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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
February 18, 1998
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(Date of earliest event reported)
Fed One Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-25348 55-0736264
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
21 Twelfth Street, Wheeling, West 26003-3295
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(Address of principal executive offices) (Zip Code)
(304) 234-1100
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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ITEM 5. OTHER EVENTS
On February 18, 1998, Fed One Bancorp, Inc. (the "Company") and United
Bankshares, Inc. ("United") announced that they had entered into an Agreement
and Plan of Merger, dated as of February 18, 1998 (the "Agreement"), which sets
forth the terms and conditions pursuant to which the Company would be merged
with and into a wholly-owned subsidiary of United (the "Merger"). The Agreement
provides, among other things, that as a result of the Merger, each outstanding
share of common stock of the Company (subject to certain exceptions) will be
converted into the right to receive 0.75 (subject to adjustment as provided in
the Agreement, the "Exchange Ratio") of a newly-issued share of United common
stock. The Exchange Ratio is subject to adjustment to prevent dilution as a
result of stock dividends, stock splits and the like, including without
limitation a proposed 100% stock dividend declared by United and payable March
27, 1998 to shareholders of record of United as of March 13, 1998, which will
result in an adjustment in the Exchange Ratio to 1.50 upon effectiveness of such
stock dividend. The Exchange Ratio also is subject to potential adjustment at
the election of United in the event that the Company elects to terminate the
Agreement because the average price of the United common stock during a
specified period falls below $38.94 and this decline in value is 20% greater
than the percentage decline in the weighted average price of the common stocks
of a group of similar financial institutions.
It is anticipated that the Merger will constitute a tax-free reorganization
under the Internal Revenue Code and be accounted for as a "pooling-of-interests"
under generally accepted accounting principles.
Consummation of the Merger is subject to a number of conditions, including,
but not limited to, (i) the approval of the Agreement by the stockholders of the
Company and the approval of an amendment to United's articles of incorporation
which increases United's authorized common stock by the stockholders of United
and (ii) the receipt of all required regulatory approvals.
The Agreement also provides for the merger of Fed One Bank, the Company's
banking subsidiary with and into United National Bank, United's lead banking
subsidiary.
In connection with the Agreement, the Company and United entered into a
Stock Option Agreement pursuant to which the Company granted United an option to
purchase up to 19.9% of the Company's Common Stock at a purchase price of $33.50
per share upon the occurrence of certain events, as set forth in the Stock
Option Agreement.
In connection with the Agreement, United and Alan E. Groover, Chairman,
President and Chief Executive Officer of the Company, entered into a
Consulting Agreement which generally provides, among other things, that Mr.
Groover shall provide consulting services to United during the 18 months
following the Merger and that United shall (i) pay to Mr. Groover
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$1,000 per month during such period and (ii) permit Mr. Groover and his
spouse to participate in all group insurance, life insurance, health and
accident, and disability plans, programs and arrangements offered by United
to its executive employees and their spouses for a period commencing on the
date that United is no longer entitled to provide employee benefits to Mr.
Groover pursuant to his existing employment agreements with the Company and
the Bank and ending on the earlier of Mr. Groover's 65th birthday and the
date of Mr. Groover's full-time employment by an employer (provided that Mr.
Groover is entitled to and accepts, under the terms of such employment,
benefits substantially similar to those to be provided pursuant to the
Consulting Agreement).
The press release issued by the Company and United with respect to the
announcement of the Agreement is included as Exhibit 99.1 hereto.
The foregoing descriptions of and references to all of the
above-mentioned agreements and documents are qualified in their entirety by
reference to the complete texts of the agreements and documents which are
filed as exhibits to this Current Report on Form 8-K.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits:
2.1 Agreement and Plan of Merger, dated as of February 18, 1998,
between the Company and United
2.2 Stock Option Agreement, dated as of February 18, 1998,
between the Company and United
2.3 Consulting Agreement, dated as of February 18, 1998, between
the Company and Alan E. Groover
99.1 Press Release, dated February 18, 1998
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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 thereunto duly authorized.
FED ONE BANCORP, INC.
Date: February 19, 1998 By: /s/ Alan E. Groover
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Alan E. Groover
Chairman, President and Chief Executive
Officer
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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
dated as of February 18, 1998
by and between
UNITED BANKSHARES, INC.
and
FED ONE BANCORP, INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE I
Certain Definitions
1.01 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
The Merger
2.01 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.02 ARTICLES AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.03 EFFECTIVE DATE AND EFFECTIVE TIME . . . . . . . . . . . . . . . . . . 8
2.04 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
Consideration; Exchange Procedures
3.01 MERGER CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . . . . 8
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS . . . . . . . . . . . . . . . 9
3.03 FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.04 EXCHANGE PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.05 ANTI-DILUTION PROVISIONS. . . . . . . . . . . . . . . . . . . . . . .10
3.06 OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE IV
Actions Pending Acquisition
4.01 FOREBEARANCES OF FED ONE. . . . . . . . . . . . . . . . . . . . . . .11
4.02 FOREBEARANCES OF UNITED.. . . . . . . . . . . . . . . . . . . . . . .14
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ARTICLE V
Representations and Warranties
5.01 DISCLOSURE SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . .14
5.02 STANDARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.03 REPRESENTATIONS AND WARRANTIES OF FED ONE . . . . . . . . . . . . . .15
5.04 REPRESENTATIONS AND WARRANTIES OF UNITED. . . . . . . . . . . . . . .25
ARTICLE VI
Covenants
6.01 REASONABLE BEST EFFORTS . . . . . . . . . . . . . . . . . . . . . . .32
6.02 STOCKHOLDER APPROVALS . . . . . . . . . . . . . . . . . . . . . . . .32
6.03 REGISTRATION STATEMENT. . . . . . . . . . . . . . . . . . . . . . . .33
6.04 PRESS RELEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . .34
6.05 ACCESS; INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .34
6.06 ACQUISITION PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . .35
6.07 AFFILIATE AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . .35
6.08 TAKEOVER LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
6.09 CERTAIN POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . .36
6.10 NASDAQ LISTING. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
6.11 REGULATORY APPLICATIONS . . . . . . . . . . . . . . . . . . . . . . .36
6.12 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . .37
6.13 BENEFIT PLANS AND ARRANGEMENTS. . . . . . . . . . . . . . . . . . . .38
6.14 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . . . . . .39
6.15 DIVIDEND COORDINATION . . . . . . . . . . . . . . . . . . . . . . . .40
6.16 DIRECTORSHIP OF UNITED AND ADVISORY BOARD OF DIRECTORS. . . . . . . .40
6.17 FED ONE STOCK ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . .40
6.18 BANK MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
ARTICLE VII
Conditions to Consummation of the Merger
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. . . . . .41
7.02 CONDITIONS TO OBLIGATION OF FED ONE . . . . . . . . . . . . . . . . .42
7.03 CONDITIONS TO OBLIGATION OF UNITED. . . . . . . . . . . . . . . . . .43
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ARTICLE VIII
Termination
8.01 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
8.02 EFFECT OF TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . .47
ARTICLE IX
Miscellaneous
9.01 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
9.02 WAIVER; AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . .47
9.03 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
9.04 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
9.05 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
9.06 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. . . . . . . . . .49
9.08 INTERPRETATION; EFFECT; ASSIGNMENT; SUCCESSORS. . . . . . . . . . . .49
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Fed One Affiliate Agreement
EXHIBIT C Form of United Affiliate Agreement
ANNEX A Form of Supplement for Merger Sub
Accession to Merger Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of February 18, 1998 (this
"AGREEMENT"), by and between United Bankshares, Inc. ("UNITED") and Fed One
Bancorp, Inc. ("FED ONE").
RECITALS
A. UNITED. United is a West Virginia corporation, having
its principal place of business in Charleston, West Virginia.
B. FED ONE. Fed One is a Delaware corporation, having its
principal place of business in Wheeling, West Virginia.
C. STOCK OPTION AGREEMENT. As a condition and an inducement
to United's entering into this Agreement , Fed One has granted to United an
option pursuant to a stock option agreement, in substantially the form of
EXHIBIT A.
D. INTENTIONS OF THE PARTIES. It is the intention of the
parties to this Agreement that the business combination contemplated hereby
be accounted for under the "pooling-of-interests" accounting method and
treated as a "reorganization" under Section 368 of the Internal Revenue Code
of 1986 (the "CODE").
E. BOARD ACTION. The respective Boards of Directors of each
of United and Fed One have determined that it is in the best interests of
their respective companies and their stockholders to consummate the strategic
business combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving Fed One
or any of its Subsidiaries or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the
assets or deposits of, Fed One or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
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"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"ARTICLES AMENDMENT" has the meaning set forth in Section 2.02.
"BANK MERGER" has the meaning set forth in Section 6.18.
"CLOSING" has the meaning set forth in Section 2.04.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COSTS" has the meaning set forth in Section 6.12(a).
"DELAWARE SECRETARY" means the Office of the Secretary of State of the
State of Delaware.
"DGCL" means the Delaware General Corporation Law.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"EFFECTIVE TIME" means the effective time of the Merger, as provided
for in Section 2.03.
"ENVIRONMENTAL LAWS" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water
Act, the Federal Clean Air Act, and the Occupational Safety and Health Act,
each as amended, regulations promulgated thereunder, and state
counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01.
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"FED ONE" has the meaning set forth in the preamble to this Agreement.
"FED ONE AFFILIATE" has the meaning set forth in Section 6.07(a).
"FED ONE BANK" means Fed One Bank, a federal savings bank.
"FED ONE BOARD" means the Board of Directors of Fed One.
"FED ONE BYLAWS" means the Bylaws of Fed One.
"FED ONE CERTIFICATE" means the Certificate of Incorporation of Fed
One.
"FED ONE COMMON STOCK" means the common stock, par value $0.10 per
share, of Fed One.
"FED ONE COMPENSATION AND BENEFIT PLANS" has the meaning set forth in
Section 5.03(m).
"FED ONE ESOP" means the Fed One Employee Stock Ownership Plan, as
amended.
"FED ONE MEETING" has the meaning set forth in Section 6.02.
"FED ONE PREFERRED STOCK" means the preferred stock, par value $0.10
per share, of Fed One.
"FED ONE STOCK" means, collectively, Fed One Common Stock and Fed One
Preferred Stock.
"FED ONE STOCK OPTION" has the meaning set forth in Section 3.06(a).
"FED ONE STOCK OPTION PLANS" means the following plans of Fed One:
the 1995 Stock Option Plan, the 1992 Stock Option Plan for Officers and
Employees and the 1992 Stock Option Plan for Outside Directors.
"FED ONE STOCK PLANS"means the following plans of Fed One: the Fed
One ESOP, the 1995 Recognition and Retention Plan and Trust, the 1992
Recognition and Retention Plan and Trust, the 1995 Stock Option Plan, the
1992 Stock Option Plan for Officers and Employees, the 1992 Stock Option
Plan for Outside Directors and the Dividend Reinvestment Plan.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
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"H-S-R ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE AMOUNT" has the meaning set forth in Section 6.12(b).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(t).
"IRS" means the Internal Revenue Service.
"LIEN" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"MATERIAL ADVERSE EFFECT" means, with respect to United or Fed One,
any effect that (i) is material and adverse to the financial position,
results of operations or business of United and its Subsidiaries taken as a
whole or Fed One and its Subsidiaries taken as a whole, respectively, or
(ii) would materially impair the ability of either United or Fed One to
perform its obligations under this Agreement or otherwise materially
threaten or materially impede the consummation of the Merger and the other
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that
Material Adverse Effect shall not be deemed to include the impact of (a)
changes in banking and similar laws of general applicability or
interpretations thereof by courts or Governmental Authorities, (b) changes
in generally accepted accounting principles or regulatory accounting
requirements applicable to banks or savings associations and their holding
companies generally, (c) actions or omissions of United or Fed One taken
with the prior written consent of Fed One and United, respectively, in
contemplation of the transaction contemplated hereby, (d) circumstances
affecting banks or savings associations or their holding companies
generally and (e) the effects of the Merger and compliance by either party
with the provisions of this Agreement on the financial position, results of
operations or business of such party and its Subsidiaries, or the other
party and its Subsidiaries, as the case may be.
"MERGER" has the meaning set forth in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 3.01.
"MERGER SUB" means UBC Holding Company, Inc., or one or more
corporations or limited liability companies to be organized under the corporate
laws of a state of the United States by United prior to the Effective Time;
provided that the laws of the state of incorporation thereof shall permit the
merger of corporations or limited liability companies organized thereunder with
a Delaware corporation.
"MULTIEMPLOYER PLAN" has the meaning set forth in Section 5.03(m).
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"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.
"STOCK OPTION AGREEMENT" has the meaning set forth in Recital C.
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"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 Fed One Stock held by Fed One or
any of its Subsidiaries or by United or any of its Subsidiaries, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted in good faith.
"UNITED" has the meaning set forth in the preamble to this Agreement.
"UNITED AFFILIATES" has the meaning set forth in Section 6.07(a).
"UNITED ARTICLES" means the Restated Articles of Incorporation of
United.
"UNITED BANK" means United National Bank, a national bank.
"UNITED BOARD" means the Board of Directors of United.
"UNITED COMMON STOCK" means the common stock, par value $2.50 per
share, of United.
"UNITED COMPENSATION AND BENEFIT PLANS" has the meaning set forth in
Section 5.04(m).
"UNITED MEETING" has the meaning set forth in Section 6.02.
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"UNITED STOCK DIVIDEND" means the 100% stock dividend declared by
United payable March 27, 1998 to shareholders of record of United as of
March 13, 1998, subject to approval of an amendment to the United Articles
at a special meeting of United's shareholders to be held on March 9, 1998.
"WEST VIRGINIA SECRETARY" means the Office of the Secretary of State
of the State of West Virginia.
"WVCA" means the West Virginia Corporation Act.
ARTICLE II
THE MERGER
2.1 THE MERGER. (a) Prior to the Effective Time, United shall
take any and all action necessary (i) to cause the Merger Sub to become a
party to this Agreement, to be evidenced by the execution by the Merger Sub
of a supplement to this Agreement in substantially the form of Annex A, and
delivery thereof to Fed One; and (ii) to cause the Merger Sub to take all
actions necessary or proper to comply with the obligations of United and the
Merger Sub to consummate the transactions contemplated hereby.
(b) At the Effective Time, Fed One shall merge with and into
Merger Sub (the "MERGER"), the separate corporate existence of Fed One shall
cease and Merger Sub shall survive and continue to be governed by the laws of
its state of incorporation (Merger Sub, as the surviving corporation in the
Merger, sometimes being referred to herein as the "SURVIVING CORPORATION").
United may at any time prior to the Effective Time (i) change the method of
effecting the combination with Fed One (including, without limitation, the
provisions of this Article II) or (ii) change the method of effecting, or not
consummate, the Bank Merger pursuant to Section 6.18, in each case if and to
the extent it deems such change to be necessary, appropriate or desirable;
PROVIDED, HOWEVER, that no such change shall (i) alter or change the amount
or kind of consideration to be issued to holders of Fed One Stock as provided
for in this Agreement (the "MERGER CONSIDERATION"), (ii) adversely affect the
tax treatment of Fed One's stockholders as a result of receiving the Merger
Consideration or the Merger qualifying for "pooling-of-interests" accounting
treatment or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement; and PROVIDED FURTHER, that
United shall provide Fed One written notice of such change.
