND WARRANTIES OF UNITED WITH RESPECT TO MERGER
SUBS. (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.
(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 subsidiaries 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).
A-16
<PAGE>
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of Mason and United agrees to use its reasonable best efforts in
good faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Merger as promptly as practicable and
otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other party hereto to that end. Without limiting
the foregoing, United agrees to use its reasonable best efforts prior to the
Effective Time to file the Articles Amendment.
6.02 STOCKHOLDER APPROVALS. United and Mason agree to take, in accordance
with applicable law or NASDAQ rules and its articles of incorporation and
by-laws, all action necessary to convene an appropriate meeting of its
stockholders to consider and vote upon in the case of United, the approval and
adoption of the Articles Amendment, the issuance of United Common Stock as
contemplated hereby and any other matter required to be approved by United's
stockholders for consummation of the Merger (including any adjournment or
postponement, the "UNITED MEETING") and, in the case of Mason, the approval of
this Agreement, the Plan of Merger and any other matters required to be approved
by Mason's stockholders for consummation of the Merger (including any
adjournment or postponement, the "MASON MEETING"), in each case as promptly as
practicable after the Registration Statement is declared effective.
6.03 REGISTRATION STATEMENT. (a) United agrees to prepare a registration
statement on Form S-4 (the "REGISTRATION STATEMENT") to be filed by United with
the SEC in connection with the issuance of United Common Stock in the Merger
(including the joint proxy statement and prospectus and other proxy solicitation
materials of United and Mason constituting a part thereof (the "PROXY
STATEMENT") and all related documents). Mason agrees to cooperate, and to cause
its Subsidiaries to cooperate, with United, its counsel and its accountants, in
preparation of the Registration Statement and the Proxy Statement; and PROVIDED
that Mason and its Subsidiaries have cooperated as required above, United agrees
to file the Proxy Statement in preliminary form with the SEC as promptly as
reasonably practicable, and to file the Registration Statement with the SEC as
soon as reasonably practicable after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of Mason and United agrees to use
all reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
filing thereof. United also agrees to use all reasonable efforts to obtain,
prior to the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. Mason agrees to furnish to United
all information concerning Mason, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of Mason and United agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to stockholders and at the time of the United Meeting or the Mason Meeting, as
the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or any statement which, in the light of the
circumstances under which such statement is made, will be false or misleading
with respect to any material fact, or which will omit to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier statement in the Proxy
Statement or any amendment or supplement thereto. Each of Mason and United
further agrees that if it shall become aware prior to the Effective Date of any
information furnished by it that would cause any of the statements in the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) United agrees to advise Mason, promptly after United receives notice
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or the
suspension of the qualification of United Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
A-17
<PAGE>
(d) United and Mason, in consultation with the other, shall employ
professional proxy solicitors to assist it in contacting stockholders in
connection with soliciting votes on the Merger.
6.04 PRESS RELEASES. Each of Mason and United agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules.
6.05 ACCESS; INFORMATION. (a) Each of Mason and United agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
the business, properties and personnel of it as the other may reasonably
request.
(b) Each agrees that it will not, and will cause its representatives not
to, use any information obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party to
which such information pertains or (iv) is or becomes readily ascertainable from
published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
or extracts thereof containing information and data as to another party hereto
to be returned to the party which furnished the same. No investigation by either
party of the business and affairs of the other shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the Effective
Time, each party shall promptly furnish the other with copies of all monthly and
other interim financial statements produced in the ordinary course of business
as the same shall become available.
6.06 ACQUISITION PROPOSALS. Mason agrees that it shall not, and shall cause
its Subsidiaries and its and its Subsidiaries' officers, directors, agents,
advisors and affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any Acquisition Proposal. It shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than United with respect to any of
the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. Mason
shall promptly (within 24 hours) advise United following the receipt by Mason of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise United of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07. AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, (i) United shall deliver to Mason a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the United Meeting, deemed to be an "affiliate" of United
(each, a "United Affiliate") as that term is used in SEC Accounting Series
Releases 130 and 135; and (ii) Mason shall deliver to United a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the Mason Meeting, deemed to be an "affiliate" of Mason (each, a
"Mason Affiliate") as that term is used in Rule 145 under the Securities Act or
SEC Accounting Series Releases 130 and 135.
(b) Each of Mason and United shall use its respective reasonable best
efforts to cause each person who may be deemed to be a Mason Affiliate or a
United Affiliate, as the case may be, to execute and deliver to Mason and United
on or before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as Exhibit B or Exhibit C, respectively.
6.08 TAKEOVER LAWS. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement or the Stock Option Agreement to
be subject to requirements imposed by any Takeover Law and each of them
A-18
<PAGE>
shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 CERTAIN POLICIES. Prior to the Effective Date, Mason shall, consistent
with generally accepted accounting principles and on a basis mutually
satisfactory to it and United, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of United; PROVIDED, HOWEVER, that Mason shall not be obligated to take any such
action pursuant to this Section 6.09 unless and until United acknowledges that
all conditions to its obligation to consummate the Merger have been satisfied
and certifies to Mason that United's representations and warranties, subject to
Section 5.02, are true and correct as of such date and that United is otherwise
material in compliance with this Agreement. Mason's representations, warranties
and covenants contained in this Agreement shall not be deemed to be untrue or
breached in any respect for any purpose as a consequence of any modifications or
changes undertaken solely on account of this Section 6.09.
6.10 NASDAQ LISTING. To the extent so required, United agrees to use its
reasonable best efforts to list, prior to the Effective Date, on the NASDAQ,
subject to official notice of issuance, the shares of United Common Stock to be
issued to the holders of Mason Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) United and Mason and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement. Each of United and Mason shall have the right to review in advance,
and to the extent practicable each will consult with the other, in each case
subject to applicable laws relating to the exchange of information, with respect
to, all material written information submitted to any third party or any
Governmental Authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable. Each party hereto agrees that
it will consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 INDEMNIFICATION. (a) Following the Effective Date and for a period of
six years thereafter, United shall indemnify, defend and hold harmless the
present directors, officers and employees of Mason and its Subsidiaries (each,
an "INDEMNIFIED PARTY") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement) to the fullest extent that Mason is permitted to indemnify (and
advance expenses to) its directors and officers under the laws of the
Commonwealth of Virginia, the Mason Certificate and the Mason By-Laws as in
effect on the date hereof; PROVIDED that any determination required to be made
with respect to whether an officer's, director's or employee's conduct complies
with the standards set forth under Virginia law, the Mason Certificate and the
Mason By-Laws shall be made by independent counsel (which shall not be counsel
that provides material services to United) selected by United and reasonably
acceptable to such officer or director.
(b) For a period of four years from the Effective Time, United shall use
its reasonable best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of Mason or any of its Subsidiaries (determined as of the Effective
Time) (as opposed to Mason) with respect to claims against such directors and
officers arising from facts or events which occurred before the Effective Time,
which insurance shall contain at least the same coverage and amounts, and
contain terms and conditions no less advantageous, as that coverage currently
provided by Mason; PROVIDED, HOWEVER, that in no event shall United be required
to expend more than 200 percent of the current amount expended by Mason (the
"INSURANCE AMOUNT") to maintain or procure such directors and officers insurance
coverage; PROVIDED, FURTHER, that if United is unable to maintain or obtain the
insurance called for by this Section 6.12(b), United shall use its reasonable
best efforts to obtain as much comparable insurance as is available for the
Insurance Amount; PROVIDED, FURTHER, that officers and directors of Mason or any
Subsidiary may be required to make application and provide customary
representations and warranties to United's insurance carrier for the purpose of
obtaining such insurance.
A-19
<PAGE>
(c) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify United thereof; PROVIDED that the failure
so to notify shall not affect the obligations of United under Section 6.12(a)
unless and to the extent that United is actually prejudiced as a result of such
failure.
(d) If United or any of its successors or assigns shall consolidate with or
merge into any other entity and shall not be the continuing or surviving entity
of such consolidation or merger or shall transfer all or substantially all of
its assets to any entity, then and in each case, proper provision shall be made
so that the successors and assigns of United shall assume the obligations set
forth in this Section 6.12.
6.13 BENEFIT PLANS. It is the intention of United that within a reasonable
period of time following the Effective Time (a) it will provide employees of the
Surviving Corporation with employee benefit plans substantially similar in the
aggregate to those provided to similarly situated employees of United, (b) any
such employees will receive credit for years of service with Mason or any of its
Subsidiaries prior to the Effective Time for the purpose of eligibility and
vesting and (c) United shall cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under the Compensation and Benefit Plans) and eligibility waiting
periods under group health plans to be waived with respect to such participants
and their eligible dependents.
6.14 NOTIFICATION OF CERTAIN MATTERS. Each of Mason and United shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
6.15 DIRECTORS AND OFFICERS. (a) United agrees to cause five members of the
Mason Board on the date hereof (selected by United after consultation with
Mason), including Bernard J. Clineburg, who are still members of the Mason Board
immediately prior to the Effective Time and willing and eligible to serve to be
elected or appointed as a director of United at the Effective Time and shall
cause Mr. Clineburg to also be elected or appointed as a member of the Executive
Committee of the United Board.
(b) United agrees to cause Bernard J. Clineburg, the Chief Executive
Officer and President of Mason to be elected or appointed as the President of
United at the Effective Time.
6.16 DIVIDEND COORDINATION. After November 1, 1997, the Board of Directors
of Mason shall cause its regular quarterly dividend record dates and payment
dates for Mason Common Stock to be the same as United's regular quarterly
dividend record dates and payment dates for United Common Stock (e.g., Mason
shall move its next dividend record and payment dates from October and October
to September and October, respectively), and Mason shall not thereafter change
its regular dividend payment dates and record dates.
6.17 BANK MERGER. Each of Mason and United shall use its reasonable best
efforts to cause and effect the merger of United's state-chartered Virginia bank
into Mason's state-chartered Virginia bank as promptly as reasonably practicable
following the Effective Date.
6.18 MASON FEE. If (a) the United Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any respect to
the interests of Mason, (b) United shall be in material and willful breach of
any of its covenants contained in this Agreement such that Mason shall be
entitled to terminate the Merger Agreement pursuant to Section 8.01(b) or (c)
the stockholders of United do not approve this Agreement at the United Meeting,
in each case after there has been proposed by a third party a United Acquisition
Transaction (the "Proposal"), then, in any such event, upon the actual
consummation of a United Acquisition Transaction with such third party within 18
months after the Proposal, United shall pay Mason a fee of $9,000,000.
Notwithstanding anything to the contrary contained herein, the fee provided
for in this Section 6.18 shall not be payable if United has terminated, or has
or had the right to terminate, the Merger Agreement pursuant to Section 8.01(b),
8.01(d)(ii) as a result of the Mason stockholders not approving this Agreement
or Section 8.01(e).
For purposes of the foregoing, "United Acquisition Transaction" shall have
the same meaning as the term "Acquisition Transaction" in the Stock Option
Agreement except that the term "Issuer" therein shall refer to and mean United
and the percentage referred to in clause (z) of the second sentence shall be
25%.
A-20
<PAGE>
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of United and Mason to consummate the Merger is
subject to the fulfillment or written waiver by United and Mason prior to the
Effective Time of each of the following conditions:
(a) STOCKHOLDER APPROVALS. This Agreement and the Plan of Merger shall
have been duly approved by the requisite vote of the stockholders of Mason
and the Articles Amendment and the issuance of United Common Stock as
contemplated hereby 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, 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
consummation of the transactions contemplated by this Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) BLUE SKY APPROVALS. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of United Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) LISTING. To the extent required, the shares of United Common Stock
to be issued in the Merger shall have been approved for listing on the
NASDAQ, subject to official notice of issuance.
(g) ARTICLES AMENDMENT. The Articles Amendment shall have been filed
and effective under the WVCA.
7.02 CONDITIONS TO OBLIGATION OF MASON. The obligation of Mason to
consummate the Merger is also subject to the fulfillment or written waiver by
Mason prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of United set forth in this Agreement shall be true and correct, subject to
Section 5.02, as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date), and Mason
shall have received a certificate, dated the Effective Date, signed on
behalf of United by the Chief Executive Officer and the Chief Financial
Officer of United to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF UNITED. United shall have performed
in all material respects all obligations required to be performed by them
under this Agreement at or prior to the Effective Time, and Mason shall
have received a certificate, dated the Effective Date, signed on behalf of
United by the Chief Executive Officer and the Chief Financial Officer of
United to such effect.
