AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
MUTUAL SAVINGS BANK, F.S.B.
AND
AMERICAN NATIONAL BANKSHARES INC.
Dated as of September 26, 1995
TABLE OF CONTENTS
Page
Parties 1
Preamble 1
ARTICLE ONE - TRANSACTIONS AND TERMS OF MERGER 1
1.1 Merger 1
1.2 Time and Place of Closing 2
1.3 Effective Time 2
ARTICLE TWO - TERMS OF MERGER 2
2.1 Business of Resulting Association 2
2.2 Assumption of Rights 2
2.3 Assumption of Liabilities 3
2.4 Articles of Association 3
2.5 Bylaws 3
2.6 Directors and Officers 3
ARTICLE THREE - MANNER OF CONVERTING SHARES 3
3.1 Conversion of Shares 3
3.2 Anti-Dilution Provisions 4
3.3 Shares Held by Mutual or ANB 4
3.4 Dissenting Shareholders 4
3.5 Fractional Shares 4
3.6 Conversion of Stock Options 4
ARTICLE FOUR - EXCHANGE OF SHARES 6
4.1 Exchange Procedures 6
4.2 Rights of Former Mutual Shareholders 6
ARTICLE FIVE - REPRESENTATIONS AND WARRANTIES OF MUTUAL 7
5.1 Organization, Standing, and Power 7
5.2 Authority; No Breach By Agreement 7
5.3 Capital Stock 8
5.4 Mutual Subsidiaries 9
5.5 Financial Statements 9
5.6 Absence of Undisclosed Liabilities 10
5.7 Absence of Certain Changes or Events 10
5.8 Adequacy of Reserves 10
5.9 Tax Matters 11
5.10Assets 11
5.11Environmental Matters 12
5.12Compliance With Laws 13
5.13Labor Relations 13
5.14Employee Benefit Plans 13
5.15Material Contracts 16
5.16Legal Proceedings 16
5.17Reports 16
5.18Statements True and Correct 17
5.19Accounting, Tax, and Regulatory Matters 17
5.20Charter Provisions 18
5.21Support Agreements 18
ARTICLE SIX - REPRESENTATIONS AND WARRANTIES OF ANB 18
6.1 Organization, Standing, and Power 18
6.2 Authority; No Breach By Agreement 18
6.3 Capital Stock 19
6.4 ANB Subsidiaries 19
6.5 Financial Statements 20
6.6 Absence of Undisclosed Liabilities 20
6.7 Absence of Certain Changes or Events 21
6.8 Adequacy of Reserves 21
6.9 Assets 22
6.10Compliance With Laws 22
6.11Legal Proceedings 22
6.12Reports 23
6.13Statements True and Correct 23
6.14Authority of American National 24
6.15Accounting, Tax, and Regulatory Matters 24
ARTICLE SEVEN - CONDUCT OF BUSINESS PENDING
CONSUMMATION 24
7.1 Covenants of Both Parties 24
7.2 Covenants of Mutual 24
7.3 Covenants of ANB 27
7.4 Adverse Changes in Condition 27
7.5 Reports 27
ARTICLE EIGHT - ADDITIONAL AGREEMENTS 27
8.1 Registration Statement; Joint Proxy Statement;
Shareholder Approval 27
8.2 Applications 28
8.3 Agreement as to Efforts to Consummate 28
8.4 Investigation and Confidentiality 29
8.5 Press Releases 29
8.6 Certain Actions 29
8.7 Tax Matters 30
8.8 Agreements of Affiliates 30
8.9 Employee Benefits and Contracts 30
8.10Indemnification 31
8.11Organization of Mortgage Subsidiary 32
8.12Certain Director and Officer Positions 32
8.13Certain Modifications 33
ARTICLE NINE - CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE 33
9.1 Conditions to Obligations of Each Party 33
9.2 Conditions to Obligations of ANB 34
9.3 Conditions to Obligations of Mutual 35
ARTICLE TEN - TERMINATION 37
10.1Termination 37
10.2Effect of Termination 38
10.3Non-Survival of Representations and Covenants 38
ARTICLE ELEVEN - MISCELLANEOUS 38
11.1Definitions 38
11.2Expenses 46
11.3Brokers and Finders 47
11.4Entire Agreement 47
11.5Amendments 47
11.6Waivers 47
11.7Assignment 48
11.8Notices 48
11.9Governing Law 49
11.10 Counterparts 49
11.11 Captions 49
11.12 Severability 49
Signatures 49
LIST OF EXHIBITS
Exhibit Number Description
1. Form of Plan of Merger and Combination between
Mutual and American National. ( 1.1, 11.1).
2. Form of Support Agreement. ( 5.21).
3. Form of Affiliate Agreement. ( 8.8).
4. Form of Employment Agreement. ( 8.12(c)).
5. Matters as to which Muldoon, Murphy & Faucette
will opine. ( 9.2(e)).
6. Matters as to which Alston & Bird will opine.
( 9.3(d)).
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered into as of September 26, 1995,
by and between MUTUAL SAVINGS BANK, F.S.B. ("Mutual"), a federal
stock savings bank organized and existing under the Laws of the
United States, with its principal office located in Danville,
Virginia; and AMERICAN NATIONAL BANKSHARES INC. ("ANB"), a
corporation organized and existing under the Laws of the
Commonwealth of Virginia, with its principal office located in
Danville, Virginia.
Preamble
The Boards of Directors of Mutual and ANB are of the
opinion that the transactions described herein are in the best
interests of the parties and their respective shareholders. This
Agreement provides for the acquisition of Mutual by ANB pursuant
to the merger (the "Merger") of Mutual with and into American
National Bank and Trust Company ("American National"), a national
banking association and a wholly owned subsidiary of ANB. At the
effective time of the Merger, the outstanding shares of the
common stock of Mutual shall be converted into shares of the
common stock of ANB (except as provided herein). As a result,
shareholders of Mutual shall become shareholders of ANB, and the
business and operations of Mutual shall be conducted through, and
as a part of, American National. The transactions described in
this Agreement are subject to the approvals of the shareholders
of Mutual and ANB, the Office of the Comptroller of the Currency,
appropriate state regulatory authorities, and the satisfaction of
certain other conditions described in this Agreement. It is the
intention of the parties to this Agreement that the Merger
(i) for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code, and that the exchange of Mutual common
stock, to the extent exchanged for ANB common stock, will not
give rise to gain or loss to the holders of Mutual common stock
with respect to such exchange, and (ii) for accounting purposes
shall be accounted for as a "pooling of interests."
Certain terms used in this Agreement are defined in
Section 11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the
mutual warranties, representations, covenants, and agreements set
forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE ONE
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, Mutual shall be merged
with and into American National in accordance with and with the
effect provided in 12 U.S.C. Sections 215c, 1815(d)(3), and
1828(c). American National shall be the Resulting Association
resulting from the Merger and shall be a wholly-owned, first tier
Subsidiary of ANB and shall continue to be governed by the Laws
of the United States. The Merger shall be consummated pursuant
to the terms of this Agreement, which has been approved and
adopted by the respective Boards of Directors of Mutual and ANB,
and the Plan of Merger, which has been approved by the respective
Boards of Directors of Mutual and American National.
1.2 Time and Place of Closing. The Closing will take
place at 9:00 A.M. on the date that the Effective Time occurs (or
the immediately preceding day if the Effective Time is earlier
than 9:00 A.M.), or at such other time as the Parties, acting
through their chief executive officers or chief financial
officers, may mutually agree. The place of Closing shall be at
the offices of ANB, or such other place as may be mutually agreed
upon by the Parties.
1.3 Effective Time. The Merger and other
transactions contemplated by this Agreement shall become
effective on the date and at the time of issuance of the
Certificate of Merger by the OCC or on such other date and at
such other time as the OCC declares the Merger effective (the
"Effective Time"). Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon in writing by the chief
executive officers or chief financial officers of each Party, the
Parties shall use their reasonable efforts to cause the Effective
Time to occur on the first business day following the last to
occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or
exempting the Merger, and (ii) the date on which the shareholders
of Mutual and ANB approve this Agreement and the Plan of Merger
to the extent such approval is required by applicable Law; or
such later date within thirty (30) days of such date as may be
mutually agreed upon by Mutual and ANB.
ARTICLE TWO
TERMS OF MERGER
2.1Business of Resulting Association. The business of
the Resulting Association from and after the Effective Time shall
continue to be that of a national banking association organized
under the Laws of the United States. The business shall be
conducted from its main office located in Danville, Virginia, and
at its legally established branches, which shall also include the
main office and all branches of Mutual, whether in operation or
approved but unopened, at the Effective Time.
2.2Assumption of Rights. At the Effective Time, the
separate existence and corporate organization of Mutual shall be
merged into and continued in the Resulting Association. All
rights, franchises, and interests of both Mutual and American
National in and to every type of property (real, personal, and
mixed), and all choses in action of both Mutual and American
National shall be transferred to and vested in the Resulting
Association without any deed or other transfer. The Resulting
Association, upon consummation of the Merger and without any
order or other action on the part of any court or otherwise,
shall hold and enjoy all rights of property, franchises, and
interests, including appointments, designations, and nominations,
and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver, and committee of estates of
incompetent persons, and in every other fiduciary capacity, in
the same manner and to the same extent as such rights,
franchises, and interests were held or enjoyed by either Mutual
or American National at the Effective Time.
2.3Assumption of Liabilities. All liabilities and
obligations of both Mutual and American National of every kind
and description (including without limitation the liquidation
account established by Mutual in connection with its conversion
to the stock form of organization, as in existence at the
Effective Time) shall be assumed by the Resulting Association,
and the Resulting Association shall be bound thereby in the same
manner and to the same extent that Mutual and American National
were so bound at the Effective Time.
2.4 Articles of Association. The Articles of
Association of American National in effect immediately prior to
the Effective Time shall be the Articles of Association of the
Resulting Association until otherwise amended or repealed.
2.5 Bylaws. The Bylaws of American National in
effect immediately prior to the Effective Time shall be the
Bylaws of the Resulting Association until otherwise amended or
repealed.
2.6 Directors and Officers. The directors of
American National in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be
elected, shall serve as the directors of the Resulting
Association from and after the Effective Time in accordance with
the Bylaws of the Resulting Association. The officers of
American National in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be
elected pursuant to Section 8.12 of this Agreement or otherwise,
shall serve as the officers of the Resulting Association from and
after the Effective Time in accordance with the Bylaws of the
Resulting Association.
ARTICLE THREE
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions
of this Article Three, at the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof,
the shares of the constituent corporations or associations shall
be converted as follows:
(a)Each share of ANB Common Stock issued and
outstanding immediately prior to the Effective Time shall
remain issued and outstanding from and after the Effective
Time.