(c) Subject to the satisfaction or waiver of the conditions
set forth in Article VII, the Merger shall become effective upon the
occurrence of the filing (i) in the office of the Delaware Secretary of a
certificate of merger in accordance with the DGCL and (ii) in the office of
the West Virginia Secretary of articles of merger in accordance with the WVCA
or
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such later date and time as may be set forth in such certificate of merger
and articles of merger. The Merger shall have the effects prescribed in the
DGCL and the WVCA.
2.2 ARTICLES AMENDMENT. At or prior to the Effective Time,
Article VI of the United Articles shall be amended to read as follows (the
"ARTICLES AMENDMENT"):
"VI. The amount of the authorized capital stock of the
corporation is $250,000,000 which shall be divided into 100,000,000
shares of a par value of $2.50 per share."
2.3 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the
satisfaction or waiver of the conditions set forth in Article VII (other than
the delivery of certificates, opinions and other instruments and documents to
be delivered at the Closing), the parties shall cause the effective date of
the Merger (the "EFFECTIVE DATE") to occur on (i) the fifth business day to
occur after the last of the conditions set forth in Article VII shall have
been satisfied or waived in accordance with the terms of this Agreement (or,
at the election of United, on the last business day of the month in which
such fifth business day occurs or, if such fifth business day occurs within
the last five business days of such month, on the last business day of the
succeeding month) or (ii) such other date to which the parties may agree in
writing. The time on the Effective Date when the Merger shall become
effective is referred to as the "EFFECTIVE TIME."
2.4 CLOSING. A closing of the Merger (the "CLOSING") shall take
place at such place, at such time and on such date as is determined by the
parties pursuant to Section 2.03 hereof. At the Closing, there shall be
delivered to United and Fed One the opinions, certificates and other
documents required to be delivered under Sections 7.02 and 7.03 hereof.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.1 MERGER CONSIDERATION. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) OUTSTANDING FED ONE COMMON STOCK. Each share, excluding
Treasury Stock, of Fed One Common Stock issued and outstanding immediately
prior to the Effective Time shall become and be converted into 0.75 of a
share of United Common Stock (subject to adjustment as set forth herein,
the "EXCHANGE RATIO"). The Exchange Ratio shall be subject to adjustment
as set forth in Sections 3.05 and 8.01(f).
(b) OUTSTANDING UNITED STOCK. Each share of United Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and unaffected by the Merger.
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(c) TREASURY SHARES. Each share of Fed One Common Stock held as
Treasury Stock immediately prior to the Effective Time shall be canceled
and retired at the Effective Time and no consideration shall be issued in
exchange therefor.
3.2 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective
Time, holders of Fed One Stock shall cease to be, and shall have no rights
as, stockholders of Fed One, other than to receive any dividend or other
distribution with respect to such Fed One Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock
transfer books of Fed One or the Surviving Corporation of shares of Fed One
Stock.
3.3 FRACTIONAL SHARES. Notwithstanding any other provision
hereof, no fractional shares of United Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, United shall pay to each holder of Fed One Common Stock who
would otherwise be entitled to a fractional share of United Common Stock
(after taking into account all Old Certificates delivered by such holder) an
amount in cash (without interest) determined by multiplying such fraction by
the average of the last sale prices of United Common Stock, as reported by
NASDAQ reporting system (as reported in THE WALL STREET JOURNAL or, if not
reported therein, in another authoritative source), for the five NASDAQ
trading days immediately preceding the Effective Date.
3.4 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 Fed One Common Stock ("OLD
CERTIFICATES"), for exchange in accordance with this Article III,
certificates representing the shares of United Common Stock ("NEW
CERTIFICATES") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record date
occurring after the Effective Date with respect thereto (without any interest
on any such cash, dividends or distributions), being hereinafter referred to
as the "EXCHANGE FUND") to be paid pursuant to this Article III in exchange
for outstanding shares of Fed One Common Stock.
(b) As promptly as practicable after the Effective Date,
United shall send or cause to be sent to each former holder of record of
shares of Fed One Common Stock immediately prior to the Effective Time
transmittal materials for use in exchanging such stockholder's Old
Certificates for the consideration set forth in this Article III. United
shall cause the New Certificates into which shares of a stockholder's Fed One
Common Stock are converted on the Effective Date and/or any check in respect
of any fractional share interests or dividends or distributions which such
person shall be entitled to receive to be delivered to such stockholder upon
delivery to the Exchange Agent of Old Certificates representing such shares
of Fed One Common Stock (or indemnity reasonably satisfactory to United and
the Exchange Agent, if any of such certificates are lost, stolen or
destroyed) owned by such stockholder. No interest will be paid on any such
cash to be paid in lieu of fractional share
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interests or in respect of dividends or distributions which any such person
shall be entitled to receive pursuant to this Article III upo
(c) Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to any former holder of Fed One Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to
United Common Stock with a record date occurring after the Effective Time
shall be paid to the holder of any unsurrendered Old Certificate representing
shares of Fed One Common Stock converted in the Merger into the right to
receive shares of such United Common Stock until the holder thereof shall be
entitled to receive New Certificates in exchange therefor in accordance with
the procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares
of United Common Stock such holder had the right to receive upon surrender of
the Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Fed One for six months after the Effective Time shall
be paid to United. Any stockholders of Fed One who have not theretofore
complied with this Article III shall thereafter look only to United for
payment of the shares of United Common Stock, cash in lieu of any fractional
shares and unpaid dividends and distributions on United Common Stock
deliverable in respect of each share of Fed One Common Stock such stockholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon.
3.5 ANTI-DILUTION PROVISIONS. In the event United changes (or a
record date for any such change occurs prior to the Effective Date) the
number of, or provides for the exchange of, shares of United Common Stock
issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect
to the outstanding United Common Stock and the record date therefor shall be
prior to the Effective Date, including without limitation pursuant to the
United Stock Dividend (which shall result in an adjustment of the Exchange
Ratio as of the date hereof to 1.5), the Exchange Ratio shall be
proportionately adjusted.
3.6 OPTIONS. (a) At the Effective Time, each outstanding option
to purchase shares of Fed One Common Stock under the Fed One Stock Option
Plans (each, a "FED ONE STOCK OPTION"), whether vested or unvested, shall be
converted into an option to acquire, on the same terms and conditions as were
applicable under such Fed One Stock Option, the number of shares of United
Common Stock equal to (a) the number of shares of Fed One Common Stock
subject to the Fed One Stock Option, multiplied by (b) the Exchange Ratio
(such product rounded to the nearest whole number) (a "REPLACEMENT OPTION"),
at an exercise price per share (rounded down to the nearest whole cent) equal
to (y) the per share exercise
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price pursuant to such Fed One Stock Option divided by the Exchange Ratio.
Notwithstanding the foregoing, each Fed One Stock Option which is intended to
be an "incentive stock option" (as defined in Section 422 of the Code) shall
be adjusted in accordance with the requirements of Section 424 of the Code.
Accordingly, with respect to "incentive stock options," fractional shares
shall be rounded down to the nearest whole number of shares and where
necessary the per share exercise price shall be rounded up to the nearest
cent. At or prior to the Effective Time, Fed One shall use its best efforts,
including using its reasonable best efforts to obtain any necessary consents
from optionees, with respect to the Fed One Stock Option Plans to permit the
replacement of the outstanding Fed One Stock Options by United pursuant to
this Section and to permit United to assume the Fed One Stock Option Plans.
Fed One shall further take all action necessary to amend the Fed One Stock
Option Plans to eliminate automatic grants or awards thereunder following the
Effective Time. At the Effective Time, United shall assume the Fed One Stock
Option Plans; PROVIDED, that such assumption shall be only in respect of the
Replacement Options and that United shall have no obligation with respect to
any awards under the Fed One Stock Option Plans other than the Replacement
Options and shall have no obligation to make any additional grants or awards
under such assumed Fed One Stock Option Plans.
(b) At all times after the Effective Time, United shall reserve
for issuance such number of shares of United Common Stock as necessary so as
to permit the exercise of options granted under the Fed One Stock Option
Plans in the manner contemplated by this Agreement and the instruments
pursuant to which such options were granted. United shall file with the SEC
a registration statement on an appropriate form under the Securities Act with
respect to the shares of Uniteon Stock issued pursuant to Section 3.06(a)
hereof, and shall use its reasonable best efforts to maintain the current
status of the prospectus contained therein, as well as comply with any
applicable state securities or "blue sky" laws, for so long as such options
remain outstanding.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.1 FOREBEARANCES OF FED ONE. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without
the prior written consent of United, Fed One will not, and will cause each of
its Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of Fed One and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse affect upon Fed One's ability to
perform any of its material obligations under this Agreement.
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(b) CAPITAL STOCK. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof or pursuant to Fed One's
Dividend Reinvestment Plan (but only with respect to open market,
non-discounted purchases), (i) issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of Fed One
Stock or any Rights, (ii) enter into any agreement with respect to the
foregoing, or (iii) permit any additional shares of Fed One Stock to become
subject to new grants of employee or director stock options, other Rights
or similar stock-based employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for
payment any dividend, other than (A) quarterly cash dividends on Fed One
Stock in an amount not to exceed $0.155 per share with record and payment
dates consistent with past practice, and (B) dividends from wholly owned
Subsidiaries to Fed One or another wholly owned Subsidiary of Fed One) on
or in respect of, or declare or make any distribution on any shares of Fed
One Stock or (b) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or
amend or renew any employment, consulting, severance or similar agreements
or arrangements with any director, officer or employee of Fed One or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit, (including incentive or bonus payments) except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof, or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) BENEFIT PLANS. Enter into, establish, adopt or amend
(except as may be required by applicable law) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any director,
officer or employee of Fed One or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of
its assets, deposits, business or properties except in the ordinary course
of business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire
(other than by way of foreclosures or acquisitions of control in a bona
fide fiduciary capacity or in
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satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice)
all or any portion of, the assets, business, deposits or properties of
any other entity.
(h) GOVERNING DOCUMENTS. Amend the Fed One Certificate, Fed One
Bylaws or the certificate of incorporation or by-laws (or similar governing
documents) of any of Fed One's Subsidiaries.
(i) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) CONTRACTS. Except in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract (as defined in Section 5.03(k)) or amend or modify in any material
respect any of its existing material contracts.
(k) CLAIMS. Except in the ordinary course of business
consistent with past practice, settle any claim, action or proceeding,
except for any claim, action or proceeding which does not involve precedent
for other material claims, actions or proceedings and which involve solely
money damages in an amount, individually or in the aggregate for all such
settlements, that is not material to Fed One and its Subsidiaries, taken as
a whole.
(l) ADVERSE ACTIONS. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the
Merger from qualifying (i) for "pooling-of- interests" accounting treatment
or (ii) as a reorganization within the meaning of Section 368 of the Code;
or (b) knowingly take any action that is intended or is reasonably likely
to result in (i) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
(m) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
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.
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(o) COMMITMENTS. Agree or commit to do any of the foregoing.
4.2 FOREBEARANCES OF UNITED. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Fed One, United will not, and will cause each of its
Subsidiaries not to:
(a) PRESERVATION. Fail to use reasonable efforts to preserve
intact in any material respect their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates.
(b) EXTRAORDINARY DIVIDENDS. Make, declare, pay or set aside
for payment any extraordinary dividend.
(c) ADVERSE ACTIONS. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the
Merger from qualifying (i) for "pooling-of- interests" accounting treatment
or (ii) as a reorganization within the meaning of Section 368 of the Code;
or (b) knowingly take any action that is intended or is reasonably likely
to result in (i) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation; PROVIDED, HOWEVER, that nothing contained
herein shall limit the ability of United to exercise its rights under the
Stock Option Agreement.
(d) COMMITMENTS. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 DISCLOSURE SCHEDULES. On or prior to the date hereof, United has
delivered to Fed One a schedule and Fed One has delivered to United a schedule
(respectively, its "DISCLOSURE SCHEDULE") setting forth, among other things,
items the disclosure of which is necessary or appropriate in relation to any or
all of its representations and warranties contained in Section 5.03 or 5.04 or
to one or more of its covenants contained in Article IV; PROVIDED, that (a) no
such item is required to be set forth in a Disclosure Schedule as an exception
to a representation or warranty if its absence would not be reasonably likely to
result in the related representation or warranty being 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
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such item is reasonably likely to result in a Material Adverse Effect on the
party making the representation. Fed One's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in
compliance with a written request of United.
5.2 STANDARD. No representation or warranty of Fed One or United
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty,
as a consequence of the existence of any fact, event or circumstance unless
such fact, circumstance or event, individually or taken together with all
other facts, events or circumstances inconsistent with any representation or
warranty contained in Section 5.03 or 5.04 has had or is reasonably likely to
have a Material Adverse Effect. For purposes of this Agreement, "knowledge"
shall mean, with respect to a party hereto, actual knowledge of any officer
of that party with the title, if any ranking not less than senior vice
president and that party's in-house counsel, if any.
5.3 REPRESENTATIONS AND WARRANTIES OF FED ONE. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of
its Disclosure Schedule corresponding to the relevant paragraph below, Fed
One hereby represents and warrants to United:
(a) ORGANIZATION, STANDING AND AUTHORITY. Fed One is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Fed One is duly qualified to do business
and is in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) FED ONE STOCK. As of the date hereof, the authorized
capital stock of Fed One consists solely of (i) 15,000,000 shares of Fed
One Common Stock, of which 2,375,556 shares were outstanding as of the date
hereof, and (ii) 5,000,000 shares of Fed One Preferred Stock, of which no
shares are outstanding. As of the date hereof, 443,206 shares of Fed One
Common Stock and no shares of Fed One Preferred Stock were held in treasury
by Fed One or otherwise owned by Fed One or its Subsidiaries ("TREASURY
STOCK"). The outstanding shares of Fed One Stock have been duly authorized
and are validly issued and outstanding, fully paid and nonassessable, and
subject to no preemptive rights (and were not issued in violation of any
preemptive rights). As of the date hereof, except as Previously Disclosed
in its Disclosure Schedule, there are no shares of Fed One Stock authorized
and reserved for issuance, Fed One does not have any Rights issued or
outstanding with respect to Fed One Stock, and Fed One does not have any
commitment to authorize, issue or sell any Fed One Stock or Rights, except
pursuant to this Agreement and the Stock Option Agreement. The number of
shares of Fed One Common Stock which are issuable and reserved for issuance
upon exercise of Fed One Stock Options as of the date hereof are Previously
Disclosed in Fed One's Disclosure
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Schedule. Fed One has Previously Disclosed all purchases of Fed One Stock
in the prior two years.
(c) SUBSIDIARIES. (i)(A)Fed One has Previously Disclosed a list
of all of its Subsidiaries together with the jurisdiction of organization
of each such Subsidiary,(B) except as Previously Disclosed, it owns,
directly or indirectly, all the issued and outstanding equity securities of
each of its Subsidiaries, (C) no equity securities of any of its
Subsidiaries are or may become required to be issued (other than to it or
its wholly-owned Subsidiaries) by reason of any Right or otherwise,
(D) there are no contracts, commitments, understandings or arrangements by
which any of such Subsidiaries is or may be bound to sell or otherwise
transfer any equity securities of any such Subsidiaries (other than to it
or its wholly-owned Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities and (F) all the equity securities of each
Subsidiary held by Fed One or its Subsidiaries are fully paid and
nonassessable and are owned by Fed One or its Subsidiaries free and clear
of any Liens.
