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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): SEPTEMBER 10, 1997
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GEORGE MASON BANKSHARES, INC.
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(Exact name of registrant as specified in its charter)
VIRGINIA 0-13833 54-1303470
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) No.)
11185 MAIN STREET FAIRFAX, VIRGINIA 22030
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 352-1100
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N/A
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(Former name or former address, if changed since last report.)
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FORWARD-LOOKING STATEMENTS
When used in this Current Report on Form 8-K or future filings by
George Mason Bankshares, Inc. ("George Mason") with the Securities and Exchange
Commission, in George Mason's press releases or other public or shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "would be," will allow," "intends to,"
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimated," "project," "believe" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties. Factors which may cause actual results to
differ materially from those contemplated by such forward-looking statements
include, among other things, the following possibilities: (i) expected cost
savings from the Merger (as defined herein) cannot be fully realized; (ii)
deposit attrition, customer loss or revenue loss following the Merger; (iii)
higher than expected costs or difficulties relating to the integration of the
businesses of the parties to the Merger; (iv) changes in general economic
conditions; (v) changes in policies by regulatory agencies; (vi) fluctuations
in interest rates; (vii) a significant increase in competition in the banking
industry and (viii) changes in the securities markets. George Mason wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. George Mason does not
undertake, and specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or circumstances
after the date of such statements.
Item 5. Other Events.
On September 10, 1997, George Mason, a Virginia corporation, and
United Bankshares, Inc., a West Virginia corporation ("United"), entered into
an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
George Mason will be merged with and into United, with United as the surviving
corporation (the "Merger"). Under the Merger Agreement, each share of the
common stock, par value $1.11 per share, of George Mason ("George Mason Common
Stock") outstanding immediately prior to the effective time of the Merger will
be converted into the right to receive 0.85 of a share of the common stock, par
value $2.50 per share, of United ("United Common Stock"). On September 11,
1997, George Mason issued a press release announcing the Merger, a copy of
which is included as Exhibit 99 hereto and incorporated by reference herein.
The Merger is intended to constitute a tax-free reorganization under
the Internal Revenue Code of 1986, as amended, and to be accounted for under
the pooling-of-interests method of accounting.
Consummation of the Merger is subject to various conditions,
including: (i) receipt of approval by the stockholders of George Mason and
United of appropriate matters relating to the Merger Agreement and the Merger,
including approval by the stockholders of United of an amendment to the
Articles of Incorporation of United increasing from 20,000,000 to 40,000,000
the number of shares of United Common Stock authorized for issuance; (ii)
receipt of requisite regulatory approvals; (iii) receipt by each of George
Mason and United of an opinion of counsel as to the tax treatment of certain
aspects of the Merger; (iv) receipt by each of George Mason and United of
letters of their independent auditors opining that the Merger will qualify for
pooling-of-interests accounting treatment; and (v) satisfaction of certain
other conditions.
The preceding description of the Merger Agreement is qualified in its
entirety by reference to the copy of the Merger Agreement included as Exhibit
2.1 hereto and which is incorporated by reference herein.
In connection with the Merger Agreement, George Mason and United
entered into a Stock Option Agreement, dated September 11, 1997 (the "Stock
Option Agreement") pursuant to which George Mason granted to United an option
(the "Option") to purchase, under certain circumstances, up to 1,018,000 shares
of George Mason Common Stock at a price, subject to certain adjustments, of
$34.375 per share. The Stock Option Agreement provides that in no event may
the number of shares for which the Option is exercisable exceed 19.9% of the
issued and outstanding shares of George Mason Common Stock. The Option was
granted by George Mason as a condition and inducement to United to enter into
the Merger Agreement. Under certain circumstances, George Mason may be
required to repurchase the Option or the shares acquired pursuant to the
exercise of the Option.
The preceding description of the Stock Option Agreement is qualified
in its entirety by reference to the copy of the Stock
2
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Option Agreement included as Exhibit 2.2 hereto and which is incorporated by
reference herein.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of September 10, 1997, by and
between United Bankshares, Inc. and George Mason Bankshares, Inc.
2.2 Stock Option Agreement, dated as of September 11, 1997, between United
Bankshares, Inc., as grantee, and George Mason Bankshares, Inc., as
issuer.
99 Press release, dated September 11, 1997, of George Mason Bankshares,
Inc.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GEORGE MASON BANKSHARES, INC.
Date: September 17, 1997 By: /s/ BERNARD H. CLINEBURG
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Bernard H. Clineburg
President and
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
2.1 Agreement and Plan of Merger, dated as of September
10, 1997, by and between United Bankshares, Inc. and
George Mason Bankshares, Inc.
2.2 Stock Option Agreement, dated as of September 11,
1997, between United Bankshares, Inc., as grantee,
and George Mason Bankshares, Inc., as issuer.
99 Press release, dated September 11, 1997, of George
Mason Bankshares, Inc.
</TABLE>
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EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
dated as of September 10, 1997
by and between
UNITED BANKSHARES, INC.
and
GEORGE MASON BANKSHARES, INC.
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TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02 Articles Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Effective Date and Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.04 Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
Consideration; Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.01 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.02 Rights as Stockholders; Stock Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.03 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.04 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.05 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.06 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
Actions Pending Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.01 Forebearances of Mason. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.02 Forebearances of United. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.01 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.02 Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.03 Representations and Warranties of Mason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.04 Representations and Warranties of United . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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ARTICLE VI
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.01 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.02 Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.03 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.04 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.05 Access; Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.06 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.07. Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.08 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.09 Certain Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.10 NASDAQ Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.11 Regulatory Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.13 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.14 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.15 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.16 Dividend Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.17 Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.18 Mason Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.01 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.02 Conditions to Obligation of Mason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.03 Conditions to Obligation of United . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.02 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.01 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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9.02 Waiver; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.03 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.04 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.05 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.07 Entire Understanding; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.08 Interpretation; Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Mason Affiliate Agreement
EXHIBIT C Form of United Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of September 10, 1997 (this
"Agreement"), by and between George Mason Bankshares, Inc. ("Mason") and
United Bankshares, Inc. ("United").
RECITALS
A. Mason. Mason is a Virginia corporation, having its principal
place of business in Fairfax, Virginia.
B. United. United is a West Virginia corporation, having its
principal place of business in Charleston, West Virginia.
C. Stock Option Agreement. As an inducement to the willingness
of United to continue to pursue the transactions contemplated by this Agreement
, Mason expects (but is not obligated) to grant to United an option pursuant to
a stock option agreement, in substantially the form of Exhibit A.
D. Intentions of the Parties. It is the intention of the parties
to this Agreement that the business combination contemplated hereby be
accounted for under the "pooling-of-interests" accounting method and treated as
a "reorganization" under Section 368 of the Internal Revenue Code of 1986 (the
"Code").
E. Board Action. The respective Boards of Directors of each of
United and Mason have determined that it is in the best interests of their
respective companies and their stockholders to consummate the strategic
business combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving Mason
or any of its Subsidiaries or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the
assets or deposits of, Mason or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
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"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m).
"Corporation Commission" has the meaning set forth in Section 2.01(b).
"Costs" has the meaning set forth in Section 6.12(a).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided
for in Section 2.03.
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water
Act, the Federal Clean Air Act, and the Occupational Safety and Health Act,
each as amended, regulations promulgated thereunder, and state
counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Amount" has the meaning set forth in Section 6.12(b).
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"Insurance Policy" has the meaning set forth in Section 5.03(t).
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Mason" has the meaning set forth in the preamble to this Agreement.
"Mason Affiliate" has the meaning set forth in Section 6.07(a).
"Mason Board" means the Board of Directors of Mason.
"Mason By-Laws" means the By-laws of Mason.
"Mason Certificate" means the Amended Articles of Incorporation of
Mason.
"Mason Common Stock" means the common stock, par value $1.11 per
share, of Mason.
"Mason Meeting" has the meaning set forth in Section 6.02.
"Mason Preferred Stock" means the preferred stock, par value $0.01 per
share, of Mason.
"Mason Stock" means, collectively, Mason Common Stock and Mason
Preferred Stock.
"Mason Stock Plans" has the meaning set forth in Section 3.06..
"Material Adverse Effect" means, with respect to United or Mason, any
effect that (i) is material and adverse to the financial position, results
of operations or business of United and its Subsidiaries taken as a whole
or Mason and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either United or Mason to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking
and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to
banks and their holding companies generally and (c) any modifications or
changes to valuation policies and practices in connection with the Merger
or restructuring charges taken in connection with the Merger, in each case
in accordance with generally accepted accounting principles.
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 3.01.
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"Multiemployer Plan" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"New Certificate" has the meaning set forth in Section 3.04.
"Old Certificate" has the meaning set forth in Section 3.04.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plans" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
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"Stock Option Agreement" has the meaning set forth in Recital C.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed
to them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03 (o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Mason Stock held by Mason or any
of its Subsidiaries or by United or any of its Subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted in good faith.
"United" has the meaning set forth in the preamble to this Agreement.
"United Board" means the Board of Directors of United.