(b)Each share of American National Common Stock
issued and outstanding at the Effective Time shall remain
issued and outstanding from and after the Effective Time.
(c)Each share of Mutual Common Stock (excluding
shares held by any Mutual Company or by any ANB Company,
which shares shall be canceled as provided in Section 3.3 of
this Agreement, in each case other than in a fiduciary
capacity or in satisfaction of debts previously contracted)
issued and outstanding at the Effective Time shall cease to
be outstanding and shall be converted into and exchanged for
.705 of a share of ANB Common Stock (the "Exchange Ratio").
3.2 Anti-Dilution Provisions. In the event Mutual or
ANB changes the number of shares of Mutual Common Stock or ANB
Common Stock, respectively, issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or
similar recapitalization with respect to such stock and the
record date therefor shall be prior to the Effective Time, the
Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by Mutual or ANB. Each of the shares
of Mutual Common Stock held by any Mutual Company or by any ANB
Company, in each case other than in a fiduciary capacity or in
satisfaction of debts previously contracted, shall be canceled
and retired at the Effective Time, and no consideration shall be
issued in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of
Mutual Common Stock who perfects such holder's dissenters' rights
of appraisal in accordance with and as contemplated by 12 C.F.R.
552.14 shall be entitled to receive the value of such shares in
cash as determined pursuant to such provision of Law; provided,
however, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of 12 C.F.R. 552.14 and
surrendered to the Resulting Association the certificate or
certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting
shareholder of Mutual fails to perfect, or effectively withdraws
or loses, such holder's right to appraisal and of payment for
such holder's shares, ANB shall issue and deliver the
consideration to which such holder of shares of Mutual Common
Stock is entitled under this Article Three (without interest)
upon surrender by such holder of the certificate or certificates
representing shares of Mutual Common Stock held by such holder.
Mutual will establish an escrow account with an amount sufficient
to satisfy the maximum aggregate payment that may be required to
be paid to dissenting shareholders. Upon satisfaction of all
claims of dissenting shareholders, the remaining escrowed amount,
reduced by payment of the fees and expenses of the escrow agent,
will be returned to the Resulting Association.
3.5 Fractional Shares. Notwithstanding any other
provision of this Agreement, each holder of shares of Mutual
Common Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of ANB Common
Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share
of ANB Common Stock multiplied by $30.50.
3.6Conversion of Stock Options.
(a)At the Effective Time, each option or other right
to purchase shares of Mutual Common Stock pursuant to stock
options or stock appreciation rights ("Mutual Options") granted
by Mutual under the Mutual Stock Plans, which are outstanding at
the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to ANB Common
Stock, and ANB shall assume each Mutual Option, in accordance
with the terms of the Mutual Stock Plan and stock option
agreement by which it is evidenced, except that from and after
the Effective Time, (i) the Board of Directors of Mutual Mortgage
Company shall be substituted for Mutual and the Committee of
Mutual's Board of Directors (including, if applicable, the entire
Board of Directors of Mutual) administering such Mutual Stock
Plan, (ii) each Mutual Option assumed by ANB may be exercised
solely for shares of ANB Common Stock (or cash in the case of
stock appreciation rights), (iii) the number of shares of ANB
Common Stock subject to such Mutual Option shall be equal to the
number of shares of Mutual Common Stock subject to such Mutual
Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and (iv) the per share exercise price under each
such Mutual Option shall be adjusted by dividing the per share
exercise price under each such Mutual Option by the Exchange
Ratio and rounding up to the nearest cent. Notwithstanding the
provisions of clause (iii) of the preceding sentence, ANB shall
not be obligated to issue any fraction of a share of ANB Common
Stock upon exercise of Mutual Options and any fraction of a share
of ANB Common Stock that otherwise would be subject to a
converted Mutual Option shall represent the right to receive a
cash payment equal to the product of such fraction and the
difference between the market value of one share of ANB Common
Stock and the per share exercise price of such option. The
market value of one share of ANB Common Stock shall be the
average of the closing bid and asked prices of such common stock
as quoted on the Nasdaq System or, if not reported thereby, any
other authoritative source selected by ANB) on the last trading
day preceding the exercise of the option. In addition,
notwithstanding the provisions of clauses (iii) and (iv) of the
first sentence of this Section 3.6, each Mutual Option which is
an "incentive stock option" shall be adjusted as required by
Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification,
extension, or renewal of the option, within the meaning of
Section 424(h) of the Internal Revenue Code.
(b)At or prior to the Effective Time, ANB shall take
all corporate action necessary to reserve for issuance sufficient
shares of ANB Common Stock for delivery upon exercise of Mutual
Options assumed by it in accordance with this Section 3.6. As
soon as reasonably practicable after the Effective Time, ANB
shall file a registration statement on Form S-3 or Form S-8, as
the case may be (or any successor or other appropriate forms),
with respect to the shares of ANB Common Stock subject to such
options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained
therein) for so long as such options remain outstanding. With
respect to those individuals who subsequent to the Merger will be
subject to the reporting requirements under Section 16(a) of the
Exchange Act, where applicable, ANB shall administer the Mutual
Option Plan assumed pursuant to this Section 3.6 in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act to
the extent the Mutual Option Plan complied with such rule prior
to the Merger.
(c)All restrictions or limitations on transfer with
respect to Mutual Common Stock awarded under the Mutual Stock
Plans or any other plan, program, or arrangement of any Mutual
Company, to the extent that such restrictions or limitations
shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in
full force and effect with respect to shares of ANB Common Stock
into which such restricted stock is converted pursuant to Section
3.1 of this Agreement.
ARTICLE FOUR
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the
Effective Time, ANB shall cause the exchange agent selected by it
(the "Exchange Agent") to mail to the former shareholders of
Mutual appropriate transmittal materials (which shall specify
that delivery shall be effected, and risk of loss and title to
the certificates theretofore representing shares of Mutual Common
Stock shall pass, only upon proper delivery of such certificates
to the Exchange Agent). After the Effective Time, each holder of
shares of Mutual Common Stock (other than shares to be canceled
pursuant to Section 3.3 of this Agreement) issued and outstanding
at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1 of this
Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest
thereon) pursuant to Section 4.2 of this Agreement. To the
extent required by Section 3.5 of this Agreement, each holder of
shares of Mutual Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in
lieu of any fractional share of ANB Common Stock to which such
holder may be otherwise entitled (without interest). ANB shall
not be obligated to deliver the consideration to which any former
holder of Mutual Common Stock is entitled as a result of the
Merger until such holder surrenders such holder's certificate or
certificates representing the shares of Mutual Common Stock for
exchange as provided in this Section 4.1. The certificate or
certificates of Mutual Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may require. Any other provision
of this Agreement notwithstanding, neither ANB, the Resulting
Association, nor the Exchange Agent shall be liable to a holder
of Mutual Common Stock for any amounts paid or property delivered
in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 Rights of Former Mutual Shareholders. At the
Effective Time, the stock transfer books of Mutual shall be
closed as to holders of Mutual Common Stock immediately prior to
the Effective Time, and no transfer of Mutual Common Stock by any
such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore
representing shares of Mutual Common Stock (other than shares to
be canceled pursuant to Section 3.3 of this Agreement or as to
which the holder thereof has perfected dissenters' rights of
appraisal as contemplated by Section 3.4 of this Agreement) shall
from and after the Effective Time represent for all purposes only
the right to receive the consideration provided in Sections 3.1
and 3.5 of this Agreement in exchange therefor. To the extent
permitted by Law, former shareholders of record of Mutual shall
be entitled to vote after the Effective Time at any meeting of
ANB shareholders the number of whole shares of ANB Common Stock
into which their respective shares of Mutual Common Stock are
converted, regardless of whether such holders have exchanged
their certificates representing Mutual Common Stock for
certificates representing ANB Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other
distribution is declared by ANB on the ANB Common Stock, the
record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all
shares of ANB Common Stock issuable pursuant to this Agreement,
but no dividend or other distribution payable to the holders of
record of ANB Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any
certificate representing shares of Mutual Common Stock issued and
outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 of this
Agreement. However, upon surrender of such Mutual Common Stock
certificate, both the ANB Common Stock certificate (together with
all such undelivered dividends or other distributions without
interest) and any undelivered cash payments to be paid for
fractional share interests (without interest) shall be delivered
and paid with respect to each share represented by such
certificate.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF MUTUAL
Mutual hereby represents and warrants to ANB as follows:
5.1 Organization, Standing, and Power. Mutual is a
federal stock savings bank duly organized, validly existing, and
in good standing under the Laws of the United States, and has the
corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Assets. Mutual is
duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States
and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on Mutual. Mutual is an "insured institution" as defined
in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured by the Savings
Association Insurance Fund.
5.2 Authority; No Breach by Agreement.
(a)Mutual has the corporate power and authority
necessary to execute, deliver, and perform its obligations under,
this Agreement and the Plan of Merger and to consummate the trans
actions contemplated hereby and thereby, subject to the approval
of this Agreement and the Plan of Merger by the requisite vote of
the holders of Mutual Common Stock. The execution, delivery, and
performance of this Agreement and the Plan of Merger and the
consummation of the transactions contemplated herein and therein,
including the Merger, have been or will be duly and validly
authorized by all necessary corporate action in respect thereof
on the part of Mutual subject to the approval of this Agreement
and the Plan of Merger by the holders of two-thirds of the
outstanding shares of Mutual Common Stock. Subject to such
requisite approval, this Agreement and the Plan of Merger
represent legal, valid, and binding obligations of Mutual
enforceable against Mutual in accordance with their respective
terms (except in all cases as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar Laws affecting the enforcement of creditors' rights
generally or the rights of creditors of a federal savings bank,
the deposits in which are insured by the FDIC, and except that
the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
(b)Neither the execution and delivery of this
Agreement and the Plan of Merger by Mutual nor the consummation
by Mutual of the transactions contemplated hereby or thereby, nor
compliance by Mutual with any of the provisions hereof or
thereof, will (i) conflict with or result in a breach of any
provision of Mutual's Charter or Bylaws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any Mutual
Company under, any Contract or Permit of any Mutual Company, or
(iii) subject to receipt of the requisite approvals referred to
in Section 9.1(b) of this Agreement, violate any material Law or
Order applicable to any Mutual Company or any of their respective
Assets.
(c)Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and
securities Laws, and rules of the NASD, and other than Consents
required from and notices to be filed with Regulatory
Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, and other
than Consents, filings, or notifications which, if not obtained
or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Mutual no notice to,
filing with, or Consent of, any public body or authority is
necessary for the consummation by Mutual of the Merger and the
other transactions contemplated by this Agreement and the Plan of
Merger.