(c) OPINION OF MASON'S COUNSEL. Mason shall have received an opinion
of Silver, Freedman & Taff, L.L.P. counsel to Mason, dated the Effective
Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, (i) the Merger constitutes a
"reorganization" within the meaning of Section 368 of the Code and (ii) no
gain or loss will be recognized by stockholders of Mason who receive shares
of United Common Stock in exchange for shares of Mason Common Stock, except
that gain or loss may be recognized as to cash received in lieu of
fractional share interests. In rendering its opinion, Silver, Freedman &
Taff, L.L.P. may require and rely upon representations contained in letters
from Mason and others.
A-21
<PAGE>
(d) ACCOUNTING TREATMENT. Mason shall have received from Ernst & Young
LLP, Mason's independent auditors, letters, dated the date of or shortly
prior to each of the mailing date of the Proxy Statement and the Effective
Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
7.03 CONDITIONS TO OBLIGATION OF UNITED. The obligation of United to
consummate the Merger is also subject to the fulfillment or written waiver by
United prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Mason set forth in this Agreement shall be true and correct, subject to
Section 5.02, as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date) and United
shall have received a certificate, dated the Effective Date, signed on
behalf of Mason by the Chief Executive Officer and the Chief Financial
Officer of Mason to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF MASON. Mason shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and United shall have
received a certificate, dated the Effective Date, signed on behalf of Mason
by the Chief Executive Officer and the Chief Financial Officer of Mason to
such effect.
(c) OPINION OF UNITED'S COUNSEL. United shall have received an opinion
of Sullivan & Cromwell, special counsel to United, dated the Effective
Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from United and others.
(d) ACCOUNTING TREATMENT. United shall have received from Ernst &
Young LLP, United's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition may
be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of United and Mason, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by United or
Mason, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein (subject to
the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by United or
Mason, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Acquisition is not
consummated by July 15, 1998, except to the extent that the failure of the
Acquisition then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate pursuant to
this Section 8.01(c).
(d) NO APPROVAL. By Mason or United, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) any stockholder approval required by Section
7.01(a) herein is not obtained at the Mason Meeting or the United Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the Mason Meeting,
by United if the Mason Board shall have failed to make its recommendation
referred to in Section 6.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the
interests of United; or at any time prior to the United
A-22
<PAGE>
Meeting, by Mason, if the United Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Mason.
(f) FAILURE TO EXECUTE AND DELIVER STOCK OPTION AGREEMENT. At any time
prior to September 13, 1997, by United if Mason shall not have executed and
delivered the Stock Option Agreement to United.
8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
no party to this Agreement shall have any liability or further obligation to any
other party hereunder except (i) as set forth in Section 9.01 and (ii) that
termination will not relieve a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than Section
6.12, 6.13, 6.15, 6.17 and this Article IX which shall survive the Effective
Time) or the termination of this Agreement if this Agreement is terminated prior
to the Effective Time (other than Sections 6.03(b), 6.04, 6.05(b), 6.18, 8.02,
and this Article IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that (A) after the
Mason Meeting, this Agreement may not be amended if it would violate the VSCA
and (B) after the United Meeting, this Agreement may not be amended if it would
violate the WVCA.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of West Virginia applicable to contracts
made and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law or of the VSCA are applicable).
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC fees shall be shared equally between Mason and
United.
9.06 NOTICES. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to Mason, to:
George Mason Bankshares, Inc.
1185 Main Street
Fairfax, VA 22030
Facsimile: (703) 246-0157
Attn: Bernard H. Clineburg,
Chief Executive Officer
James Consagra,
Chief Financial Officer
With a copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Suite 700
Washington, D.C. 20005-3934
Facsimile: (202) 682-0354
A-23
<PAGE>
Attn: Barry P. Taff, P.C.
Christopher R. Kelly, P.C.
If to United, to:
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Attn: Richard M. Adams,
Chairman of the Board and Chief Executive Officer
Steven Wilson
Chief Financial Officer
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Facsimile: (212) 558-3588
Attn: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement and
any Stock Option Agreement entered into represent the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than any such Stock Option Agreement). Except
for Section 6.12, nothing in this Agreement expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Mason, United or any of their respective Subsidiaries,
affiliates or directors to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
GEORGE MASON BANKSHARES, INC.
By: /s/_BERNARD H. CLINEBURG___________
Name: Bernard H. Clineburg
Title: President and Chief Executive
Officer
By: /s/_KEVIN F. DECOSTE_______________
Name: Kevin F. DeCoste
Title: Secretary
UNITED BANKSHARES, INC.
By: /s/_RICHARD M. ADAMS_______________
Name: Richard M. Adams
Title: Chairman of the Board and
Chief Executive Officer
A-24
<PAGE>
EXHIBIT A-1
PLAN OF MERGER
PLAN OF MERGER (this "PLAN") of George Mason Bankshares, Inc. ("MASON"), a
Virginia corporation, and George Mason Holding Company ("MASON HOLDING"), a
Virginia Corporation and wholly owned subsidiary of United Bankshares, Inc.
("UNITED").
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. The following terms are used in this Plan with the
meanings set forth below:
"CODE" means the Internal Revenue Code of 1986, as amended.
"EFFECTIVE DATE" means the effective date of the Merger.
"EFFECTIVE TIME" means the effective time of the Merger.
"MASON COMMON STOCK" means the common stock, par value $1.11 per share, of
Mason.
"MASON PREFERRED STOCK" means the preferred stock, par value $0.01 per
share, of Mason.
"MASON STOCK" means, collectively, Mason Common Stock and Mason Preferred
Stock.
"MERGER AGREEMENT" means the Amended and Restated Agreement and Plan of
Merger, dated as of December 10, 1997, as amended, by and between Mason and
United.
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"SUBSIDIARY" has the meaning ascribed to it in Rule 1-02 of Regulation S-X
of the Securities and Exchange Commission.
"TREASURY STOCK" mean shares of Mason Stock held by Mason or any of its
Subsidiaries or by United or any of its Subsidiaries, in each case other than in
a fiduciary capacity or as a result of debts previously contracted in good
faith.
"UNITED COMMON STOCK" means the common stock, par value $5.00 per share, of
United.
"VSCA" means the Virginia Stock Corporation Act.
1.2 CERTAIN DEFINITIONS. Terms used and not otherwise defined herein have
the meanings specified in the Merger Agreement.
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER. The names of the corporations to be merged are George Mason
Holding Company and George Mason Bankshares, Inc. At the Effective Time, Mason
Holding shall merge with and into Mason (the "MERGER"), the separate corporate
existence of Mason Holding shall cease and Mason shall survive and continue to
exist as a Virginia corporation and wholly owned subsidiary of United (Mason, as
the surviving corporation in the Merger, sometimes being referred to herein as
the "SURVIVING CORPORATION").
2.2 EFFECT OF THE MERGER. Subject to the satisfaction or waiver of the
conditions set forth in Article IV of this Plan, the Merger shall become
effective upon the occurrence of the filing in the office of the Virginia State
Corporation Commission (the "CORPORATION COMMISSION") of articles of merger in
accordance with Section 13.1-720 of the VSCA or such later date and time as may
be set forth in such articles and the issuance of a certificate of merger by the
Corporation Commission under the VSCA. The Merger shall have the effects
prescribed in the VSCA.
2.3 ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorporation
and by-laws of Mason immediately after the Merger shall be those of Mason
Holding as in effect immediately prior to the Effective Time.
1
<PAGE>
2.4 DIRECTORS AND OFFICERS OF MASON. The directors and officers of Mason
immediately after the Merger shall be the directors and officers of Mason
Holding immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified.
ARTICLE III
MANNER AND BASIS OF
CONVERTING SHARES
3.1 MERGER CONSIDERATION. At the Effective Time, automatically by virtue of
the Merger and without any action on the part of any person:
(a) OUTSTANDING MASON COMMON STOCK. Each share, excluding Treasury Stock,
of Mason Common Stock issued and outstanding immediately prior to the Effective
Time shall become and be converted into 0.85 of a share of United Common Stock
(the "EXCHANGE RATIO"). In the event United changes (or establishes a record
date for changing) the number of shares of United Common Stock issued and
outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding United Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be proportionately adjusted. Mason
Common Stock is the only class of stock of Mason issued and outstanding.
(b) TREASURY SHARES. Each share of Mason Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
3.2 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time, holders
of Mason Common Stock shall cease to be, and shall have no rights as,
stockholders of Mason, other than to receive any dividend or other distribution
with respect to such Mason Common Stock with a record date occurring prior to
the Effective Time and the consideration provided herein. After the Effective
Time, there shall be no transfers on the stock transfer books of Mason or the
Surviving Corporation of shares of Mason Common Stock.
3.3 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of United Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
United shall pay to each holder of Mason Common Stock who would otherwise be
entitled to a fractional share of United Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the last
sale prices of United Common Stock, as reported by NASDAQ reporting system (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
authoritative source), for the five NASDAQ trading days immediately preceding
the Effective Date.
3.4 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, United
shall deposit, or shall cause to be deposited, with Chase Mellon Shareholder
Services (in such capacity, the "EXCHANGE AGENT"), for the benefit of the
holders of certificates formerly representing shares of Mason Common Stock ("OLD
CERTIFICATES"), for exchange in accordance with this Article III, certificates
representing the shares of United Common Stock ("NEW CERTIFICATES") and an
estimated amount of cash (such cash and New Certificates, together with any
dividends or distributions with a record date occurring after the Effective Date
with respect thereto (without any interest on any such cash, dividends or
distributions), being hereinafter referred to as the "EXCHANGE FUND") to be paid
pursuant to this Article III in exchange for outstanding shares of Mason Common
Stock.
(b) As promptly as practicable after the Effective Date, United shall send
or cause to be sent to each former holder of record of shares of Mason Common
Stock immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the consideration set forth
in this Article III. United shall cause the New Certificates into which shares
of a stockholder's Mason Common Stock are converted on the Effective Date and/or
any check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Mason Common Stock (or indemnity reasonably
satisfactory to United and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
2
<PAGE>
(c) Notwithstanding the foregoing, neither the Exchange Agent, if any, nor
any party hereto shall be liable to any former holder of Mason Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions with respect to United Common Stock
with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Mason Common
Stock converted in the Merger into the right to receive shares of such United
Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.4, and, following 90 days after the Effective Date, no such
shares of Mason Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.4. After becoming so entitled in
accordance with this Section 3.4, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
United Common Stock such holder had the right to receive upon surrender of the
Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Mason for six months after the Effective Time shall be paid to
United. Any stockholders of Mason who have not theretofore complied with this
Article III shall thereafter look only to United for payment of the shares of
United Common Stock, cash in lieu of any fractional shares and unpaid dividends
and distributions on United Common Stock deliverable in respect of each share of
Mason Common Stock such stockholder holds as determined pursuant to the Merger
Agreement and this Plan, in each case, without any interest thereon.
3.5 OPTIONS. (a) At the Effective Time, each outstanding option to purchase
shares of Mason Common Stock under the Mason Stock Plans (each, a "MASON STOCK
OPTION"), whether vested or unvested, shall be converted into an option to
acquire, on the same terms and conditions as were applicable under such Mason
Stock Option, the number of shares of United Common Stock equal to (a) the
number of shares of Mason Common Stock subject to the Mason Stock Option,
multiplied by (b) the Exchange Ratio (such product rounded to the nearest whole
number) (a "REPLACEMENT OPTION"), at an exercise price per share (rounded to the
nearest whole cent) equal to (y) the aggregate exercise price for the shares of
Mason Common Stock which were purchasable pursuant to such Mason Stock Option
divided by (z) the number of full shares of United Common Stock subject to such
Replacement Option in accordance with the foregoing. Notwithstanding the
foregoing, each Mason Stock Option which is intended to be an "incentive stock
option" (as defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code. At or prior to the Effective
Time, Mason shall use its best efforts, including using its best efforts to
obtain any necessary consents from optionees, with respect to the Mason Stock
Plans to permit the replacement of the outstanding Mason Stock Options by United
pursuant to this Section and to permit United to assume the Mason Stock Plans.
Mason shall further take all action necessary to amend the Mason Stock Plans to
eliminate automatic grants or awards thereunder following the Effective Time. At
the Effective Time, United shall assume the Mason Stock Plans; PROVIDED, that
such assumption shall be only in respect of the Replacement Options and that
United shall have no obligation with respect to any awards under the Mason Stock
Plans other than the Replacement Options and shall have no obligation to make
any additional grants or awards under such assumed Mason Stock Plans.
(b) At all times after the Effective Time, United shall reserve for
issuance such number of shares of United Common Stock as necessary so as to
permit the exercise of options granted under the Mason Stock Plans in the manner
contemplated by the Merger Agreement, this Plan and the instruments pursuant to
which such options were granted. United shall make all filings required under
federal and state securities laws no later than the Effective Time so as to
permit the exercise of such options and the sale of the shares received by the
optionee upon such exercise at and after the Effective Time and United shall
continue to make such filings thereafter as may be necessary to permit the
continued exercise of options and sale of such shares.