"United Common Stock" means the common stock, par value $2.50 per
share, of United.
"United Meeting" has the meaning set forth in Section 6.02.
"VSCA" means the Virginia Stock Corporation Act.
"West Virginia Secretary" has the meaning set forth in Section
2.01(b).
"WVCA" means the West Virginia Corporation Act.
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ARTICLE II
THE MERGER
2.01 The Merger. (a) At the Effective Time, Mason shall merge
with and into United (the "Merger"), the separate corporate existence of Mason
shall cease and United shall survive and continue to exist as a West Virginia
corporation (United, as the surviving corporation in the Merger, sometimes
being referred to herein as the "Surviving Corporation"). United may at any
time prior to the Effective Time change the method of effecting the combination
with Mason (including, without limitation, the provisions of this Article II)
if and to the extent it deems such change to be necessary, appropriate or
desirable; provided, however, that no such change shall (i) alter or change the
amount or kind of consideration to be issued to holders of Mason Stock as
provided for in this Agreement (the "Merger Consideration"), (ii) adversely
affect the tax treatment of Mason's stockholders as a result of receiving the
Merger Consideration or the Merger qualifying for "pooling of interests"
accounting treatment or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement; and provided further, that United
shall provide Mason written notice of such change.
(b) Subject to the satisfaction or waiver of the conditions set
forth in Article VII, the Merger shall become effective upon the occurrence of
the filing in the office of the Virginia State Corporation Commission (the
"Corporation Commission") of articles of merger in accordance with Section
13.1-720 of the VSCA and the filing in the Office of the Secretary of State of
the State of West Virginia (the "West Virginia Secretary") of articles of
merger in accordance with Section 31-1-36 of the WVCA or such later date and
time as may be set forth in such articles and the issuance of a certificate of
merger by the Corporation Commission under the VSCA and the issuance of a
certificate of merger by the West Virginia Secretary. The Merger shall have
the effects prescribed in the WVCA and the VSCA.
(c) Articles of Incorporation and By-Laws. Subject to Section
2.02, the articles of incorporation and by-laws of United immediately after the
Merger shall be those of United as in effect immediately prior to the Effective
Time.
(d) Directors and Officers of the Surviving Corporation. The
directors and officers of United immediately after the Merger shall be the
directors and officers of United (except as provided in Section 6.15)
immediately prior to the Effective Time, until such time as their successors
shall be duly elected and qualified.
2.02 Articles Amendment. At the Effective Time, Article VI of the
United Restated Articles of Incorporation shall be amended to read as follows
(the "Articles Amendment"):
"VI. The amount of the authorized capital stock of the corporation
is $100,000,000 which shall be divided into 40,000,000 shares of a par
value of $2.50 per share."
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2.03 Effective Date and Effective Time. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, the parties
shall cause the effective date of the Merger (the "Effective Date") to occur on
(i) the fifth business day to occur after the last of the conditions set forth
in Article VII shall have been satisfied or waived in accordance with the
terms of this Agreement (or, at the election of United, on the last business
day of the month in which such fifth business day occurs or, if such fifth
business day occurs within the last five business days of such month, on the
last business day of the succeeding month) or (ii) such other date to which the
parties may agree in writing; provided, however, that in no event shall the
Effective Date occur on or prior to January 1, 1998. The time on the Effective
Date when the Merger shall become effective is referred to as the "Effective
Time."
2.04 Plan of Merger. At the request of United, United and Mason
shall enter into a separate plan of merger reflecting the terms hereof for
purposes of any filing requirement.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) Outstanding Mason Common Stock and Mason Rights. Each share,
excluding Treasury Stock, of Mason Common Stock issued and outstanding
immediately prior to the Effective Time shall become and be converted into
0.85 of a share of United Common Stock (the "Exchange Ratio"). The
Exchange Ratio shall be subject to adjustment as set forth in Section 3.05.
(b) Outstanding United Stock. Each share of United Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and unaffected by the Merger, subject to any
applicable dissenters or appraisal rights under the WVCA.
(c) Treasury Shares. Each share of Mason Common Stock held as
Treasury Stock immediately prior to the Effective Time shall be canceled
and retired at the Effective Time and no consideration shall be issued in
exchange therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective
Time, holders of Mason Stock shall cease to be, and shall have no rights as,
stockholders of Mason, other than to receive any dividend or other distribution
with respect to such Mason Stock with a record date occurring prior to the
Effective Time and the consideration provided under this Article III. After
the
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Effective Time, there shall be no transfers on the stock transfer books of
Mason or the Surviving Corporation of shares of Mason Stock.
3.03 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of United Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, United shall pay to each holder of Mason Common Stock who
would otherwise be entitled to a fractional share of United Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the last sale prices of United Common Stock, as reported by NASDAQ reporting
system (as reported in The Wall Street Journal or, if not reported therein, in
another authoritative source), for the five NASDAQ trading days immediately
preceding the Effective Date.
3.04 Exchange Procedures. (a) At or prior to the Effective Time,
United shall deposit, or shall cause to be deposited, with United Bank (in such
capacity, the "Exchange Agent"), for the benefit of the holders of certificates
formerly representing shares of Mason Common Stock ("Old Certificates"), for
exchange in accordance with this Article III, certificates representing the
shares of United Common Stock ("New Certificates") and an estimated amount of
cash (such cash and New Certificates, together with any dividends or
distributions with a record date occurring after the Effective Date with
respect thereto (without any interest on any such cash, dividends or
distributions), being hereinafter referred to as the "Exchange Fund") to be
paid pursuant to this Article III in exchange for outstanding shares of Mason
Common Stock.
(b) As promptly as practicable after the Effective Date, United
shall send or cause to be sent to each former holder of record of shares of
Mason Common Stock immediately prior to the Effective Time transmittal
materials for use in exchanging such stockholder's Old Certificates for the
consideration set forth in this Article III. United shall cause the New
Certificates into which shares of a stockholder's Mason Common Stock are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Mason Common
Stock (or indemnity reasonably satisfactory to United and the Exchange Agent,
if any of such certificates are lost, stolen or destroyed) owned by such
stockholder. No interest will be paid on any such cash to be paid in lieu of
fractional share interests or in respect of dividends or distributions which
any such person shall be entitled to receive pursuant to this Article III upon
such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, if
any, nor any party hereto shall be liable to any former holder of Mason Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
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(d) No dividends or other distributions with respect to United
Common Stock with a record date occurring after the Effective Time shall be
paid to the holder of any unsurrendered Old Certificate representing shares of
Mason Common Stock converted in the Merger into the right to receive shares of
such United Common Stock until the holder thereof shall be entitled to receive
New Certificates in exchange therefor in accordance with the procedures set
forth in this Section 3.04, and, following 90 days after the Effective Date, no
such shares of Mason Common Stock shall be eligible to vote until the holder of
Old Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares
of United Common Stock such holder had the right to receive upon surrender of
the Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Mason for six months after the Effective Time shall be paid to
United. Any stockholders of Mason who have not theretofore complied with this
Article III shall thereafter look only to United for payment of the shares of
United Common Stock, cash in lieu of any fractional shares and unpaid dividends
and distributions on United Common Stock deliverable in respect of each share
of Mason Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
3.05 Anti-Dilution Provisions. In the event United changes (or
establishes a record date for changing) the number of shares of United Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding United Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted.
3.06 Options. (a) At the Effective Time, each outstanding option
to purchase shares of Mason Common Stock under the Mason Stock Plans (each, a
"Mason Stock Option"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such Mason Stock Option, the number of shares of United Common Stock equal to
(a) the number of shares of Mason Common Stock subject to the Mason Stock
Option, multiplied by (b) the Exchange Ratio (such product rounded to the
nearest whole number) (a "Replacement Option"), at an exercise price per share
(rounded to the nearest whole cent) equal to (y) the aggregate exercise price
for the shares of Mason Common Stock which were purchasable pursuant to such
Mason Stock Option divided by (z) the number of full shares of United Common
Stock subject to such Replacement Option in accordance with the foregoing.
Notwithstanding the foregoing, each Mason Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code. At or
prior to the Effective Time, Mason shall use its best efforts, including using
its best efforts to obtain any necessary consents from optionees, with respect
to the Mason Stock Plans to permit the replacement of the outstanding Mason
Stock
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Options by United pursuant to this Section and to permit United to assume the
Mason Stock Plans. Mason shall further take all action necessary to amend the
Mason Stock Plans to eliminate automatic grants or awards thereunder following
the Effective Time. At the Effective Time, United shall assume the Mason Stock
Plans; provided, that such assumption shall be only in respect of the
Replacement Options and that United shall have no obligation with respect to
any awards under the Mason Stock Plans other than the Replacement Options and
shall have no obligation to make any additional grants or awards under such
assumed Mason Stock Plans.