5.3 Capital Stock.
(a)The authorized capital stock of Mutual consists
of (i) 7,500,000 shares of Mutual Common Stock, of which
1,154,100 shares are issued and outstanding as of the date of
this Agreement and not more than 1,248,100 shares will be issued
and outstanding at the Effective Time, and (ii) 2,500,000 shares
of Mutual Preferred Stock, of which no shares are issued and
outstanding. All of the issued and outstanding shares of Mutual
Common Stock are duly and validly issued and outstanding and are
fully paid and nonassessable. None of the outstanding shares of
Mutual Common Stock has been issued in violation of any
preemptive rights of the current or past shareholders of Mutual.
Mutual has reserved 94,000 shares of Mutual Common Stock for
issuance under the Mutual Stock Plans, pursuant to which options
to purchase no more than 94,000 shares of Mutual Common Stock are
outstanding.
(b)Except as set forth in Section 5.3(a) of this
Agreement, or as disclosed in Section 5.3(b) of the Mutual
Disclosure Memorandum, there are no shares of capital stock or
other equity securities of Mutual outstanding and no outstanding
options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares
of the capital stock of Mutual or contracts, commitments,
understandings, or arrangements by which Mutual is or may be
bound to issue additional shares of Mutual capital stock or
options, warrants, or rights to purchase or acquire any
additional shares of its capital stock.
5.4 Mutual Subsidiaries. Mutual has disclosed in
Section 5.4 of the Mutual Disclosure Memorandum all of the Mutual
Subsidiaries as of the date of this Agreement. Except as
disclosed, Mutual or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each Mutual
Subsidiary. No equity securities of any Mutual Subsidiary are or
may become required to be issued (other than to a Mutual Company)
by reason of any options, warrants, scrip, rights to subscribe
to, calls, or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of any such Subsidiary, and there are
no Contracts by which any Mutual Subsidiary is bound to issue
(other than to a Mutual Company) additional shares of its capital
stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock or by which any Mutual
Company is or may be bound to transfer any shares of the capital
stock of any Mutual Subsidiary (other than to a Mutual Company).
There are no Contracts relating to the rights of any Mutual
Company to vote or to dispose of any shares of the capital stock
of any Mutual Subsidiary. All of the shares of capital stock of
each Mutual Subsidiary held by any Mutual Company are duly
authorized, validly issued, and fully paid and nonassessable
under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the
Mutual Company free and clear of any Lien. Each Mutual
Subsidiary is a corporation, and is duly organized, validly
existing, and in good standing under the Laws of the jurisdiction
in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate
its Assets and to carry on its business as now conducted. Each
Mutual Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States
of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed
is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Mutual.
5.5 Financial Statements. Mutual has disclosed in
Section 5.5 of the Mutual Disclosure Memorandum, and has
delivered to ANB, copies of, all Mutual Financial Statements
prepared for periods ended prior to the date hereof and will
deliver to ANB copies of all Mutual Financial Statements prepared
subsequent to the date hereof. The Mutual Financial Statements
(as of the dates thereof and for the periods covered thereby)
(i) are or, if dated after the date of this Agreement, will be in
accordance with the books and records of the Mutual Companies,
which are or will be, as the case may be, complete and correct
and which have been or will have been, as the case may be,
maintained in accordance with good business practices, and
(ii) present or will present, as the case may be, fairly the
consolidated financial position of the Mutual Companies as of the
dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows of the Mutual
Companies for the periods indicated, in accordance with GAAP
(subject to any exceptions as to consistency specified therein or
as may be indicated in the notes thereto or, in the case of
interim financial statements, to normal recurring year-end
adjustments that are not material).
5.6Absence of Undisclosed Liabilities. To the Knowledge
of Mutual no Mutual Company has any Liabilities that are
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Mutual except Liabilities which are
accrued or reserved against in the consolidated balance sheets of
Mutual as of June 30, 1995 included in the Mutual Financial
Statements or reflected in the notes thereto. Except as
disclosed in Section 5.6 of the Mutual Disclosure Memorandum, no
Mutual Company has incurred or paid any Liability since June 30,
1995, except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business
practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Mutual.
5.7Absence of Certain Changes or Events. Since June 30,
1995, except as disclosed in the Mutual Financial Statements
filed with the OTS after such date and prior to the date of this
Agreement, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Mutual and
(ii) the Mutual Companies have not taken any action, or failed to
take any action, prior to the date of this Agreement, which
action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of
any of the covenants and agreements of Mutual provided in Section
7.2(a), (b), (c), (g), (h), or (i) of this Agreement.
5.8Adequacy of Reserves.
(a)The allowance for possible loan or credit losses
(the "Allowance") shown on the consolidated balance sheets of
Mutual included in the most recent Mutual Financial Statements
dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of Mutual included in
the Mutual Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for losses relating to or
inherent in the loan and lease portfolios (including accrued
interest receivables) of the Mutual Companies and other
extensions of credit (including letters of credit and commitments
to make loans or extend credit) by the Mutual Companies as of the
dates thereof.
(b)The reserve for losses on real estate owned ("REO
Reserve") shown on the consolidated balance sheets of Mutual
included in the most recent Mutual Financial Statements dated
prior to the date of this Agreement was, and the REO Reserve
shown on the consolidated balance sheets of Mutual included in
the Mutual Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for losses relating to or
inherent in the other real estate owned portfolios of the Mutual
Companies as of the dates thereof.
(c)The reserves for losses in respect of Litigation
("Litigation Reserves") shown on the consolidated balance sheets
of Mutual included in the most recent Mutual Financial Statements
dated prior to the date of this Agreement was, and the Litigation
Reserves shown on the consolidated balance sheets of Mutual
included in the Mutual Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of the
dates thereof, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide for
losses relating to or arising out of Litigation of the Mutual
Companies as of the dates thereof.
5.9Tax Matters.
(a)All Tax returns required to be filed by or on
behalf of any of the Mutual Companies have been timely filed, or
requests for extensions have been timely filed, granted, and have
not expired for periods ended on or before September 30, 1994,
and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent
that all such failures to file, taken together, are not
reasonably likely to have a Material Adverse Effect on Mutual and
all such returns filed are complete and accurate in all material
respects. All Taxes shown on filed returns have been paid.
There is no audit examination, deficiency, or refund Litigation
with respect to any Taxes that is reasonably likely to result in
a determination that would have, individually or in the
aggregate, a Material Adverse Effect on Mutual except to the
extent reserved against in the Mutual Financial Statements dated
prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b)None of the Mutual Companies has executed an
extension or waiver of any statute of limitations on the
assessment or collection of any Tax due (excluding such statutes
that relate to years currently under examination by the Internal
Revenue Service or other applicable Taxing authorities) that is
currently in effect.
(c)Adequate provision for any Taxes due or to become
due for any of the Mutual Companies for the period or periods
through and including the date of the respective Mutual Financial
Statements has been made and is reflected on such Mutual
Financial Statements.
5.10 Assets. Except as disclosed or reserved against
in the Mutual Financial Statements, the Mutual Companies have to
the extent material or applicable, good and marketable title,
free and clear of all Liens, to all of their respective Assets
that are material to the business of the Mutual Companies. All
material tangible properties used in the businesses of the Mutual
Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business
consistent with Mutual's past practices. All Assets which are
material to the business of the Mutual Companies and held under
leases or subleases by any of the Mutual Companies, are held
under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or
other Laws affecting the enforcement of creditors' rights
generally and the rights of creditors of a federal savings bank,
the deposits in which are insured by the FDIC, and except that
the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of the court
before which any proceedings may be brought), and each such
Contract is in full force and effect.
5.11 Environmental Matters.
(a)Except as disclosed in Section 5.11 of the Mutual
Disclosure Memorandum, to the Knowledge of Mutual each Mutual
Company, its Participation Facilities, and its Loan Properties
are, and have been, in compliance with all Environmental Laws,
except for violations which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Mutual.
(b)To the Knowledge of Mutual there is no Litigation
pending or threatened before any court, governmental agency, or
authority, or other forum in which any Mutual Company or any of
its Participation Facilities has been or, with respect to
threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material (as defined below) or oil,
whether or not occurring at, on, under, or involving a site
owned, leased, or operated by any Mutual Company or any of its
Participation Facilities, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Mutual.
(c)To the Knowledge of Mutual there is no Litigation
pending or threatened before any court, governmental agency, or
board, or other forum in which any of its Loan Properties (or
Mutual in respect of such Loan Property) has been or, with
respect to threatened Litigation, may be named as a defendant or
potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or
(ii) relating to the release into the environment of any
Hazardous Material or oil, whether or not occurring at, on,
under, or involving a Loan Property, except for such Litigation
pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Mutual.
(d)To the Knowledge of Mutual there is no reasonable
basis for any Litigation of a type described in subsections (b)
or (c), except such as is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Mutual.
(e)To the Knowledge of Mutual during the period of
(i) any Mutual Company's ownership or operation of any of their
respective current properties, (ii) any Mutual Company's
participation in the management of any Participation Facility,
or, (iii) any Mutual Company's holding of a security interest in
a Loan Property, there have been no releases of Hazardous
Material or oil in, on, under, or affecting such properties,
except such as are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Mutual. Prior to
the period of (i) any Mutual Company's ownership or operation of
any of their respective current properties, (ii) any Mutual
Company's participation in the management of any Participation
Facility, or (iii) any Mutual Company's holding of a security
interest in a Loan Property, to the Knowledge of Mutual there
were no releases of Hazardous Material or oil in, on, under, or
affecting any such property, Participation Facility, or Loan
Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Mutual.
5.12 Compliance With Laws. Each Mutual Company has in
effect all Permits necessary for it to own, lease, or operate its
Assets and to carry on its business as now conducted, except for
those Permits the absence of which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on Mutual and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on Mutual. None of the Mutual Companies:
(a)Is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its
business, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on Mutual; and
(b)Has received any notification or communication
from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof
(i) asserting that any Mutual Company is not in compliance
with any of the material Laws or material Orders which such
governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Mutual (ii) threatening to revoke any material Permits the
revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on Mutual or (iii) requiring any Mutual Company (x) to enter
into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment, or memorandum of
understanding, or (y) to adopt any Board resolution or
similar undertaking which restricts materially the conduct of
its business, or in any manner relates to its capital
adequacy, its management, or the payment of dividends.