ARTICLE IV
CONDITIONS TO THE MERGER
4.1 Consummation of the Merger is conditioned upon the following:
(a) (i) Approval of the Merger Agreement and this Plan by the affirmative
vote of more than two-thirds of the outstanding shares of Mason Common Stock and
(ii) approval of an amendment to the United Restated Articles of Incorporation
increasing the number of authorized shares of United Common Stock and the
issuance by United of shares of United Common Stock to be issued pursuant to the
Merger by a majority of the outstanding shares of United Common Stock;
3
<PAGE>
(b) Receipt of required regulatory approvals;
(c) Absence of governmental action prohibiting consummation;
(d) An effective Registration Statement under the Securities Act of 1933
and no orders or other action suspending such effectiveness;
(e) Receipt of all required permits and authorizations under state
securities laws;
(f) To the extent required, approval of the shares of United Common Stock
issued in the Merger for listing on the NASDAQ, subject to notice of issuance;
(g) The filing and effectiveness of the amendment to the United Restated
Articles of Incorporation;
(h) All representations and warranties made by the respective parties are
true and correct as of the Effective Time as contemplated by the Merger
Agreement and receipt by the parties of appropriate officers' certificates to
such effect; and
(i) Performance of all required obligations by the respective parties and
receipt by the parties of appropriate officers' certificates to such effect.
ARTICLE V
TERMINATION
5.1 This Plan may be terminated prior to the Effective Time as provided in
Article VIII of the Merger Agreement and shall terminate at the same time as the
Merger Agreement.
4
<PAGE>
EXHIBIT B
FORM OF MASON AFFILIATE LETTER
____________, 1997
George Mason Bankshares, Inc.
1185 Main Street
Fairfax, VA 22030
Attention: James Consagra,
Chief Financial Officer
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Attention: 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 George Mason Bankshares, Inc. a Virginia corporation
("Mason"), 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 September 10, 1997 (the "Merger Agreement"), by and between Mason and
United Bankshares, Inc. a West Virginia corporation ("United"), Mason plans to
merge with and into 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 $1.11 per share, of Mason ("Mason
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 Mason Stock, to the
extent I felt necessary, with my counsel or counsel for Mason.
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 Bankshares, Inc., a copy of which agreement is on file at the
principal offices of United Bankshares, Inc."
1
<PAGE>
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, 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 Mason 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 Mason 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 Mason 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 Mason or United
advises me in writing that additional restrictions apply to my ability to sell,
transfer, or otherwise dispose of Mason 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
_______________, 1997.
GEORGE MASON BANKSHARES, INC.
By __________________________________________________________
Name:
Title:
UNITED BANKSHARES, INC.
By __________________________________________________________
Name:
Title:
2
<PAGE>
EXHIBIT C
FORM OF UNITED AFFILIATE LETTER
____________, 1997
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Attention: 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 Bankshares, Inc., 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 September 10, 1997 (the "Merger
Agreement"), by and between George Mason Bankshares, Inc., a Virginia
corporation ("Mason"), and United, Mason plans to merge with and into 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 Mason, 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 Mason 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 Mason 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 Mason and United that I am deemed to beneficially
own pursuant to applicable federal securities laws.
3. If United advises me in writing that additional restrictions apply to my
ability to sell, transfer, or otherwise dispose of common stock of Mason 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
_______________, 1997.
UNITED BANKSHARES, INC.
By __________________________________________________________
Name:
Title:
1
<PAGE>
ANNEX A
FORM OF SUPPLEMENT FOR MERGER SUB ACCESSION TO ACQUISITION AGREEMENT
SUPPLEMENT, dated as of the [ ] day of [ ], 1997 (this "SUPPLEMENT"), to
the Agreement and Plan of Merger, dated as of September 10, 1997 (as amended
from time to time in accordance with the terms thereof, the "MERGER AGREEMENT"),
by and between George Mason Bankshares, Inc. ("MASON") and United Bankshares,
Inc. ("UNITED").
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 [insert
name(s) of Merger Sub(s)] ([each and][the] "MERGER SUB") with and into Mason.
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:
<PAGE>
CONFORMED COPY
SUPPLEMENT FOR MERGER SUB ACCESSION TO ACQUISITION AGREEMENT
SUPPLEMENT, dated as of the 10th day of December, 1997 (this "SUPPLEMENT"),
to the Amended and Restated Agreement and Plan of Merger, dated as of December
10, 1997 (as amended from time to time in accordance with the terms thereof, the
"MERGER AGREEMENT"), by and between George Mason Bankshares, Inc. ("MASON") and
United Bankshares, Inc. ("UNITED").
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 George Mason
Holding Company ("MERGER SUB") with and into Mason.
NOW, THEREFORE, by its execution of this Supplement, as of the date hereof,
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.
GEORGE MASON HOLDING COMPANY
By: /s/_RICHARD M. ADAMS_______________
Name: Richard M. Adams
Title: President
<PAGE>
PLAN OF MERGER
PLAN OF MERGER (this "PLAN") of George Mason Bankshares, Inc. ("MASON"), a
Virginia corporation, and George Mason Holding Company ("MASON HOLDING"), a
Virginia Corporation and wholly owned subsidiary of United Bankshares, Inc.
("UNITED").
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS. The following terms are used in this Plan with the
meanings set forth below:
"CODE" means the Internal Revenue Code of 1986, as amended.
"EFFECTIVE DATE" means the effective date of the Merger.
"EFFECTIVE TIME" means the effective time of the Merger.
"MASON COMMON STOCK" means the common stock, par value $1.11 per share, of
Mason.
"MASON PREFERRED STOCK" means the preferred stock, par value $0.01 per
share, of Mason.
"MASON STOCK" means, collectively, Mason Common Stock and Mason Preferred
Stock.
"MERGER AGREEMENT" means the Amended and Restated Agreement and Plan of
Merger, dated as of December 10, 1997, as amended, by and between Mason and
United.
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"SUBSIDIARY" has the meaning ascribed to it in Rule 1-02 of Regulation S-X
of the Securities and Exchange Commission.
"TREASURY STOCK" mean shares of Mason Stock held by Mason or any of its
Subsidiaries or by United or any of its Subsidiaries, in each case other than in
a fiduciary capacity or as a result of debts previously contracted in good
faith.
"UNITED COMMON STOCK" means the common stock, par value $5.00 per share, of
United.
"VSCA" means the Virginia Stock Corporation Act.
1.2 CERTAIN DEFINITIONS. Terms used and not otherwise defined herein have
the meanings specified in the Merger Agreement.
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER. The names of the corporations to be merged are George Mason
Holding Company and George Mason Bankshares, Inc. At the Effective Time, Mason
Holding shall merge with and into Mason (the "MERGER"), the separate corporate
existence of Mason Holding shall cease and Mason shall survive and continue to
exist as a Virginia corporation and wholly owned subsidiary of United (Mason, as
the surviving corporation in the Merger, sometimes being referred to herein as
the "SURVIVING CORPORATION").
2.2 EFFECT OF THE MERGER. Subject to the satisfaction or waiver of the
conditions set forth in Article IV of this Plan, the Merger shall become
effective upon the occurrence of the filing in the office of the Virginia State
Corporation Commission (the "CORPORATION COMMISSION") of articles of merger in
accordance with Section 13.1-720 of the VSCA or such later date and time as may
be set forth in such articles and the issuance of a certificate of merger by the
Corporation Commission under the VSCA. The Merger shall have the effects
prescribed in the VSCA.
2.3 ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorpora tion
and by-laws of Mason immediately after the Merger shall be those of Mason
Holding as in effect immediately prior to the Effective Time.
2.4 DIRECTORS AND OFFICERS OF MASON. The directors and officers of Mason
immediately after the Merger shall be the directors and officers of Mason
Holding immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified.
1
<PAGE>
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
3.1 MERGER CONSIDERATION. At the Effective Time, automatically by virtue of
the Merger and without any action on the part of any person:
(a) OUTSTANDING MASON COMMON STOCK. Each share, excluding Treasury Stock,
of Mason Common Stock issued and outstanding immediately prior to the Effective
Time shall become and be converted into 0.85 of a share of United Common Stock
(the "EXCHANGE RATIO"). In the event United changes (or establishes a record
date for changing) the number of shares of United Common Stock issued and
outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization or similar transaction with respect to the
outstanding United Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be proportionately adjusted. Mason
Common Stock is the only class of stock of Mason issued and outstanding.
(b) TREASURY SHARES. Each share of Mason Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
3.2 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time, holders
of Mason Common Stock shall cease to be, and shall have no rights as,
stockholders of Mason, other than to receive any dividend or other distribution
with respect to such Mason Common Stock with a record date occurring prior to
the Effective Time and the consideration provided herein. After the Effective
Time, there shall be no transfers on the stock transfer books of Mason or the
Surviving Corporation of shares of Mason Common Stock.
3.3 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of United Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
United shall pay to each holder of Mason Common Stock who would otherwise be
entitled to a fractional share of United Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the last
sale prices of United Common Stock, as reported by NASDAQ reporting system (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
authoritative source), for the five NASDAQ trading days immediately preceding
the Effective Date.
3.4 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, United
shall deposit, or shall cause to be deposited, with Chase Mellon Shareholder
Services (in such capacity, the "EXCHANGE AGENT"), for the benefit of the
holders of certificates formerly representing shares of Mason Common Stock ("OLD
CERTIFICATES"), for exchange in accordance with this Article III, certificates
representing the shares of United Common Stock ("NEW CERTIFICATES") and an
estimated amount of cash (such cash and New Certificates, together with any
dividends or distributions with a record date occurring after the Effective Date
with respect thereto (without any interest on any such cash, dividends or
distributions), being hereinafter referred to as the "EXCHANGE FUND") to be paid
pursuant to this Article III in exchange for outstanding shares of Mason Common
Stock.
(b) As promptly as practicable after the Effective Date, United shall send
or cause to be sent to each former holder of record of shares of Mason Common
Stock immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the consideration set forth
in this Article III. United shall cause the New Certificates into which shares
of a stockholder's Mason Common Stock are converted on the Effective Date and/or
any check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Mason Common Stock (or indemnity reasonably
satisfactory to United and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, if any, nor
any party hereto shall be liable to any former holder of Mason Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions with respect to United Common Stock
with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Mason Common
Stock converted in the Merger into the right to receive shares of such United
Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.4, and,
2
<PAGE>
following 90 days after the Effective Date, no such shares of Mason Common Stock
shall be eligible to vote until the holder of Old Certificates is entitled to
receive New Certificates in accordance with the procedures set forth in this
Section 3.4. After becoming so entitled in accordance with this Section 3.4, the
record holder thereof also shall be entitled to receive any such dividends or
other distributions, without any interest thereon, which theretofore had become
payable with respect to shares of United Common Stock such holder had the right
to receive upon surrender of the Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Mason for six months after the Effective Time shall be paid to
United. Any stockholders of Mason who have not theretofore complied with this
Article III shall thereafter look only to United for payment of the shares of
United Common Stock, cash in lieu of any fractional shares and unpaid dividends
and distributions on United Common Stock deliverable in respect of each share of
Mason Common Stock such stockholder holds as determined pursuant to the Merger
Agreement and this Plan, in each case, without any interest thereon.
3.5 OPTIONS. (a) At the Effective Time, each outstanding option to purchase
shares of Mason Common Stock under the Mason Stock Plans (each, a "MASON STOCK
OPTION"), whether vested or unvested, shall be converted into an option to
acquire, on the same terms and conditions as were applicable under such Mason
Stock Option, the number of shares of United Common Stock equal to (a) the
number of shares of Mason Common Stock subject to the Mason Stock Option,
multiplied by (b) the Exchange Ratio (such product rounded to the nearest whole
number) (a "REPLACEMENT OPTION"), at an exercise price per share (rounded to the
nearest whole cent) equal to (y) the aggregate exercise price for the shares of
Mason Common Stock which were purchasable pursuant to such Mason Stock Option
divided by (z) the number of full shares of United Common Stock subject to such
Replacement Option in accordance with the foregoing. Notwithstanding the
foregoing, each Mason Stock Option which is intended to be an "incentive stock
option" (as defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code. At or prior to the Effective
Time, Mason shall use its best efforts, including using its best efforts to
obtain any necessary consents from optionees, with respect to the Mason Stock
Plans to permit the replacement of the outstanding Mason Stock Options by United
pursuant to this Section and to permit United to assume the Mason Stock Plans.