(b) At all times after the Effective Time, United shall reserve
for issuance such number of shares of United Common Stock as necessary so as to
permit the exercise of options granted under the Mason Stock Plans in the
manner contemplated by this Agreement and the instruments pursuant to which
such options were granted. United shall make all filings required under
federal and state securities laws no later than the Effective Time so as to
permit the exercise of such options and the sale of the shares received by the
optionee upon such exercise at and after the Effective Time and United shall
continue to make such filings thereafter as may be necessary to permit the
continued exercise of options and sale of such shares.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forebearances of Mason. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of United, Mason will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Mason and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse affect upon Mason's ability to perform
any of its material obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of Mason Stock or any Rights, (ii) enter into any agreement with
respect to the foregoing, or (iii) permit any additional shares of Mason
Stock to become subject to new grants of employee or director stock
options, other Rights or similar stock-based employee rights.
(c) Dividends, Etc. (a) Make, declare, pay or set aside for
payment any dividend, other than (A) quarterly cash dividends on Mason
Stock in an amount not to exceed $0.14 per share with record and payment
dates consistent with past practice, and (B) dividends from
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wholly owned Subsidiaries to Mason or another wholly owned Subsidiary of
Mason) on or in respect of, or declare or make any distribution on any
shares of Mason Stock or (b) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend
or renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Mason or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit, (including incentive or bonus payments) except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend (except
(i) as may be required by applicable law or (ii) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of Mason or its Subsidiaries, or take any
action to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire (other
than by way of foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously contracted in
good faith, in each case in the ordinary and usual course of business
consistent with past practice) all or any portion of, the assets, business,
deposits or properties of any other entity.
(h) Governing Documents. Amend the Mason Certificate, Mason
By-laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of Mason's Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
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(j) Contracts. Except in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract (as defined in Section 5.03(k)) or amend or modify in any material
respect any of its existing material contracts.
(k) Claims. Except in the ordinary course of business consistent
with past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other
material claims, actions or proceedings and which involve solely money
damages in an amount, individually or in the aggregate for all such
settlements, that is not material to Mason and its Subsidiaries, taken as a
whole.
(l) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii)
as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
(m) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure
to interest rate risk.
(n) Indebtedness. Incur any indebtedness for borrowed money other
than in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 Forebearances of United. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Mason, United will not, and will cause each of its
Subsidiaries not to:
(a) Preservation. Fail to use reasonable efforts to preserve
intact in any material respect their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates.
(b) Extraordinary Dividends. Make, declare, pay or set aside for
payment any extraordinary dividend.
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(c) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii)
as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation; provided, however, that nothing contained
herein shall limit the ability of United to exercise its rights under the
Stock Option Agreement.
(d) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, United
has delivered to Mason a schedule and Mason has delivered to United a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section
5.03 or 5.04 or to one or more of its covenants contained in Article IV;
provided, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not be reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section
5.02, and (b) the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by a
party that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to result in a Material
Adverse Effect on the party making the representation. Mason's
representations, warranties and covenants contained in this Agreement shall not
be deemed to be untrue or breached as a result of effects arising solely from
actions taken in compliance with a written request of United.
5.02 Standard. No representation or warranty of Mason or United
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as
a consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect. For purposes of this Agreement, "knowledge" shall
mean, with respect to a party hereto, actual
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knowledge of any officer of that party with the title, if any ranking not less
than senior vice president and that party's in-house counsel, if any.
5.03 Representations and Warranties of Mason. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Mason hereby
represents and warrants to United:
(a) Organization, Standing and Authority. Mason is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Mason is duly qualified to do business and is in
good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Mason Stock. As of the date hereof, the authorized capital
stock of Mason consists solely of (i) 9,000,000 shares of Mason Common
Stock, of which 5,117,405 shares were outstanding as of the date hereof,
and (ii) 1,000,000 shares of Mason Preferred Stock, of which no shares are
outstanding. As of the date hereof, no shares of Mason Common Stock and no
shares of Mason Preferred Stock were held in treasury by Mason or otherwise
owned by Mason or its Subsidiaries ("Treasury Stock"). The outstanding
shares of Mason Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). As of
the date hereof, except as Previously Disclosed in its Disclosure Schedule,
there are no shares of Mason Stock authorized and reserved for issuance,
Mason does not have any Rights issued or outstanding with respect to Mason
Stock, and Mason does not have any commitment to authorize, issue or sell
any Mason Stock or Rights, except pursuant to this Agreement and the Stock
Option Agreement. The number of shares of Mason Common Stock which are
issuable and reserved for issuance upon exercise of Mason Stock Options as
of the date hereof are Previously Disclosed in Mason's Disclosure Schedule.
(c) Subsidiaries. (i)(A) Mason has Previously Disclosed a list of
all of its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) except as Previously Disclosed, it owns, directly
or indirectly, all the issued and outstanding equity securities of each of
its Subsidiaries, (C) no equity securities of any of its Subsidiaries are
or may become required to be issued (other than to it or its wholly-owned
Subsidiaries) by reason of any Right or otherwise, (D) there are no
contracts, commitments, understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer any equity
securities of any such Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (E) there are no contracts, commitments, understandings, or
arrangements relating to its rights to vote or to dispose of such
securities and (F) all the equity securities of each Subsidiary held by
Mason or its Subsidiaries are fully paid and nonassessable (except
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pursuant to 12 U.S.C. Section 55) and are owned by Mason or its Subsidiaries
free and clear of any Liens.
(ii) Mason does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Mason's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) Corporate Power. Each of Mason and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Mason has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of this Agreement (including the
agreement of merger set forth herein) by the holders of more than
two-thirds of the outstanding shares of Mason Common Stock entitled to vote
thereon (which is the only shareholder vote required thereon), this
Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby have been authorized by all necessary corporate action
of Mason and the Mason Board prior to the date hereof. This Agreement is a
valid and legally binding obligation of Mason, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles). In approving this Agreement and
the Merger and the related transactions, the Board of Directors of Mason
has satisfied its obligations under Article 8 of the Mason Certificate.
The Mason Board of Directors has received the written opinion of Friedman,
Billings, Ramsey & Co., Inc. to the effect that as of the date hereof the
consideration to be received by the holders of Mason Common Stock in the
Merger is fair to the holders of Mason Common Stock from a financial point
of view.
(f) Regulatory Filings; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by Mason or any of its
Subsidiaries in connection with the execution, delivery or performance by
Mason of this Agreement or the Stock Option Agreement or to consummate the
Merger except for (A) filings of applications or notices with federal and
Virginia banking authorities, (B) filings with the SEC and state securities
authorities, and (C) the filing of articles of merger with the Corporation
Commission pursuant to the VSCA and
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the issuance of a certificate of merger in connection therewith. As of the
date hereof, Mason is not aware of any reason why the approvals set forth
in Section 7.01(b) will not be received without the imposition of a
condition, restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in
the preceding paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any right
of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Mason or of any of its Subsidiaries or to which Mason or any
of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Mason Certificate or the
Mason By-Laws, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) Financial Reports and SEC Documents. (i) Mason's Annual
Reports on Form 10-K for the fiscal years ended December 31, 1994, 1995 and
1996, and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it or any of
its Subsidiaries subsequent to December 31, 1994 under the Securities Act,
or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed or to be filed (collectively, Mason's "SEC Documents") with the SEC,
as of the date filed, (A) complied or will comply in all material respects
with the applicable requirements under the Securities Act or the Exchange
Act, as the case may be, and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and each of
the balance sheets or statements of condition contained in or incorporated
by reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of Mason and its Subsidiaries as of its date, and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and cash flows, as the case
may be, of Mason and its Subsidiaries for the periods to which they relate,
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments and the
absence of footnotes in the case of unaudited statements.
(ii) Since December 31, 1996, Mason and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
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(iii) Since December 31, 1996, (A) Mason and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to this Agreement
and the transactions contemplated hereby) and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.03
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Mason.
(h) Litigation. No litigation, claim or other proceeding before
any court or governmental agency is pending against Mason or any of its
Subsidiaries and, to Mason's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Mason nor any of its
Subsidiaries or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged with the
supervision or regulation of financial institutions (or their holding
companies) or issuers of securities or engaged in the insurance of deposits
(including, without limitation, the Office of the Comptroller of the Currency,
the Federal Reserve System and the FDIC) or the supervision or regulation of it
or any of its Subsidiaries (collectively, the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(j) Compliance with Laws. Each of Mason and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to own or lease their properties and to conduct their
businesses as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect and, to Mason's knowledge, no suspension or cancellation of any
of them is threatened; and
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(iii) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that Mason
or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to Mason's knowledge, do any
grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for this Agreement, the
Stock Option Agreement and those agreements and other documents filed as
exhibits to its SEC Documents, neither it nor any of its Subsidiaries is a
party to, bound by or subject to any agreement, contract, arrangement,
commitment or understanding (whether written or oral) (i) that is a
"material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that restricts or limits in any way the conduct of
business by it or any of its Subsidiaries (including without limitation a
non-compete or similar provision). Neither it nor any of its Subsidiaries
is in default under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it is a party, by
which its respective assets, business, or operations may be bound or
affected, or under which it or its respective assets, business, or
operations receive benefits, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute
such a default.