5.13 Labor Relations. No Mutual Company is the
subject of any Litigation asserting that it or any other Mutual
Company has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state
law) or seeking to compel it or any other Mutual Company to
bargain with any labor organization as to wages or conditions of
employment, nor is any Mutual Company a party to or bound by any
collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is
there any strike or other labor dispute involving any Mutual
Company, pending or threatened, or to its Knowledge, is there any
activity involving any Mutual Company's employees seeking to
certify a collective bargaining unit or engaging in any other
organization activity.
5.14 Employee Benefit Plans.
(a)Mutual has disclosed in Section 5.14 of the
Mutual Disclosure Memorandum, and has delivered or made available
to ANB prior to the execution of this Agreement correct and
complete copies in each case of, all pension, retirement, profit-
sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive
plan, all other written employee programs or agreements, all
medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe
benefit plans, including, without limitation, "employee benefit
plans" as that term is defined in Section 3(3) of ERISA,
currently or previously adopted, maintained by, sponsored in
whole or in part by, or contributed to by any Mutual Company for
the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and
under which employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries are eligible to
participate (collectively, the "Mutual Benefit Plans"). Any of
the Mutual Benefit Plans which is an "employee welfare benefit
plan," as that term is defined in Section 3(l) of ERISA, or an
"employee pension benefit plan," as that term is defined in
Section 3(2) of ERISA, is referred to herein as a "Mutual ERISA
Plan." Each Mutual ERISA Plan which is also a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code
or Section 3(35) of ERISA) is referred to herein as a "Mutual
Pension Plan." On or after September 26, 1980, neither Mutual
nor any Mutual Company has had an "obligation to contribute" (as
defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(b)Mutual has delivered or made available to ANB
prior to the execution of this Agreement correct and complete
copies of the following documents: (i) all trust agreements or
other funding arrangements for such Mutual Benefit Plans
(including insurance contracts), and all amendments thereto,
(ii) with respect to any such Mutual Benefit Plans or amendments,
all determination letters, rulings, opinion letters, information
letters, or advisory opinions issued by the Internal Revenue
Service, the United States Department of Labor, or the Pension
Benefit Guaranty Corporation after December 31, 1974,
(iii) annual reports or returns, audited or unaudited financial
statements, actuarial valuations and reports, and summary annual
reports prepared for any Mutual Benefit Plan with respect to the
most recent three plan years, and (iv) the most recent summary
plan descriptions and any material modifications thereto.
(c)All Mutual Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any
other applicable Laws the breach or violation of which are
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Mutual. Except as disclosed in
Section 5.14(c) of the Mutual Disclosure Memorandum, each Mutual
ERISA Plan which is intended to be qualified under Section 401(a)
of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and
Mutual is not aware of any circumstances which will or could
result in revocation of any such favorable determination letter.
Except as disclosed in Section 5.14(c) of the Mutual Disclosure
Memorandum, each trust created under any Mutual ERISA Plan has
been determined to be exempt from Tax under Section 501(a) of the
Internal Revenue Code and Mutual is not aware of any circumstance
which will or could result in revocation of such exemption. With
respect to each Mutual Benefit Plan, except as disclosed in
Section 5.14(c) of the Mutual Disclosure Memorandum, no event has
occurred which will or could give rise to a loss of any intended
Tax consequences under the Internal Revenue Code or to any Tax
under Section 511 of the Internal Revenue Code. There is no
material pending or threatened Litigation relating to any Mutual
ERISA Plan. Except as disclosed in Section 5.14(c) of the Mutual
Disclosure Memorandum, no Mutual Company has engaged in a
transaction with respect to any Mutual Benefit Plan that,
assuming the taxable period of such transaction expired as of the
date hereof, would subject any Mutual Company to a tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or
Section 502(i) of ERISA in amounts which are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on Mutual.
(d)No Mutual Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of
ERISA, and the fair market value of the assets of any such plan
exceeds the plan's "benefit liabilities," as that term is defined
in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance
with all applicable legal requirements. Since the date of the
most recent actuarial valuation, there has been (i) no material
change in the financial position of any Mutual Pension Plan,
(ii) no change in the actuarial assumptions with respect to any
Mutual Pension Plan, and (iii) no increase in benefits under any
Mutual Pension Plan as a result of plan amendments or changes in
applicable Law which is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Mutual or
materially adversely affect the funding status of any such plan.
Neither any Mutual Pension Plan nor any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any Mutual Company, or the single-employer
plan of any entity which is considered one employer with Mutual
under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code or Section 302 of ERISA (whether or not waived) (an
"ERISA Affiliate") has an "accumulated funding deficiency" within
the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, which is reasonably likely to have a
Material Adverse Effect on Mutual. No Mutual Company has
provided, or is required to provide, security to a Mutual Pension
Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
(e)Except as disclosed in Section 5.14(e) of the
Mutual Disclosure Memorandum, no liability under Title IV of
ERISA has been or is expected to be incurred by any Mutual
Company with respect to any defined benefit plan currently or
formerly maintained by any of them or by any entity which is
considered an ERISA Affiliate.
(f)Except as disclosed in Section 5.14(f) of the
Mutual Disclosure Memorandum, no defined benefit plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. No Mutual Company has provided, or
is required to provide, security to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Internal
Revenue Code.
(g)Except as disclosed in Section 5.14(g) of the
Mutual Disclosure Memorandum, no Mutual Company has any
obligations for retiree health and life benefits under any of the
Mutual Benefit Plans.
(h)Except as disclosed in Section 5.14(h) of the
Mutual Disclosure Memorandum, neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden
parachute, or otherwise) becoming due to any director or any
employee of any Mutual Company from any Mutual Company under any
Mutual Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Mutual Benefit Plan, or (iii) result
in any acceleration of the time of payment or vesting of any such
benefit.
(i)No oral or written representation or
communication with respect to any aspect of the Mutual Benefit
Plans has been made to employees of any of the Mutual Companies
prior to the date hereof which is not in accordance with the
written or otherwise preexisting terms and provisions of such
plans. All Mutual Benefit Plan documents and annual reports or
returns, audited or unaudited financial statements, actuarial
valuations, summary annual reports, and summary plan descriptions
issued with respect to the Mutual Benefit Plans are correct and
complete and there have been no changes in the information set
forth therein.
5.15 Material Contracts. Except as disclosed in
Section 5.15 of the Mutual Disclosure Memorandum, none of the
Mutual Companies, nor any of their respective Assets, businesses,
or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for
aggregate payments to any Person in any calendar year in excess
of $50,000, (ii) any Contract relating to the borrowing of money
by any Mutual Company or the guarantee by any Mutual Company of
any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase
agreements, and Federal Home Loan Bank advances, trade payables,
and Contracts relating to borrowings or guarantees made in the
ordinary course of business), (iii) any Contracts between or
among Mutual Companies; and (iv) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a
Form 10-K filed by Mutual with the OTS as of the date of this
Agreement that has not been filed as an exhibit to Mutual's Form
10-K filed for the fiscal year ended September 30, 1994 or in an
SEC Document and identified to ANB, (together with all Contracts
referred to in Sections 5.10 and 5.14(a) of this Agreement, the
"Mutual Contracts"). None of the Mutual Companies is in Default
under any Mutual Contract which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect
on Mutual.
5.16 Legal Proceedings. Except to the extent
specifically reserved against in the Mutual Financial Statements
dated prior to the date of this Agreement, there is no Litigation
instituted or pending, or, to the Knowledge of Mutual threatened
(or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an
unfavorable outcome) against any Mutual Company, or against any
Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on Mutual nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any Mutual Company, that are
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Mutual. Mutual has disclosed in
Section 5.16 of the Mutual Disclosure Memorandum all Litigation
pending or, to the Knowledge of Mutual threatened, as of the date
of this Agreement where there are claims against Mutual.
5.17 Reports. Since January 1, 1990, or the date of
organization if later, each Mutual Company has timely filed all
reports and statements, together with any amendments required to
be made with respect thereto, that it was required to file with
(i) the OTS, including, but not limited to, Forms 10-K, Forms 10-
Q, Forms 8-K, and proxy statements, (ii) other Regulatory
Authorities, and (iii) any applicable state securities or banking
authorities (except, in the case of state securities authorities,
failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Mutual). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all
applicable Laws. As of its respective date, each such report and
document did 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 made therein, in light of the
circumstances under which they were made, not misleading.
5.18 Statements True and Correct. To the Knowledge of
Mutual, no statement, certificate, instrument, or other writing
furnished or to be furnished by any Mutual Company or any
Affiliate thereof to ANB pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains or
will contain any untrue statement of material fact or will omit
to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be
supplied by any Mutual Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by ANB with
the SEC will, when the Registration Statement becomes effective,
be false or misleading with respect to any material fact, or
contain any untrue statement of a material fact, or omit to state
any material fact required to be stated thereunder or necessary
to make the statements therein not misleading. None of the
information supplied or to be supplied by any Mutual Company or
any Affiliate thereof for inclusion in the Joint Proxy Statement
to be mailed to Mutual's and ANB's shareholders in connection
with the Shareholders' Meetings, and any other documents to be
filed by any Mutual Company or any Affiliate thereof with the SEC
or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time
such documents are filed, and with respect to the Joint Proxy
Statement, when first mailed to the shareholders of Mutual and
ANB be false or misleading with respect to any material fact, or
contain any misstatement of material fact, or omit to state any
material fact required to be stated thereunder or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the
Joint Proxy Statement as amended or supplemented, at the time of
the Shareholders' Meetings, be false or misleading with respect
to any material fact, or omit to state any material fact required
to be stated thereunder or necessary to correct any material
statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meetings. All
documents that any Mutual Company or any Affiliate thereof is
responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of
applicable Law.
5.19 Accounting, Tax, and Regulatory Matters. No
Mutual Company or any Affiliate thereof has taken any action, or
agreed to take any action, or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or
treatment as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) materially impede or
delay receipt of any Consents of Regulatory Authorities referred
to in Section 9.1(b) of this Agreement. To the Knowledge of
Mutual there exists no fact, circumstance, or reason why the
requisite Consents referred to in Section 9.1(b) of this
Agreement cannot be received in a timely manner without
imposition of any condition of the type described in the second
sentence of such Section 9.1(b).
5.20 Charter Provisions. Each Mutual Company has
taken or will take all action so that the entering into of this
Agreement and the Plan of Merger and the consummation of the
Merger and the other transactions contemplated by this Agreement
and the Plan of Merger do not and will not result in the grant of
any rights to any Person (other than an ANB Company or as
contemplated by Section 3.4 of this Agreement) under the Charter,
Bylaws, or other governing instruments of any Mutual Company or
restrict or impair the ability of ANB to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of
any Mutual Company that may be acquired or controlled by it.