Mason shall further take all action necessary to amend the Mason Stock Plans to
eliminate automatic grants or awards thereunder following the Effective Time. At
the Effective Time, United shall assume the Mason Stock Plans; PROVIDED, that
such assumption shall be only in respect of the Replacement Options and that
United shall have no obligation with respect to any awards under the Mason Stock
Plans other than the Replacement Options and shall have no obligation to make
any additional grants or awards under such assumed Mason Stock Plans.
(b) At all times after the Effective Time, United shall reserve for
issuance such number of shares of United Common Stock as necessary so as to
permit the exercise of options granted under the Mason Stock Plans in the manner
contemplated by the Merger Agreement, this Plan and the instruments pursuant to
which such options were granted. United shall make all filings required under
federal and state securities laws no later than the Effective Time so as to
permit the exercise of such options and the sale of the shares received by the
optionee upon such exercise at and after the Effective Time and United shall
continue to make such filings thereafter as may be necessary to permit the
continued exercise of options and sale of such shares.
ARTICLE IV
CONDITIONS TO THE MERGER
4.1 Consummation of the Merger is conditioned upon the following:
(a) (i) Approval of the Merger Agreement and this Plan by the affirmative
vote of more than two-thirds of the outstanding shares of Mason Common Stock and
(ii) approval of an amendment to the United Restated Articles of Incorporation
increasing the number of authorized shares of United Common Stock and the
issuance by United of shares of United Common Stock to be issued pursuant to the
Merger by a majority of the outstanding shares of United Common Stock;
(b) Receipt of required regulatory approvals;
(c) Absence of governmental action prohibiting consummation;
(d) An effective Registration Statement under the Securities Act of 1933
and no orders or other action suspending such effectiveness;
(e) Receipt of all required permits and authorizations under state
securities laws;
3
<PAGE>
(f) To the extent required, approval of the shares of United Common Stock
issued in the Merger for listing on the NASDAQ, subject to notice of issuance;
(g) The filing and effectiveness of the amendment to the United Restated
Articles of Incorporation;
(h) All representations and warranties made by the respective parties are
true and correct as of the Effective Time as contemplated by the Merger
Agreement and receipt by the parties of appropriate officers' certificates to
such effect; and
(i) Performance of all required obligations by the respective parties and
receipt by the parties of appropriate officers' certificates to such effect.
ARTICLE V
TERMINATION
5.1 This Plan may be terminated prior to the Effective Time as provided in
Article VIII of the Merger Agreement and shall terminate at the same time as the
Merger Agreement.
4
<PAGE>
APPENDIX B
STOCK OPTION AGREEMENT
<PAGE>
CONFORMED COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 11, 1997, between United
Bankshares, Inc., a West Virginia corporation ("Grantee"), and George Mason
Bankshares, Inc., a Virginia corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Grantee to continue to
pursue the transactions contemplated by the Merger Agreement, Issuer has agreed
to grant Grantee the Option (as hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to an aggregate of
1,018,000 fully paid and nonassessable shares of the common stock, par value
$1.11 per share, of Issuer ("Common Stock") at a price per share equal to the
average of last reported sale prices per share of Common Stock as reported on
the NASDAQ National Market System on September 4 and 5, 1997; PROVIDED, HOWEVER,
that in the event Issuer issues or agrees to issue any shares of Common Stock
(other than shares of Common Stock issued pursuant to stock options granted
pursuant to any employee benefit plan prior to the date hereof) at a price less
than such average price per share (as adjusted pursuant to subsection (b) of
Section 5), such price shall be equal to such lesser price (such price, as
adjusted if applicable, the "Option Price"); PROVIDED, FURTHER, that in no event
shall the number of shares for which this Option is exercisable exceed 19.9% of
the issued and outstanding shares of Common Stock. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e) of the
Merger Agreement (but only if the breach giving rise to the termination was
willful) (each, a "Listed Termination"); or (iii) the passage of eighteen (18)
months (or such longer period as provided in Section 10) after termination of
the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination. The term "Holder" shall mean the
holder or holders of the Option. Notwithstanding anything to the contrary
contained herein, (i) the Option may not be exercised at any time when Grantee
shall be in material breach of any of its covenants or agreements contained in
the Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.01(b) thereof as a result of a material breach
and (ii) this Agreement shall automatically terminate upon the proper
termination of the Merger Agreement (x) by Issuer pursuant to Section 8.01(b)
thereof as a result of the material breach by Grantee of its covenants or
agreements contained in the Merger Agreement, (y)
B-1
<PAGE>
by Issuer or Grantee pursuant to Section 8.01(d) (ii) if Grantee's shareholders
do not approve the Merger Agreement at the meeting, or (z) by Issuer or Grantee
pursuant to Section 8.01(d)(i).
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) (an "Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Merger Agreement.
For purposes of this Agreement, (a) "Acquisition Transaction" shall mean
(x) a merger or consolidation, or any similar transaction, involving Issuer
or any Issuer Subsidiary (other than mergers, consolidations or similar
transactions (i) involving solely Issuer and/or one or more wholly-owned
(except for directors' qualifying shares and a de minimis number of other
shares) Subsidiaries of the Issuer, provided, any such transaction is not
entered into in violation of the terms of the Merger Agreement or (ii) in
which the shareholders of Issuer immediately prior to the completion of
such transaction own at least 50% of the Common Stock of the Issuer (or the
resulting or surviving entity in such transaction) immediately after
completion of such transaction, provided any such transaction is not
entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of the
assets or deposits of Issuer or any Issuer Subsidiary, or (z) a purchase or
other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
power of Issuer or any Issuer Subsidiary and (b) "Subsidiary" shall have
the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common Stock (the
term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules
and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or
shall have been cancelled prior to termination of the Merger Agreement if,
prior to such meeting (or if such meeting shall not have been held or shall
have been cancelled, prior to such termination), it shall have been
publicly announced that any person (other than Grantee or any of its
Subsidiaries) shall have made, or publicly disclosed an intention to make,
a proposal to engage in an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in any
respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, or Issuer or
any Issuer Subsidiary shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
made a proposal to Issuer or its shareholders to engage in an Acquisition
Transaction and such proposal shall have been publicly announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its shareholders to approve the
issuance of shares to be offered in such an exchange offer);
(vii) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
B-2
<PAGE>
(viii) Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or other federal or
state bank regulatory or antitrust authority, which application or notice
has been accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, PROVIDED that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement, dated as of ________, 199_, between
the registered holder hereof and Issuer and to resale restrictions arising
under the Securities Act of 1933, as amended. A copy of such agreement is
on file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act") in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the opinion
of Counsel to the Holder; and (iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be
B-3
<PAGE>
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 notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon exercise
hereof is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best
B-4
<PAGE>
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 and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(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
B-5
<PAGE>
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b) (i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer Subsidiary's assets or deposits to
any person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of the Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer),
(ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person, and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
B-6
<PAGE>
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute 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.
B-7
<PAGE>
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
PROVIDED, HOWEVER, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; PROVIDED, HOWEVER,
that until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (E.G., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
B-8
<PAGE>
13. Each of Grantee and Issuer will use its reasonable best efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the Federal Reserve
Board under the BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; PROVIDED, HOWEVER, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $9.0 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) the net cash amounts, if any, received by Grantee pursuant to
the arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 14(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of West Virginia, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law or of the VSCA are applicable).
B-9
<PAGE>
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
GEORGE MASON BANKSHARES, INC.
By: /s/_BERNARD H. CLINEBURG___________
Name: Bernard H. Clineburg
Title: President and Chief Executive
Officer
By: /s/_KEVIN F. DECOSTE_______________
Name: Kevin F. DeCoste
Title: Secretary
UNITED BANKSHARES, INC.
By: /s/_RICHARD M. ADAMS_______________
Name: Richard M. Adams
Title: Chairman of the Board and
Chief Executive Officer
B-10
<PAGE>
APPENDIX C
OPINION OF FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
January , 1998
Board of Directors
George Mason Bankshares, Inc.
11185 Main Street
Fairfax, VA 22030
Board of Directors:
You have requested that Friedman, Billings, Ramsey & Co., Inc. ("FBR"),
provide you with its opinion as to the fairness, from a financial point of view,
to holders of common stock ("Stockholders") of George Mason Bankshares, Inc.
("GMB" or the "Company") of the Consideration (as hereinafter defined) to be
received by them pursuant to the Agreement and Plan of Merger between GMB and
United Bankshares, Inc. ("UBI"), dated September 10, 1997 (the "Merger
Agreement"), pursuant to which GMB will be merged with and into UBI (the
"Merger") and George Mason Bank, the wholly-owned banking subsidiary of GMB,
will continue in existence as a wholly-owned banking subsidiary of UBI as a
result of the Merger. The Merger Agreement provides, among other things, that
each issued and outstanding share of common stock of GMB (other than those
shares subject to dissenters' rights) shall be converted into the right to
receive from UBI .85 shares of UBI common stock (the "Consideration"), subject
to certain terms and conditions. The Merger Agreement will be considered at a
special meeting of the Stockholders of GMB. The terms of the Merger are more
fully set forth in the Merger Agreement.
In delivering this opinion, FBR has completed the following tasks:
1. reviewed UBI Annual Reports to Stockholders for the fiscal year ended
December 31, 1996 and UBI Annual Reports on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") for the fiscal years
ended December 31, 1994 through 1996;
2. reviewed GMB's Annual Reports to Stockholders for the fiscal years
ended December 31, 1995 and 1996 and GMB Annual Reports on Form 10-K
filed with the SEC for the fiscal years ended December 31, 1995 and
1996;
3. reviewed UBI Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997 filed with
the SEC;
4. reviewed GMB's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997 filed with
the SEC;
5. reviewed both UBI's and GMB's unaudited financial statements for the
seven months ended July 31, 1997;
6. reviewed the reported market prices and trading activity for GMB common
stock for the period January 1994 through September 9, 1997 and for UBI
common stock for the period January 1994 through January , 1998;
7. discussed the financial condition, results of operations, business and
prospects of GMB and UBI with the managements of GMB and UBI;
8. compared the results of operations and financial condition of GMB and
UBI with those of certain publicly-traded financial institutions (or
their holding companies) that FBR deemed to be reasonably comparable to
GMB or UBI, as the case may be;
9. reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions that FBR deemed to be reasonably
comparable;
10. reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions entered into by UBI;
11. reviewed a copy of the Merger Agreement; and
12. performed such other analyses and reviewed and analyzed such other
information as FBR deemed appropriate.
In rendering this opinion, FBR did not assume responsibility for
independently verifying, and did not independently verify, any financial or
other information concerning GMB and UBI furnished to it by GMB or UBI, or the
publicly-available
C-1
<PAGE>
Board of Directors
George Mason Bankshares, Inc.
January 23, 1998
Page 2
financial and other information regarding GMB, UBI and other financial
institutions (or their holding companies). FBR has assumed that all such
information is accurate and complete. FBR has further relied on the assurances
of management of GMB and UBI that they are not aware of any facts that would
make such financial or other information relating to such entities inaccurate or
misleading. With respect to financial forecasts for UBI and GMB provided to FBR
by their respective management, FBR has assumed, for the purposes of this
opinion, that the forecasts have been reasonably prepared on bases reflecting
the best available estimates and judgments of such management at the time of
preparation as to the future financial performance of UBI and GMB, as the case
may be. FBR has assumed that there has been no material change in GMB's assets,
financial condition, result of operations, business or prospects since September
30, 1997. FBR did not undertake an independent appraisal of the assets or
liabilities of GMB nor was FBR furnished with any such appraisals. FBR is not an
expert in the evaluation of allowances for loan losses, was not requested to and
did not review such allowances, and was not requested to and did not review any
individual credit files of GMB. FBR's conclusions and opinion are necessarily
based upon economic, market and other conditions and the information made
available to FBR as of the date of this opinion. FBR expresses no opinion on
matters of a legal, regulatory, tax or accounting nature related to the Merger.
FBR, as part of its institutional brokerage, research and investment
banking practice, is regularly engaged in the valuation of securities and the
evaluation of transactions in connection with mergers and acquisitions of
commercial banks, savings institutions and financial institution holding
companies, initial and secondary offerings, mutual-to-stock conversions of
savings institutions, as well as business valuations for other corporate
purposes for financial institutions and real estate related companies. FBR has
experience in, and knowledge of, the valuation of bank and thrift securities in
Virginia, West Virginia and the rest of the United States.
FBR has acted as a financial advisor to GMB in connection with the Merger
and will receive a fee for services rendered which is contingent upon the
consummation of the Merger. In the ordinary course of FBR's business, it may
effect transactions in the securities of GMB or UBI for its own account and/or
for the accounts of its customers and, accordingly, may at any time hold long or
short positions in such securities. From time to time, principals and/or
employees of FBR may also have positions in the securities.