(l) No Brokers. No action has been taken by Mason that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a Previously
Disclosed fee to be paid to Friedman, Billings, Ramsey & Co., Inc.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of Mason's
Disclosure Schedule contains a complete and accurate list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, severance, welfare and
fringe benefit plans, employment or severance agreements and all similar
practices, policies and arrangements in which any employee or former
employee (the "Employees"), consultant or former consultant (the
"Consultants") or director or former director (the "Directors") of Mason or
any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (the "Compensation and Benefit
Plans"). Neither Mason nor any of its Subsidiaries has any commitment to
create any additional Compensation and Benefit Plan or to modify or change
any existing Compensation and Benefit Plan.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
or any regulations or rules promulgated thereunder, and all filings,
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<PAGE> 23
disclosures and notices required by ERISA, the Code, the Securities Act,
the Exchange Act, the Age Discrimination in Employment Act and any other
applicable law have been timely made. Each Compensation and Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter (including a determination that the related trust under such
Compensation and Benefit Plan is exempt from tax under Section 501(a) of
the Code) from the Internal Revenue Service ("IRS"), and Mason is not aware
of any circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
Mason, threatened legal action, suit or claim relating to the Compensation
and Benefit Plans. Neither Mason nor any of its Subsidiaries has engaged in
a transaction, or omitted to take any action, with respect to any
Compensation and Benefit Plan that would reasonably be expected to subject
Mason or any of its Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA, assuming for purposes of
Section 4975 of the Code that the taxable period of any such transaction
expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of
ERISA has been or is expected to be incurred by Mason or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any single-employer
plan of any entity (an "ERISA Affiliate") which is considered one employer
with Mason under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA Affiliate Plan"). None of Mason, any of its
Subsidiaries or any ERISA Affiliate has contributed, or has been obligated
to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA at any time since September 26, 1980. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed
for any Compensation and Benefit Plan or by any ERISA Affiliate Plan within
the 12-month period ending on the date hereof, and no such notice will be
required to be filed as a result of the transactions contemplated by this
Agreement. The PBGC has not instituted proceedings to terminate any
Pension Plan or ERISA Affiliate Plan and, to Mason's knowledge, no
condition exists that presents a material risk that such proceedings will
be instituted. To the knowledge of Mason, there is no pending
investigation or enforcement action by the PBGC, the Department of Labor
(the "DOL") or IRS or any other governmental agency with respect to any
Compensation and Benefit Plan. Under each Pension Plan and ERISA Affiliate
Plan, as of the date of the most recent actuarial valuation performed prior
to the date of this Agreement, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions contained in
such actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did
not exceed the then current value of the assets of such Pension Plan or
ERISA Affiliate Plan and since such date there has been neither an adverse
change in the financial condition of such Pension Plan or ERISA Affiliate
Plan nor any
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<PAGE> 24
amendment or other change to such Pension Plan or ERISA Affiliate Plan that
would increase the amount of benefits thereunder which reasonably could be
expected to change such result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which
Mason or any of its Subsidiaries is a party have been timely made or have
been reflected on Mason's financial statements. Neither any Pension Plan
nor any ERISA Affiliate Plan has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and all required payments to the PBGC with respect to
each Pension Plan or ERISA Affiliate Plan have been made on or before their
due dates. None of Mason, any of its Subsidiaries or any ERISA Affiliate
(x) has provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has taken any action,
or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a lien under Section 412(n) of the
Code or pursuant to ERISA.
(v) Neither Mason nor any of its Subsidiaries has any obligations to
provide retiree health and life insurance or other retiree death benefits
under any Compensation and Benefit Plan, other than benefits mandated by
Section 4980B of the Code, and each such Compensation and Benefit Plan may
be amended or terminated without incurring liability thereunder. There has
been no communication to Employees by Mason or any of its Subsidiaries that
would reasonably be expected to promise or guarantee such Employees retiree
health or life insurance or other retiree death benefits on a permanent
basis.
(vi) Mason and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign Employees.
(vii) With respect to each Compensation and Benefit Plan, if
applicable, Mason has provided or made available to United, true and
complete copies of existing: (A) Compensation and Benefit Plan documents
and amendments thereto; (B) trust instruments and insurance contracts; (C)
two most recent Forms 5500 filed with the IRS; (D) most recent actuarial
report and financial statement; (E) the most recent summary plan
description; (F) forms filed with the PBGC (other than for premium
payments); (G) most recent determination letter issued by the IRS; (H) any
Form 5310 or Form 5330 filed with the IRS; and (I) most recent
nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(viii) Except as disclosed on Section 5.03(m)(viii) of Mason's
Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement would not, directly or indirectly (including, without
limitation, as a result of any termination of employment prior to
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<PAGE> 25
or following the Effective Time) reasonably be expected to (A) entitle any
Employee, Consultant or Director to any payment (including severance pay or
similar compensation) or any increase in compensation, (B) result in the
vesting or acceleration of any benefits under any Compensation and Benefit
Plan or (C) result in any material increase in benefits payable under any
Compensation and Benefit Plan.
(ix) Except as disclosed on Section 5.03(m)(ix) of Mason's Disclosure
Schedule, neither Mason nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which would
not reasonably be expected to be deductible as a result of the limitations
under Section 162(m) of the Code and the regulations issued thereunder.
(x) Except as disclosed on Section 5.03(m)(x) of Mason's Disclosure
Schedule, as a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result
of any termination of employment prior to or following the Effective Time),
none of United, Mason or the Surviving Corporation, or any of their
respective Subsidiaries will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of the
Code), without regard to whether such payment is reasonable compensation
for personal services performed or to be performed in the future.
(n) Labor Matters. Neither Mason nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is Mason or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or
seeking to compel Mason or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Mason's knowledge, threatened, nor is Mason aware of any
activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) Takeover Laws; Dissenters Rights. Mason has taken all action
required to be taken by it in order to exempt this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby from,
and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
"moratorium", "control share", "fair price", "affiliate transaction",
"business combination" or other antitakeover laws and regulations of any
state (collectively, "Takeover Laws"), including, without limitation, the
Commonwealth of Virginia, and including, without limitation, Sections
13.1-725 through 13.1-728 of the VSCA (because a majority of Mason's
disinterested directors approved such transactions for such purposes prior
to any "determination date" with respect to United) and Sections 13.1-728.1
through 13.1-728.9 of
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<PAGE> 26
the VSCA. The provisions of Article 7 of the Mason Certificate do not
apply to the entering into of this Agreement, this Agreement and the
transactions contemplated hereby, including the Merger, as they have been
approved by the required majority votes of the directors referred to
therein. The provisions of Article 7 of the Mason Certificate do not apply
to the entering into of the Stock Option Agreement, the Stock Option
Agreement and the transactions contemplated thereby. Holders of Mason
Common Stock do not have dissenters' rights in connection with the Merger.
(p) Environmental Matters. To Mason's knowledge, neither the
conduct nor operation of Mason or its Subsidiaries nor any condition of any
property presently or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or on
which any of them holds a Lien, violates or violated Environmental Laws and
to Mason's knowledge, no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To Mason's knowledge, neither Mason nor any of its
Subsidiaries has received any notice from any person or entity that Mason
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(q) Tax Matters. (i) All Tax Returns that are required to be filed
by or with respect to Mason and its Subsidiaries have been duly filed, (ii)
all Taxes shown to be due on the Tax Returns referred to in clause (i) have
been paid in full, (iii) the Tax Returns referred to in clause (i) have
been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have been raised by
the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (i) are currently pending, and (vi)
no waivers of statutes of limitation have been given by or requested with
respect to any Taxes of Mason or its Subsidiaries. Mason has made
available to United true and correct copies of the United States federal
income Tax Returns filed by Mason and its Subsidiaries for each of the
three most recent fiscal years ended on or before December 31, 1996.
Neither Mason nor any of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes that accrued on or before the end of the
most recent period covered by Mason's SEC Documents filed prior to the date
hereof in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in Mason's SEC Documents
filed on or prior to the date hereof. As of the date hereof, neither Mason
nor any of its Subsidiaries has any
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<PAGE> 27
reason to believe that any conditions exist that might prevent or impede
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of
the Code as a result of the transfer contemplated by this Agreement.
(iii) Mason and its Subsidiaries will not be liable for any taxes as a
result of any Covered Transaction.
(r) Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for Mason's own account,
or for the account of one or more of Mason's Subsidiaries or their
customers (all of which are listed on Mason's Disclosure Schedule), were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each
of them constitutes the valid and legally binding obligation of Mason or
one of its Subsidiaries, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and is in full force and effect. Neither Mason nor its
Subsidiaries, nor to Mason's knowledge any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement.
(s) Books and Records. The books and records of Mason and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein and they fairly reflect the
substance of events and transactions included therein.
(t) Insurance. Mason's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Mason or its
Subsidiaries. Mason and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Mason
reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; Mason
and its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(u) Accounting Treatment. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
(v) Disclosure. The representations and warranties contained in
this Section 5.03 do not contain any untrue statement of a material fact or
omit to state any material fact necessary
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<PAGE> 28
in order to make the statements and information contained in this Section
5.03 not misleading.