(ii) Fed One does not own beneficially, directly or indirectly,
any equity securities or similar interests of any Person, or any interest
in a partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Fed One's Subsidiaries has been duly organized and
is validly existing in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and in good standing
in the jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified.
(d) CORPORATE POWER. Each of Fed One and its Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Fed One has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement
to receipt of the requisite approval and adoption of this Agreement
(including the agreement of merger set forth herein) by the holders of more
than a majority of the outstanding shares of Fed One Common Stock entitled
to vote thereon pursuant to the DGCL (which is the only shareholder vote
required thereon), this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby have been authorized by all
necessary corporate action of Fed One and the Fed One Board prior to the
date hereof. This Agreement is a valid and legally binding obligation of
Fed One, enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles). The
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actions leading up to the entering into of this Agreement and the
Stock Option Agreement, the entering into of this Agreement and the
Stock Option Agreement, and the consummation of the transactions
contemplated hereby and thereby are not prohibited or in any way affected
by the provisions of Article 10 of the Fed One Certificate. The Fed One
Board of Directors has received the written opinion of Ryan, Beck & Co. to
the effect that as of the date hereof the consideration to be received by
the holders of Fed One Common Stock in the Merger is fair to the holders of
Fed One Common Stock from a financial point of view.
(f) REGULATORY FILINGS; NO DEFAULTS. (i) No consents or
approvals of, or filings or registrations with, any Governmental Authority
or with any third party are required to be made or obtained by Fed One or
any of its Subsidiaries in connection with the execution, delivery or
performance by Fed One of this Agreement or the Stock Option Agreement or
to consummate the Merger except for (A) filings of applications or notices
with federal and state banking and thrift authorities, (B) filings with the
SEC and state securities authorities, (C) filings of applications or
notices with the U.S. Department of Justice and Federal Trade Commission
pursuant to the H-S-R Act, (D) the filing of the certificate of merger
with the Delaware Secretary pursuant to the DGCL and the filing of articles
of merger with the West Virginia Secretary pursuant to the WVCA, and (E)
the adoption and approval of this Agreement by the stockholders of Fed One.
As of the date hereof, Fed One is not aware of any reason why the approvals
set forth in Section 7.01(b) will not be received without the imposition of
a condition, restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to
in the preceding paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any right
of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Fed One or of any of its Subsidiaries or to which Fed One or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Fed One Certificate or the
Fed One Bylaws or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE
EFFECT. (i) Fed One's Annual Reports on Form 10-K for the fiscal years
ended December 31, 1994, 1995 and 1996, and all other reports, registration
statements, definitive proxy statements or information statements filed or
to be filed by it or any of its Subsidiaries subsequent to December 31,
1994 under the Securities Act, or under Section 13(a), 13(c),
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14 or 15(d) of the Exchange Act, in the form filed or to be filed
(collectively, Fed One's "SEC DOCUMENTS") with the SEC, as of the date
filed, (A) complied or will comply in all material respects with the
applicable requirements under the Securities Act or the Exchange Act,
as the case may be, and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
and each of the balance sheets or statements of condition contained in
or incorporated by reference into any such SEC Document (including the
related notes and schedules thereto) fairly presents, or will fairly
present, the financial position of Fed One and its Subsidiaries as of
its date, and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in such
SEC Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of operations,
changes in stockholders' equity and cash flows, as the case may be, of
Fed One and its Subsidiaries for the periods to which they relate, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal year-end audit adjustments
and the absence of footnotes in the case of unaudited statements. Fed
One's press release announcing its 1997 year end results fairly
presents the financial condition of Fed One as of December 31, 1997 and
the results of its operations for the year ended December 31, 1997, in
each case as determined in accordance with generally accepted
accounting principles.
(ii) Since December 31, 1997, Fed One and its Subsidiaries have
not incurred any liability other than in the ordinary course of business
consistent with past practice (excluding expenses incurred in connection
with this Agreement and the transactions contemplated hereby).
(iii) Since December 31, 1997, (A) Fed One and its Subsidiaries
have conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to this Agreement
and the transactions contemplated hereby) and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.03
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Fed One.
(h) LITIGATION. No litigation, claim or other proceeding
before any court or governmental agency is pending against Fed One or any of
its Subsidiaries and, to Fed One's knowledge, no such litigation, claim or
other proceeding has been threatened.
(i) REGULATORY MATTERS. (i) Neither Fed One nor any of its
Subsidiaries or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory
letter from, any federal or state governmental agency or authority
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charged with the supervision or regulation of financial institutions (or
their holding companies) or issuers of securities or engaged in the insurance
of deposits (including, without limitation, the Office of Thrift Supervision,
the Board of Governors of the Federal Reserve System and the Federal Deposit
Insurance Corporation) or the supervision or regulation of it or any of its
Subsidiaries (collectively, the "REGULATORY AUTHORITIES").
(ii) Neither Fed One nor any of its Subsidiaries has been
advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. Each of Fed One and its Subsidiaries:
(i) is in compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory
business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to own or lease their properties and to conduct their
businesses as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect and, to Fed One's knowledge, no suspension or cancellation of
any of them is threatened; and
(iii) has received, since December 31, 1995, no notification
or communication from any Governmental Authority (A) asserting that
Fed One or any of its Subsidiaries is not in compliance with any of
the statutes, regulations, or ordinances which such Governmental
Authority enforces, (B) threatening to revoke any license, franchise,
permit, or governmental authorization (nor, to Fed One's knowledge, do
any grounds for any of the foregoing exist) or (C) as of the date
hereof, failing to approve any proposed acquisition, or stating its
intention not to approve acquisitions proposed to be effected by it
within a certain time period or indefinitely.
(k) MATERIAL CONTRACTS; DEFAULTS. Except for this Agreement,
the Stock Option Agreement and those agreements and other documents filed
as exhibits to its SEC Documents, neither it nor any of its Subsidiaries is
a party to, bound by or subject to any agreement, contract, arrangement,
commitment or understanding (whether written or oral) (i) that is a
"material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that restricts or limits in any way the conduct of
business by it or
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any of its Subsidiaries (including without limitation a
non-compete or similar provision). Neither Fed One nor any of its
Subsidiaries is in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a
party, by which its respective assets, business, or operations may be bound
or affected, or under which it or its respective assets, business, or
operations receive benefits, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute
such a default.
(l) NO BROKERS. No action has been taken by Fed One that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a Previously
Disclosed fee to be paid to Ryan, Beck & Co.
(m) EMPLOYEE BENEFIT PLANS. (i) Fed One's Disclosure Schedule
contains a complete and accurate list of all existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, severance, welfare and fringe benefit plans,
employment or severance agreements and all similar practices, policies and
arrangements in which any employee or former employee (the "EMPLOYEES"),
consultant or former consultant (the "CONSULTANTS") or director or former
director (the "DIRECTORS") of Fed One or any of its Subsidiaries
participates or to which any such Employees, Consultants or Directors are a
party (the "FED ONE COMPENSATION AND BENEFIT PLANS"). Neither Fed One nor
any of its Subsidiaries has any commitment to create any additional
Compensation and Benefit Plan or to modify or change any existing
Compensation and Benefit Plan.
(ii) Each Fed One Compensation and Benefit Plan has been operated
and administered in all material respects in accordance with its terms and
with applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
or any regulations or rules promulgated thereunder, and all filings,
disclosures and notices required by ERISA, the Code, the Securities Act,
the Exchange Act, the Age Discrimination in Employment Act and any other
applicable law have been timely made. Each Fed One Compensation and
Benefit Plan which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA (a "PENSION PLAN") and which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter (including a determination that the related trust
under such Fed One Compensation and Benefit Plan is exempt from tax under
Section 501(a) of the Code) from the IRS, and Fed One is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
Fed One, threatened legal action, suit or claim relating to the Fed One
Compensation and Benefit Plans. Neither Fed One nor any of its
Subsidiaries has engaged in a transaction, or omitted to take any action,
with respect to any Fed One Compensation and Benefit Plan that would
reasonably be expected to subject Fed One or any of its Subsidiaries to a
tax or penalty imposed by either Section 4975 of
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the Code or Section 502 of ERISA, assuming for purposes of Section 4975
of the Code that the taxable period of any such transaction expired as of
the date hereof.
(iii) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of
ERISA has been or is expected to be incurred by Fed One or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any single-employer
plan of any entity (an "ERISA AFFILIATE") which is considered one employer
with Fed One under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA AFFILIATE PLAN"). None of Fed One, any of its
Subsidiaries or any ERISA Affiliate has contributed, or has been obligated
to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA at any time since September 26, 1980. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed
for any Fed One Compensation and Benefit Plan or by any ERISA Affiliate
Plan within the 12-month period ending on the date hereof, and no such
notice will be required to be filed as a result of the transactions
contemplated by this Agreement. The PBGC has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan and, to Fed One's
knowledge, no condition exists that presents a material risk that such
proceedings will be instituted. To the knowledge of Fed One, there is no
pending investigation or enforcement action by the PBGC, the U.S.
Department of Labor (the "DOL") or IRS or any other governmental agency
with respect to any Fed One Compensation and Benefit Plan. Under each
Pension Plan and ERISA Affiliate Plan, as of the date of the most recent
actuarial valuation performed prior to the date of this Agreement, the
actuarially determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in such actuarial valuation of such
Pension Plan or ERISA Affiliate Plan), did not exceed the then current
value of the assets of such Pension Plan or ERISA Affiliate Plan and since
such date there has been neither an adverse change in the financial
condition of such Pension Plan or ERISA Affiliate Plan nor any amendment or
other change to such Pension Plan or ERISA Affiliate Plan that would
increase the amount of benefits thereunder which reasonably could be
expected to change such result.
(iv) All contributions required to be made under the terms of any Fed
One Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which Fed
One or any of its Subsidiaries is a party have been timely made or have
been reflected on Fed One's financial statements. Neither any Pension Plan
nor any ERISA Affiliate Plan has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and all required payments to the PBGC with respect to
each Pension Plan or ERISA Affiliate Plan have been made on or before their
due dates. None of Fed One, any of its Subsidiaries or any ERISA Affiliate
(x) has
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provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has taken any action,
or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a lien under Section 412(n) of the
Code or pursuant to ERISA.
(v) Neither Fed One nor any of its Subsidiaries has any
obligations to provide retiree health and life insurance or other retiree
death benefits under any Fed One Compensation and Benefit Plan, other than
benefits mandated by Section 4980B of the Code, and each such Fed One
Compensation and Benefit Plan may be amended or terminated without
incurring liability thereunder. There has been no communication to
Employees by Fed One or any of its Subsidiaries that would reasonably be
expected to promise or guarantee such Employees retiree health or life
insurance or other retiree death benefits on a permanent basis.
(vi) Fed One and its Subsidiaries do not maintain any Fed One
Compensation and Benefit Plans covering foreign Employees.
(vii) With respect to each Fed One Compensation and Benefit Plan,
if applicable, Fed One has provided or made available to United, true and
complete copies of existing: (A) Fed One Compensation and Benefit Plan
documents and amendments thereto; (B) trust instruments and insurance
contracts; (C) two most recent Forms 5500 filed with the IRS; (D) most
recent actuarial report and financial statement; (E) the most recent
summary plan description; (F) forms filed with the PBGC (other than for
premium payments); (G) most recent determination letter issued by the IRS;
(H) any Form 5310 or Form 5330 filed with the IRS; and (I) most recent
nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(viii) The consummation of the transactions contemplated by this
Agreement would not, directly or indirectly (including, without limitation,
as a result of any termination of employment prior to or following the
Effective Time) reasonably be expected to (A) entitle any Employee,
Consultant or Director to any payment (including severance pay or similar
compensation) or any increase in compensation, (B) result in the vesting or
acceleration of any benefits under any Fed One Compensation and Benefit
Plan or (C) result in any material increase in benefits payable under any
Fed One Compensation and Benefit Plan.
(ix) Neither Fed One nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which would
not reasonably be expected to be deductible as a result of the limitations
under Section 162(m) of the Code and the regulations issued thereunder.
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(x) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result
of any termination of employment prior to or following the Effective Time),
none of United, Fed One or the Surviving Corporation, or any of their
respective Subsidiaries will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of the
Code), without regard to whether such payment is reasonable compensation
for personal services performed or to be performed in the future.
(n) LABOR MATTERS. Neither Fed One nor any of its Subsidiaries
is a party to or is bound by any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor
organization, nor is Fed One or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel Fed One or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Fed One's knowledge, threatened, nor is Fed One aware of any
activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) TAKEOVER LAWS; DISSENTERS' RIGHTS. Fed One has taken all
action required to be taken by it in order to exempt this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby
from, and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby (the "COVERED TRANSACTIONS") are exempt
from, the requirements of any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws
and regulations of any state (collectively, "TAKEOVER LAWS"), including,
without limitation, the State of Delaware and Section 203 of the DGCL,
applicable to Fed One. Assuming the United Common Stock meets the
requirements set forth in Section 262(b)(2) of the DGCL, holders of Fed One
Common Stock do not have dissenters' rights in connection with the Merger.
(p) ENVIRONMENTAL MATTERS. To Fed One's knowledge, neither the
conduct nor operation of Fed One or its Subsidiaries nor any condition of
any property presently or previously owned, leased or operated by any of
them (including, without limitation, in a fiduciary or agency capacity), or
on which any of them holds a Lien, violates or violated Environmental Laws
and to Fed One's knowledge, no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To Fed One's knowledge, neither Fed One nor any of its
Subsidiaries has received any notice from any person or entity that Fed One
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
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by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(q) TAX MATTERS. (i) All Tax Returns that are required to be
filed by or with respect to Fed One and its Subsidiaries have been duly
filed, (ii) all Taxes shown to be due on the Tax Returns referred to in
clause (i) have been paid in full, (iii) the Tax Returns referred to in
clause (i) have been examined by the IRS or the appropriate state, local or
foreign taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have been raised by
the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (i) are currently pending, and
(vi) no waivers of statutes of limitation have been given by or requested
with respect to any Taxes of Fed One or its Subsidiaries. Fed One has made
available to United true and correct copies of the United States federal
income Tax Returns filed by Fed One and its Subsidiaries for each of the
three most recent fiscal years ended on or before December 31, 1996.
Neither Fed One nor any of its Subsidiaries has any liability with respect
to income, franchise or similar Taxes that accrued on or before the end of
the most recent period covered by Fed One's SEC Documents filed prior to
the date hereof in excess of the amounts accrued with respect thereto that
are reflected in the financial statements included in Fed One's SEC
Documents filed on or prior to the date hereof. As of the date hereof,
neither Fed One nor any of its Subsidiaries has any reason to believe that
any conditions exist that might prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(ii) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the transfer contemplated by this Agreement.
(r) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for Fed One's own
account, or for the account of one or more of Fed One's Subsidiaries or
their customers (all of which are listed on Fed One's Disclosure Schedule),
were entered into (i) in accordance with applicable laws, rules,
regulations and regulatory policies and (ii) with counterparties believed
to be financially responsible at the time; and each of them constitutes the
valid and legally binding obligation of Fed One or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles), and is in
full force and effect. Neither Fed One nor its Subsidiaries, nor to Fed
One's knowledge any
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other party thereto, is in breach of any of its obligations under any
such agreement or arrangement.