Based upon and subject to the foregoing, as well as any such other matters
as we consider relevant, it is FBR's opinion, as of the date hereof, that the
Consideration is fair, from a financial point of view, to the Stockholders of
GMB.
This letter is solely for the information of the Board of Directors of GMB
and may not be relied upon by any other person or used for any other purpose,
reproduced, disseminated, quoted from or referred to without FBR's prior written
consent.
Very truly yours,
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
C-2
<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 Amended and Restated Articles of Incorporation of United Bankshares,
Inc., contains 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, suit 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 judgement 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)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ --------------------------------------------------------------------------------------------------------------------
<C> <S>
2.1 -- Amended and Restated Agreement and Plan of Merger, dated as of December 10, 1997, by and among United Bankshares,
Inc., George Mason Bankshares, Inc. and George Mason Holding Company (included as Appendix A to the Joint Proxy
Statement/Prospectus*).
2.2 -- Plan of Merger of George Mason Bankshares, Inc. and George Mason Holding Company (included as Appendix A to the
Joint Proxy Statement/Prospectus*).
4.1 -- Restated Articles of Incorporation (Exhibit 3(b) to United Bankshares, Inc.'s Form 10-K for the year ended
December 31, 1989, File No. 0-13322*).
4.2 -- Bylaws (Exhibit 3(a) to United Bankshares, Inc.'s Form 10-K for the year ended December 31, 1989, File No.
0-13322*).
5.1 -- Opinion of Bowles Rice McDavid Graff & Love, including consent.
8.1 -- Opinion of Sullivan & Cromwell, including consent.
8.2 -- Opinion of Silver Freedman & Taff, L.L.P., including consent.
10.1 -- Employment Agreement, dated as of September 10, 1997, by and among United Bankshares, Inc., United Bank and
Bernard H. Clineburg.
23.1 -- Consent of Bowles Rice McDavid Graff & Love (appears in Legal Opinion, Exhibit 5.1).
23.2 -- Consent of Sullivan & Cromwell (appears in Legal Opinion, Exhibit 8.1).
23.3 -- Consent of Silver Freedman & Taff, L.L.P (appears in Legal Opinion, Exhibit 8.2).
23.4 -- Consent of Ernst & Young LLP re United Bankshares, Inc.
23.5 -- Consent of Ernst & Young LLP. re George Mason Bankshares, Inc..
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
23.6 -- Consent of Arthur Andersen LLP.
23.7 -- Consent of Friedman, Billings, Ramsey & 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 George Mason Bankshares, Inc..
99.3 -- Consent of Bernard H. Clineburg.
</TABLE>
- ---------------
* 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.
(a) The undersigned Registrant hereby undertakes:
(1) 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.
(2) 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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 Registrant 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.
(5) That every Prospectus (a) that is filed pursuant to paragraph (4)
immediately preceding, or (b) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part
of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(6) 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 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
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.
(7) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions
(See Item 20), or otherwise, the
II-2
<PAGE>
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(b) 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.
(c) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-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 January 22, 1998.
UNITED BANKSHARES, INC.
By: /s/ RICHARD M. ADAMS_______________
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Know all persons 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 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 premises, as fully to all intents and purposes as he might do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------------- -------------------
<C> <S> <C>
/s/ RICHARD M. ADAMS Chairman of the Board, Director January 22, 1998
- ------------------------------------------------------ Chief Executive Officer
RICHARD M. ADAMS
/s/ STEVEN E. WILSON Chief Financial Officer and January 22, 1998
- ------------------------------------------------------ Chief Accounting Officer
STEVEN E. WILSON
/s/ DOUGLASS H. ADAMS Director January 22, 1998
- ------------------------------------------------------
DOUGLASS H. ADAMS
/s/ ROBERT G. ASTORG Director January 22, 1998
- ------------------------------------------------------
ROBERT G. ASTORG
Director January 22, 1998
- ------------------------------------------------------
THOMAS J. BLAIR, III
/s/ HARRY L. BUCH Director January 22, 1998
- ------------------------------------------------------
HARRY L. BUCH
Director January 22, 1998
- ------------------------------------------------------
R. TERRY BUTCHER
Director January 22, 1998
- ------------------------------------------------------
W. GASTON CAPERTON, III
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S> <C>
/s/ JOHN W. DUDLEY Director January 22, 1998
- ------------------------------------------------------
JOHN W. DUDLEY
/s/ H. SMOOT FAHLGREN Director January 22, 1998
- ------------------------------------------------------
H. SMOOT FAHLGREN
Director January 22, 1998
- ------------------------------------------------------
THEODORE J. GEORGELAS
Director January 22, 1998
- ------------------------------------------------------
C.E. GOODWIN
/s/ F. T. GRAFF, JR. Director January 22, 1998
- ------------------------------------------------------
F.T. GRAFF, JR.
Director January 22, 1998
- ------------------------------------------------------
ANDREW J. HOUVOURAS
/s/ RUSSELL L. ISAACS Director January 22, 1998
- ------------------------------------------------------
RUSSELL L. ISAACS
/s/ ROBERT P. MCLEAN Director January 22, 1998
- ------------------------------------------------------
ROBERT P. MCLEAN
/s/ G. OGDEN NUTTING Director January 22, 1998
- ------------------------------------------------------
G. OGDEN NUTTING
Director January 22, 1998
- ------------------------------------------------------
WILLIAM C. PITT, III
/s/ I. N. SMITH, JR. Director January 22, 1998
- ------------------------------------------------------
I.N. SMITH, JR.
Director January 22, 1998
- ------------------------------------------------------
CHARLES E. STEALEY
/s/ WARREN A. THORNHILL, III Director January 22, 1998
- ------------------------------------------------------
WARREN A. THORNHILL, III
Director January 22, 1998
- ------------------------------------------------------
WILLIAM W. WAGNER
/s/ HAROLD L. WILKES Director January 22, 1998
- ------------------------------------------------------
HAROLD L. WILKES
Director January 22, 1998
- ------------------------------------------------------
P. CLINTON WINTER, JR.
Director January 22, 1998
- ------------------------------------------------------
JAMES W. WORD, JR.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT IN
EXHIBIT SEQUENTIAL NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------ ---------------------------------------------------------------------------------------------- -----------------------
<C> <S> <C>
2.1 -- Amended and Restated Agreement and Plan of Merger, dated as of December 10, 1997, by and
among United Bankshares, Inc., George Mason Bankshares, Inc. and George Mason Holding
Company (included as Appendix A to the Joint Proxy Statement/Prospectus*).
2.2 -- Plan of Merger of George Mason Bankshares, Inc. and George Mason Holding Company (included
as Appendix A to the Joint Proxy Statement/Prospectus*).
4.1 -- Restated Articles of Incorporation (Exhibit 3(b) to United Bankshares, Inc.'s Form 10-K for
the year ended December 31, 1989, File No. 0-13322*).
4.2 -- Bylaws (Exhibit 3(a) to United Bankshares, Inc.'s Form 10-K for the year ended December 31,
1989, File No. 0-13322*).
5.1 -- Opinion of Bowles Rice McDavid Graff & Love, including consent.
8.1 -- Opinion of Sullivan & Cromwell, including consent.
8.2 -- Opinion of Silver Freedman & Taff, L.L.P., including consent.
10.1 -- Employment Agreement, dated as of September 10, 1997, by and among United Bankshares, Inc.,
United Bank and Bernard H. Clineburg.
23.1 -- Consent of Bowles Rice McDavid Graff & Love (appears in Legal Opinion, Exhibit 5.1).
23.2 -- Consent of Sullivan & Cromwell (appears in Legal Opinion, Exhibit 8.1).
23.3 -- Consent of Silver Freedman & Taff, L.L.P. (appears in Legal Opinion, Exhibit 8.2).
23.4 -- Consent of Ernst & Young LLP re United Bankshares, Inc.
23.5 -- Consent of Ernst & Young LLP re George Mason Bankshares, Inc.
23.6 -- Consent of Arthur Andersen LLP.
23.7 -- Consent of Friedman, Billings, Ramsey & 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 George Mason Bankshares, Inc.
99.3 -- Consent of Bernard H. Clineburg.
</TABLE>
- ---------------
* Incorporated herein by reference
II-6
Exhibit 5.1
<TABLE>
<S> <C>
BOWLES RICE
McDAVID GRAFF & LOVE, P.L.L.C.
ATTORNEYS AT LAW
1000 TECHNOLOGY DRIVE, SUITE 1330 800 QUARRIER STREET 1200 VINE CENTER TOWER
FAIRMONT, WEST VIRGINIA 28654 POST OFFICE BOX 1366 333 WEST VINE STREET
TELEPHONE 304-368-4000 CHARLESTON, WEST VIRGINIA 25325-1386 LEXINGTON, KENTUCKY 40607
TELEPHONE 304-347-1100 TELEPHONE 606-225-8700
105 WEST BURKE STREET FACSIMILE 304-343-2867
MARTINSBURG, WEST VIRGINIA 25401 633 STARKS BUILDING
TELEPHONE 304-283-0836 455 SOUTH FOURTH STREET
January 23, 1998 LOUISVILLE, KENTUCKY 40202
206 SPRUCE STREET TELEPHONE 502-588-0500
MORGANTOWN, WEST VIRGINIA 28505
TELEPHONE 304-284-4013 ONE DAVE COWENS DRIVE
ONE RIVERFRONT PLACE, SUITE 950
601 AVERY STREET NEWPORT, KENTUCKY 41071
PARKERSBURG, WEST VIRGINIA 28102 TELEPHONE 606-581-8700
TELEPHONE 304-485-8500
WRITER'S DIRECT DIAL NUMBER E-MAIL
(304) 347-1124 o (304) 343-3058 (FAX) [email protected]
</TABLE>
United Bankshares, Inc.
500 Virginia Street, East
Charleston, West Virginia 25301
Re: Form S-4 Registration Statement
--------------------------------
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 4,760,953 shares of common stock of the Registrant, $2.50 par
value ("Common Stock") issuable in connection with the proposed acquisition of
George Mason Bankshares, Inc. ("George Mason"), Fairfax, Virginia, pursuant to
the terms of the Restated Agreement and Plan of Merger dated December 10, 1997,
among George Mason, the Registrant and George Mason Holding Company, Inc. (the
"Agreement").
We have acted as local counsel for the Registrant in connection
with the preparation of the Registration Statement. In this connection, we have
reviewed the Registration Statement; the Registrant's Articles of Incorporation,
as amended, and Bylaws, as amended; certificates of public officials; the
Agreement; and certain records of the Registrant's corporate proceedings as
reflected in its minutes book. In this examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted as
originals and the conformity with the original of all documents submitted to us
as copies thereof.
<PAGE>
BOWLES RICE
McDAVID GRAFF & LOVE, P.L.L.C.
United Bankshares, Inc.
January 22, 1998
Page 2
In our opinion, the Common Shares to be issued by the Registrant as
described and under the conditions set forth in the Registration Statement (as
conditioned upon, among other things, the amendment to the Articles of
Incorporation of the Registrant and when and to the extent issued in accordance
with the Agreement) will be legally issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement and to any references to the opinion in the Registration
Statement. In giving such consent, we do not thereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
Act and the rules and regulations of the Securities and Exchange Commission
thereunder.
We are licensed to practice law in West Virginia and this opinion
is limited to the laws of West Virginia and federal law. This opinion is issued
in connection with the Registration Statement and may not be used for any other
purpose without our prior written consent.
Very truly yours,
BOWLES RICE McDAVID GRAFF & LOVE, P.L.L.C.
Deborah A Sink, Member
DAS/bal
cc: Joseph Wm. Sowards
January 23, 1998
United Bankshares, Inc.,
300 United Center,
500 Virginia Street, East,
Charleston, West Virginia 25301.
Ladies and Gentlemen:
We have acted as counsel to United Bankshares, Inc., a
corporation organized under the laws of West Virginia ("United"), in connection
with the planned merger (the "Merger") of George Mason Holding Company, a
Virginia corporation and wholly-owned subsidiary of United ("Merger Sub"), with
and into George Mason Bankshares, Inc., a Virginia corporation ("George Mason"),
pursuant to the Amended and Restated Agreement and Plan of Merger (the
"Agreement"), dated as of December 10, 1997, by and among United, George Mason
and Merger Sub. Capitalized terms used but not defined herein shall have the
meanings specified in the joint proxy statement/prospectus regarding the Merger
or the appendices thereto (including the Agreement).
We have assumed with your consent that (1) the Merger will be
effected in accordance with the Agreement and will qualify as a merger under
applicable law and (2) the representations contained in the letters of
representation from United and George Mason to us dated January 23, 1998
<PAGE>
United Bankshares, Inc. -2-
were true and correct when made and will be true and correct at the Effective
Time.