5.04 Representations and Warranties of United. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, United
hereby represents and warrants to Mason as follows:
(a) Organization, Standing and Authority. United is a corporation
duly organized, validly existing and in good standing under the laws of the
State of West Virginia. United is duly qualified to do business and is in
good standing in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified.
(b) United Stock. (i) As of the date hereof, the authorized
capital stock of United consists solely of 20,000,000 shares of United
Common Stock, of which no more than 15,295,130 shares were outstanding as
of the date hereof. As of the date hereof, except as set forth in its
Disclosure Schedule, United does not have any Rights issued or outstanding
with respect to United Stock and United does not have any commitment to
authorize, issue or sell any United Stock or Rights, except pursuant to
this Agreement. The outstanding shares of United Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights).
(ii) The shares of United Common Stock to be issued in exchange for
shares of Mason Common Stock in the Merger, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and subject to no preemptive rights.
(c) Subsidiaries. Each of United's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and
is in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and
it owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Significant Subsidiaries.
(d) Corporate Power. Each of United and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and United has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of this Agreement (including the
agreement of merger set forth herein) and the Articles Amendment by the
holders of a majority of the outstanding shares of United
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<PAGE> 29
Common Stock entitled to vote thereon (which are the only shareholder votes
required thereon), this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby have been authorized by all
necessary corporate action of United and the United Board prior to the date
hereof. This Agreement is a valid and legally binding agreement of United,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles).
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by United or any of its
Subsidiaries in connection with the execution, delivery or performance by
United of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) the adoption and approval by the
shareholders of United of this Agreement and the Articles Amendment; (C)
the filing and declaration of effectiveness of the Registration Statement;
(D) the filing of articles of merger with the Corporation Commission
pursuant to the VSCA and the West Virginia Secretary pursuant to the WVCA
and the issuance of related certificates of merger and the filing of the
Articles Amendment with the West Virginia Secretary of State; (E) such
filings as are required to be made or approvals as are required to be
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of United Stock in the Merger; and (F) receipt
of the approvals set forth in Section 7.01(b). As of the date hereof,
United is not aware of any reason why the approvals set forth in Section
7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred to in
the preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of United or of any of its
Subsidiaries or to which United or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of United or any of its Subsidiaries, or (C) require any consent
or approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect.
(i) United's SEC Documents, as of the date filed, (A) complied or will
comply in all material respects with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (B) did not and
will not contain any untrue statement of a material fact or omit to state a
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<PAGE> 30
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. (iii) No litigation, claim or
other proceeding before any Governmental Authority is pending against
United or any of its Subsidiaries and, to the best of United's knowledge,
no such litigation, claim or other proceeding has been threatened.
(ii) Neither United nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has United or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) Compliance with Laws. Each of United and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are
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<PAGE> 31
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
(iv) has received, since December 31, 1995, no notification or
communication from any Governmental Authority (A) asserting that
United or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to United's knowledge, do any
grounds for any of the foregoing exist).
(j) No Brokers. No action has been taken by United that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement.
(k) Takeover Laws. United has taken all action required to be taken
by it in order to exempt this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby
are exempt from, the requirements of any Takeover Laws applicable to
United.
(l) Environmental Matters. To United's knowledge, neither the
conduct nor operation of United or its Subsidiaries nor any condition of
any property presently or previously owned, leased or operated by any of
them (including, without limitation, in a fiduciary or agency capacity), or
on which any of them holds a Lien, violates or violated Environmental Laws
and to Mason's knowledge no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To United's knowledge, neither United nor any of its
Subsidiaries has received any notice from any person or entity that United
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(m) Tax Matters. (i) All Tax Returns that are required to be filed
by or with respect to United and its Subsidiaries have been duly filed,
(ii) all Taxes shown to be due on the Tax Returns referred to in clause (i)
have been paid in full, (iii) the Tax Returns referred to in clause (i)
have been examined by the Internal Revenue Service or the appropriate
state, local or foreign taxing authority or the period for assessment of
the Taxes in respect of which such Tax Returns were required to be filed
has expired, (iv) all deficiencies asserted or
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<PAGE> 32
assessments made as a result of such examinations have been paid in full,
(v) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in
clause (i) are currently pending, and (vi) no waivers of statutes of
limitation have been given by or requested with respect to any Taxes of
United or its Subsidiaries. Neither United nor any of its Subsidiaries has
any liability with respect to income, franchise or similar Taxes that
accrued on or before the end of the most recent period covered by United's
SEC Documents filed prior to the date hereof in excess of the amounts
accrued with respect thereto that are reflected in the financial statements
included in United's SEC Documents filed on or prior to the date hereof.
(n) Books and Records. The books and records of United and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
(o) Insurance. United's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by United or its
Subsidiaries. United and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of United
reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect;
United and its Subsidiaries are not in material default thereunder; and all
claims thereunder have been filed in due and timely fashion.
(p) Accounting Treatment. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
(q) Disclosure. The representations and warranties contained in
this Section 5.04 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
and information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, each of Mason and United agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end. Without limiting the foregoing,
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United agrees to use its reasonable best efforts prior to the Effective Time to
file the Articles Amendment.
6.02 Stockholder Approvals. United and Mason agree to take, in
accordance with applicable law or NASDAQ rules and its articles of
incorporation and by-laws, all action necessary to convene an appropriate
meeting of its stockholders to consider and vote upon in the case of United,
the approval and adoption of this Agreement and the Articles Amendment and any
other matter required to be approved by United's stockholders for consummation
of the Merger (including any adjournment or postponement, the "United Meeting")
and, in the case of Mason, the approval and adoption of this Agreement and any
other matters required to be approved by Mason's stockholders for consummation
of the Merger (including any adjournment or postponement, the "Mason Meeting"),
in each case as promptly as practicable after the Registration Statement is
declared effective. The United Board and the Mason Board shall each recommend
such approval, and United and Mason shall take all reasonable, lawful action
to solicit such approval by its stockholders.
6.03 Registration Statement. (a) United agrees to prepare a
registration statement on Form S-4 (the "Registration Statement") to be filed
by United with the SEC in connection with the issuance of United Common Stock
in the Merger (including the joint proxy statement and prospectus and other
proxy solicitation materials of United and Mason constituting a part thereof
(the "Proxy Statement") and all related documents). Mason agrees to cooperate,
and to cause its Subsidiaries to cooperate, with United, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement; and provided that Mason and its Subsidiaries have cooperated as
required above, United agrees to file the Proxy Statement in preliminary form
with the SEC as promptly as reasonably practicable, and to file the
Registration Statement with the SEC as soon as reasonably practicable after any
SEC comments with respect to the preliminary Proxy Statement are resolved.
Each of Mason and United agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. United also agrees to
use all reasonable efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement. Mason agrees to furnish to United all information concerning
Mason, its Subsidiaries, officers, directors and stockholders as may be
reasonably requested in connection with the foregoing.
(b) Each of Mason and United agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement
thereto, if any, becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) the Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to stockholders and at the time of the United Meeting or the
Mason Meeting, as the case may be, contain any untrue statement of a
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material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or any statement
which, in the light of the circumstances under which such statement is made,
will be false or misleading with respect to any material fact, or which will
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier statement in the Proxy Statement or any amendment or supplement
thereto. Each of Mason and United further agrees that if it shall become aware
prior to the Effective Date of any information furnished by it that would cause
any of the statements in the Proxy Statement to be false or misleading with
respect to any material fact, or to omit to state any material fact necessary
to make the statements therein not false or misleading, to promptly inform the
other party thereof and to take the necessary steps to correct the Proxy
Statement.
(c) United agrees to advise Mason, promptly after United receives
notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of United Stock for offering
or sale in any jurisdiction, of the initiation or threat of any proceeding for
any such purpose, or of any request by the SEC for the amendment or supplement
of the Registration Statement or for additional information.
(d) United and Mason, in consultation with the other, shall employ
professional proxy solicitors to assist it in contacting stockholders in
connection with soliciting votes on the Merger.
6.04 Press Releases. Each of Mason and United agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules.
6.05 Access; Information. (e) Each of Mason and United agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax
returns and work papers of independent auditors), properties, personnel and to
such other information as any party may reasonably request and, during such
period, it shall furnish promptly to such other party (i) a copy of each
material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (ii) all other
information concerning the business, properties and personnel of it as the
other may reasonably request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the
requirements of law, each party will keep confidential, and will cause its
representatives to
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keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date
hereof in connection with the entering into of this Agreement) unless such
information (i) was already known to such party, (ii) becomes available to such
party from other sources not known by such party to be bound by a
confidentiality obligation, (iii) is disclosed with the prior written approval
of the party to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto to be returned to the party which furnished the same. No
investigation by either party of the business and affairs of the other shall
affect or be deemed to modify or waive any representation, warranty, covenant
or agreement in this Agreement, or the conditions to either party's obligation
to consummate the transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the
Effective Time, each party shall promptly furnish the other with copies of all
monthly and other interim financial statements produced in the ordinary course
of business as the same shall become available.