(s) BOOKS AND RECORDS. The books and records of Fed One and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein and they fairly reflect the
substance of events and transactions included therein.
(t) INSURANCE. Fed One's Disclosure Schedule sets forth all of
the insurance policies, binders, or bonds maintained by Fed One or its
Subsidiaries. Fed One and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Fed
One reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; Fed
One and its Subsidiaries are not in material default thereunder; and all
claims thereunder have been filed in due and timely fashion.
(u) ACCOUNTING TREATMENT. As of the date hereof, it is aware of
no reason why the Merger will fail to qualify for "pooling-of-interests"
accounting treatment, assuming compliance by Fed One and United with the
requirements of Section 6.17 hereof.
(v) DISCLOSURE. The representations and warranties contained in
this Section 5.03 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
and information contained in this Section 5.03 not misleading.
5.4 REPRESENTATIONS AND WARRANTIES OF UNITED. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, United hereby
represents and warrants to Fed One as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. United is a
corporation duly organized, validly existing and in good standing under the
laws of the State of West Virginia. United is duly qualified to do
business and is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or assets
or the conduct of its business requires it to be so qualified.
(b) UNITED STOCK. (i) As of the date hereof, the authorized
capital stock of United consists solely of 20,000,000 shares of United
Common Stock, of which no more than 15,004,661 shares were outstanding as
of the date hereof. As of the date hereof, except as set forth in its
Disclosure Schedule, United does not have any Rights issued or outstanding
with respect to United Stock and United does not have any commitment to
authorize, issue or sell any United Stock or Rights, except pursuant to
this Agreement. The outstanding shares of United Common Stock have been
duly authorized and are
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validly issued and outstanding, fully paid and nonassessable, and subject
to no preemptive rights (and were not issued in violation of any
preemptive rights).
(ii) The shares of United Common Stock to be issued in exchange
for shares of Fed One Common Stock in the Merger, when issued in accordance
with the terms of this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable and subject to no preemptive rights.
(c) SUBSIDIARIES. Each of United's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and
is in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and
it owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Significant Subsidiaries.
(d) CORPORATE POWER. Each of United and its Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and United has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement
to receipt of the requisite approval by the holders of a majority of the
outstanding shares of United Common Stock entitled to vote thereon of the
Articles Amendment (which is the only shareholder vote required thereon),
this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby have been authorized by all necessary
corporate action of United and the United Board prior to the date hereof.
This Agreement is a valid and legally binding agreement of United,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or
approvals of, or filings or registrations with, any Governmental Authority
or with any third party are required to be made or obtained by United or
any of its Subsidiaries in connection with the execution, delivery or
performance by United of this Agreement or to consummate the Merger except
for (A) the filing of applications and notices, as applicable, with the
federal and state banking and thrift authorities; (B) the adoption and
approval by the shareholders of United of the Articles Amendment as
contemplated hereby; (C) the filing and declaration of effectiveness of the
Registration Statement; (D) the filing of applications or notices with the
U.S. Department of Justice and Federal Trade Commission pursuant to the
H-S-R Act; (E) the filing of a certificate of merger with the Delaware
Secretary pursuant to the DGCL and the filing of articles of merger and the
Articles Amendment with the West Virginia
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Secretary; (F) such filings as are required to be made or approvals as
are required to be obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of United Stock in the
Merger; and (G) receipt of the approvals set forth in Section 7.01(b).
As of the date hereof, United is not aware of any reason why the approvals
set forth in Section 7.01(b) will not be received without the imposition
of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred to
in the preceding paragraph and expiration of the related waiting periods,
and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (A) constitute
a breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of United or of any of its
Subsidiaries or to which United or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of United or any of its Subsidiaries, or (C) require any consent
or approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE
EFFECT. (i) United's SEC Documents, as of the date filed, (A) complied or
will comply in all material respects with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets or statements of
condition contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of United and its
Subsidiaries as of its date, and each of the statements of income or
results of operations and changes in stockholders' equity and cash flows or
equivalent statements in such SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results
of operations, changes in stockholders' equity and cash flows, as the case
may be, of United and its Subsidiaries for the periods to which they
relate, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in each
case as may be noted therein, subject to normal year-end audit adjustments
in the case of unaudited statements. United's press release announcing its
1997 year end results fairly presents the financial condition of United as
of December 31, 1997 and the results of its operations for the year ended
December 31, 1997, in each case as determined in accordance with generally
accepted accounting principles.
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(ii) Since December 31, 1997, no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.04
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to United.
(h) LITIGATION; REGULATORY ACTION. (i) No litigation, claim or
other proceeding before any Governmental Authority is pending against
United or any of its Subsidiaries and, to the best of United's knowledge,
no such litigation, claim or other proceeding has been threatened.
(ii) Neither United nor any of its Subsidiaries or properties is
a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has United or any of its Subsidiaries been
advised by a Regulatory Authority that such agency is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) COMPLIANCE WITH LAWS. Each of United and its Subsidiaries:
(i) is in compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory
business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to conduct their businesses substantially as presently
conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best of
its knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1995, no notification
or communication from any Governmental Authority (A) asserting that
United or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces, (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to United's knowledge, do any grounds
for any of the foregoing exist) or (C) as of the date hereof, failing
to approve any proposed acquisition, or stating its intention not to
approve acquisitions proposed to be effected by it within a certain
time period or indefinitely.
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(j) DEFAULTS. Neither United nor any of its Subsidiaries is in
default under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or
under which it or its respective assets, business, or operations receive
benefits, and there has not occurred any event that, with the lapse of time
or the giving of notice or both, would constitute such a default.
(k) NO BROKERS. No action has been taken by United that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement.
(l) TAKEOVER LAWS; DISSENTERS' RIGHTS. United has taken all
action required to be taken by it in order to exempt this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby
from, and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
Takeover Laws applicable to United. Holders of United Common Stock do not
have dissenters' rights in connection with the Articles Amendment.
(m) EMPLOYEE BENEFIT PLANS. (i) Each existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, severance, welfare and fringe benefit plans,
employment or severance agreements and all similar practices, policies and
arrangements in which any Employees, Consultants or Directors of United or
any of its Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (each, a "UNITED COMPENSATION AND
BENEFIT PLAN") has been operated and administered in all material respects
in accordance with its terms and with applicable law, including, but not
limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age
Discrimination in Employment Act, or any regulations or rules promulgated
thereunder, and all filings, disclosures and notices required by ERISA, the
Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made. Each
United Compensation and Benefit Plan which is a Pension Plan and which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter (including a determination that the related
trust under such United Compensation and Benefit Plan is exempt from tax
under Section 501(a) of the Code) from the IRS, and United is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of
United, threatened legal action, suit or claim relating to the United
Compensation and Benefit Plans. Neither United nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action, with respect
to any United Compensation and Benefit Plan that would reasonably be
expected to subject United or any of its Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA,
assuming for purposes of
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Section 4975 of the Code that the taxable period of any such
transaction expired as of the date hereof.
(ii) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV of
ERISA has been or is expected to be incurred by United or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any ERISA Affiliate
Plan. None of United, any of its Subsidiaries or any ERISA Affiliate has
contributed, or has been obligated to contribute, to a multiemployer plan
under Subtitle E of Title IV of ERISA at any time since September 26, 1980.
No notice of a "reportable event", within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any United Compensation and Benefit Plan or
by any ERISA Affiliate Plan within the 12-month period ending on the date
hereof, and no such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. The PBGC has not instituted
proceedings to terminate any Pension Plan or ERISA Affiliate Plan and, to
United's knowledge, no condition exists that presents a material risk that
such proceedings will be instituted. To the knowledge of United, there is
no pending investigation or enforcement action by the PBGC, the DOL or IRS
or any other governmental agency with respect to any United Compensation
and Benefit Plan. Under each Pension Plan and ERISA Affiliate Plan, as of
the date of the most recent actuarial valuation performed prior to the date
of this Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did not
exceed the then current value of the assets of such Pension Plan or ERISA
Affiliate Plan and since such date there has been neither an adverse change
in the financial condition of such Pension Plan or ERISA Affiliate Plan nor
any amendment or other change to such Pension Plan or ERISA Affiliate Plan
that would increase the amount of benefits thereunder which reasonably
could be expected to change such result.
(iii) All contributions required to be made under the terms of any
United Compensation and Benefit Plan or ERISA Affiliate Plan or any
employee benefit arrangements under any collective bargaining agreement to
which United or any of its Subsidiaries is a party have been timely made or
have been reflected on United's financial statements. Neither any Pension
Plan nor any ERISA Affiliate Plan has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and all required payments to the PBGC with respect to
each Pension Plan or ERISA Affiliate Plan have been made on or before their
due dates. None of United, any of its Subsidiaries or any ERISA Affiliate
(x) has provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has taken any
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action, or omitted to take any action, that has resulted, or would
reasonably be expected to result, in the imposition of a lien under
Section 412(n) of the Code or pursuant to ERISA.
(n) ENVIRONMENTAL MATTERS. To United's knowledge, neither the
conduct nor operation of United or its Subsidiaries nor any condition of
any property presently or previously owned, leased or operated by any of
them (including, without limitation, in a fiduciary or agency capacity), or
on which any of them holds a Lien, violates or violated Environmental Laws
and to Fed One's knowledge no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To United's knowledge, neither United nor any of its
Subsidiaries has received any notice from any person or entity that United
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(o) TAX MATTERS. (i) All Tax Returns that are required to be
filed by or with respect to United and its Subsidiaries have been duly
filed, (ii) all Taxes shown to be due on the Tax Returns referred to in
clause (i) have been paid in full, (iii) the Tax Returns referred to in
clause (i) have been examined by the IRS or the appropriate state, local or
foreign taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired,
(iv) all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have been raised by
the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (i) are currently pending, and
(vi) no waivers of statutes of limitation have been given by or requested
with respect to any Taxes of United or its Subsidiaries. Neither United
nor any of its Subsidiaries has any liability with respect to income,
franchise or similar Taxes that accrued on or before the end of the most
recent period covered by United's SEC Documents filed prior to the date
hereof in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in United's SEC Documents
filed on or prior to the date hereof. As of the date hereof, neither
United nor any of its Subsidiaries has any reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
(p) BOOKS AND RECORDS. The books and records of United and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
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(q) INSURANCE. United and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management
of United reasonably has determined to be prudent in accordance with
industry practices. All such insurance policies are in full force and
effect; United and its Subsidiaries are not in material default thereunder;
and all claims thereunder have been filed in due and timely fashion.
(r) ACCOUNTING TREATMENT. As of the date hereof, it is aware of
no reason why the Merger will fail to qualify for "pooling-of-interests"
accounting treatment.
(s) DISCLOSURE. The representations and warranties contained in
this Section 5.04 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
and information contained in this Section 5.04 not misleading.
(t) REPRESENTATIONS AND WARRANTIES OF UNITED WITH RESPECT TO
MERGER SUBS. United represents and warrants to Fed One with respect to any
Merger Sub that executes the supplement attached to this Agreement as Annex
A that, at the time of such execution and as of the Effective Date:
(i) ORGANIZATION, STANDING AND AUTHORITY. Each Merger Sub has been
duly organized and is validly existing in good standing under the laws of
the State of its organization, and is duly qualified to do business and in
good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified.
(ii) POWER. Each Merger Sub has the power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby.
(iii) AUTHORITY. This Agreement and the transactions contemplated
hereby have been authorized by all requisite action on the part of each
Merger Sub and its respective shareholders or members. This Agreement is a
valid and legally binding agreement of each Merger Sub enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles).
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ARTICLE VI
COVENANTS
6.1 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of Fed One and United agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end. Without limiting the foregoing, United agrees to use its reasonable
best efforts prior to the Effective Time to file the Articles Amendment and, if
necessary, organize one or more Merger Subs.
6.2 STOCKHOLDER APPROVALS. United and Fed One agree to take, in
accordance with applicable law or NASDAQ rules and its articles of incorporation
and bylaws, all action necessary to convene an appropriate meeting of its
stockholders (which in the case of United or Fed One may be its regular annual
meeting or a special meeting) to consider and vote upon, in the case of United,
the approval and adoption of the Articles Amendment as contemplated hereby
(including any adjournment or postponement, the "UNITED MEETING") and, in the
case of Fed One, the approval and adoption of this Agreement (including any
adjournment or postponement, the "FED ONE MEETING"), in each case as promptly as
practicable after the Registration Statement is declared effective. The United
Board will recommend that the United shareholders approve the Articles
Amendment. The Fed One Board will recommend that the Fed One stockholders
approve and adopt the Agreement and the transactions contemplated hereby,
provided that the Fed One Board may fail to make such recommendation, or
withdraw, modify or change any such recommendation, if the Fed One Board, after
having consulted with and considered the advice of outside counsel, has
determined that the making of such recommendation, or the failure to withdraw,
modify or change such recommendation, would constitute a breach of the fiduciary
duties of the members of the Fed One Board under applicable law.
6.3 REGISTRATION STATEMENT. (a) Each of United and Fed One agrees to
cooperate in the preparation of a registration statement on Form S-4 (the
"REGISTRATION STATEMENT") to be filed by United with the SEC in connection with
the issuance of United Common Stock in the Merger (including the joint proxy
statement and prospectus and other proxy solicitation materials of United and
Fed One constituting a part thereof (the "PROXY STATEMENT") and all related
documents). Provided that Fed One has cooperated as required above, United
agrees to file the Proxy Statement in preliminary form with the SEC as promptly
as reasonably practicable, and to file the Registration Statement with the SEC
as soon as reasonably practicable after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of Fed One and United agrees to
use all reasonable efforts to cause the
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Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. United also agrees
to use all reasonable efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement. Fed One agrees to furnish to United all information
concerning Fed One, its Subsidiaries, officers, directors and stockholders as
may be reasonably requested in connection with the foregoing.
(b) Each of Fed One and United agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the time of the United Meeting or the Fed One
Meeting, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or any statement which, in the light
of the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier statement in the
Proxy Statement or any amendment or supplement thereto. Each of Fed One and
United further agrees that if it shall become aware prior to the Effective Date
of any information furnished by it that would cause any of the statements in the
Proxy Statement to be false or misleading with respect to any material fact, or
to omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) United agrees to advise Fed One, promptly after United
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of United Stock for offering
or sale in any jurisdiction, of the initiation or threat of any proceeding for
any such purpose, or of any request by the SEC for the amendment or supplement
of the Registration Statement or for additional information.
(d) United and Fed One, each in consultation with the other,
shall employ professional proxy solicitors to assist it in contacting
stockholders in connection with soliciting votes on the Agreement and the
Articles Amendment.
6.4 PRESS RELEASES. Each of Fed One and United agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general
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circulation relating to the transactions contemplated hereby, except as
otherwise required by applicable law or regulation or NASDAQ rules.
6.5 ACCESS; INFORMATION. (a) Each of Fed One and United agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
the business, properties and personnel of it as the other may reasonably
request.
(b) Each agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.05 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Agreement)
unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the party to which such information pertains or (iv) is or becomes
readily ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to another party hereto to be returned to the party which furnished the
same. No investigation by either party of the business and affairs of the other
shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the
Effective Time, each party shall promptly furnish the other with copies of all
monthly and other interim financial statements produced in the ordinary course
of business as the same shall become available.