5.21 Support Agreements. Each of the directors and
executive officers of Mutual has executed and delivered to ANB an
agreement in substantially the form of Exhibit 2 to this
Agreement.
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES OF ANB
ANB hereby represents and warrants to Mutual as follows:
6.1 Organization, Standing, and Power. ANB is a
corporation duly organized, validly existing, and in good
standing under the Laws of the Commonwealth of Virginia, and has
the corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Assets. ANB is duly
qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States
and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed is not reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on ANB.
6.2 Authority; No Breach by Agreement.
(a)ANB has the corporate power and authority
necessary to execute, deliver, and perform its obligations under,
this Agreement and to consummate the transactions contemplated
hereby, subject to the approval of the Articles of Incorporation
Amendment by the requisite vote of the holders of ANB Common
Stock. The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated
herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof
on the part of ANB. This Agreement represents a legal, valid,
and binding obligation of ANB, enforceable against ANB in
accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
(b)Neither the execution and delivery of this
Agreement by ANB, nor the consummation by ANB of the transactions
contemplated hereby, nor compliance by ANB with any of the
provisions hereof, will (i) subject to the approval of the
Articles of Incorporation Amendment by the requisite vote of the
holders of ANB Common Stock, conflict with or result in a breach
of any provision of ANB's Articles of Incorporation or Bylaws, or
(ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any
Asset of any ANB Company under, any Contract or Permit of any ANB
Company, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.1(b) of this Agreement, violate any Law
or Order applicable to any ANB Company or any of their respective
Assets.
(c)Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and
securities Laws, and rules of the NASD, and other than Consents
required from and notices to be filed with Regulatory
Authorities, and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans and other
than Consents, filings, or notifications which, if not obtained
or made, is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on ANB, no notice to, filing
with, or Consent of, any public body or authority is necessary
for the consummation by ANB or American National of the Merger
and the other transactions contemplated in this Agreement and the
Plan of Merger.
6.3 Capital Stock.
(a)The authorized capital stock of ANB consists of
(i) 3,000,000 shares of ANB Common Stock, of which 2,400,000
shares were issued and outstanding as of June 30, 1995 and (ii)
200,000 shares of ANB Preferred Stock, of which none is
outstanding. All of the issued and outstanding shares of ANB
Common Stock are, and all of the shares of ANB Common Stock to be
issued in exchange for shares of Mutual Common Stock upon
consummation of the Merger, when issued in accordance with the
terms of this Agreement, will be, duly and validly issued and
outstanding and fully paid and nonassessable under the Virginia
SCA. None of the outstanding shares of ANB Common Stock has
been, and none of the shares of ANB Common Stock to be issued in
exchange for shares of Mutual Common Stock upon consummation of
the Merger will be, issued in violation of any preemptive rights
of the current or past shareholders of ANB.
(b)Except as set forth in Section 6.3(a) of this
Agreement, there are no shares of capital stock or other equity
securities of ANB outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls, or commitments of
any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock
of ANB or contracts, commitments, understandings, or arrangements
by which ANB is or may be bound to issue additional shares of ANB
capital stock or options, warrants, or rights to purchase or
acquire any additional shares of its capital stock.
6.4ANB Subsidiaries. ANB has no Subsidiaries other than
American National as of the date of this Agreement. ANB or one
of its Subsidiaries owns all of the issued and outstanding shares
of capital stock of each ANB Subsidiary. No equity securities of
any ANB Subsidiary are or may become required to be issued (other
than to an ANB Company) by reason of any options, warrants,
scrip, rights to subscribe to, calls, or commitments of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock
of any such Subsidiary, and there are no Contracts by which any
ANB Subsidiary is bound to issue (other than to an ANB Company)
additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its
capital stock or by which any ANB Company is or may be bound to
transfer any shares of the capital stock of any ANB Subsidiary
(other than to an ANB Company). There are no Contracts relating
to the rights of any ANB Company to vote or to dispose of any
shares of the capital stock of any ANB Subsidiary. All of the
shares of capital stock of each ANB Subsidiary held by an ANB
Company are duly authorized, validly issued, and fully paid and
(except pursuant to 12 U.S.C. Section 55, in the case of national
banks) nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the ANB Company free and clear of any
Lien. Each ANB Subsidiary is either a bank or a corporation, and
is duly organized, validly existing, and in good standing under
the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each ANB Subsidiary is duly qualified
or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to
be so qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
ANB. Each ANB Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance
Act and applicable regulations thereunder, and the deposits in
which are insured by the Bank Insurance Fund.
6.5 Financial Statements. ANB has disclosed in
Section 6.5 of the ANB Disclosure Memorandum and has delivered to
Mutual copies of all ANB Financial Statements and certain SEC
Documents prepared for periods ended prior to the date hereof and
will deliver to Mutual copies of all ANB Financial Statements
prepared subsequent to the date hereof. The ANB Financial
Statements (as of the dates thereof and for the periods covered
thereby) (i) are or, if dated after the date of this Agreement,
will be in accordance with the books and records of the ANB
Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may
be, maintained in accordance with good business practices, and
(ii) present or will present, as the case may be, fairly the
consolidated financial position of the ANB Companies as of the
dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows of the ANB
Companies for the periods indicated, in accordance with GAAP
(subject to exceptions as to consistency specified therein or as
may be indicated in the notes thereto or, in the case of interim
financial statements, to normal recurring year-end adjustments
that are not material).
6.6Absence of Undisclosed Liabilities. No ANB Company
has any Liabilities (including Liabilities relating to matters
contemplated by Sections 5.9, 5.11, and 5.14 of this Agreement
applying such sections to ANB) that are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on ANB, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of ANB as of June 30, 1995
included in the ANB Financial Statements or reflected in the
notes thereto. Except as disclosed in Section 6.6 of the ANB
Disclosure Memorandum, no ANB Company has incurred or paid any
Liability since June 30, 1995, except for such Liabilities
incurred or paid in the ordinary course of business consistent
with past business practice and which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on ANB.
6.7Absence of Certain Changes or Events. Since June 30,
1995, except as disclosed in the ANB Financial Statements filed
with the SEC after such date and prior to the date of this
Agreement or in Section 6.7 of the ANB Disclosure Memorandum, (i)
there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on ANB and (ii) the ANB
Companies have not taken any action, or failed to take any
action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would
represent or result in a material breach or violation of any of
the covenants and agreements of ANB provided in Article Seven of
this Agreement.
6.8Adequacy of Reserves.
(a)The allowance for possible loan or credit losses
(the "Allowance") shown on the consolidated balance sheets of ANB
included in the most recent ANB Financial Statements dated prior
to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of ANB included in the ANB Financial
Statements as of dates subsequent to the execution of this
Agreement will be, as of the dates thereof, adequate (within the
meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for losses relating to or inherent in the
loan and lease portfolios (including accrued interest
receivables) of the ANB Companies and other extensions of credit
(including letters of credit and commitments to make loans or
extend credit) by the ANB Companies as of the dates thereof.
(b)The reserve for losses on real estate owned ("REO
Reserve") shown on the consolidated balance sheets of ANB
included in the most recent ANB Financial Statements dated prior
to the date of this Agreement was, and the REO Reserve shown on
the consolidated balance sheets of ANB included in the ANB
Financial Statements as of dates subsequent to the execution of
this Agreement will be, as of the dates thereof, adequate (within
the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for losses relating to or inherent in the
other real estate owned portfolios of the ANB Companies as of the
dates thereof.
(c)The reserves for losses in respect of Litigation
("Litigation Reserves") shown on the consolidated balance sheets
of ANB included in the most recent ANB Financial Statements dated
prior to the date of this Agreement was, and the Litigation
Reserves shown on the consolidated balance sheets of ANB included
in the ANB Financial Statements as of dates subsequent to the
execution of this Agreement will be, as of the dates thereof,
adequate (within the meaning of GAAP and applicable regulatory
requirements or guidelines) to provide for losses relating to or
arising out of Litigation of the ANB Companies as of the dates
thereof.
6.9Assets. Except as disclosed or reserved against in
the ANB Financial Statements, the ANB Companies have to the
extent material or applicable, good and marketable title, free
and clear of all Liens, to all of their respective Assets that
are material to the business of the ANB Companies. All material
tangible properties used in the businesses of the ANB Companies
are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with ANB
past practices. All Assets which are material to the business of
the ANB Companies and held under leases or subleases by any of
the ANB Companies, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganiza
tion, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full
force and effect.
6.10 Compliance With Laws. ANB is duly registered as
a bank holding company under the BHC Act. Each ANB Company has
in effect all Permits necessary for it to own, lease, or operate
its Assets and to carry on its business as now conducted, except
for those Permits the absence of which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on ANB, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on ANB. None of the ANB Companies:
(a)Is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its
business, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on ANB; and
(b)Has received any notification or communication
from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof
(i) asserting that any ANB Company is not in compliance with
any of the material Laws or material Orders which such
governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on ANB, (ii) threatening to revoke any Permits, the
revocation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on ANB, or (iii) requiring any ANB Company (x) to enter into
or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment, or memorandum of
understanding, or (y) to adopt any Board resolution or
similar undertaking which restricts materially the conduct of
its business, or in any manner relates to its capital
adequacy, its management, or the payment of dividends.
6.11 Legal Proceedings. Except to the extent
specifically reserved against in the ANB Financial Statements
dated prior to the date of this Agreement, there is no Litigation
instituted or pending, or, to the Knowledge of ANB, threatened
(or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an
unfavorable outcome) against any ANB Company, or against any
Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on ANB, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators
outstanding against any ANB Company, that are reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on ANB.
6.12 Reports. Since January 1, 1990, or the date of
organization if later, ANB has timely filed all reports and
statements, together with any amendments required to be made with
respect thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K,
and proxy statements, (ii) other Regulatory Authorities, and
(iii) any applicable state securities or banking authorities
(except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on ANB). As of their
respective dates, each of such reports and documents, including
the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As
of its respective date, each such report and document did 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 made therein, in light of the circumstances
under which they were made, not misleading.