6.06 Acquisition Proposals. Mason agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal. It shall immediately cease and cause to
be terminated any activities, discussions or negotiations conducted prior to
the date of this Agreement with any parties other than United with respect to
any of the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal.
Mason shall promptly (within 24 hours) advise United following the receipt by
Mason of any Acquisition Proposal and the substance thereof (including the
identity of the person making such Acquisition Proposal), and advise United of
any developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07 Affiliate Agreements. (f) Not later than the 15th day prior to
the mailing of the Proxy Statement, (i) United shall deliver to Mason a
schedule of each person that, to the best of its knowledge, is or is reasonably
likely to be, as of the date of the United Meeting, deemed to be an "affiliate"
of United (each, a "United Affiliate") as that term is used in SEC Accounting
Series Releases 130 and 135; and (ii) Mason shall deliver to United a schedule
of each person that, to the best of its knowledge, is or is reasonably likely
to be, as of the date of the Mason Meeting, deemed to be an "affiliate" of
Mason (each, a "Mason Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Each of Mason and United shall use its respective reasonable best
efforts to cause each person who may be deemed to be a Mason Affiliate or a
United Affiliate, as the case may
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be, to execute and deliver to Mason and United on or before the date of mailing
of the Proxy Statement an agreement in the form attached hereto as Exhibit B or
Exhibit C, respectively.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable
Takeover Law, as now or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Mason shall,
consistent with generally accepted accounting principles and on a basis
mutually satisfactory to it and United, modify and change its loan, litigation
and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of United; provided, however, that Mason shall not be
obligated to take any such action pursuant to this Section 6.09 unless and
until United acknowledges that all conditions to its obligation to consummate
the Merger have been satisfied and certifies to Mason that United's
representations and warranties, subject to Section 5.02, are true and correct
as of such date and that United is otherwise material in compliance with this
Agreement. Mason's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 6.09.
6.10 NASDAQ Listing. To the extent so required, United agrees to use
its reasonable best efforts to list, prior to the Effective Date, on the
NASDAQ, subject to official notice of issuance, the shares of United Common
Stock to be issued to the holders of Mason Common Stock in the Merger.
6.11 Regulatory Applications. (g) United and Mason and their
respective Subsidiaries shall cooperate and use their respective reasonable
best efforts to prepare all documentation, to effect all filings and to obtain
all permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of United and Mason shall have the right to review in
advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to, all material written information submitted to any third party
or any Governmental Authority in connection with the transactions contemplated
by this Agreement. In exercising the foregoing right, each of the parties
hereto agrees to act reasonably and as promptly as practicable. Each party
hereto agrees that it will consult with the other party hereto with respect to
the obtaining of all material permits, consents, approvals and authorizations
of all third parties and Governmental Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party will
keep the other party apprised of the status of material matters relating to
completion of the transactions contemplated hereby.
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(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 Indemnification. (h) Following the Effective Date and for a
period of six years thereafter, United shall indemnify, defend and hold
harmless the present directors, officers and employees of Mason and its
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that Mason
is permitted to indemnify (and advance expenses to) its directors and officers
under the laws of the Commonwealth of Virginia, the Mason Certificate and the
Mason By-Laws as in effect on the date hereof; provided that any determination
required to be made with respect to whether an officer's, director's or
employee's conduct complies with the standards set forth under Virginia law,
the Mason Certificate and the Mason By-Laws shall be made by independent
counsel (which shall not be counsel that provides material services to United)
selected by United and reasonably acceptable to such officer or director.
(b) For a period of four years from the Effective Time, United shall
use its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of Mason or any of its Subsidiaries (determined as of
the Effective Time) (as opposed to Mason) with respect to claims against such
directors and officers arising from facts or events which occurred before the
Effective Time, which insurance shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that
coverage currently provided by Mason; provided, however, that in no event shall
United be required to expend more than 200 percent of the current amount
expended by Mason (the "Insurance Amount") to maintain or procure such
directors and officers insurance coverage; provided, further, that if United is
unable to maintain or obtain the insurance called for by this Section 6.12(b),
United shall use its reasonable best efforts to obtain as much comparable
insurance as is available for the Insurance Amount; provided, further, that
officers and directors of Mason or any Subsidiary may be required to make
application and provide customary representations and warranties to United's
insurance carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify United thereof; provided
that the failure so to notify shall not affect the obligations of United under
Section 6.12(a) unless and to the extent that United is actually prejudiced as
a result of such failure.
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(d) If United or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or
surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of United shall
assume the obligations set forth in this Section 6.12.
6.13 Benefit Plans. It is the intention of United that within a
reasonable period of time following the Effective Time (a) it will provide
employees of the Surviving Corporation with employee benefit plans
substantially similar in the aggregate to those provided to similarly situated
employees of United, (b) any such employees will receive credit for years of
service with Mason or any of its Subsidiaries prior to the Effective Time for
the purpose of eligibility and vesting and (c) United shall cause any and all
pre-existing condition limitations (to the extent such limitations did not
apply to a pre-existing condition under the Compensation and Benefit Plans) and
eligibility waiting periods under group health plans to be waived with respect
to such participants and their eligible dependents.
6.14 Notification of Certain Matters. Each of Mason and United shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach
of any of its representations, warranties, covenants or agreements contained
herein.
6.15 Directors and Officers. (a) United agrees to cause five members
of the Mason Board on the date hereof (selected by United after consultation
with Mason), including Bernard J. Clineburg, who are still members of the Mason
Board immediately prior to the Effective Time and willing and eligible to serve
to be elected or appointed as a director of United at the Effective Time and
shall cause Mr. 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.
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6.18 Mason Fee. If (a) the United Board shall have failed to make
its recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any respect
to the interests of Mason, (b) United shall be in material and willful breach
of any of its covenants contained in this Agreement such that Mason shall be
entitled to terminate the Merger Agreement pursuant to Section 8.01(b) or (c)
the stockholders of United do not approve this Agreement at the United Meeting,
in each case after there has been proposed by a third party a United
Acquisition Transaction (the "Proposal"), then, in any such event, upon the
actual consummation of a United Acquisition Transaction with such third party
within 18 months after the Proposal, United shall pay Mason a fee of
$9,000,000.
Notwithstanding anything to the contrary contained herein, the fee
provided for in this Section 6.18 shall not be payable if United has
terminated, or has or had the right to terminate, the Merger Agreement pursuant
to Section 8.01(b), 8.01(d)(ii) as a result of the Mason stockholders not
approving this Agreement or Section 8.01(e).
For purposes of the foregoing, "United Acquisition Transaction" shall
have the same meaning as the term "Acquisition Transaction" in the Stock Option
Agreement except that the term "Issuer" therein shall refer to and mean United
and the percentage referred to in clause (z) of the second sentence shall be
25%.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of United and Mason to consummate the Merger is
subject to the fulfillment or written waiver by United and Mason prior to the
Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the stockholders of Mason and
duly adopted by the requisite vote of the stockholders of United and the
Articles Amendment and any required approvals in connection with the Mason
Stock Options shall have been duly adopted by the requisite vote of the
stockholders of United.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
(i) any conditions, restrictions or requirements which the United Board
reasonably determines would either before or after the Effective Time have
a Material Adverse Effect on the Surviving Corporation and its Subsidiaries
taken as a whole or (ii) any conditions, restrictions or requirements that
are not customary and usual for approvals of
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such type and which the United Board reasonably determines would either
before or after the Effective Date be unduly burdensome.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) Blue Sky Approvals. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of United Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) Listing. To the extent required, the shares of United Common
Stock to be issued in the Merger shall have been approved for listing on
the NASDAQ, subject to official notice of issuance.
(g) Articles Amendment. The Articles Amendment shall have been
filed and effective under the WVCA.
(h) Dissenters. Holders of not more than 10% of the United Common
Stock shall have elected to exercise dissenters or appraisal rights under
the WVCA.
7.02 Conditions to Obligation of Mason. The obligation of Mason to
consummate the Merger is also subject to the fulfillment or written waiver by
Mason prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of United set forth in this Agreement shall be true and correct,
subject to Section 5.02, as of the date of this Agreement and as of the
Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct as of such
date), and Mason shall have received a certificate, dated the Effective
Date, signed on behalf of United by the Chief Executive Officer and the
Chief Financial Officer of United to such effect.
(b) Performance of Obligations of United. United shall have
performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Effective Time, and Mason
shall have received a certificate, dated the Effective Date,
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signed on behalf of United by the Chief Executive Officer and the Chief
Financial Officer of United to such effect.
(c) Opinion of Mason's Counsel. Mason shall have received an
opinion of Silver, Freedman & Taff, L.L.P. counsel to Mason, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, (i) the Merger constitutes a
"reorganization" within the meaning of Section 368 of the Code and (ii) no
gain or loss will be recognized by stockholders of Mason who receive shares
of United Common Stock in exchange for shares of Mason Common Stock, except
that gain or loss may be recognized as to cash received in lieu of
fractional share interests. In rendering its opinion, Silver, Freedman &
Taff, L.L.P. may require and rely upon representations contained in
letters from Mason and others.