6.6 ACQUISITION PROPOSALS. Fed One agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or, except to the extent that the Fed One Board has
determined, after consulting with and considering the advice of outside
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counsel, that the failure to do so would constitute a breach of the fiduciary
duties of the Fed One Board's directors under applicable law, engage in any
negotiations concerning, or provide any confidential information to, or have
any discussions with, any person relating to, any Acquisition Proposal. It
shall immediately cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of this Agreement
with any parties other than United with respect to any of the foregoing and
shall use its reasonable best efforts to enforce any confidentiality or
similar agreement relating to an Acquisition Proposal. Fed One shall
promptly (within 24 hours) advise United following the receipt by Fed One of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise United of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.7 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to
the mailing of the Proxy Statement, (i) United shall deliver to Fed One a
schedule of each person that, to the best of its knowledge, is or is reasonably
likely to be, as of the date of the United Meeting, deemed to be an "affiliate"
of United (each, a "UNITED AFFILIATE") as that term is used in SEC Accounting
Series Releases 130 and 135; and (ii) Fed One shall deliver to United a schedule
of each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Fed One Meeting, deemed to be an "affiliate" of Fed
One (each, a "FED ONE AFFILIATE") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Each of Fed One and United shall use its respective reasonable
best efforts to cause each person who may be deemed to be a Fed One Affiliate or
a United Affiliate, as the case may be, to execute and deliver to Fed One and
United on or before the date of mailing of the Proxy Statement an agreement in
the form attached hereto as EXHIBIT B or EXHIBIT C, respectively.
6.8 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.
6.9 CERTAIN POLICIES. Prior to the Effective Date, Fed One shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and United, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of United; PROVIDED, HOWEVER, that Fed One shall not be obligated to take any
such action pursuant to this Section 6.09 (i) if such action is not in
accordance with generally accepted accounting principles, is not consistent with
the "pooling-of-interests" accounting method for the Merger or is prohibited by
applicable law, and (ii) unless and until
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United acknowledges that all conditions to its obligation to consummate the
Merger have been satisfied and certifies to Fed One that United's
representations and warranties, subject to Section 5.02, are true and correct
as of such date and that United is otherwise in material in compliance with
this Agreement. Fed One's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in
any respect for any purpose as a consequence of any modifications or changes
undertaken solely on account of this Section 6.09.
6.10 NASDAQ LISTING. To the extent so required, United agrees to use
its reasonable best efforts to list, prior to the Effective Date, on the NASDAQ,
subject to official notice of issuance, the shares of United Common Stock to be
issued to the holders of Fed One Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) United and Fed One and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement, and to comply with the terms and conditions of such permits,
consents, approvals and authorizations. Each of United and Fed One shall have
the right to review in advance, and to the extent practicable each will consult
with the other, in each case subject to applicable laws relating to the exchange
of information, with respect to, all material written information submitted to
any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with the other party
hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party apprised of the status of
material matters relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party
with all information concerning itself, its Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
6.12 INDEMNIFICATION. (a) Following the Effective Date and for a
period of six years thereafter, United shall indemnify, defend and hold harmless
the present and former directors, officers and employees of Fed One or a Fed One
Subsidiary, determined as of the Effective Date (each, an "INDEMNIFIED PARTY"),
against all costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "COSTS") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil,
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criminal, administrative or investigative, arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement and the Stock
Option Agreement) to the fullest extent that Fed One or the relevant Fed One
Subsidiary is permitted to indemnify (and advance expenses to) its directors,
officers and employees under the DGCL or other applicable state law, as in
effect from time to time, or any of the Fed One Certificate, the Fed One
Bylaws, the charter (or similar governing instrument) of any Fed One
Subsidiary or the bylaws of any Fed One Subsidiary, in each case as in effect
on the date hereof. United agrees that all limitations on liability existing
in favor of the Indemnified Parties as provided in the Fed One Certificate as
in effect on the date hereof shall survive the Merger and shall continue in
full force and effect.
(b) For a period of six years from the Effective Time, United
shall use its reasonable best efforts to maintain Fed One's existing director's
and officer's liability insurance with respect to claims against such directors
and officers arising from facts or events which occurred before the Effective
Time, (or substitute insurance which shall contain at least the same coverage
and amounts, and contain terms and conditions no less advantageous, as that
coverage currently provided by Fed One); PROVIDED, HOWEVER, that in no event
shall United be required to expend on an annual basis more than 200 percent of
the current annual amount expended by Fed One (the "INSURANCE AMOUNT") to
maintain or procure such directors and officers insurance coverage; PROVIDED,
FURTHER, that if United is unable to maintain or obtain the insurance called for
by this Section 6.12(b), United shall use its reasonable best efforts to obtain
as much comparable insurance as is available for the Insurance Amount; PROVIDED,
FURTHER, that officers and directors of Fed One or any Fed One Subsidiary may be
required to make application and provide customary representations and
warranties to United's insurance carrier for the purpose of obtaining such
insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify United thereof; PROVIDED
that the failure so to notify shall not affect the obligations of United under
Section 6.12(a) unless and to the extent that United is actually materially
prejudiced as a result of such failure.
(d) If United or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of United shall
assume the obligations set forth in this Section 6.12.
(e) The provisions of this Section 6.12 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
6.13 BENEFIT PLANS AND ARRANGEMENTS. (a) It is the intention of
United that within a reasonable period of time following the Effective Time (i)
it will provide employees of the
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Surviving Corporation with employee benefit plans substantially similar in
the aggregate to those provided to similarly situated employees of
United,(ii) any such employees will receive credit for years of service with
Fed One or any of its Subsidiaries prior to the Effective Time for the
purpose of eligibility and vesting and (iii) United shall cause any and all
pre-existing condition limitations (to the extent such limitations did not
apply to a pre-existing condition under the Compensation and Benefit Plans)
and eligibility waiting periods under group health plans to be waived with
respect to such participants and their eligible dependents.
(b) Following the Effective Time, United shall, and shall cause
its appropriate Subsidiaries to, honor in accordance with their terms the
employment agreements, severance agreements, severance policies, consulting
agreement and excess benefit plan which have been Previously Disclosed by Fed
One to United pursuant to this Agreement. United shall take no action that
would adversely affect the rights of holders of awards granted under the Fed One
Stock Plans which are outstanding as of the date hereof.
(c) United agrees to maintain the terms of the existing
consulting arrangement between Fed One Bank and Louis Salvatori, as Previously
Disclosed by Fed One to United pursuant to this Agreement, until Mr. Salvatori's
death.
(d) As soon as practicable after the execution of this
Agreement, Fed One and United will use their reasonable best efforts to take
such actions as may be necessary or advisable to provide that the Fed One ESOP
will terminate on the Effective Date. Between the date hereof and the Effective
Date, the existing Fed One ESOP indebtedness shall be paid in the ordinary
course of business and Fed One or Fed One Bank shall make such contributions to
the Fed One ESOP as is necessary to fund such payments. Any indebtedness of the
Fed One ESOP remaining as of the Effective Date shall be repaid from the related
Trust, provided, however, that (i) any related sale or distribution of shares by
the Fed One ESOP shall be effected in accordance with the requirements of
federal and any applicable state securities laws and regulations, (ii) any
related sale or distribution of shares by the Fed One ESOP and any participant
shall be effected in such a manner (and with such safeguards as may be necessary
or appropriate) so as not to jeopardize "pooling-of-interests" accounting
treatment for the Merger, and (iii) all distributions from the Fed One ESOP
after the Effective Date shall be in shares of United Common Stock. Upon the
repayment of the Fed One ESOP loan, the remaining funds in the Fed One ESOP
suspense account will be allocated (to the extent permitted by Sections 401(a),
415 and 4975 of the Code and the applicable provisions of ERISA) to Fed One ESOP
participants, as determined under the terms of the Fed One ESOP. Fed One and
United agree that, subject to the conditions described herein, as soon as
practicable after the Effective Date and repayment of the Fed One ESOP loan,
participants in the Fed One ESOP shall be entitled at their election to have the
amounts in their Fed One ESOP accounts either distributed to them in a lump sum
or rolled over to another tax-qualified plan (including United plans to the
extent permitted by United) or individual retirement account. The actions
relating to termination of the Fed One ESOP will be adopted conditioned upon the
consummation of the Merger and upon receiving a favorable
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determination letter from the IRS with regard to the continued qualification
of the Fed One ESOP. Fed One and United will cooperate in submitting
appropriate requests for such a determination letter to the IRS and will use
their reasonable best efforts to seek the issuance of such letter as soon as
practicable after the date hereof. As of and following the Effective Date,
United shall cause the Fed One ESOP to be maintained for the exclusive
benefit of employees and other persons who are participants or beneficiaries
therein prior to the Effective Date and proceed with termination of the Fed
One ESOP through distribution of its assets in accordance with this Section
6.13(d) and as otherwise may be required to comply with applicable law or to
obtain a favorable determination from the IRS as to the continuing qualified
status of the Fed One ESOP, provided, however, that no such termination
distributions of the Fed One ESOP shall occur after the Effective Date until
a favorable determination letter has been received from the IRS.
(e) United shall have the right to merge the Fed One defined
benefit retirement plan (the "FED ONE RETIREMENT PLAN") into the United defined
benefit retirement plan (the "UNITED RETIREMENT PLAN"), provided that upon
consummation of such merger the United Retirement Plan shall be deemed, in the
reasonable opinion of United and Fed One, to be a "qualified successor plan," as
defined in the Fed One Retirement Plan. In the event that the United Retirement
Plan would not qualify as such upon consummation of such merger, United shall
either maintain the Fed One Retirement Plan for the benefit of participating Fed
One employees or amend the Fed One Retirement Plan in order to maximize the use
of the excess funding or future employer contribution offset. The effectiveness
of such amendments shall be conditioned upon the receipt of a favorable
determination letter from the IRS with regard to the continued qualification of
the Fed One Retirement Plan.
(f) The Excess Benefit Plan for the benefit of Mr. and Mrs. Alan
Groover, effective as of January 1, 1995, shall be terminated as of the
Effective Date and shall not apply to the final distribution or allocation of
the Fed One ESOP expense account.
6.14 NOTIFICATION OF CERTAIN MATTERS. Each of Fed One and United
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 DIVIDEND COORDINATION. The Fed One Board shall cause its regular
quarterly dividend record dates and payment dates for Fed One Common Stock to be
the same as United's regular quarterly dividend record dates and payment dates
for United Common Stock (E.G., Fed One shall move its next dividend record and
payment dates to the next dividend record and payment date for United Common
Stock), and Fed One shall not thereafter change its regular dividend payment
dates and record dates (it being the intention of the parties that the
stockholders of Fed One shall not receive two dividends, or fail to receive one
dividend,
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for any single calendar quarter with respect to their shares of Fed One
Common Stock or the United Common Stock exchanged therefor in the Merger).
Notwithstanding the foregoing, nothing contained in this Section 6.15 shall
require either of the parties to take any action that would materially impair
their ability to satisfy the conditions set forth in Sections 7.02(d) and
7.03(d) hereof.
6.16 DIRECTORSHIP OF UNITED AND ADVISORY BOARD OF DIRECTORS.
(a) United agrees to cause Mr. Groover to be elected or
appointed as a director of United as of the Effective Time.
(b) United agrees to cause four members of the Fed One Board on
the date hereof (selected by Fed One after consultation with United), who are
members of the Fed One Board immediately prior to the Effective Time and willing
and eligible to serve, to be elected or appointed to the Northern West Virginia
Regional Advisory Board of Directors of United Bank.
6.17 FED ONE STOCK ISSUANCE. After the stockholder approvals
contemplated by Section 6.02 hereof and the regulatory approvals contemplated by
Section 7.01(b) hereof have been obtained and prior to the Effective Date, Fed
One shall use its reasonable best efforts to offer and sell for fair value to
individuals or entities unaffiliated with Fed One and United such number of
shares of Treasury Stock held by Fed One as shall be sufficient in the opinion
of Fed One's and United's respective independent auditors to permit them to
issue the letters referenced in Section 7.02(d) and 7.03(d) hereof, respectively
(the "FED ONE STOCK ISSUANCE"). Fed One and United shall cooperate with each
other in connection with the Fed One Stock Issuance and shall enter into such
placement or underwriting agreements as may be necessary or advisable in
connection therewith.
6.18 BANK MERGER. Upon the request of United, United and Fed One
shall use their reasonable best efforts to cause, including causing the entering
into of a merger agreement, their respective subsidiaries, Fed One Bank and
United Bank, to merge (the "BANK MERGER") immediately after the consummation of
the Merger, with United Bank being the surviving bank ("SURVIVING BANK") thereof
pursuant to the provisions of applicable law. At the effective time of the Bank
Merger, the articles of association and by-laws of the Surviving Bank shall be
the articles of association and by-laws of United Bank in effect immediately
prior to the effective time of the Bank Merger. At the effective time of the
Bank Merger, the directors and officers of the Surviving Bank shall be the
directors and officers of United Bank immediately prior to the effective time of
the Bank Merger.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of United and Fed One to consummate the Merger is
subject to the fulfillment or written waiver by United and Fed One prior to the
Effective Time of each of the following conditions:
(a) STOCKHOLDER APPROVALS. This Agreement shall have been duly
approved and adopted by the requisite vote of the stockholders of Fed One
and the Articles Amendment shall have been duly approved by the requisite
vote of the stockholders of United.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby, including the Bank Merger
if requested by United pursuant to Section 6.18, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
(i) any conditions, restrictions or requirements which the United Board
reasonably determines would either before or after the Effective Time have
a Material Adverse Effect on the Surviving Corporation and its Subsidiaries
taken as a whole or (ii) any conditions, restrictions or requirements that
are not customary and usual for approvals of such type and which the United
Board reasonably determines would either before or after the Effective Date
be unduly burdensome.
(c) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits, restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall
have become effective under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by
the SEC.
(e) BLUE SKY APPROVALS. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of United Common Stock to be
issued in the Merger shall have been received and be in full force and
effect.
(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.
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(g) ARTICLES AMENDMENT. The Articles Amendment shall have been
filed and effective under the WVCA.
7.2 CONDITIONS TO OBLIGATION OF FED ONE. The obligation of Fed One to
consummate the Merger is also subject to the fulfillment or written waiver by
Fed One prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of United set forth in this Agreement shall be true and correct,
subject to Section 5.02, as of the date of this Agreement and as of the
Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct as of such
date), and Fed One shall have received a certificate, dated the Effective
Date, signed on behalf of United by the Chief Executive Officer and the
Chief Financial Officer of United to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF UNITED. United shall have
performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Effective Time, and Fed One
shall have received a certificate, dated the Effective Date, signed on
behalf of United by the Chief Executive Officer and the Chief Financial
Officer of United to such effect.
(c) OPINION OF FED ONE'S COUNSEL. Fed One shall have received
an opinion of Elias, Matz, Tiernan & Herrick L.L.P., counsel to Fed One,
dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368 of the
Code and (ii) no gain or loss will be recognized by stockholders of Fed One
who receive shares of United Common Stock in exchange for shares of Fed One
Common Stock, except that gain or loss may be recognized as to cash
received in lieu of fractional share interests. In rendering its opinion,
Elias, Matz, Tiernan & Herrick L.L.P. may require and rely upon
representations contained in letters from Fed One, United and others.