On the basis of the foregoing, and our consideration of such
other matters of fact and law as we have deemed necessary or appropriate, it is
our opinion, under presently applicable federal income tax law, that the Merger
will constitute a reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended, and that:
(i) no gain or loss will be recognized by United or George
Mason 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 George
Mason 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 George Mason 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 George Mason Common Stock
exchanged therefor, provided such shares of George
<PAGE>
United Bankshares, Inc. -3-
Mason Common Stock were held as capital assets at the
Effective Time; and
(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.
We express no opinion as to the effect of the Merger on any
taxpayer that is required to recognize unrealized gains and losses for federal
income tax purposes at the end of each taxable year under a mark-to-market
system.
<PAGE>
United Bankshares, Inc. -4-
The federal income tax consequences described herein may not
apply to certain classes of taxpayers, including, without limitation, George
Mason stockholders that received their George Mason Common Stock upon the
exercise of employee stock options or otherwise as compensation, that hold their
George Mason Common Stock in a hedging transaction as part of a "straddle" or
"conversion transaction" for federal income tax purposes, or that are foreign
persons, insurance companies, tax-exempt organizations, financial institutions
or securities dealers.
We hereby consent to the filing of this opinion as an exhibit
to the joint proxy statement/prospectus and to the references to this opinion in
the joint proxy statement/prospectus. In giving this consent, we do not hereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
SULLIVAN & CROMWELL
LAW OFFICES
SILVER, FREEDMAN & TAFF, L.L.P.
A LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20005-3934
(202) 414-6100
SIDNEY J. SILVER, P.C. TELECOPIER NUMBER
ROBERT L. FREEDMAN, P.C. (202) 682-0354
BARRY P. TAFF, P.C.
HOWARD J. ROSS, P.C. OF COUNSEL
JAMES S. FLEISCHER, P.C. DAVID B. MYATT, P.C.
JEFFREY M. WERTHAN, P.C. JOHN B. SELMAN*
KIP A. WEISSMAN, P.C. JAMES W. LANCE*
MARTIN L. MEYROWITZ, P.C. NANCY M. STILES
RICHARD S. GARABEDIAN, P.C. SHEILA FOOTER
RICHARD E. BYER, P.C. MARTIN J. O'RIORDAN*
CHRISTOPHER R. KELLY, P.C.
DAVE M. MUCHNIKOFF, P.C. WRITER'S DIRECT DIAL NUMBER
STEVEN M. ABRAMSON, P.C. (202) 414-6103
BRIAN L. ALPERT, P.C.
GARY A. LAX, P.C.
BETH A. FREEDMAN*
MICHAEL E. GADOW
BRIAN S. TAFF
CRAIG M. SCHEER
January 23, 1998
*NOT ADMITTED IN D.C.
Board of Directors
George Mason Bankshares, Inc.
1185 Main Street
Fairfax, Virginia 22030
Re: Federal Income Tax Consequences Arising From the Merger
Contemplated By That Certain Amended and Restated Agreement
And Plan of Merger dated December 10, 1997 By And Between
George Mason Bankshares, Inc. And United Bankshares, Inc.
(the "Agreement")
Ladies and Gentlemen:
In connection with the Form S-4 Registration Statement/Proxy Statement
(the "Registration Statement") filed by United Bankshares, Inc. with the SEC
pursuant to the Agreement, set forth hereinbelow is this firm's opinion relating
to certain federal income tax consequences applicable to the Merger contemplated
by the Agreement. Capitalized terms used herein which are not expressly defined
herein shall have the meaning assigned to them in the Agreement.
FACTS
United is a stock corporation organized and existing under the laws of
the State of West Virginia. Merger Sub is a stock corporation organized and
existing under the laws of the State of Virginia, is a first-tier wholly owned
subsidiary of United and was formed for the sole purpose of facilitating the
Merger. United's principal business consists of lending and deposit taking
activities through one or more banking subsidiaries.
Mason is a stock corporation organized and existing under the laws of
the State of Virginia. Mason's principal business consists of lending and
deposit taking activities through its banking subsidiary.
<PAGE>
Board of Directors
January 23, 1998
Page 2
- --------------------------------------------------------------------------------
Pursuant to the Agreement, it is proposed that the Merger will be
implemented through the merger of Merger Sub with and into Mason. In the Merger
all of the outstanding Mason Common Stock will be exchanged solely for United
Common Stock or cash in lieu of fractional share interests.
ASSUMPTIONS
A. The Merger will be implemented strictly in accordance with the
terms of the Agreement and will constitute a statutory merger.
B. All conditions precedent contained in the Agreement shall be
performed or waived prior to the Effective Time.
C. The representations of Mason and United made in their respective
tax representation letters dated January 23, 1998 to Sullivan & Cromwell and us
are true and correct on the date hereof and will be true and correct as of the
Effective Time.
D. All of the stockholders of Mason are citizens or residents of the
United States of America ("U.S. Holders"). For purposes hereof, U.S. Holders do
not include certain classes of taxpayers including but not limited to foreign
persons, insurance companies, tax-exempt organizations, financial institutions,
dealers in securities, persons who acquired or acquire Mason Common Stock
pursuant to the exercise of employee stock options or otherwise as compensation
and persons who hold shares of Mason Common Stock in a hedging transaction or as
part of a straddle or conversion transaction.
OPINIONS
Subject to the foregoing and to the conditions and limitations
expressed elsewhere herein, we are of the opinion on the date hereof that for
federal income tax purposes:
1. the Merger will constitute a tax-free reorganization within the
meaning of Section 368(a) of the Code and United, Merger Sub and Mason will each
be a party to the reorganization;
2. except as provided in paragraph 4 below, no gain or loss will be
recognized by any U.S. Holder upon the exchange of Mason Common Stock solely for
United Common Stock in the Merger; 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
<PAGE>
Board of Directors
January 23, 1998
Page 3
- --------------------------------------------------------------------------------
by a U.S. Holder will be the same as the aggregate adjusted tax basis of the
shares of the Mason Common Stock exchanged therefor;
3. the holding period of the United Common Stock received by a U.S.
Holder in the Merger will include the holding period of the Mason Common Stock
surrendered and exchanged therefor, provided that such shares of Mason Common
Stock were held as a capital asset by such U.S. Holder at the Effective Time;
and
4. a U.S. Holder who receives cash in lieu of a fractional share
interest in United Common Stock in the Merger 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 paragraph 2 above). Such
capital gain or loss would be long-term capital gain or loss if the U.S.
Holder's holding period in a fractional share interest (determined as described
in paragraph 3 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.
The foregoing opinion reflects our legal judgment as of the date
hereof based upon the facts and assumptions presented herein. This opinion has
no official status or binding effect of any kind. Accordingly, we cannot assure
you that the Internal Revenue Service or any court of competent jurisdiction
will agree with this opinion.
We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to all references made to this letter in the
Registration Statement.
Very truly yours,
/s/ Barry P. Taff, P.C.
SILVER, FREEDMAN & TAFF, L.L.P.
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 10th day of September, 1997, by
and among United Bankshares, Inc. ("United"), a West Virginia corporation (the
"Corporation"), United Bank, a Virginia state-chartered bank (the "Bank"), and
Bernard H. Clineburg (the "Executive").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to provide for the
Executive's employment by the Corporation and the Bank (collectively, the
"Employers") following the consummation of the transactions contemplated in the
Agreement and Plan of Merger by and between George Mason Bankshares, Inc.
("Mason"), a Virginia corporation and the Corporation, dated as of September 10,
1997 (the "Merger Agreement"); and
WHEREAS, in consideration for the benefits provided under this
Agreement, the Executive has agreed to waive all rights to any benefits payable
under that certain employment agreement among Mason, The George Mason Bank
("Mason Bank"), and the Executive, dated as of August 3, 1995 (the "Prior
Agreement"), except for the right to a limited payment as described more fully
herein; and
WHEREAS, the Board of Directors of the Corporation (the
"Corporation Board") and the Bank (the "Bank Board") has authorized the
Corporation and the Bank to enter into this Agreement.
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the Employers and the Executive agree as follows:
<PAGE>
1. Employment. Subject to the consummation of the transactions
contemplated by the Merger Agreement, the Employers agree to employ the
Executive and the Executive agrees to continue in the employ of the Employers on
the terms and conditions hereinafter set forth.
2. Capacity. The Executive shall serve as President of the
Corporation and as Chairman and Chief Executive Officer of the Bank and shall
perform such services for the Corporation and the Bank as are consistent with
such positions.
3. Effective Date and Term; Prior Agreement. (a) The
commencement date (the "Commencement Date") of this Agreement shall be the
Effective Date, as defined in the Merger Agreement. Subject to the provisions of
Section 6, the term (the "Term") of the Executive's employment hereunder shall
be three years from the Commencement Date; and the Term shall be automatically
extended from day to day so that on any day the remaining Term shall be three
years; provided however, that in no event shall the Term extend beyond the
anniversary of the Commencement Date that occurs in the year 2004 and provided
further, that the Corporation Board and the Bank Board may by written notice
advice the Executive that the Term will not be extended beyond three years from
the date of such notice. The last day of such Term, as so extended from time to
time, is sometimes referred to herein as the "Expiration Date."
(b) The Executive hereby acknowledges and agrees that the
Prior Agreement shall terminate as of the Commencement Date and shall be of no
further force and effect, and the Executive hereby waives his rights to any and
all benefits that would have been provided under such Prior Agreement.
4. Compensation and Benefits. The regular compensation and
benefits payable to the Executive under this Agreement shall be as follows:
-2-
<PAGE>
(a) Base Salary and Bonus. For each year during the term, the
Employers shall pay the Executive a base salary of $285,000. The
Executive's base salary may be subject to increase from time to time in
accordance with the usual practice of the Employers with respect to the
review of compensation of their senior executives. The Executive's base
salary shall be payable in periodic installments in accordance with the
Employers' usual practice for their senior executives. In addition, the
Executive shall be eligible to receive an annual bonus under the bonus
incentive plan offered by the Employers; provided, however, that the
maximum amount payable to Executive for any year under any such bonus
incentive plan shall be an amount equal to 40% of Executive's then
current base salary.
(b) Initial Up-Front Payment. In consideration for entering
into this Agreement and waiving all rights to any benefits to which
Executive may have been entitled under the Prior Agreement, the
Employers shall pay to Executive in a lump sum within seven days
following the Effective Date (as defined in the Merger Agreement) an
amount equal to 2.99 times the Executive's "base amount" (as determined
under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), assuming that the consummation of the transactions
contemplated by the Merger Agreement constitute a change described in
Code Section 280G(b)(2)(A)(i)) (the "Special Severance Payment");
provided, however, that the Special Severance Payment shall in no event
exceed $1,750,000.
(c) Regular Benefits. The Executive shall be entitled to
participate in any and all employee benefit plans, medical insurance
plans, retirement plans and other benefit plans from time to time in
effect for senior executives of the Bank to the extent commensurate
with his duties and responsibilities with the Employers. Such
participation shall be subject to (i) the terms of the applicable plan
documents and (ii) generally applied policies of the Employers. The
Executive shall receive credit under such employee benefit plans for
eligibility and vesting purposes in respect of Executive's prior
service with Mason.
-3-
<PAGE>
(d) Business Expenses. The Employers shall reimburse the
Executive for all reasonable travel, entertainment and other business
expenses incurred by him in the performance of his duties and
responsibilities hereunder, subject to audit as necessary and to such
reasonable requirements with respect to substantiation and
documentation as may be specified by the Employers.
(e) Vacation. The Executive shall be entitled to four (4)
weeks of vacation per calendar year, to be taken at such times and
intervals as shall be determined by the Executive with the approval of
the Employers, which approval shall not be unreasonably withheld.
(f) Automobile. The Employers at their sole cost shall during
the Term provide the Executive with the use of an appropriate
automobile that shall be selected by the Executive with the approval of
the Employers, which shall not be unreasonably withheld.
5. Extent of Service. During his employment hereunder, the
Executive shall, subject to the direction and supervision of the Corporation
Board and the Bank Board, devote his full business time, best efforts and
business judgment, skill and knowledge to the advancement of the Employer's
interests and to the discharge of his duties and responsibilities hereunder. He
shall not engage in any other business activity, except as may be approved by
the Corporation Board and the Bank Board; provided, however, that nothing herein
shall be construed as preventing the Executive from:
(a) investing his assets in a manner not prohibited by Section
8, and in such form or manner as shall not require any material
services on his part in the operations or affairs of the companies or
other entities in which such investments are made;
(b) serving on the board of directors or governing board of
any entity subject to the prohibitions set forth in Section 8 and
provided that he shall not be required to render any material services
with respect to the operations or affairs or any such entity and
subject to disclosure and advance approval by the Corporation
-4-
<PAGE>
Board and the Bank Board, which approval will not be unreasonably
withheld, as well as annual notification to the Corporation Board and
the Bank Board of all boards on which the Executive serves; or
(c) engaging in religious, charitable or other community or
non-profit activities which do not impair his ability to fulfill his
duties and responsibilities under this Agreement.