(d) Accounting Treatment. Mason shall have received from Ernst &
Young LLP, Mason's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
7.03 Conditions to Obligation of United. The obligation of United to
consummate the Merger is also subject to the fulfillment or written waiver by
United prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Mason set forth in this Agreement shall be true and correct,
subject to Section 5.02, as of the date of this Agreement and as of the
Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct as of such
date) and United shall have received a certificate, dated the Effective
Date, signed on behalf of Mason by the Chief Executive Officer and the
Chief Financial Officer of Mason to such effect.
(b) Performance of Obligations of Mason. Mason shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and United shall
have received a certificate, dated the Effective Date, signed on behalf of
Mason by the Chief Executive Officer and the Chief Financial Officer of
Mason to such effect.
(c) Opinion of United's Counsel. United shall have received an
opinion of Sullivan & Cromwell, special counsel to United, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from United and others.
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(d) Accounting Treatment. United shall have received from Ernst &
Young LLP, United's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Acquisition may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of United and Mason, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by United or
Mason, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein (subject to
the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the Effective Time, by United or
Mason, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Acquisition is not
consummated by July 15, 1998, except to the extent that the failure of the
Acquisition then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate pursuant to
this Section 8.01(c).
(d) No Approval. By Mason or United, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) any stockholder approval required by Section
7.01(a) herein is not obtained at the Mason Meeting or the United Meeting.
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(e) Failure to Recommend, Etc. At any time prior to the Mason
Meeting, by United if the Mason Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of United; or at any time prior to the United
Meeting, by Mason, if the United Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Mason.
(f) Failure to Execute and Deliver Stock Option Agreement. At any
time prior to September 13, 1997, by United if Mason shall not have
executed and delivered the Stock Option Agreement to United.
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
this Article VIII, no party to this Agreement shall have any liability or
further obligation to any other party hereunder except (i) as set forth in
Section 9.01 and (ii) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement giving rise to such
termination.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Section 6.12, 6.13, 6.15, 6.17 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.04,
6.05(b), 6.18, 8.02, and this Article IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision
of this Agreement may be (i) waived by the party benefitted by the provision,
or (ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that (A)
after the Mason Meeting, this Agreement may not be amended if it would violate
the VSCA and (B) after the United Meeting, this Agreement may not be amended if
it would violate the WVCA.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of West Virginia
applicable to contracts made and to be performed entirely within such State
(except to the extent that mandatory provisions of Federal law or of the VSCA
are applicable).
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<PAGE> 44
9.05 Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby,
except that printing expenses and SEC fees shall be shared equally between
Mason and United.
9.06 Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if
personally delivered, telecopied (with confirmation) or mailed by registered or
certified mail (return receipt requested) to such party at its address set
forth below or such other address as such party may specify by notice to the
parties hereto.
If to Mason, to:
George Mason Bankshares, Inc.
1185 Main Street
Fairfax, VA 22030
Facsimile: (703) 246-0157
Attn: Bernard H. Clineburg,
Chief Executive Officer
James Consagra,
Chief Financial Officer
With a copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Suite 700
Washington, D.C. 20005-3934
Facsimile: (202) 682-0354
Attn: Barry P. Taff, P.C.
Christopher R. Kelly, P.C.
If to United, to:
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Attn: Richard M. Adams,
Chairman of the Board and Chief Executive Officer
Steven Wilson
Chief Financial Officer
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<PAGE> 45
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Facsimile: (212) 558-3588
Attn: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
9.07 Entire Understanding; No Third Party Beneficiaries. This
Agreement and any Stock Option Agreement entered into represent the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made (other than any such Stock Option
Agreement). Except for Section 6.12, nothing in this Agreement expressed or
implied, is intended to confer upon any person, other than the parties hereto
or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." No provision
of this Agreement shall be construed to require Mason, United or any of their
respective Subsidiaries, affiliates or directors to take any action which would
violate applicable law (whether statutory or common law), rule or regulation.
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<PAGE> 46
* * *
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
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<PAGE> 1
EXHIBIT 2.2
EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 11, 1997, between United
Bankshares, Inc., a West Virginia corporation ("Grantee"), and George Mason
Bankshares, Inc., a Virginia corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Grantee to continue to
pursue the transactions contemplated by the Merger Agreement, Issuer has agreed
to grant Grantee the Option (as hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 1,018,000 fully paid and nonassessable shares of the common stock,
par value $1.11 per share, of Issuer ("Common Stock") at a price per share
equal to the average of last reported sale prices per share of Common Stock as
reported on the NASDAQ National Market System on September 4 and 5, 1997;
provided, however, that in the event Issuer issues or agrees to issue any
shares of Common Stock (other than shares of Common Stock issued pursuant to
stock options granted pursuant to any employee benefit plan prior to the date
hereof) at a price less than such average price per share (as adjusted pursuant
to subsection (b) of Section 5), such price shall be equal to such lesser price
(such price, as adjusted if applicable, the "Option Price"); provided, further,
that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock.
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, such number together
with any shares of Common Stock previously issued pursuant hereto, equals 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued
<PAGE> 2
pursuant to the Option. Nothing contained in this Section l(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer to issue shares in breach
any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2)
within six (6) months following such Subsequent Triggering Event (or such later
period as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of
the Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e)
of the Merger Agreement (but only if the breach giving rise to the termination
was willful) (each, a "Listed Termination"); or (iii) the passage of eighteen
(18) months (or such longer period as provided in Section 10) after termination
of the Merger Agreement if such termination follows the occurrence of an
Initial Triggering Event or is a Listed Termination. The term "Holder" shall
mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, (i) the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof as a result
of a material breach and (ii) this Agreement shall automatically terminate upon
the proper termination of the Merger Agreement (x) by Issuer pursuant to
Section 8.01(b) thereof as a result of the material breach by Grantee of its
covenants or agreements contained in the Merger Agreement, (y) by Issuer or
Grantee pursuant to Section 8.01(d)(ii) if Grantee's shareholders do not
approve the Merger Agreement at the meeting, or (z) by Issuer or Grantee
pursuant to Section 8.01(d)(i).
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Significant Subsidiary (as defined in Rule 1-02
of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) (an "Issuer Subsidiary"), without having received Grantee's
prior written consent, shall have entered into an agreement to engage in
an Acquisition Transaction (as hereinafter defined) with any person (the
term "person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a
"Grantee Subsidiary") or the Board of Directors of Issuer (the "Issuer
Board") shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction other than as contemplated by the
Merger Agreement. For purposes of this Agreement, (a) "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary (other than
mergers, consolidations or similar transactions (i) involving solely
Issuer and/or one or more wholly-owned (except for directors'
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<PAGE> 3
qualifying shares and a de minimis number of other shares) Subsidiaries
of the Issuer, provided, any such transaction is not entered into in
violation of the terms of the Merger Agreement or (ii) in which the
shareholders of Issuer immediately prior to the completion of such
transaction own at least 50% of the Common Stock of the Issuer (or the
resulting or surviving entity in such transaction) immediately after
completion of such transaction, provided any such transaction is not
entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of
the assets or deposits of Issuer or any Issuer Subsidiary, or (z) a
purchase or other acquisition (including by way of merger, consolidation,
share exchange or otherwise) of securities representing 10% or more of
the voting power of Issuer or any Issuer Subsidiary and (b) "Subsidiary"
shall have the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or
shall have been cancelled prior to termination of the Merger Agreement
if, prior to such meeting (or if such meeting shall not have been held or
shall have been cancelled, prior to such termination), it shall have been
publicly announced that any person (other than Grantee or any of its
Subsidiaries) shall have made, or publicly disclosed an intention to
make, a proposal to engage in an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, or Issuer
or any Issuer Subsidiary shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a proposal to Issuer or its shareholders to engage in an
Acquisition Transaction and such proposal shall have been publicly
announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy
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<PAGE> 4
statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an
exchange offer);
(vii) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of engaging
in an Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or other federal or
state bank regulatory or antitrust authority, which application or notice
has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) of the second sentence thereof shall
be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing
Date"); provided, that if prior notification to or approval of the Federal
Reserve Board or any other regulatory or antitrust agency is required in
connection with such purchase, the Holder shall promptly file the required
notice or application for approval, shall promptly notify Issuer of such
filing, and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date
on which any required notification periods have expired or been terminated or
such approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto.
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<PAGE> 5
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and
(ii) present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the
Holder from exercising the Option .
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of ________,
199_, between the registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as amended. A
copy of such agreement is on file at the principal office of Issuer and
will be provided to the holder hereof without charge upon receipt by
Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the
opinion of Counsel to the Holder; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may
be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed subject to the receipt of any necessary regulatory
approvals to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and
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<PAGE> 6
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder
or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
of this Agreement at the principal office of Issuer, for other Agreements
providing for Options of different denominations entitling the holder thereof
to purchase, on the same terms and subject to the same conditions as are set
forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Agreements and related Options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5.