(d) ACCOUNTING TREATMENT. Fed One shall have received from KPMG
Peat Marwick LLP, Fed One's independent auditors, a letter, dated the
Effective Date, stating its opinion that the Merger shall qualify for
"pooling-of-interests" accounting treatment.
7.3 CONDITIONS TO OBLIGATION OF UNITED. The obligation of United to
consummate the Merger is also subject to the fulfillment or written waiver by
United prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Fed One set forth in this Agreement shall be true and
correct, subject to Section 5.02, as of the date of this 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
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<PAGE>
the date of this Agreement or some other date shall be true and correct as
of such date) and United shall have received a certificate, dated the
Effective Date, signed on behalf of Fed One by the Chief Executive Officer
and the Chief Financial Officer of Fed One to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF FED ONE. Fed One shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and United
shall have received a certificate, dated the Effective Date, signed on
behalf of Fed One by the Chief Executive Officer and the Chief Financial
Officer of Fed One to such effect.
(c) OPINION OF UNITED'S COUNSEL. United shall have received an
opinion of Sullivan & Cromwell, special counsel to United, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from United, Fed One and others.
(d) ACCOUNTING TREATMENT. United shall have received from Ernst
& Young LLP, United's independent auditors, a letter, dated the Effective
Date, stating its opinion that the Merger shall qualify for
"pooling-of-interests" accounting treatment.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated, and the
Acquisition may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by
the mutual consent of United and Fed One, if the Board of Directors of each
so determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by United
or Fed One, if its Board of Directors so determines by vote of a majority
of the members of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained herein (subject
to the standard set forth in Section 5.02), which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such
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<PAGE>
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 Fed One, if its Board of Directors so determines by vote of a majority
of the members of its entire Board, in the event that the Merger is not
consummated by December 31, 1998, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the willful
failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth herein.
(d) NO APPROVAL. By Fed One or United, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental Authority
required for consummation of the Merger and the other transactions
contemplated by this Agreement shall have been denied by final
nonappealable action of such Governmental Authority or (ii) any stockholder
approval required by Section 7.01(a) herein is not obtained at the Fed One
Meeting or the United Meeting, except in the case of clause (i) or clause
(ii) that the failure of an action specified therein arises out of or
results from the willful failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party
set forth herein.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the Fed One
Meeting, by United if the Fed One Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of United; or at any time prior to the United
Meeting, by Fed One, if the United Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Fed One.
(f) DECLINE IN UNITED COMMON STOCK PRICE. By Fed One, if the
Fed One Board so determines by a vote of a majority of the members of its
entire board, at any time during the five-day period commencing with the
Determination Date (as defined below), if both of the following conditions
are satisfied:
(i) the number obtained by dividing the Average Closing Price by
the Starting Price (each as defined below) (the "UNITED RATIO") shall be
less than .80; and
(ii) (x) the United Ratio shall be less than (y) the number obtained
by dividing the Final Index Price by the Index Price on the Starting Date
(each as defined below) and subtracting 0.20 from the quotient in this
clause (ii)(y) (such number in this clause (ii)(y) being referred to
herein as the "INDEX RATIO");
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subject, however, to the following three sentences. If Fed One elects to
exercise its termination right pursuant to this Section 8.01(f), it shall give
written notice to United (provided that such notice of election to terminate may
be withdrawn at any time within the aforementioned five-day period). During the
five-day period commencing with its receipt of such notice, United shall have
the option to increase the consideration to be received by the holders of Fed
One Common Stock hereunder, by adjusting the Exchange Ratio (calculated to the
nearest one one-thousandth) to equal the lesser of (x) a number (rounded to the
nearest one one-thousandth) obtained by dividing (A) the product of the Starting
Price, 0.80 and the Exchange Ratio (as then in effect) by (B) the Average
Closing Price and (y) a number (rounded to the nearest one one-thousandth)
obtained by dividing (A) the product of the Index Ratio and the Exchange Ratio
(as then in effect) by (B) the United Ratio. If United so elects within such
five-day period, it shall give prompt written notice to Fed One of such election
and the revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 8.01(f) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified).
For purposes of this Section 8.01(f), the following terms shall have
the meanings indicated:
"Average Closing Price" shall mean the average of the closing
prices of a share of United Common Stock on the NASDAQ reporting
system (as reported in THE WALL STREET JOURNAL, or if not reported
therein, in another authoritative source) during the period of 20
consecutive full trading days ending on the trading day prior to the
Determination Date, rounded to the nearest whole cent.
"Determination Date" shall mean the date on which the last required
approval of a Governmental Entity is obtained with respect to the Merger,
and if requested by United pursuant to Section 6.18, the Bank Merger,
without regard to any requisite waiting period in respect thereof.
"Final Index Price" shall mean the average of the Index Prices for the
20 consecutive full trading days ending on the trading day prior to the
Determination Date.
"Index Group" shall mean the 21 financial institutions or financial
institution holding companies listed below, the common stock of which shall
be publicly traded and as to which there shall not have been a publicly
announced proposal since the Starting Date and before the Determination
Date for any such company to be acquired. In the event that the common
stock of any such company ceases to be publicly traded or a proposal to
acquire any such company is announced after the Starting Date and before
the Determination Date, such company shall be removed from the Index Group,
and the weights (which have been determined based on the number of
outstanding shares of common stock and the market prices of such stock)
attributed to the remaining companies shall be adjusted proportionately for
purposes of determining the Final Index Price. The 21 financial
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institutions or financial institution holding companies and the weights
attributed to them are as follows:
<TABLE>
<CAPTION>
Company Weighting
------- ---------
<S> <C>
Keystone Financial Inc. 11.98%
FirstMerit Corp. 10.05
Valley National Bancorp 8.94
Fulton Financial Corp. 7.16
One Valley Bancorp Inc. 5.37
Park National Corp. 4.68
Riggs National Corp. 4.59
Susquehanna Bancshares Inc.. 4.56
First Financial Bancorp. 4.55
HUBCO Inc. 4.52
Commerce Bancorp Inc. 4.45
Provident Bankshares Corp. 4.26
F&M National Corp. 3.80
Mid Am Inc. 3.61
First Commonwealth Financial 3.54
F.N.B. Corp. 2.98
Trust Co. of New Jersey 2.71
Trans Financial Inc. 2.46
Carolina First Corp. 2.14
USBANCORP Inc. 1.92
First Citizens Bancorp. of SC 1.74
------
100.00%
</TABLE>
"Index Price," on a given date, shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices on such date of the common stocks of the companies comprising the
Index Group, as such prices are reported on the consolidated transactions
reporting system for the market or exchange on which such common stock is
principally traded on such date.
"Starting Date" shall mean the last trading day immediately preceding
the date of the first public announcement of entry into this Agreement.
"Starting Price" shall mean the closing price of a share of United
Common Stock on the NASDAQ reporting system (as reported in THE WALL STREET
JOURNAL, or if not reported therein, in another authoritative source) on
the Starting Date.
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If any company belonging to the Index Group or United declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between and including
the Starting Date and the Determination Date, the prices for the common stock of
such company or United and the Exchange Ratio shall be appropriately adjusted
for the purposes of applying this Section 8.01(f).
8.2 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
9.1 SURVIVAL. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Sections 3.04, 3.06, 6.12, 6.13, 6.16 and this Article IX which shall
survive the Effective Time) or the termination of this Agreement if this
Agreement is terminated prior to the Effective Time (other than Sections
6.03(b), 6.04, 6.05(b), 8.02 and this Article IX which shall survive such
termination).
9.2 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, to
the extent permitted by applicable law, or (ii) amended or modified at any time,
by an agreement in writing between the parties hereto executed in the same
manner as this Agreement, except that (A) after the Fed One Meeting, this
Agreement may not be amended if it would violate the DGCL and (B) after the
United Meeting, this Agreement may not be amended if it would violate the WVCA.
9.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.4 GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of West Virginia
applicable to contracts made and to be performed entirely within such State
(except to the extent that mandatory provisions of federal law or of the DGCL
are applicable).
9.5 EXPENSES. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby,
except that expenses incurred in connection with the printing of the
Registration Statement and joint proxy statement and SEC fees shall be shared
equally between Fed One and United.
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9.6 NOTICES. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Fed One, to:
Fed One Bancorp, Inc.
21 Twelfth Street
Wheeling, WV 26003-3295
Facsimile: (304) 234-3419
Attn: Alan E. Groover
Chairman, President and
Chief Executive Officer
With a copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Facsimile: (202) 347-2172
Attn: Gerard L. Hawkins, Esq.
Raymond A. Tiernan, Esq.
If to United, to:
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Facsimile: (304) 424-8711
Attn: Richard M. Adams
Chairman of the Board and Chief Executive Officer
Steven Wilson
Chief Financial Officer
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Facsimile: (212) 558-3588
Attn: Mark J. Menting, Esq.
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9.7 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Stock Option Agreement represent the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than the Stock Option Agreement). Except for
Sections 6.12, 6.13(c) and 6.16, nothing in this Agreement expressed or implied,
is intended to confer upon any person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.8 INTERPRETATION; EFFECT; ASSIGNMENT; SUCCESSORS. (a) When a
reference is made in this Agreement to Sections, Exhibits or Schedules, such
reference shall be to a Section of, or Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and are not part of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." No provision of this Agreement shall be construed to require Fed
One, United or any of their respective Subsidiaries, affiliates or directors to
take any action which would violate applicable law (whether statutory or common
law), rule or regulation.
(b) A party hereto may not assign any of its rights or obligations
under this Agreement to any other person without the prior written consent of
the other party (provided that any merger, consolidation, share exchange or
similar business combination involving United shall not be deemed to be an
assignment for purposes of this clause (b)). The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
UNITED BANKSHARES, INC.
By: /s/ Steven E. Wilson
---------------------------------
Name: Steven E. Wilson
Title: Executive Vice President and
Chief Financial Officer
FED ONE BANCORP, INC.
By: /s/ Alan E. Groover
---------------------------------
Name: Alan E. Groover
Title: Chairman, President and
Chief Executive Officer
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EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
Reference is made to the execution copy of the Stock Option Agreement
included as Exhibit 2.2 to the Current Report on Form 8-K to which this
Agreement and Plan of Merger is an exhibit.
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EXHIBIT B
FORM OF FED ONE AFFILIATE LETTER
____________, 1998
Fed One Bancorp, Inc.
21 Twelfth Street
Wheeling, WV 26003-3295
Attention:
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Facsimile: (304) 424-8711
Attn: Steven Wilson
Chief Financial Officer
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit
that I am, an "affiliate" of Fed One Bancorp, Inc., a Delaware corporation
("Fed One"), as that term is defined in Rule 145 promulgated by the
Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act"), and/or SEC Accounting Series
Releases 130 and 135. I understand that pursuant to the terms of the
Agreement and Plan of Merger, dated as of February 18, 1998 (the "Merger
Agreement"), by and between United Bankshares, Inc., a West Virginia
corporation ("United"), and Fed One, Fed One plans to merge with and into a
wholly owned subsidiary of United (the "Merger") and that the Merger is
intended to be accounted for under the "pooling-of-interests" accounting
method.
I further understand that as a result of the Merger, I may receive
shares of common stock, par value $2.50 per share, of United ("United Stock")
(i) in exchange for shares of common stock, par value $0.10 per share, of Fed
One ("Fed One Stock") or (ii) as a result of the exercise of Rights (as defined
in the Merger Agreement).
I have carefully read this letter and reviewed the Merger Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of United Stock and Fed One
Stock, to the extent I felt necessary, with my counsel or counsel for Fed One.
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I represent, warrant and covenant with and to United that in the event
I receive any United Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such
United Stock unless (i) such sale, transfer or other disposition has
been registered under the Securities Act, (ii) such sale, transfer or
other disposition is made in conformity with the provisions of Rule
145 under the Securities Act (as such rule may be amended from time to
time), or (iii) in the opinion of counsel in form and substance
reasonably satisfactory to United, or under a "no-action" letter
obtained by me from the staff of the SEC, such sale, transfer or other
disposition will not violate or is otherwise exempt from registration
under the Securities Act.
2. I understand that United is under no obligation to register the sale,
transfer or other disposition of shares of United Stock by me or on
my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
3. I understand that stop transfer instructions will be given to United's
transfer agent with respect to shares of United Stock issued to me as
a result of the Merger and that there will be placed on the
certificates for such shares, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were issued
in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares
represented by this certificate may be transferred only
in accordance with the terms of a letter agreement,
dated __, 199_, between the registered holder hereof
and United, a copy of which agreement is on file at the
principal offices of United."
4. I understand that, unless transfer by me of the United Stock issued to
me as a result of the Merger has been registered under the Securities
Act or such transfer is made in conformity with the provisions of Rule
145(d) under the Securities Act, United reserves the right, in its
sole discretion, to place the following legend on the certificates
issued to my transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares in
a transaction to which Rule 145 under the Securities
Act of 1933 applies. The shares have been acquired by
the holder not with a view to, or for resale in
connection with, any distribution thereof within the
meaning of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise transferred
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except in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs
(3) and (4) above shall be removed by delivery of substitute certificates
without such legends if I shall have delivered to United (i) a copy of a "no
action" letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to United, to the effect that such legend is
not required for purposes of the Act, or (ii) evidence or representations
satisfactory to United that the United Stock represented by such certificates is
being or has been sold in conformity with the provisions of Rule 145(d).
I further represent, warrant and covenant with and to United that I
will not sell, transfer or otherwise dispose of, or reduce my risk relative to,
any shares of Fed One Stock or United Stock (whether or not acquired by me in
the Merger) during the period commencing 30 days prior to effective date of the
Merger and ending at such time as United notifies me that results covering at
least 30 days of combined operations of Fed One and United after the Merger have
been published by United. I understand that United is not obligated to publish
such combined financial results except in accordance with its normal financial
reporting practice.
I further understand and agree that this letter agreement shall apply
to all shares of Fed One Stock and United Stock that I am
I also understand that the Merger is intended to be treated as a
"pooling of Interests" for accounting purposes, and I agree that if Fed One or
United advises me in writing that additional restrictions apply to my ability
to sell, transfer, or otherwise dispose of
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Fed One Stock or United Stock in order for United to be entitled to use the
pooling of interests accounting method, I will abide by such restrictions.
Very truly yours,
By
-------------------------
Name:
Accepted this ____ day of
_______________, 1998.
Fed One Bancorp, Inc.
By
--------------------------
Name:
Title:
United Bankshares, Inc.
By
--------------------------
Name:
Title:
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EXHIBIT C
FORM OF UNITED AFFILIATE LETTER
____________, 1998
United Bankshares, Inc.
514 Market Street
Parkersburg, WV 26101
Facsimile: (304) 424-8711
Attn: Steven Wilson
Chief Financial Officer
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that
I am, an "affiliate" of United, a West Virginia corporation ("United"), as that
term is defined in the Securities and Exchange Commission's Accounting Series
Releases 130 and 135. I understand that pursuant to the terms of the Agreement
and Plan of Merger, dated as of February 18, 1998 (the "Merger Agreement"), by
and between United and Fed One Bancorp, Inc., a Delaware corporation ("Fed
One"), Fed One plans to merge with and into a wholly owned subsidiary of United
(the "Merger") and that the merger is intended to be accounted for under the
"pooling-of-interests" accounting method.