6. Termination and Termination Benefits. Notwithstanding the
provisions of Section 3, the Executive's employment hereunder shall terminate
under the following circumstances:
(a) Death. In the event of the Executive's death while he is
actively employed by the Employers, the Executive's employment shall
terminate on the date of his death; all compensation and benefits
earned by the Executive but unpaid at the time of his death shall be
paid to the Executive's estate.
(b) Termination by the Employers for Cause. The Executive's
employment hereunder may be terminated for "Cause" by the Employers
(acting jointly and not severally), which shall mean termination
because of the Executive's breach of fiduciary duty involving personal
profit, willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or entry of a final
cease-and-desist order relating to either of the Employers, or acts or
omissions constituting gross negligence, dishonesty, or immoral or
disreputable conduct, or material breach of any provisions of this
Agreement, provided, however, that such determination of termination
for Cause shall require the affirmative vote of at least two thirds of
the members of the each of the Corporation Board and the Bank Board and
such votes shall not be made prior to the expiration of a thirty (30)
day period following the date on which the Corporation Board and Bank
Board shall, by written notice to the Executive, furnish to him a
statement of the grounds for his termination for Cause, during which
the Executive shall be afforded a reasonable opportunity to make oral
and written presentations to the Corporation
-5-
<PAGE>
Board and the Bank Board, and to be represented by his legal counsel at
such presentations, to refute the grounds for the termination.
Regardless of the circumstances surrounding the termination for
"Cause," the Executive shall continue to receive all compensation and
benefits otherwise payable under this Agreement and otherwise during
such thirty (30) day period. For purposes of this paragraph, no act or
failure to act on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that the Executive's action or omission
was in the best interests of the Employers.
In the event of termination for Cause, all obligations of the
Employers under this Agreement shall terminate as of the date the
Executive's employment is terminated, except that all compensation and
benefits earned by the Executive but unpaid at the time of his
termination will be paid to the Executive.
(c) Termination by the Employers Without Cause. The
Executive's employment with the Employers may be terminated, subject as
provided below, prior to the Expiration Date without Cause following
the provision of thirty (30) days' prior written notice to the
Executive. Termination without Cause is defined as termination for any
reason other than termination by Death, Disability, with Cause or by
Operation of Law, as defined in this Agreement. The Employers agree
that the Executive shall not be terminated without Cause during the
first eighteen months of the Term; provided, however, that the
Employers may during such period place the Executive on a leave of
absence, and the Executive shall continue to receive his base salary
while on such leave of absence. In the event of termination without
Cause, all obligations of the Employers under this Agreement shall
terminate as of the date the Executive's employment is terminated,
except that (I) the Employers shall continue to pay the Executive his
monthly base salary in effect as of the date of termination for the
lesser of (x) the number of months remaining in the Term, and (y) 18
months; provided, however, that the number of months as so determined
shall be reduced by the number of months during which
-6-
<PAGE>
the Executive was on a leave of absence, if any, and (II) the Employers
shall comply with the provisions of Section 6(g).
(d) Termination by Operation of Law. The Executive's
employment with the Employers shall terminate:
(i) if the Executive is removed and/or
permanently prohibited from participating in the conduct of
the affairs of the Bank by an order issued under Section
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C. ss.1818(e)(3) or ss.(g)(1)) or Va. Code Ann. Section
6.1-49 as of the effective date of the order; or
(ii) if the Executive is removed and/or permanently
prohibited from participating in the conduct of the affairs of
either of the Employers under, or such removal is required to
comply with, any final judicial decree or order.
In the event of termination by Operation of law, all obligations of the
Employers under this Agreement shall terminate as of the date
indicated, except that all compensation and benefits earned by the
Executive but unpaid at the time of his termination will be paid to
Executive.
(e) Termination by Disability. The Executive's employment may
be terminated in the event that he is unable to perform the essential
duties of his position due to any mental, physical or other disability.
The Executive may only be terminated under this provision if he remains
unable to perform the essential functions of his position following a
leave of absence because of disability for a period in excess of twelve
(12) weeks and each of the Corporation Board and the Bank Board
thereafter concludes, based upon medical and other evidence
satisfactory to them, that the Executive is disabled within the meaning
of this provision. The Executive may, and at the request of either of
the Employers will, submit to the Employers a certification of his
medical condition and prognosis, in reasonable detail by a physician or
physicians satisfactory to the Employers. All obligations of the
Employers under this Agreement shall terminate as of the date
-7-
<PAGE>
the Executive's employment is terminated under this provision, except
that (I) all compensation and benefits earned by the Executive but
unpaid at the time of this termination will be paid to Executive, and
(II) the Employers shall comply with the provisions of Section 6(g)..
(f) Limitation of Payments.
(i) If any payment received or to be received by the Executive
in connection with an event described in Section 280G(2)(A)(i) of the
Code (whether payable pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Employers (or their
affiliates), (together with the Special Severance Payment, the "Total
Payments")) would not be deductible by the Employers (or any
predecessor Employers of the Executive) in full as a result of Section
280G of the Code, the Special Severance Payment or other payments or
both shall be reduced until no portion of the Total Payments is not
deductible as a result of Section 280G of the Code, or the Special
Severance Payment is reduced to zero, whichever occurs first.
(ii) In the event a dispute develops between the Employers and
the Executive as to the manner of calculating the amount of the Special
Severance Payment payable to the Executive pursuant to this provision,
the Special Severance Payment shall be calculated by the Employers'
independent certified public accountants and if desired by the
Employers, outside legal counsel, whose determination shall be binding
on the parties hereto. Except as provided in Section 6(f) (iii), the
Employers shall have no liability for inaccurate calculation of the
benefits payable to the Executive pursuant to this Section 6 so long as
such calculation is made in good faith.
(iii) As a result of the possible uncertainty in the
application of Section 280(G) of the Code at the time of the initial
determination of any amount payable hereunder or as a result of the
uncertainties of this Agreement as they may be affected by other
compensation plans, programs, or agreements of the Employers, it is
possible that payments made under this Agreement will have been made by
the
-8-
<PAGE>
Employers which should not have been made (an "Overpayment") or that
additional payments could have been made which were not made (an
"Underpayment"). In the event that a payment or other benefit is due to
the Executive under this Agreement or any other plan, program or
agreement of the Employers and such payment or benefit results in an
Overpayment, as determined by the Employers' independent certified
public accountants or outside legal counsel, such Overpayment shall be
treated for all purposes as a loan to the Executive which he shall
repay to the Employers, together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code. In the
event that the Employers, based on the assertion of a deficiency by the
Internal Revenue Service against the Employers or the Executive which
the Employers' certified public accountants or outside legal counsel
believe has a high probability of success, determines that an
Overpayment has been made, such Overpayment shall be treated as a loan
to the Executive which he shall repay to the Employers, together with
interest at the applicable federal rate provided in Section 7872(f)(2)
of the Code; provided, however, that no amount shall be payable by the
Executive to the Employers if and to the extent that such payment would
not reduce both the amount which is subject to taxation under Section
4999 of the Code and the deduction denied under Section 280G of the
Code. In the event that the Employers' independent certified public
accountants or outside legal counsel determine that an Underpayment has
occurred, such Underpayment shall be paid promptly by the Employers to
or for the benefit of the Executive, together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.
(g) Health Benefits upon Termination. In addition to the
benefits otherwise provided hereunder, in the event of termination of
Executive's employment other than (i) a termination by the Employers
for Cause or (ii) by Operation of Law, or (iii) by the Executive during
the first two years of the Term
-9-
<PAGE>
under circumstances other than those that would give rise to a
Constructive Termination under the SERP (as defined in Section 7), the
Employers agree to maintain coverage for Executive and his spouse, for
the lifetime of Executive and his spouse, under the health plans of the
Employers in which Executive participated (and his spouse was covered)
immediately prior to such termination, or any successor health plans
(or, if it is not possible under the terms of such plans to provide
such continued coverage, the Employers will otherwise provide
equivalent coverage outside of such plans). Such continued coverage (i)
will have the same deductibles and copayments currently applicable to
Executive and his spouse as of the date of Executive's termination of
employment, and (ii) shall not be secondary to Medicare. The provisions
of this paragraph will survive the termination of this Agreement and
the termination of the Executive's employment with the Employers.
7. SERP. The occurrence of either (i) the termination of
Executive's employment under this Agreement during the Term, or (ii) at the
expiration of the Term, the inability of the Executive and the Employers to
reach agreement on a new employment agreement on terms reasonably satisfactory
to both parties, shall be considered to be a Constructive Termination of the
Executive's employment for purposes of the Supplemental Retirement Benefits
Agreement, dated as of July 21, 1997, by and between Mason, Mason Bank and
Executive (the "SERP"); provided, however, that termination of Executive's
employment during the first two years of the Term (x) by the Employers for
Cause, or (y) by the Executive under circumstances other than those that would
give rise to a Constructive Termination under the SERP, will not be considered
to be a Constructive Termination for purposes of the SERP; provided, further,
that notwithstanding clause (y) of the previous proviso, termination of the
Executive's employment by the Executive in the event that the annual bonus
provided by the Employers under Section 4(a) is less than 40% of Executive's
then current base salary shall be considered to be a Constructive Termination
for purposes of the SERP.
-10-
<PAGE>
8. Noncompetition and Confidential Information.
(a) Noncompetition. During Executive's employment with
the Employers, and for a period of six months following the termination of his
employment under this Agreement for any reason, the Executive shall not,
directly or indirectly, whether as owner, partner, shareholder, consultant,
agent, employee, co-venturer or otherwise, or through any Person, compete in any
City or County where the Employers maintain offices or branches at the time of
the Executive's termination and at any time during the period this
Noncompetition provision is in effect, with the banking or any other business
conducted by the Employers during the period of his employment hereunder, nor
shall be attempt to hire any employee of the Employers, assist in such hiring by
any other Person, encourage any such employee to terminate his or her
relationship with the Employers or solicit or encourage any customer of the
Employers to terminate its relationship with the Employers or to conduct with
any other Person any business or activity which such customer conducts with the
Employers. Notwithstanding anything to the contrary contained herein, the
Executive shall be permitted to invest his assets in any corporation, firm or
entity which may be deemed to compete with the Employers within the meaning of
this Section 8(a), provided that the Executive does not acquire beneficial
ownership of more than 5% of the outstanding voting stock of any such
corporation, firm or entity.
(b) Confidential Information. The Executive will not at any
time disclose to any other Person (except as required by applicable law or in
connection with the performance of his duties and responsibilities hereunder),
or use for his own benefit or gain, any confidential information of the
Employers obtained by him incident to his employment with the Employers. The
term "confidential information" includes, without limitation, financial
information, business plans and opportunities (such as lending relationships,
financial product developments or possible acquisitions or dispositions of
businesses or facilities) which have been discussed or considered by the
management of the Employers but does not include any information which has
become part of the public domain by means other than the Executive's
nonobservance of his obligations hereunder.
-11-
<PAGE>
(c) Relief Interpretation. The Executive agrees that a breach
of this Section 8 will irreparably and continually damage the Employers and that
the Employers shall be entitled to injunctive relief for any breach by him of
the covenants contained in this Section 8, in addition to any other remedy
provided by law. Breach of this Section 8 by the Executive will result in the
cessation of any payments due to the Executive under Section 6 of this
Agreement, including the Special Severance Payment, and the Employers may elect
to suspend such payments in the event of breach, pending final determination of
the merits of the dispute by a court of competent jurisdiction. The parties
agree that the prevailing party will be entitled to recover the reasonable
attorneys' fees and court costs incurred by such party in the course of
prosecuting or defending any lawsuit brought under Section 8 of this Agreement.
(d) Executive Acknowledgment. This Section 8 is intended to
limit the Executive's right to compete only to the extent necessary to protect
the Employers from unfair competition and the Executive acknowledges that it is
reasonable in scope.
(e) Survival of Restrictions. The provisions of this Section 8
will survive the termination of this Agreement and the termination of the
Executive's employment with the Employers, regardless of the reasons for
termination.
9. Conflicting Agreements. The Executive hereby represents and
warrants that the execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he is a party or is bound, and that he is not now subject to any
covenants against competition or similar covenants which would affect the
performance of his obligations hereunder.
10. Definition of "Person". For purposes of this Agreement,
the term "Person" shall mean an individual, a corporation, an association, a
partnership, an estate, a limited liability company, a trust and any other
entity or organization.