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<PAGE> 7
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in
Section 10) of such Subsequent Triggering Event (whether on its own behalf or
on behalf of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly prepare, file and
keep current a registration statement under the 1933 Act covering any shares
issued and issuable pursuant to this Option and shall use its reasonable best
efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee.
Issuer will use its reasonable best efforts to cause such registration
statement promptly to become effective and then to remain effective for such
period not in excess of 180 days from the day such registration statement first
becomes effective or such shorter time as may be reasonably necessary to effect
such sales or other dispositions. Grantee shall have the right to demand two
such registrations. The Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer's attorneys' fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers' fees
and the fees and disbursements of Grantee's counsel related thereto). The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the offer and sale of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the
number of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and
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<PAGE> 8
Issuer in the aggregate; and provided further, however, that if such reduction
occurs, then Issuer shall file a registration statement for the balance as
promptly as practicable thereafter as to which no reduction pursuant to this
Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to
be filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for Issuer.
Upon receiving any request under this Section 6 from any Holder, Issuer agrees
to send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained
herein, in no event shall the number of registrations that Issuer is obligated
to effect be increased by reason of the fact that there shall be more than one
Holder as a result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term
"market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender or exchange offer therefor has been made, (ii)
the price per share of Common Stock to be paid by any third party pursuant to
an agreement with Issuer, (iii) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale of all or any substantial part of Issuer's assets or
deposits, the sum of the net price paid in such sale for such assets or
deposits and the current market value of the remaining net assets of Issuer as
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be,
and reasonably acceptable to Issuer.
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<PAGE> 9
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of
the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within five
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 7 is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively, in full
(and Issuer hereby undertakes to use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option and/or the Option
Shares whether in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Repurchase Price and/or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the
denominator of which is the Option Repurchase Price, and/or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from repurchasing.
If an Exercise Termination Event shall have occurred prior to the date of the
notice by Issuer described in the first sentence of this subsection (c), or
shall be scheduled to occur at any time before the expiration of a period
ending on the thirtieth day after such date, the Holder shall nonetheless have
the right to exercise the Option until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
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(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or a Grantee Subsidiary, or engage in a plan of
exchange with any person, other than Grantee or a Grantee Subsidiary and Issuer
shall not be the continuing or surviving corporation of such consolidation or
merger or the acquirer in such plan of exchange, (ii) to permit any person,
other than Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired
by Issuer in a plan of exchange and Issuer shall be the continuing or surviving
or acquiring corporation, but, in connection with such merger or plan of
exchange, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger or plan of exchange represent less than 50% of the outstanding shares
and share equivalents of the merged or acquiring company, or (iii) to sell or
otherwise transfer all or a substantial part of its or the Issuer Subsidiary's
assets or deposits to any person, other than Grantee or a Grantee Subsidiary,
then, and in each such case, the agreement governing such transaction shall
make proper provision so that the Option shall, upon the consummation of any
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at the
election of the Holder, of either (x) the Acquiring Corporation (as hereinafter
defined) or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits
(or the assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for one year immediately preceding
the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of Substitute Common Stock on the
day preceding such consolidation, merger or sale; provided that if Issuer
is the
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issuer of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person,
as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option
shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement (after
giving effect for such purpose to the provisions of Section 9), which agreement
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised, and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the "Substitute Shares"),
the Substitute
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<PAGE> 12
Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement)
and/or certificates for Substitute Shares accompanied by a written notice or
notices stating that the Substitute Option Holder or the Substitute Share
Owner, as the case may be, elects to require the Substitute Option Issuer to
repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable and in any
event within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing the Substitute Option and/or the Substitute Shares in part or
in full, the Substitute Option Issuer shall immediately so notify the
Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase
Price, respectively, which it is no longer prohibited from delivering, within
five (5) business days after the date on which the Substitute Option Issuer is
no longer so prohibited; provided, however, that if the Substitute Option
Issuer is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or regulation,
or as a consequence of administrative policy, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in full (and the Substitute Option Issuer shall use its
reasonable best efforts to receive all required regulatory and legal approvals
as promptly as practicable in order to accomplish such repurchase), the
Substitute Option Holder and/or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole or
to the extent of prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option Holder or
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver,
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<PAGE> 13
as appropriate, either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder to purchase that
number of shares of the Substitute Common Stock obtained by multiplying the
number of shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after such date, the
Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights (for so long as the Holder, Owner, Substitute
Option Holder or Substitute Share Owner, as the case may be, is using
commercially reasonable efforts to obtain such regulatory approvals), and for
the expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of
such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in
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whole or in part its rights and obligations hereunder; provided, however, that
until the date 15 days following the date on which the Federal Reserve Board
has approved an application by Grantee to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire the shares
issuable hereunder, but Grantee shall not be obligated to apply to state
banking authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior
to the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option
Shares issued to and then owned by Grantee) to Issuer in exchange for a cash
fee equal to the Surrender Price; provided, however, that Grantee may not
exercise its rights pursuant to this Section 14 if Issuer has repurchased the
Option (or any portion thereof) or any Option Shares pursuant to Section 7.
The "Surrender Price" shall be equal to $9.0 million (i) plus, if applicable,
Grantee's purchase price with respect to any Option Shares and (ii) minus, if
applicable, the excess of (B) the net cash amounts, if any, received by Grantee
pursuant to the arms' length sale of Option Shares (or any other securities
into which such Option Shares were converted or exchanged) to any unaffiliated
party, over (B) Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice stating (i) that Grantee
elects to relinquish the Option and Option Shares, if any, in accordance with
the provisions of this Section 14 and (ii) the Surrender Price. The Surrender
Price shall be payable in immediately available funds on or before the second
business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from
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<PAGE> 15
paying to Grantee the Surrender Price in full, (i) Issuer shall (A) use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to make
such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions
with any relevant regulatory or other third party reasonably related to the
same and (ii) Grantee may revoke such notice of surrender by delivery of a
notice of revocation to Issuer and, upon delivery of such notice of revocation,
the Exercise Termination Date shall be extended to a date six months from the
date on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 14(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section l(a) hereof (as adjusted pursuant to Section
l(b) or Section 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of West Virginia, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law or of the VSCA are applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions
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contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assignees. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assignees, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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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
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<PAGE> 1
EXHIBIT 99
[GEORGE MASON BANKSHARES, INC. PRESS RELEASE]
GEORGE MASON BANKSHARES, INC.
AND
UNITED BANKSHARES, INC.
ANNOUNCE MERGER
George Mason Bankshares, Inc., (GMBS), the parent company of George
Mason Bank in Fairfax, Virginia, and United Bankshares, Inc. (UBSI), a $2.5
billion bank holding company, headquartered in West Virginia, announced the
signing of a definitive agreement for a merger between the two companies.
George Mason has $963 million in assets and 22 full service offices located
throughout Northern Virginia, Washington, D.C., and Montgomery County,
Maryland. United becomes the largest banking company headquartered in West
Virginia based on pro forma market capitalization.
The agreement will be structured as a pooling of interests and will
provide for a tax-free exchange of 0.85 share of United common stock for each
common share of George Mason. Based on United's September 10th closing stock
price, the transaction would have a value of approximately $38.68 per share, or
an aggregate consideration of $215 million based on George Mason's 5.55 million
common shares and options outstanding.
The dividend to George Mason shareholders based upon United's current
dividend would be $1.15 or a 105% increase.
George Mason President and Chief Executive Officer, Bernard H.
Clineburg said, "George Mason is joining a shareholder-driven company with a
strong track record of performance. We are excited to be part of the United
team. This strategic alliance with another community-oriented
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financial institution will allow us to continue to serve the Washington
Metropolitan area with the same personalized service and quick response that
George Mason Bank customers have come to expect." Clineburg will become the
President of United Bankshares, Chairman and CEO of United's Virginia banking
entity and will serve on the Executive Committee of the holding company Board.
Also George Mason will be represented by five members on the United Bankshares
Board of Directors.
Richard M. Adams, Chairman and Chief Executive Officer of United,
said, "George Mason's franchise, along with United's recent acquisition of
First Patriot Bankshares Corporation, significantly enhances United market
share. United will be a major bank in northern Virginia with assets over $1.3
billion. We expect the transaction to be nondilutive to earnings per share and
should significantly enhance our franchise value."
Following completion of the proposed merger with George Mason, United
will have consolidated assets of over $3.5 billion with 74 full service offices
in West Virginia, Virginia, Maryland and Washington, D.C. As part of the
merger, George Mason Bank, the subsidiary bank of George Mason, will be merged
with United Bank, United's Virginia banking subsidiary. The proposed merger is
expected to close by the first quarter of 1998.
United Bankshares and George Mason stock is traded on the NASDAQ
(National Association of Securities Dealers Quotation System) National Market
System under quotation symbols "UBSI" and "GMBS", respectively.
###