I have carefully read this letter and reviewed the Merger Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of common stock of United and
Fed One, to the extent I felt necessary, with my counsel or counsel for United.
I hereby represent, warrant and covenant with and to United that:
1. I will not sell, transfer or otherwise dispose of, or reduce my
risk relative to, any shares of common stock of Fed One or
United(whether or not acquired by me in the Merger) during the
period commencing 30 days prior to the effective date of the
Merger and ending at such time as United notifies me that results
covering at least 30 days of combined operations of Fed One and
United after the Merger have been published by United. I
understand that United is not obligated to publish such combined
financial results except in accordance with its normal financial
reporting practice.
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<PAGE>
2. I further understand and agree that this letter agreement shall
apply to all shares of common stock of Fed One and United that I
am deemed to beneficially own pursuant to applicable federal
securities laws.
3. If United advises me in writing that additional restrictions
apply to my ability to sell, transfer, or otherwise dispose of
common stock of Fed One or United in order for United to be
entitled to use the "pooling-of-interests" accounting method, I
will abide by such restrictions.
Very truly yours,
By
------------------------
Name:
Accepted this ____ day of
_______________, 1998.
United Bankshares, Inc.
By
-------------------------------
Name:
Title:
-58-
<PAGE>
ANNEX A
FORM OF SUPPLEMENT FOR MERGER SUB ACCESSION
TO MERGER AGREEMENT
SUPPLEMENT, dated as of the [ ] day of [ ], 1998 (this
"SUPPLEMENT"), to the Agreement and Plan of Merger, dated as of February 18,
1998 (as amended from time to time in accordance with the terms thereof, the
"MERGER AGREEMENT"), by and between United Bankshares, Inc. ("UNITED") and Fed
One Bancorp, Inc. ("FED ONE") .
WHEREAS, terms used but not otherwise defined herein have the meanings
specified in the Merger Agreement; and
WHEREAS, pursuant to Section 2.01 of the Merger Agreement, United has
determined to consummate the Merger in part through the merger of Fed One with
and into [insert name(s) of Merger Sub(s)] ([each a][the] "MERGER SUB").
NOW, THEREFORE, by its execution of this Supplement, as of the date
hereof, [each of] the undersigned (i) adopts and becomes a party to the
Acquisition Agreement, as required by Section 2.01 thereof and (ii) agrees to
perform all its obligations and agreements set forth therein.
IN WITNESS WHEREOF, this Supplement has been duly executed and
delivered by the undersigned, duly authorized thereunto as of the date first
hereinabove written.
[INSERT NAME OF MERGER SUB]
By:
--------------------------------
Name:
Title:
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<PAGE>
EXHIBIT 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 18, 1998, between United
Bankshares, Inc., a West Virginia corporation ("Grantee"), and Fed One Bancorp,
Inc., a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as a condition to Grantee's entering into the Merger Agreement,
Issuer has agreed to grant Grantee the Option (as hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 474,800 fully paid and nonassessable shares of the common stock,
par value $0.10 per share, of Issuer ("Common Stock") at a price per share equal
to $33.50; PROVIDED, HOWEVER, that in the event Issuer issues or agrees to
issue any shares of Common Stock (other than shares of Common Stock issued
pursuant to stock options or restricted stock grants granted pursuant to any
employee benefit plan prior to the date hereof) at a price less than such
average price per share (as adjusted pursuant to subsection (b) of Section 5),
such price shall be equal to such lesser price (such price, as adjusted if
applicable, the "Option Price"); PROVIDED, FURTHER, that in no event shall the
number of shares for which this Option is exercisable exceed 19.9% of the issued
and outstanding shares of Common Stock. The number of shares of Common Stock
that may be received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement and other than pursuant to an event described in
Section 5ement, the number of shares of Common Stock subject to the Option shall
be increased or decreased, as appropriate, so that, after such event, such
number equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section l(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer to issue shares in breach of any
provision of the Merger Agreement.
<PAGE>
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time; (ii) termination of the Merger
Agreement in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event except a termination by
Grantee pursuant to Section 8.01(b) or Section 8.01(e) of the Merger Agreement
(but only in each case if the breach giving rise to the termination was willful)
(each, a "Listed Termination"); or (iii) the passage of fourteen (14) months (or
such longer period as provided in Section 10) after termination of the Merger
Agreement if such termination follows the occurrence of an Initial Triggering
Event or is a Listed Termination. The term "Holder" shall mean the holder or
holders of the Option pursuant to this Agreement. Notwithstanding anything to
the contrary contained herein, (i) the Option may not be exercised (nor may
Grantee's rights under Sections 7, 8, 9, 12 or 14 hereof be exercised) at any
time when Grantee shall be in willful material breach of any of its covenants or
agreements contained in the Merger Agreement such that Issuer shall be entitled
to terminate the Merger Agreement pursuant to Section 8.01(b) thereof as a
result of such a willful material breach and (ii) this Agreement shall
automatically terminate upon the proper termination of the Merger Agreement (x)
by Issuer pursuant to Section 8.01(b) thereof as a result venants or agreements
contained in the Merger Agreement, (y) by Issuer or Grantee pursuant to Section
8.01(d)(ii) if Grantee's shareholders do not approve the Articles Amendment, or
(z) by Issuer or Grantee pursuant to Section 8.01(d)(i).
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Significant Subsidiary (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer (an "Issuer Subsidiary"), without having
received Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having
the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer (the
"Issuer Board") shall have recommended that the shareholders of Issuer
approve or accept any Acquisition Transaction other than as contemplated by
the Merger Agreement. For purposes of this Agreement, (a) "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions (i) involving solely Issuer and/or
one or more wholly-owned (except for directors' qualifying shares and a de
minimis number of other shares)
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<PAGE>
Subsidiaries of the Issuer, PROVIDED, any such transaction is not
entered into in violation of the terms of the Merger Agreement, or (ii)
in which the shareholders of Issuer immediately prior to the completion
of such transaction own at least 50% of the Common Stock of the Issuer
(or the resulting or surviving entity in such transaction) immediately
after completion of such transaction, PROVIDED any such transaction is
not entered into in violation of the terms of the Merger Agreement),
(y) a purchase, lease or other acquisition of all or any substantial
part of the assets or deposits of Issuer or any Issuer Subsidiary, or
(z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing
10% or more of the voting power of Issuer or any Issuer Subsidiary and
(b) "Subsidiary" shall have the meaning set forth in Rule 12b-2 under
the 1934 Act;
(ii) Any person other than the Grantee or any Grantee
Subsidiary shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
adopt and approve the Merger Agreement and the Merger at a meeting which
has been held for that purpose or any adjournment or postponement thereof,
or such meeting shall not have been held in violation of the Merger
Agreement or shall have been cancelled prior to termination of the Merger
Agreement if, prior to such meeting (or if such meeting shall not have been
held or shall have been cancelled, prior to such termination), it shall
have been publicly announced that any person (other than Grantee or any of
its Subsidiaries) shall have made, or publicly disclosed an intention to
make, a bona fide proposal to engage in an Acquisition Transaction;
(iv) The Issuer Board (without having received Grantee's prior
written consent) shall have withdrawn or modified (or publicly announced
its intention to withdraw or modify) in any manner adverse in any respect
to Grantee its recommendation that the shareholders of Issuer approve the
transactions contemplated by the Merger Agreement, or Issuer or any Issuer
Subsidiary shall have authorized, recommended or proposed (or publicly
announced its intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the SEC with respect to a potential vote by its shareholders
to approve the issuance of shares to be offered in such an exchange offer);
-3-
<PAGE>
(vi) After an overture is made by a third party to Issuer to
engage in an Acquisition Transaction, Issuer shall have willfully breached
any covenant or obligation contained in the Merger Agreement, and such
breach (x) would entitle Grantee to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or both) and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vii) Any person other than Grantee or any Grantee Subsidiary
shall have filed an application or notice with the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") or other federal
or state bank regulatory or antitrust authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) of the second sentence thereof shall
be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased
-4-
<PAGE>
pursuant to the exercise of the Option in immediately available fis Agreement
to Issuer at its principal executive offices, PROVIDED that the failure or
refusal of the Issuer to designate such a bank account or accept surrender of
this Agreement shall not preclude the Holder from exercising the Option .
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number
of shares of Common Stock purchased by the Holder and, if the Option should
be exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement, dated as of February 18, 1998,
between the registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of Issuer and will be provided
to the holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act") in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a copy of
a letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that such legend
is not required for purposes of the 1933 Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference in
the opinion of Counsel to the Holder; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are
both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall h 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>
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 denominatiame terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any Stock Option Agreements and related
Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the
-6-
<PAGE>
Option Price shall be subject to adjustment from time to time as provided in
this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision
shall be made so that, in the event that any additional shares of Common
Stock are to be issued or otherwise become outstanding as a result of any
such change (other than pursuant to an exercise of the Option), the number of
shares of Common Stock that remain subject to the Option shall be adjusted so
that, after such issuance and together with shares of Common Stock previously
issued pursuant to the exercise of the Option (as adjusted on account of any
of the foregoing changes in the Common Stock), it equals 19.9% of the number
of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within nine (9) months (or such later period as provided
in Section 10) of such Subsequent Triggering Event (whether on its own behalf
or on behalf of any subsequent holder of this Option (or part thereof) or any
of the shares of Common Stock issued pursuant hereto), promptly prepare, file
and keep current a registration statement under the 1933 Act covering any
shares issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition
of any shares of Common Stock issued upon total or partial exercise of this
Option ("Option Shares") in accordance with any plan of disposition requested
by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement promptly to become effective and then to remain
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee
shall have the right to demand two such registrations. The Issuer shall bear
the costs of such registrations (including, but not limited to, Issuer's
attorneys' fees, printing costs and filing fees, except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Grantee's counsel related thereto). The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of Option Shares as
provided above, Issuer is in registration with respect to an underwritten
public offering by Issuer of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none,
the sole underwriter or underwriters, of
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<PAGE>
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,Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; PROVIDED, HOWEVER, that after any such
required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be sold by the Holder and Issuer in the aggregate;
and PROVIDED FURTHER, HOWEVER, that if such reduction occurs, then Issuer
shall file a registration statement for the balance as promptly as
practicable thereafter as to which no reduction pursuant to this Section 6
shall be permitted or occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to
be filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for Issuer.
Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be
entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall the number of registrations that
Issuer is obligated to effect be increased by reason of the fact that there
shall be more than one Holder as a result of any assignment or division of
this Agreement.
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
Holdere") equal to the amount by which (A) the Market/Offer Price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which this Option may then be exercised and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within 135 days
of such occurrence (or such later period as provided in Section 10), Issuer
(or any successor thereto) shall repurchase such number of the Option Shares
from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the Market/Offer Price multiplied by the number
of Option Shares so designated. The term "Market/Offer Price" shall mean the
highest of (i) the price per share of Common Stock at which a tender or
exchange offer therefor has been made, (ii) the price per share of Common
Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the
six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the
required repurchase of Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of Issuer's assets or
deposits, the sum of the net price paid in such sale for such assets or
deposits and the current market value of the remaining net assets of Issuer
as determined by a nationally recognized investment banking firm selected by
the Holder or the Owner, as the case may be, and reasonably acceptable to
Issuer, divided by the number of shares of Common Stock of Issuer outstanding
at the time of such
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<PAGE>
sale. In determining the Market/Offer Price, the value of consideration other
than cash shall be determined by a nationally recognized investment banking
firm selected by the Holder or Owner, as the case may be, and reasonably
acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with the
provisions of this Section 7. As promptly as practicable, and in any event
within five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to
the Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited undence of administrative
policy, from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is
no longer so prohibited; PROVIDED, HOWEVER, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section
7 is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase
Price, respectively, in full (and Issuer hereby undertakes to use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option and/or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase
Price that Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Agreement evidencing the right
of the Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the surrendered
Agreement was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, and/or (B) toicate for the Option
Shares it is then so prohibited from repurchasing.
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<PAGE>
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%;
, provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into
any person, other than Grantee or a Grantee Subsidiary, or engage in a plan
of exchange with any person, other than Grantee or a Grantee Subsidiary, and
Issuer shall not be the continuing or surviving corporation of such
consolidation or merger or the acquirer in such plan of exchange, (ii) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, but, in connection with
such merger or plan of exchange, the then outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
person or cash or any other property or the then outstanding shares of Common
Stock shall after such merger or plan of exchange represent less than 50% of
the outstanding shares and share equivalents of the merged or acquiring
company, or (iii) to sell or otherwise transfer all or a substantial part of
its or the Issuer Subsidiary's assets or deposits to any person, other than
Grantee or a Grantee Subsidiary, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option
shall, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, 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.
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(iii) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger, share exchange or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger, share exchange or
sale; PROVIDED that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which controls
or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
PROVIDED that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder or
Holders of the Substitute Option in substantially the same form as this
Agreement (after giving effect for such purpose to the provisions of Section
9), which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be
the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section
8(a) and the denominator of which shall be the number of shares of Substitute
Common Stock for which theof the foregoing paragraphs, shall the Substitute
Option be exercisable for more than 19.9% of the shares of Substitute Common
Stock outstanding prior to exercise of the Substitute Option. In the event
that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall
be determined by a nationally recognized investment banking firm selected by
the Holder and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
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9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option Issuer shall
repurchase the Substitute Option from the Substitute Option Holder at a price
(the "Substitute Option Repurchase Price") equal to the amount by which (i)
the Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise
price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be
exercised, and at the request of the owner (the "Substitute Share Owner") of
shares of Substitute Common Stock (the "Substitute Shares"), the Substitute
Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute ng price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement)
and/or certificates for Substitute Shares accompanied by a written notice or
notices stating that the Substitute Option Holder or the Substitute Share
Owner, as the case may be, elects to require the Substitute Option Issuer to
repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable and in any
event within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing the Substitute Option and/or the Substitute Shares in part
or in full, the Substitute Option Issuer following a request for repurchase
pursuant to this Section 9 shall immediately so notify the Substitutr 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
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<PAGE>
and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order
to accomplish such repurchase), the Substitute Option Holder and/or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of
prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute
Share Owner, as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute Option
Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that number
of shares of the Substitute Common Stock obtained by multiplying the number
of shares of the Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by
a fraction, the nuthe Substitute Option Repurchase Price less the portion
thereof theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, and/or (B) to
the Substitute Share Owner, a certificate for the Substitute Option Shares it
is then so prohibited from repurchasing.
10. The 135-day, 6-month, 9-month or 14-month periods for exercise of
certain rights under Sections 2, 6, 7, 12 and 14 shall be extended: (i) to
the extent necessary to obtain all regulatory approvals for the exercise of
such rights (for so long as the Holder, Owner, Substitute Option Holder or
Substitute Share Owner, as the case may be, is using commercially reasonable
efforts to obtain such regulatory approvals), and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise,
PROVIDED that any such extension pursuant to this clause (ii) shall not
exceed two months.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Issuer Board prior to the date hereof and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly
and validly executed and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant thereto, will be duly authorized, validly issued,
fully paid,
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<PAGE>
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and
deliver this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed and
delivered by Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that
in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express pros hereunder
within six (6) months following such Subsequent Triggering Event (or such
later period as is provided in Section 10); PROVIDED, HOWEVER, that until the
date 15 days following the date on which the Federal Reserve Board has
approved an application by Grantee to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of
2% of the voting shares of Issuer, (iii) an assignment to a single party
(E.G., a broker or investment banker) for the purpose of conducting a widely
dispersed public distribution on Grantee's behalf or (iv) any other manner
approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to
the Federal Reserve Board under the BHCA for approval to acquire the shares
issuable hereunder, but Grantee shall not be obligated to apply to state
banking authorities for approval to acquire the shares of Common Stock
issuable hereunder until such time, if ever, as it deems appropriate to do
so.