6.13 Statements True and Correct. To the Knowledge of
ANB, no statement, certificate, instrument, or other writing
furnished or to be furnished by any ANB Company or any Affiliate
thereof to Mutual pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains or
will contain any untrue statement of material fact or will omit
to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be
supplied by any ANB Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by ANB with
the SEC, will, when the Registration Statement becomes effective,
be false or misleading with respect to any material fact, or
contain any untrue statement of a material fact, or omit to state
any material fact required to be stated thereunder or necessary
to make the statements therein not misleading. None of the
information supplied or to be supplied by any ANB Company or any
Affiliate thereof for inclusion in the Joint Proxy Statement to
be mailed to Mutual's and ANB's shareholders in connection with
the Shareholders' Meetings, and any other documents to be filed
by any ANB Company or any Affiliate thereof with the SEC or any
other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Joint Proxy Statement, when
first mailed to the shareholders of Mutual and ANB be false or
misleading with respect to any material fact, or contain any
misstatement of material fact, or omit to state any material fact
required to be stated thereunder or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, or, in the case of the Joint
Proxy Statement as amended or supplemented, at the time of the
Shareholders' Meetings, be false or misleading with respect to
any material fact, or omit to state any material fact required to
be stated thereunder or necessary to correct any statement in any
earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meetings. All documents that any ANB
Company or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
6.14 Authority of American National. American
National has the corporate power and authority necessary to
execute, deliver, and perform its obligations under the Plan of
Merger and to consummate the transactions contemplated thereby.
The execution, delivery, and performance of the Plan of Merger
and the consummation of the transactions contemplated therein,
including the Merger, have been duly and validly authorized by
all necessary corporate action in respect thereof on the part of
American National. The Plan of Merger represents a legal, valid,
and binding obligation of American National, enforceable against
American National in accordance with its terms (except in all
cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar
Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of
the court before which any proceeding may be brought).
6.15 Accounting, Tax, and Regulatory Matters. No ANB
Company or any Affiliate thereof has taken any action, or agreed
to take any action, or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or
treatment as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) materially impede or
delay receipt of any Consents of Regulatory Authorities referred
to in Section 9.1(b) of this Agreement. To the Knowledge of ANB,
there exists no fact, circumstance, or reason why the requisite
Consents referred to in Section 9.1(b) of this Agreement cannot
be received in a timely manner without imposition of any
condition of the type described in the second sentence of such
Section 9.1(b).
ARTICLE SEVEN
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Covenants of Both Parties. Unless the prior
written consent of the other Party shall have been obtained, and
except as otherwise expressly contemplated herein, each Party
shall and shall cause each of its Subsidiaries to (i) operate its
business only in the usual, regular, and ordinary course,
(ii) preserve intact its business organizations and Assets and
maintain its rights and franchises, and (iii) take no action
which would materially adversely affect the ability of any Party
to (a) obtain any Consents required for the transactions
contemplated hereby, or (b) perform its covenants and agreements
under this Agreement in all material respects and to consummate
the Merger; provided, that the foregoing shall not prevent any
ANB Company from discontinuing or disposing of any of its Assets
or business, or from acquiring or agreeing to acquire any other
Person or any Assets thereof, if such action is, in the
reasonable judgment of ANB, desirable in the conduct of the
business of ANB and its Subsidiaries and such discontinuance or
disposition would not represent a material portion of the Assets
of the ANB Companies.
7.2 Covenants of Mutual. Except as specifically
contemplated or permitted by this Agreement, from the date of
this Agreement until the earlier of the Effective Time or the
termination of this Agreement, Mutual covenants and agrees that
it will not do or agree or commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the following
without the prior written consent of the chief executive officer
or chief financial officer of ANB:
(a)amend the Charter, Bylaws, or other governing
instruments of any Mutual Company; or
(b)incur, guarantee, or otherwise become responsible
for, any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Mutual Company
to another Mutual Company) in excess of an aggregate of
$50,000 (for the Mutual Companies on a consolidated basis)
except in the ordinary course of the business of Mutual
Companies consistent with past practices (which shall
include, for Mutual creation of deposit liabilities,
purchases of federal funds, advances from the Federal Home
Loan Bank or the Federal Reserve Bank, and entry into
repurchase agreements fully secured by U.S. government or
agency securities), or forgive any such indebtedness of any
Person to any Mutual Company (in excess of an aggregate of
$25,000), or impose, or suffer the imposition, on any share
of stock held by any Mutual Company of any Lien or permit any
such Lien to exist; or
(c)repurchase, redeem, or otherwise acquire or
exchange (other than exchanges in the ordinary course under
employee benefit plans or in their capacity as transfer
agent), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any
Mutual Company, or declare or pay any dividend or make any
other distribution in respect of any Mutual Common Stock;
provided that Mutual may (to the extent legally able to do
so), but shall not be obligated to, declare and pay regular
quarterly cash dividends on the shares of Mutual Common Stock
at a rate not in excess of $ .10 per share with usual and
regular record and payment dates in accordance with past
practice disclosed in Section 7.2(c) of the Mutual Disclosure
Memorandum; provided further, that any dividend declared or
payable on the shares of Mutual Common Stock for the quarter
during which the Effective Time occurs shall, unless
otherwise agreed upon in writing by ANB and Mutual, be
declared only if the record date for payment of the quarterly
dividend to holders of ANB Common Stock for the quarter in
which the Effective Time occurs is prior to the Effective
Time; and provided further, that in the event ANB declares a
special cash dividend prior to the Effective Time, Mutual may
(to the extent legally able to do so), but shall not be
obligated to, declare and pay a cash dividend on the shares
of Mutual Common Stock at a rate per share of Mutual Common
Stock equivalent, taking into account the Exchange Ratio, to
the special dividend paid by ANB on each share of ANB Common
Stock; or
(d)except pursuant to the exercise of stock options
outstanding as of the date hereof and pursuant to the terms
thereof in existence on the date hereof, issue, sell, pledge,
encumber, authorize the issuance of, enter into any Contract
to issue, sell, pledge, encumber, or authorize the issuance
of, or otherwise permit to become outstanding, any additional
shares of Mutual Common Stock, Mutual Preferred Stock, or any
other capital stock of any Mutual Company, or any stock
appreciation rights, or any option, warrant, conversion, or
other right to acquire any such stock, or any security
convertible into any such stock; or
(e)adjust, split, combine, or reclassify any capital
stock of any Mutual Company or issue or authorize the
issuance of any other securities in respect of or in
substitution for shares of Mutual Common Stock or sell,
lease, mortgage, or otherwise dispose of or otherwise
encumber any shares of capital stock of any Mutual Subsidiary
(unless any such shares of stock are sold or otherwise
transferred to another Mutual Company) or any Assets other
than in the ordinary course of business for reasonable and
adequate consideration; or
(f)acquire direct or indirect control over, or
invest in equity securities of, any Person, other than in
connection with (i) foreclosures in the ordinary course of
business, or (ii) acquisitions of control by Mutual in its
fiduciary capacity; or
(g)grant any increase in compensation or benefits to
the employees or officers of any Mutual Company except in the
ordinary course of business or as disclosed in Section 7.2(g)
of the Mutual Disclosure Memorandum or as required by Law;
pay any bonus except in the ordinary course of business or
pursuant to the provisions of any applicable program or plan
adopted by its Board of Directors prior to the date of this
Agreement and disclosed in Section 7.2(g) of the Mutual
Disclosure Memorandum; enter into or amend any severance
agreements with officers of any Mutual Company except as
disclosed in Section 7.2(g) of the Mutual Disclosure
Memorandum; or grant any increase in fees or other increases
in compensation or other benefits to directors of any Mutual
Company; or
(h)enter into or amend any employment Contract
between any Mutual Company and any Person (unless such
amendment is required by Law) that the Mutual Company does
not have the unconditional right to terminate without
Liability (other than Liability for services already
rendered), at any time on or after the Effective Time; or
(i)adopt any new employee benefit plan or program of
any Mutual Company or make any material change in or to any
existing employee benefit plans or programs of any Mutual
Company other than any such change that is required by Law or
that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan; or
(j)make any significant change in any accounting
methods, principles, or practices or systems of internal
accounting controls, except as may be necessary to conform to
changes in regulatory accounting requirements or GAAP; or
(k)commence or settle any Litigation other than in
accordance with past practice; provided that, except to the
extent specifically reserved against in the Mutual Financial
Statements dated prior to the date of this Agreement, no
Mutual Company shall settle any Litigation involving any
Liability of any Mutual Company for money damages in excess
of $25,000 or restrictions upon the operations of any Mutual
Company; or
(l)except in the ordinary course of business, enter
into or terminate any material Contract or make any change in
any material lease or Contract, other than renewals of leases
and Contracts without material adverse changes of terms.
7.3 Covenants of ANB. From the date of this
Agreement until the earlier of the Effective Time or the
termination of this Agreement, ANB covenants and agrees that it
shall (i) continue to conduct its business and the business of
its Subsidiaries in the usual, regular, and ordinary course, (ii)
take no action which would materially adversely affect the
ability of any Party to obtain any Consents required for the
transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c) of this Agreement, and
(iii) not, except as contemplated by this Agreement, amend the
Articles of Incorporation or Bylaws of ANB, in each case, in any
manner which is adverse to, and discriminates against, the
holders of Mutual Common Stock.
7.4 Adverse Changes in Condition. Each Party agrees
to give written notice promptly to the other Party upon becoming
aware of the occurrence or impending occurrence of any event or
circumstance relating to it or any of its Subsidiaries which
(i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) is reasonably
likely to cause or constitute a material breach of any of its
representations, warranties, or covenants contained herein, and
to use its reasonable efforts to prevent or promptly to remedy
the same.
7.5 Reports. Each Party and its Subsidiaries shall
file all reports required to be filed by it with Regulatory
Authorities between the date of this Agreement and the Effective
Time and shall deliver to the other Party copies of all such
reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC,
in the case of ANB, or the OTS, in the case of Mutual, such
financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the
dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods
then ended in accordance with GAAP (subject in the case of
interim financial statements to normal recurring year-end
adjustments that are not material). As of their respective
dates, such reports filed with the SEC or the OTS, as the case
may be, will comply in all material respects with the Securities
Laws 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 in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Any financial statements contained in any other reports to
another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
ARTICLE EIGHT
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Joint Proxy Statement;
Shareholder Approvals. As soon as reasonably practicable after
the execution of this Agreement, ANB shall file the Registration
Statement with the SEC, provided Mutual has provided, on a
reasonably timely basis, all information concerning Mutual
necessary for inclusion in the Registration Statement, and shall
use its reasonable efforts to cause the Registration Statement to
become effective under the 1933 Act as soon as reasonably
practicable after the filing thereof and take any action required
to be taken under the applicable state Blue Sky or securities
Laws in connection with the issuance of the shares of ANB Common
Stock upon consummation of the Merger. Mutual shall promptly
furnish all information concerning it and the holders of its
capital stock as ANB may reasonably request in connection with
such action. Mutual shall call a Shareholders' Meeting, to be
held as soon as reasonably practicable after the Registration
Statement is declared effective by the SEC, for the purpose of
voting upon approval of (i) this Agreement and the Plan of Merger
and (ii) such other related matters as it deems appropriate. ANB
shall call a Shareholders' Meeting, to be held as soon as
reasonably practicable after the Registration Statement is
declared effective by the SEC, for the purpose of voting upon
approval of (i) the Articles of Incorporation Amendment, and (ii)
such other related matters as it deems appropriate. In
connection with the Shareholders' Meetings, (i) Mutual and ANB
shall file the Joint Proxy Statement (which shall be included in
the Registration Statement) with the OTS and the SEC,
respectively, and mail it to their respective shareholders,
(ii) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection
with such Joint Proxy Statement, (iii) the Board of Directors of
Mutual and ANB shall recommend (subject to compliance with their
fiduciary duties) to their respective shareholders the approval
of the matters submitted for consideration and approval by such
shareholders, and (iv) the Board of Directors and officers of
Mutual and ANB shall use their reasonable efforts to obtain such
shareholders' approval (subject to compliance with their
fiduciary duties as advised in writing by counsel to such Board).