-12-
<PAGE>
11. Withholding. All payments made by the Employers under this
Agreement shall be net of any tax or other amounts required to be withheld by
the Employers under applicable law.
12. Assignment; Successors and Assigns, etc. Neither the
Employers nor the Executive may make any assignment of this Agreement or any
interest herein, by operation of law or otherwise, without the prior written
consent of the other party hereto, and without such consent, any attempted
transfer or assignment shall be null and of no effect; provided, however, that
the Employers may assign its rights under this Agreement without consent of the
Executive in the event that the Employers shall hereafter effect a
reorganization, consolidate with or merge into any other Person, or transfer all
or substantially all of its properties or assets to any other Person and such
other Person assumes the obligations of the Employers under this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Employers and
the Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the completion
by the Employers of all payments due him under this Agreement, the Employers
shall continue such payments to the Executive's beneficiary or to his estate, as
appropriate.
13. Exclusivity of Benefits. The specific arrangements
referred to herein are not intended to exclude any other benefits which may be
available to the Executive upon a termination of employment with the Employers
pursuant to employee benefit plans of the Employers or otherwise;
notwithstanding this provision, however, the parties agree that there will be no
duplication of benefits. Consequently, any compensation or benefits to which
Executive is entitled upon termination under any benefit plan, policy or
practice of the Employers will be offset against the compensation and benefits
payable under this Agreement; provided, that for the avoidance of doubt,
benefits received under the SERP or under the Employers' tax-qualified benefits
plans shall not be considered duplicative of any benefits provided under this
Agreement.
-13-
<PAGE>
14. Enforceability. If any portion or provision of this
Agreement shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this Agreement, or the application
of such portion or provision in circumstances other than those as to which it is
so declared illegal or enforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
15. Waiver. No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party. The failure of
any party to require the performance of any term or obligation of this
Agreement, or the waiver by any party of any breach of this Agreement, shall not
prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
16. Notices. Any notices and other communications required by
this Agreement shall be sufficient if in writing and delivered in person, by
overnight delivery, or sent by registered or certified mail, postage prepaid, to
the Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Employers, at their respective main offices, to
the attention of the Chairman of the Corporation Board and the Chairman of the
Bank Board, or at such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
17. Payment of Legal Fees. The prevailing party in any dispute
or question of interpretation relating to this Agreement will be entitled to
reimbursement by the non-prevailing party of all reasonable legal fees and costs
incurred. For purposes of this Agreement, a prevailing party is defined as one
who has obtained a legal judgment or arbitration award in his or its favor on
the merits of the dispute.
-14-
<PAGE>
18. Indemnification. To the extent consistent with any general
liability or directors' and officers' insurance policies in effect during the
term of this Agreement, and as permitted by applicable law, the Employers shall
indemnify, hold harmless and defend the Executive for all acts or omissions
taken or not taken by him in good faith while performing services for the
Employers to no lesser extent than, and upon the same terms and conditions as,
other similarly situated officers of the Employers. If and to the extent that
the Employers maintain, at any time during the term of this Agreement, a
liability insurance policy covering the other officers and directors of the
Employers, the Employers shall use its best efforts to cause the Executive to be
covered under such policy upon the same terms and conditions as other similarly
situated officers and directors.
19. Regulatory Prohibition. Notwithstanding any other
provision of this Agreement to the contrary, any payments made to the Executive
pursuant to his Agreement, or otherwise, will not be made or shall be returned
promptly by the Executive, if required, if the Federal Deposit Insurance
Corporation (FDIC) or any other enforcement authority finds that the payments
violate Section 18(k) of the Federal Deposit Insurance Act, as amended (12
U.S.C. ss. 1828(k)) and any final rules and regulations promulgated thereunder.
20. Amendment. This Agreement may be amended or modified only
by a written instrument signed by the Executive and by the duly authorized
representatives of the Employers.
21. Governing Law. This Agreement shall be construed under and
be governed in all respects by the laws of the Commonwealth of Virginia, to the
extent not preempted by Federal law.
22. Other Severance Benefits. The Executive hereby agrees that
in consideration for the payments to be received under this Agreement, the
Executive waives
-15-
<PAGE>
any and all rights to any payments or benefits, in the nature of severance,
otherwise payable to Executive under any Mason or Mason Bank plans, programs,
contracts or arrangements that provide for the payment of severance benefits
(including, without limitation, the Prior Agreement) or under any other such
plans, programs, contracts or arrangements of the Employers or their affiliates
that provide for severance payments or benefits upon a termination of
employment.
23. Complete Agreement. On and after the Commencement Date,
this Agreement shall supersede any other agreement, written or oral, pertaining
to the subject matter of this Agreement.
-16-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the
Employers, by their respective duly authorized officers, and by the Executive,
as of the date first above written:
UNITED BANKSHARES, INC.
/s/ Richard M. Adams
By: ________________________
Title: Chairman of the Board and Chief
Executive Officer
UNITED BANK
/s/ Thomas E. Williams
By: ________________________
Title: President
EXECUTIVE
/s/ Bernard H. Clineburg
_____________________________
Bernard H. Clineburg
-17-
Exhibit 23.4
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 4,760,953 shares of
its common stock and to the incorporation by reference therein of our report
dated February 24, 1997 with respect to the consolidated financial statements of
United Bankshares, Inc. incorporated by reference in its Annual Report (Form
10-K) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
---------------------
Charleston, West Virginia
January 23, 1998
Exhibit 23.5
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Experts" and
"Background of the Merger" in the Joint Proxy Statement/Prospectus that is part
of the United Bankshares, Inc. (United) Registration Statement (Form S-4) for
the registration of 4,760,953 shares of United's common stock and to the
incorporation by reference therein of our report dated January 23, 1997 with
respect to the consolidated financial statements of George Mason Bankshares,
Inc. incorporated by reference in its Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
Washington, D.C.
January 23, 1998
Exhibit 23.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this joint proxy statement prospectus of our report on the
consolidated financial statements of Palmer National Bancorp, Inc. and
subsidiaries dated February 14, 1996, except in respect to the matter discussed
in Note 20, as to which date is May 17, 1996, included in George Mason
Bankshares, Inc.'s Form 10-K for the year ended December 31, 1996 and all
references to our Firm included in this joint proxy statement prospectus.
ARTHUR ANDERSEN LLP
Washington, D.C.
January 23, 1998
Exhibit 23.7
January 23, 1998
United Bankshares, Inc.
300 United Center
500 Virginia Street East
Charleston, WV 25301
Gentlemen:
This letter will constitute our consent to the inclusion of our opinion
regarding the acquisition of George Mason Bankshares, Inc. ("George Mason") by
United Bankshares, Inc. ("United") in United's registration statement on Form
S-4 (the "Registration Statement") and to the inclusion of the summary of such
opinion and the use of our name in the Registration Statement. In giving the
foregoing consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended (the "Securities Act"), or the rules and regulations of the Securities
and Exchange Commission (the "Commission") with respect to any part of such
Registration Statement within the meaning of the term "experts" as used in the
Securities Act and the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
/s/ Eugene S. Weil
Eugene S. Weil
Managing Director
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, each with full power of substitution)
to attend the Special Meeting of United shareholders at 10:00 a.m., on Monday,
March 9, 1998, at the 10th floor of United Square, located at Fifth and Avery
Streets, Parkersburg, West Virginia (and any adjournments, postponements,
continuations or reschedulings thereof), at which holders of United Common Stock
will be voting on two proposals in connection with the proposed merger of George
Mason Holding Company ("Merger Sub"), a wholly owned subsidiary of United, and
George Mason Bankshares, Inc. ("George Mason") pursuant to which George Mason
would become a wholly owned subsidiary of United (the "Merger"). The first is a
proposal to amend the articles of incorporation of United (the "United Articles
Amendment") to increase the number of authorized shares of United Common Stock
from 20,000,000 to 41,000,000 shares. The second is a proposal to approve the
issuance of the shares of United Common Stock to be issued in the Merger (the
"United Share Issuance"). If the Merger is consummated, each outstanding share
of common stock of George Mason will be converted into and exchanged for 0.85 of
a share of United Common Stock, subject to adjustment. 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 PROPOSALS.
IF RETURNED CARDS ARE SIGNED BUT NOT MARKED, THE UNDERSIGNED WILL BE
DEEMED TO HAVE VOTED FOR THE PROPOSALS 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 PROPOSALS 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 20,000,000 TO 41,000,000 SHARES.
FOR AGAINST ABSTAIN
|_| |_| |_|
2. APPROVAL OF A PROPOSAL TO APPROVE THE ISSUANCE OF THE SHARES OF
UNITED COMMON STOCK TO BE ISSUED IN THE MERGER OF GEORGE MASON
BANKSHARES, INC. AND GEORGE MASON HOLDING COMPANY.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. 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 RESCHEDULINGS
THEREOF.
<TABLE>
<S> <C>
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-
Signature (Title, if any) fact, executor, administrator, trustee or
guardian, please give full title as such. If a
__________________________________________ corporation, please sign in full corporate name
Signature (Title, if any) by president or authorized officer. If a
partnership, please sign in partnership name
by authorized person.
</TABLE>
The number of shares shown above and covered by this proxy include, where
applicable, shares held in the United Bankshares, Inc. Dividend Reinvestment
Plan.
-2-
Exhibit 99.2
[FRONT OF PROXY CARD]
PROXY SOLICITED BY THE BOARD OF DIRECTORS
OF GEORGE MASON BANKSHARES, INC.
The undersigned, a holder of record of shares of common stock, par value
$1.11 per share ("George Mason Common Stock"), of George Mason Bankshares, Inc.,
a Virginia corporation ("George Mason"), hereby appoints Kimberly F. Shrewsbury
and James J. Consagra, Jr., 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 George Mason shareholders at
10:00 a.m., on Monday, March 9, 1998, at the Washington Golf and Country Club,
located at 3017 North Glebe Road, Arlington, Virginia (and any adjournments,
postponements, continuations or reschedulings thereof), at which holders of
George Mason Common Stock will be voting on a proposal to approve the Amended
and Restated Agreement and Plan of Merger, dated as of December 10, 1997, among
George Mason, United Bankshares, Inc. ("United"), and George Mason Holding
Company, a wholly owned subsidiary of United ("Merger Sub") (the "Merger
Agreement") and the related Plan of Merger, under which Merger Sub will be
merged with and into George Mason and George Mason will become a wholly owned
subsidiary of United (the "Merger"). If the Merger is consummated, each
outstanding share of George Mason Common Stock will be converted into and
exchanged for 0.85 of a share of common stock of United, subject to adjustment.
Furthermore, holders of George Mason Common Stock will be voting on 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 George Mason 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 GEORGE MASON 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 AND TO HAVE ABSTAINED ON ALL OTHER MATTERS.
<PAGE>
[REVERSE OF PROXY CARD]
THE BOARD OF DIRECTORS OF GEORGE MASON UNANIMOUSLY RECOMMENDS
A VOTE FOR THE PROPOSAL SET FORTH BELOW.
1. APPROVAL OF AN AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER,
DATED AS OF DECEMBER 10, 1997, AMONG GEORGE MASON, UNITED, AND
GEORGE MASON HOLDING COMPANY, A WHOLLY OWNED SUBSIDIARY OF UNITED,
AND THE RELATED PLAN OF MERGER, UNDER WHICH GEORGE MASON HOLDING
COMPANY WILL BE MERGED WITH AND INTO GEORGE MASON AND GEORGE MASON
WILL BECOME A WHOLLY OWNED SUBSIDIARY 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 RESCHEDULINGS
THEREOF.
<TABLE>
<S> <C>
Date: _____________________________, 1998 Please sign your name exactly as it appears
hereon. When shares of George Mason
Common Stock are held of record by joint
tenants, both should sign. When signing as
_________________________________________ an attorney-in-fact, executor, administrator,
Signature (Title, if any) trustee or guardian, please give full title as
such. If a corporation, please sign in full
_________________________________________ corporate name by president or authorized
Signature (Title, if any) officer. If a partnership, please sign in
partnership name by authorized person.
</TABLE>
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CONTACT REGAN & ASSOCIATES,
INC. AT 1-800-737-3426.
The number of shares shown above and covered by this proxy include, where
applicable, shares held in the George Mason Bankshares, Inc. Dividend
Reinvestment and Stock Purchase Plan.
Exhibit 99.3
CONSENT OF BERNARD H. CLINEBURG
Pursuant to Rule 438 of the General Rules and Regulations under the
Securities Act of 1933, I hereby consent to being named in the Proxy
Statement/Prospectus included in the Registration Statement on Form S-4 to which
this consent is an exhibit and confirm my consent to serve in such capacity.
/s/ Bernard H. Clineburg
_________________________
Bernard H. Clineburg
Date: January 22, 1998