14. (a) Grantee may, at any time following a Repurchase Event and
prior to the occurrence of an Exercise Termination Event (or such later
period as provided in Section 10), relinquish the Option (together with any
Option Shares issued to and then owned by Grantee) to Issuer in exchange for
a cash fee equal to the Surrender Price (as defined below); PROVIDED,
HOWEVER, that Grantee may not exercise its rights pursuant to this Section
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<PAGE>
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 ith
respect to any Option Shares and (ii) minus, if applicable, the sum of (A)
the excess of (1) the net cash amounts, if any, received by Grantee pursuant
to the arms' length sale of Option Shares (or any other securities into which
such Option Shares were converted or exchanged) to any unaffiliated party,
over (2) Grantee's purchase price of such Option Shares and (B) the net cash
amounts, if any, received by Grantee pursuant to an arm's length sale of a
portion of the Option to an unaffiliated party.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to relinquish the Option and Option Shares, if any, in
accordance with the provisions of this Section 14 and (ii) the Surrender
Price. The Surrender Price shall be payable in immediately available funds
on or before the second business day following receipt of such notice by
Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify
Grantee and thereafter deliver or cause to be delivered, from time to time,
to Grantee, the portion of the Surrender Price that it is no longer
prohibited from paying, within five business days after the date on which
Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if Issuer at any
time after delivery of a notice of surrender pursuant to paragraph (b) of
this Section 14 is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from paying to Grantee the Surrender
Price in full, (i) Issuer shall (A) use its reasonable best efforts to obtain
all required regulatory and legal approvals and to file any required notices
as, (B) within five days of the submission or receipt of any documents
relating to any such regulatory and legal approvals, provide Grantee with
copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions
with any relevant regulatory or other third party reasonably related to the
same and (ii) Grantee may revoke such notice of surrender by delivery of a
notice of revocation to Issuer and, upon delivery of such notice of
revocation, the Exercise Termination Date shall be extended to a date six
months from the date on which the Exercise Termination Date would have
occurred if not for the provisions of this Section 14(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all
rights pursuant to this Section 14).
15. (a) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed
$6,000,000 and, if it otherwise would exceed such amount, the Grantee, at its
sole election, shall either (i) reduce the number of shares of Common Stock
subject to this Option, (ii) deliver to the Issuer for cancellation Option
Shares previously purchased by Grantee, (iii) pay cash to the Issuer or (iv)
any combination thereof, so that Grantee's actually realized Total Profit
shall not exceed
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<PAGE>
$6,000,000 after taking into account the foregoing actions. As used herein,
the term "Total Profit" shall mean the aggregate amount (before taxes) of the
following: (i) the amount received by Grantee pursuant to Issuer's
repurchase of the Option (or any portion thereof) pursuant to Section 7
hereof, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of the Option Shares pursuant to Section 7 hereof, less (y) the
Grantee's purchase price for such Option Shares, (iii)(x) the net cash
amounts received by Grantee pursuant to the sale of Option Shares (or any
other securities into which such any unaffiliated party, less (y) the
Grantee's purchase price of such Option Shares, (iv) any amounts received by
Grantee on the transfer of the Option (or any portion thereof) to any
unaffiliated party and (v) any equivalent amount with respect to the
Substitute Option.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as hereinafter defined) of more
than $6,000,000, provided that nothing in this sentence shall restrict any
exercise of the Option permitted hereby on any subsequent date. As used
herein, "Total Notional Profit" with respect to any number of shares as to
which Grantee may propose to exercise this Option shall be the Total Profit
determined as of the date of such proposed exercise assuming that this Option
were exercised on such date for such number of shares and assuming that such
shares, together with all other Option Shares held by Grantee and its
affiliates as of such date, were sold for cash at the closing market price
for the Common Stock as of the close of business on the preceding trading day
(less customary brokerage commissions).
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If forolder is not permitted to acquire,
or Issuer is not permitted to repurchase pursuant to Section 7, the full
number of shares of Common Stock provided in Section l(a) hereof (as adjusted
pursuant to Section l(b) or Section 5 hereof), it is the express intention of
Issuer to allow the Holder to acquire or to require Issuer to repurchase such
lesser number of shares as may be permissible, without any amendment or
modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in
the Merger Agreement.
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19. This Agreement shall be governed by and construed in accordance
with the laws of the State of West Virginia, without regard to the conflict
of law principles thereof (except to the extent that mandatory provisions of
Federal law or of the DGCL are applicable).
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successed to confer
upon any party, other than the parties hereto, and their respective
successors except as assignees, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly
provided herein.
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
FED ONE BANCORP, INC.
By: /s/ Alan E. Groover
-----------------------------------
Name: Alan E. Groover
Title: Chairman, President and
Chief Executive Officer
UNITED BANKSHARES, INC.
By: /s/ Steven E. Wilson
------------------------------------
Name: Steven E. Wilson
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT 2.3
AGREEMENT
THIS AGREEMENT is made between United Bankshares, Inc. ("United")
and Alan E. Groover (the "Executive") in connection with that certain
Agreement and Plan of Merger between United and Fed One Bancorp., Inc. (the
"Merger Agreement")
WITNESSETH:
WHEREAS, prior to the Effective Date, which term is defined in the
Merger Agreement and subsequently referred to herein, the Executive was
Chairman, President and Chief Executive Officer of Fed One Bancorp., Inc. and
Fed One Bank (collectively referred to as the "Employers"); and
WHEREAS, United is acquiring the business and assets of the
Employers pursuant to the Merger Agreement; and
WHEREAS, as of the Effective Date, the Executive shall no longer be
employed by Employers; and
WHEREAS, following the Effective Date, the Executive shall be a
member of the Board of Directors of United and United wishes to engage the
Executive to render consultive and advisory services with regard to the
business of Employers; and
WHEREAS, the Executive desires to accept such engagement, upon the
terms and conditions set forth herein.
NOW, THEREFORE, United and the Executive (collectively referred to
as the "Parties") agree as follows:
1. DUTIES AND TERM. United hereby retains the Executive as a general advisor
and consultant on all matters pertaining to the business and assets of
Employers being acquired by United, and to render all other services
relevant thereto, for the 18-month period immediately following the
Effective Date (the "Consulting Period"). During the Consultancy Period,
the Executive shall not be required to provide services pursuant to this
Agreement for more than 5 hours in any week or 20 hours in any monthly
period. Such services shall be provided in Wheeling, West Virginia or as
otherwise may be agreed to by the parties. United shall reimburse the
Executive for any travel or other expenses which may be incurred by the
Executive in providing services to United pursuant to this Agreement.
2. COMPENSATION AND BENEFITS. United shall compensate Executive for his
services pursuant to this Agreement, as follows:
<PAGE>
2.1 United shall pay the Executive compensation in the amount of One
Thousand Dollars ($1,000) per month for 18 months beginning as of the
Effective Date and terminating with the eighteenth such monthly
payment.
2.2 On the Effective Date, United shall transfer to Executive all right,
title and interest in the automobile driven by Executive and owned by
Employers (the "Automobile"). As of the Effective Date, United shall
not be responsible for and shall not pay any costs of insurance
coverage, repairs, maintenance, or other incidental expenses including
license, fuel and oil, relating to the Automobile.
2.3 United shall permit for a period commencing on the date that United
and United National Bank are no longer required to provide benefits to
Mr. Groover pursuant to Section 5(d)(B) of the Employment Agreements,
dated June 10, 1997 between Mr. Groover and each of the Employers (the
"Employment Agreements") and ending on the earlier of (a) the
Executive's 65th birthday, or (b) the date of the Executive's
full-time employment by an employer (provided that the Executive is
entitled to and accepts, under the terms of such employment, benefits
substantially similar to those described in this paragraph 2.3), the
Executive and his spouse to participate in all group insurance, life
insurance, health and accident, and disability plans, programs and
arrangements offered by United to its executive employees and their
spouses. In the event that the Executive is not entitled to
participate in any of the foregoing plans, programs or arrangements,
United shall provide, or arrange to provide, at its sole expense,
substitute coverage on the same terms as provided by such plan,
program or arrangement.
3. RESTRICTIVE COVENANT. In recognition of the Executive's access to the
various protectable business interests of Employers and United and the
Executive's knowledge and expertise relating to the business of Employers
and United, the Executive agrees to the following terms and conditions:
Following the Effective Date, the Executive shall not disclose (other than
pursuant to a court order or pursuant to providing consulting services
hereunder) to any person or entity not associated with United any business,
financial or other confidential and/or proprietary information of United
and/or its customers which is not (i) available to the general public
and/or (ii) generally known outside of United and its subsidiaries.
4. DISABILITY OF THE EXECUTIVE. The Executive's inability to render services
to United because of temporary or permanent illness, disability or
incapacity shall not constitute a failure to perform his duties as set
forth in Paragraph 1 and shall not be deemed a breach or default by him.
5. DEATH OF THE EXECUTIVE. Should the Executive die during the term of this
Agreement, the Agreement shall terminate as of the last day of the month of
his death. United
2
<PAGE>
shall pay to the Executive's estate any remaining consulting payments set
forth in Paragraph 2.1.
6. INDEPENDENT CONTRACTOR STATUS. In furnishing the services hereunder, the
Executive shall be acting as an independent contractor in relation to
United.
7. NOTICES AND COMMUNICATIONS. Any notice, payment, request, instruction or
other document to be delivered pursuant to this Agreement shall be deemed
sufficiently given if in writing and delivered personally or mailed by
registered mail, return receipt requested, to United at 514 Market Street,
Parkersburg, West Virginia 26102, or to the Executive at 19 Highland Park,
Wheeling, West Virginia 26003, or to any changed address that the Parties
may designate by like notice.
8. ARBITRATION. Any dispute between the parties arising out of or with
respect to this Agreement shall be resolved by the sole and exclusive
remedy of binding arbitration. The arbitration shall be conducted in
Parkersburg, West Virginia under the auspices of and in accordance with the
rules of the American Arbitration Association. Any decision issued by an
arbitrator in accordance with this provision shall be final and binding on
the parties thereto and not subject to appeal or civil litigation.
9. NO WAIVER. No delay or failure by either party in exercising any right
under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right.
10. AMENDMENT. No amendment, modification or termination of, or addition to,
this Agreement shall be valid unless and until executed in writing by the
Parties.
11. BINDING AGREEMENT. This Agreement shall be binding on and inure to the
benefit of United and any of its successors, whether by merger,
consolidation, sale of assets or otherwise.
12. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13. VALIDITY. If any provision hereof, or any portion of any provision hereof,
is held to be invalid, illegal or unenforceable, all other provisions shall
remain in force and effect as if such invalid, illegal or unenforceable
provision or portion thereof had not been included herein. If any
provision or portion of any provision of this Agreement is so broad as to
be unenforceable, such provision or a portion thereof shall be interpreted
to be only so broad as is enforceable.
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<PAGE>
14. GOVERNING LAW. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the Untied States where
applicable and otherwise by the substantive laws of the State of West
Virginia.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
United and the Executive regarding the consulting services and related
matters set forth herein. Notwithstanding anything contained herein to be
contrary, nothing contained in this Agreement shall affect any obligation
of either of the Employers or their successors under the Employment
Agreements.
IN WITNESS WHEREOF, this Agreement has been executed as of the 18th
day of February, 1998.
/s/ Alan E. Groover
------------------------------------------
Alan E. Groover
UNITED BANKSHARES, INC.
By: /s/ Steven E. Wilson
--------------------------------------
Name: Steven E. Wilson
Title: Executive Vice President and Chief
Financial Officer
4
<PAGE>
EXHIBIT 99.1
NEWS RELEASE
FED ONE RELEASE DATE: February 18, 1998
BANCORP CONTACT: United Bankshares, Inc. Fed One Bancorp, Inc.
Steven E. Wilson Lisa K. DiCarlo
Executive Vice President Senior Vice President
and Chief Financial and Treasurer
Officer
(304)424-8800 (304)234-1100
FROM: United Bankshares, Inc. Fed One Bancorp, Inc.
514 Market Street 21 12th Street
Parkersburg, WV 26101 Wheeling, WV 26003
UNITED BANKSHARES, INC. AND FED ONE BANCORP, INC.
ANNOUNCE AGREEMENT TO MERGE AND CREATE
$4 BILLION BANKING COMPANY
COMBINED COMPANY TO RANK AMONG NATION'S TOP 100 IN MARKET CAPITALIZATION
United Bankshares, Inc. (UBSI), and Fed One Bancorp, Inc. (FOBC),
jointly announced today the signing of a definitive agreement to merge. The
transaction will add approximately $367 million in assets and twelve full
service banking offices to United's franchise to bring total company assets
to $4 billion and total offices to eighty-two.
The agreement will be structured as a pooling of interests and will
provide for a tax-free exchange of 0.75 of a share of United common stock for
each common share of Fed One. Based on United's February 17th closing stock
price, the transaction would have a value of approximately $36.47 per share,
or an aggregate consideration of approximately $87 million based on Fed One's
2.4 million common shares outstanding.
Richard M. Adams, Chairman and Chief Executive Officer of United, said,
"Fed One's franchise significantly enhances United's market share in the
northern panhandle of West Virginia. In addition, this will represent
United's first entry into the state of Ohio. We expect the transaction to be
nondilutive to earnings per share and should enhance our franchise value.
The merger will strengthen United's current offices in the Wheeling and
Morgantown areas and will allow United to add offices in the eastern Ohio
region. Further, following the combination United will rank in the top 100
banking companies in the Nation in terms of market capitalization."
Fed One's Chairman, President and Chief Executive Officer, Alan E.
Groover, said, "I am quite pleased that Fed One is joining United. We will
now be able to offer our customers many new financial products and services
including cash management and trust services." Groover will become a member
of United Bankshares' Board of Directors.
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Following completion of the proposed merger with Fed One, United will
have consolidated assets over $4 billion with 82 full service offices in West
Virginia, Ohio, Virginia, Maryland and Washington, D.C. As part of the
merger, Fed One Bank, the subsidiary of Fed One, will be merged with United
National Bank, United's lead banking subsidiary. The proposed merger is
expected to close early in the fourth quarter of 1998.
United is currently awaiting final regulatory approval and the approval
of its shareholders and the shareholders of George Mason Bankshares, Inc.,
Fairfax, Virginia, to consummate its merger with George Mason early in the
second quarter of 1998. The merger with George Mason, with $1 billion
assets, will add to United's existing Northern Virginia presence and
represents an in-market transaction that will give United twenty-seven
offices in this strong economic area.
The common stock of United Bankshares and Fed One stock are traded on
the NASDAQ (National Association of Securities Dealers Quotation System)
National Market System under the quotation symbols "UBSI" and "FOBC,"
respectively.