8.2 Applications. As soon as reasonably practicable
after execution of this Agreement, ANB shall prepare and file,
and Mutual shall cooperate in the preparation and, where
appropriate, filing of, applications with all Regulatory
Authorities having jurisdiction over the transactions
contemplated by this Agreement and the Plan of Merger seeking the
requisite Consents necessary to consummate the transactions
contemplated by this Agreement and the Plan of Merger. ANB shall
use all reasonable efforts to obtain the requisite Consents of
all Regulatory Authorities as soon as reasonably practicable
after the filing of the appropriate applications.
8.3Agreement as to Efforts to Consummate. Subject to
the terms and conditions of this Agreement, each Party agrees to
use, and to cause its Subsidiaries to use, its reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause
to be done, all things necessary, proper, or advisable under
applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the
transactions contemplated by this Agreement and the Plan of
Merger, including, without limitation, using its reasonable
efforts to lift or rescind any Order adversely affecting its
ability to consummate the transactions contemplated herein and
therein and to cause to be satisfied the conditions applicable to
such Party referred to in Article Nine of this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use,
its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated
by this Agreement and the Plan of Merger.
8.4 Investigation and Confidentiality.
(a)Prior to the Effective Time, each Party will keep
the other Party advised of all material developments relevant to
its business and to consummation of the Merger and shall permit
the other Party to make or cause to be made such investigation of
the business and properties of it and its Subsidiaries and of
their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall
be reasonably related to the transactions contemplated hereby and
shall not interfere unreasonably with normal operations. No
investigation by a Party shall affect the representations and
warranties of the other Party.
(b)Each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential
information furnished to it by the other Party concerning its and
its Subsidiaries' businesses, operations, and financial positions
and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement.
If this Agreement is terminated prior to the Effective Time, each
Party shall promptly return or destroy all documents and copies
thereof, and all work papers containing confidential information
received from the other Party and shall not use such information
in a manner detrimental to the other Party and its Affiliates.
(c)Mutual shall use its reasonable efforts to
exercise its rights under confidentiality agreements entered into
with Persons which were considering an acquisition transaction
with Mutual to preserve the confidentiality of the information
relating to Mutual provided to such parties.
8.5 Press Releases. Prior to the Effective Time,
Mutual and ANB shall consult with each other as to the form and
substance of any press release or other public disclosure
materially related to this Agreement or any other transaction
contemplated hereby; provided, however, that nothing in this
Section 8.5 shall be deemed to prohibit any Party from making any
disclosure which its counsel advises as necessary or advisable in
order to satisfy such Party's disclosure obligations imposed by
Law.
8.6Certain Actions. Except with respect to this
Agreement and the transactions contemplated hereby, no Mutual
Company nor any Affiliate thereof nor any investment banker,
attorney, accountant, or other representative (collectively,
"Representatives") retained by any Mutual Company shall directly
or indirectly solicit any Acquisition Proposal by any Person.
Except to the extent necessary to comply with the fiduciary
duties of Mutual's Board of Directors, no Mutual Company or any
Affiliate or Representative thereof shall furnish any non-public
information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with
respect to, any Acquisition Proposal, and shall direct and use
its reasonable efforts to cause all of its Representatives not to
engage in any of the foregoing, but Mutual may communicate
information about such an Acquisition Proposal to its
shareholders if and to the extent that it is required to do so in
order to comply with its legal obligations. Mutual shall
promptly notify ANB orally and in writing in the event that it
receives any inquiry or proposal relating to any such
transaction. Mutual shall immediately cease and cause to be
terminated as of the date of this Agreement any existing
activities, discussions, or negotiations with any Persons
conducted heretofore with respect to any of the foregoing.
8.7Tax Matters. The Parties agree to use their
reasonable efforts to obtain a written opinion of Alston & Bird
to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of Mutual
Common Stock for ANB Common Stock will not give rise to gain or
loss to the shareholders of Mutual with respect to such exchange
(except to the extent of any cash received), and (iii) each of
Mutual, ANB, and American National will be a party to that
reorganization within the meaning of Section 368(b) of the
Internal Revenue Code ("Tax Opinion"). In rendering such Tax
Opinion, Alston & Bird shall be entitled to rely upon
representations of officers of Mutual and ANB reasonably
satisfactory in form and substance to such counsel. Each of the
Parties undertakes and agrees to use its reasonable efforts to
cause the Merger, and to take no action which would cause the
Merger not, to qualify for treatment as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code for
Federal income tax purposes.
8.8Agreements of Affiliates. Mutual has disclosed in
Section 8.8 of the Mutual Disclosure Memorandum all Persons whom
it reasonably believes is an "affiliate" of Mutual for purposes
of Rule 145 under the 1933 Act. Mutual shall use its reasonable
efforts to cause each such Person to deliver to ANB not later
than thirty (30) days prior to the Effective Time, a written
agreement, substantially in the form of Exhibit 3 to this
Agreement, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of Mutual Common
Stock held by such Person except as contemplated by such
agreement or by this Agreement and will not sell, pledge,
transfer, or otherwise dispose of the shares of ANB Common Stock
to be received by such Person upon consummation of the Merger
except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder (and ANB shall be
entitled to place restrictive legends upon certificates for
shares of ANB Common Stock issued to affiliates of Mutual
pursuant to this Agreement to enforce the provisions of this
Section 8.8). ANB shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act
for the purposes of resale of ANB Common Stock by such
affiliates.
8.98.14Employee Benefits and Contracts. As of the
Effective Time, the ANB Companies shall offer employment to all
employees of Mutual with no reduction in base salary. Following
the Effective Time, ANB shall provide generally to officers and
employees of the Mutual Companies employee benefits under
employee benefit plans, on terms and conditions which when taken
as a whole are substantially the same as those currently provided
by the ANB Companies to their similarly situated officers and
employees; provided that ANB shall not be required to, but may,
permit the officers and employees of the Mutual Companies to
participate in the Cash Profit Sharing Bonus Plan of American
National. For purposes of participation and vesting (but not
benefit accrual) under such employee benefit plans, the service
of the employees of the Mutual Companies prior to the Effective
Time shall be treated as service with an ANB Company
participating in such employee benefit plans. Any vacation and
sick leave accrued for the then current year but not taken prior
to the Effective Time will carry over and be available until the
end of such year. ANB also shall cause the Resulting Association
and its Subsidiaries to honor in accordance with their terms all
provisions for vested benefits or other vested amounts earned or
accrued through the Effective Time under the Mutual Benefit
Plans. In addition, ANB agrees not to terminate, except for
"cause" as determined under the employee policies of ANB, any
employee of Mutual who becomes an employee of ANB at the
Effective Time for a period of one year after the Effective Time.
8.10 Indemnification.
(a)Subject to the conditions set forth in paragraph
(b) below, for a period of six (6) years after the Effective
Time, ANB shall, and shall cause the Resulting Association to,
indemnify, defend, and hold harmless each person entitled to
indemnification from a Mutual Company (each, an "Indemnified
Party") against all Liabilities arising out of actions or
omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this
Agreement) to the same extent and subject to the conditions set
forth in applicable regulations of the OTS (including all
official interpretations thereof) and Mutual's Charter and
Bylaws, in each case as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the
defense of any Litigation. Without limiting the foregoing, in
any case in which approval by the Resulting Association is
required to effectuate any indemnification, ANB shall cause the
Resulting Association to direct, at the election of the
Indemnified Party, that the determination of any such approval
shall be made by independent counsel mutually agreed upon between
ANB and the Indemnified Party.
(b)ANB shall, or shall cause the Resulting
Association to, use its reasonable efforts (and Mutual shall
cooperate prior to the Effective Time in these efforts) to
maintain in effect for a period of one (1) year after the
Effective Time, Mutual's existing directors' and officers'
liability insurance policy (provided that ANB may substitute
therefor (i) policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less
advantageous or (ii) with the consent of Mutual given prior to
the Effective Time, any other policy) with respect to claims
arising from facts or events which occurred prior to the
Effective Time and covering persons who are currently covered by
such insurance.
(c)Any Indemnified Party wishing to claim
indemnification under paragraph (a), upon learning of any such
Liability or Litigation, shall promptly notify ANB thereof. In
the event of any such Litigation (whether arising before or after
the Effective Time), (i) ANB or the Resulting Association shall
have the right to assume the defense thereof and ANB shall not be
liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof,
except that if ANB or the Resulting Association elects not to
assume such defense or counsel for the Indemnified Parties
advises that there are substantive issues which raise conflicts
of interest between ANB or the Resulting Association and the
Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and ANB or the Resulting Association shall
pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received;
provided, however, that ANB shall be obligated pursuant to this
paragraph (c) to pay for only one (1) firm of counsel for all
Indemnified Parties in any jurisdiction (assuming there are no
conflicts), (ii) the Indemnified Parties will cooperate in the
defense of any such Litigation, and (iii) ANB shall not be liable
for any settlement effected without its prior written consent;
and provided further that the Resulting Association shall not
have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification
of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.
(d)If ANB or the Resulting Association or any of its
successors or assigns shall consolidate with or merge into any
other Person and shall not be the continuing or surviving Person
of such consolidation or merger or shall transfer all or
substantially all of its Assets to any Person, then in each case,
proper provision shall be made so that the successors and assigns
of ANB or the Resulting Association shall assume the obligations
set forth in this Section 8.10.
8.11 Organization of Mortgage Subsidiary. ANB agrees
to organize as a subsidiary of ANB or American National, as soon
as reasonably practicable after the Effective Time and subject to
receipt of all necessary Consents from Regulatory Authorities, a
mortgage banking subsidiary, containing sufficient capital,
personnel, and other resources, to be named "Mutual Mortgage
Company."
8.12 Certain Director and Officer Positions.
(a)ANB agrees to cause two (2) members of Mutual's
Board of Directors, which members shall be nominated by Mutual
and approved by ANB and willing so to serve (subject to any
applicable legal restrictions) ("Former Mutual Directors") and
shall include Mr. H. Dan Davis, to be elected or appointed as
directors of ANB and American National at the first meetings of
the Boards of Directors of ANB and American National held after
the Effective Time. At the first annual meeting of shareholders
of ANB after the Effective Time, ANB shall take all corporate
action necessary to, and shall, renominate such two (2) Former
Mutual Directors for election as directors of ANB and shall
recommend that the ANB shareholders vote for the election of such
individuals as directors.
(b)ANB also agrees to establish a Board of Directors
for Mutual Mortgage Company, which shall be composed of all
individuals who are serving as members of Mutual's Board of
Directors at the Effective Time (other than the outside Former
Mutual Director who is elected a director of ANB) , and which
Board shall receive fees for such service as directors of Mutual
Mortgage at the same rate as Mutual's Board as of the date of
this Agreement.
(c)ANB agrees to elect or appoint all individuals of
Mutual who are serving as officers of Mutual at the Effective
Time as officers of either American National or Mutual Mortgage
Company taking into account the prior positions and experience of
such officers with Mutual in designating such officer positions.
Specifically, ANB shall appoint Mr. H. Dan Davis as (i) Executive
Vice President of ANB and Senior Vice President of American
National at the Effective Time and (ii) President and Chief
Executive Officer of Mutual Mortgage Company at the time of its
organization. In addition, at the Effective Time, ANB shall
offer to enter into an employment agreement with Mr. Davis,
substantially in the form of Exhibit 4 to this Agreement.
8.13 Certain Modifications.
(a)Mutual and ANB shall consult with respect to
their loan, litigation, and real estate valuation policies and
practices (including loan classifications and levels of reserves)
and Mutual shall make such modifications or changes to its
policies and practices, if any, prior to the Effective Time, as
may be mutually agreed upon. Mutual and ANB shall also consult
with respect to the character, amount, and timing of
restructuring and merger-related expense charges to be taken by
each of the Parties in connection with the transactions
contemplated by this Agreement and the Plan of Merger and shall
take such charges in accordance with GAAP, prior to the Effective
Time, as may be mutually agreed upon by the Parties. Neither
Parties' representations, warranties, and covenants contained in
this Agreement shall be deemed to be inaccurate or breached in
any respect as a consequence of any modifications or charges
undertaken solely on account of this Section 8.13.
(b)During the first full quarter after the Effective
Time, management of ANB agrees, subject to the earnings of the
ANB Companies, their financial condition, liquidity and capital
requirements, applicable governmental regulations and policies,
and other factors deemed relevant by management, to recommend to
the Board of Directors of ANB that the regular semi-annual cash
dividend payable per share of ANB Common Stock be increased to a
rate not less than $.2837.
ARTICLE NINE
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1Conditions to Obligations of Each Party. The
respective obligations of each Party to perform this Agreement
and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following
conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(a)Shareholder Approval. The shareholders of Mutual
shall have approved (i) this Agreement and the Plan of Merger
and (ii) the consummation of the transactions contemplated
hereby and thereby, including the Merger, as and to the
extent required by Law or by the provisions of any governing
instruments. The shareholders of ANB shall have approved the
Articles of Incorporation Amendment, as and to the extent
required by Law or by the provisions of any governing
instruments.
(b)Regulatory Approvals. All Consents of, filings
and registrations with, and notifications to, all Regulatory
Authorities required for consummation of the Merger shall
have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have
expired. No Consent so obtained which is necessary to
consummate the transactions as contemplated hereby shall be
conditioned or restricted in a manner which in the reasonable
good faith judgment of the Board of Directors of ANB or
Mutual would so materially adversely impact the economic
benefits of the transaction as contemplated by this Agreement
so as to render inadvisable the consummation of the Merger.
(c)Consents and Approvals. Each Party shall have
obtained any and all other Consents required for consummation
of the Merger (other than those referred to in Section 9.1(b)
of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained
or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(d)Legal Proceedings. No court or governmental or
regulatory authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced, or entered any Law or
Order (whether temporary, preliminary, or permanent) or taken
any other action which prohibits, restricts, or makes illegal
consummation of the transactions contemplated by this
Agreement.
(e)Registration Statement. The Registration
Statement shall be effective under the 1933 Act, no stop
orders suspending the effectiveness of the Registration
Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to the
issuance of the shares of ANB Common Stock issuable pursuant
to the Merger shall have been received.
(f)Tax Matters. Each Party shall have received a
copy of the Tax Opinion referred to in Section 8.7 of this
Agreement. Each Party shall have delivered to the other a
certificate, dated as of the Effective Time, signed by its
chief executive officer and chief financial officer, to the
effect that, to the best knowledge and belief of such
officers, the statement of facts and representations made on
behalf of the management of such Party, presented to the
legal counsel delivering the Tax Opinion were at the date of
such presentation, true, correct, and complete, and are on
the date of such certificate, to the extent contemplated by
the presentation, true, correct, and complete, as though such
presentation had been made on the date of such certificate.
9.2Conditions to Obligations of ANB. The obligations of
ANB to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by ANB
pursuant to Section 11.6(a) of this Agreement:
(a)Representations and Warranties. For purposes of
this Section 9.2(a), the accuracy of the representations and
warranties of Mutual set forth in this Agreement shall be
assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such
representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of
such date). The representations and warranties of Mutual set
forth in Section 5.3 of this Agreement shall be true and
correct (except for inaccuracies which are de minimus in
amount). The representations and warranties of Mutual set
forth in Sections 5.19, 5.20, 5.21, and 5.22 of this
Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and
warranties of Mutual set forth in this Agreement (including
the representations and warranties set forth in Sections 5.3,
5.19, 5.20, 5.21, and 5.22) such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Mutual; provided that, for
purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or
"Material Adverse Effect" shall be deemed not to include such
qualifications.
(b)Performance of Agreements and Covenants. Each
and all of the agreements and covenants of Mutual to be
performed and complied with pursuant to this Agreement and
the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied
with in all material respects.
(c)Certificates. Mutual shall have delivered to ANB
(i) a certificate, dated as of the Effective Time and signed
on its behalf by its chief executive officer and its chief
financial officer, to the effect that the conditions of its
obligations set forth in Sections 9.2(a) and 9.2(b) of this
Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Mutual's Board of Directors and
shareholders evidencing the taking of all corporate action
necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable
detail as ANB and its counsel shall request.
(d)Pooling Letter. ANB shall have received a letter
from Arthur Andersen LLP, dated as of the Effective Time, to
the effect that the Merger will qualify for pooling-of-
interests accounting treatment under Accounting Principles
Board Opinion No. 16 if closed and consummated in accordance
with this Agreement.
(e)Legal Opinion. ANB shall have received a written
opinion, dated as of the Effective Time, of counsel to Mutual
in form reasonably satisfactory to ANB, which shall cover the
matters set forth in Exhibit 5 to this Agreement.
(f)Fairness Opinion. ANB shall have received from
Scott & Stringfellow, Inc., a letter, dated not more than ten
(10) business days prior to the date of the Joint Proxy
Statement, to the effect that, in the opinion of such firm,
the Exchange Ratio is fair, from a financial point of view,
to the shareholders of ANB.
9.3Conditions to Obligations of Mutual. The obligations
of Mutual to perform this Agreement and consummate the Merger and
the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Mutual
pursuant to Section 11.6(b) of this Agreement:
(a)Representations and Warranties. For purposes of
this Section 9.3(a), the accuracy of the representations and
warranties of ANB set forth in this Agreement shall be
assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such
representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of
such date). The representations and warranties of ANB set
forth in Section 6.3 of this Agreement shall be true and
correct (except for inaccuracies which are de minimus in
amount). The representations and warranties of ANB set forth
in Section 6.13 of this Agreement shall be true and correct
in all material respects. There shall not exist inaccuracies
in the representations and warranties of ANB set forth in
this Agreement (including the representations and warranties
set forth in Sections 6.3 and 6.13) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to
have, a Material Adverse Effect on ANB; provided that, for
purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or
"Material Adverse Effect" shall be deemed not to include such
qualifications.
(b)Performance of Agreements and Covenants. Each
and all of the agreements and covenants of ANB to be
performed and complied with pursuant to this Agreement and
the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied
with in all material respects.
(c)Certificates. ANB shall have delivered to Mutual
(i) a certificate, dated as of the Effective Time and signed
on its behalf by its chief executive officer and its chief
financial officer, to the effect that the conditions of its
obligations set forth in Sections 9.3(a) and 9.3(b) of this
Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by ANB's Board of Directors and
American National's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this
Agreement and the Plan of Merger, and the consummation of the
transactions contemplated hereby, all in such reasonable
detail as Mutual and its counsel shall request.
(d)Legal Opinion. Mutual shall have received a
written opinion, dated as of the Effective Time, of counsel
to ANB, in form reasonably satisfactory to Mutual which shall
cover the matters set forth in Exhibit 6 to this Agreement.
(e)Fairness Opinion. Mutual shall have received
from Baxter Fentriss and Company, a letter, dated not more
than ten (10) business days prior to the date of the Joint
Proxy Statement, to the effect that, in the opinion of such
firm, the Exchange Ratio is fair, from a financial point of
view, to the shareholders of Mutual.
ARTICLE TEN
TERMINATION
10.1 Termination. Notwithstanding any other provision
of this Agreement, and notwithstanding the approval of this
Agreement by the shareholders of Mutual or ANB, this Agreement
may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a)By mutual consent of the Board of Directors of
ANB and the Board of Directors of Mutual; or
(b)By the Board of Directors of either Party
(provided that the terminating Party is not then in breach of
any representation or warranty contained in this Agreement
under the applicable standard set forth in Section 9.2(a) of
this Agreement in the case of Mutual and Section 9.3(a) in
the case of ANB or in material breach of any covenant or
other agreement contained in this Agreement) in the event of
an inaccuracy of any representation or warranty of the other
Party contained in this Agreement which cannot be or has not
been cured within thirty (30) days after the giving of
written notice to the breaching Party of such inaccuracy and
which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the
applicable standard set forth in Section 9.2(a) of this
Agreement in the case of Mutual and Section 9.3(a) of this
Agreement in the case of ANB; or
(c)By the Board of Directors of either Party
(provided that the terminating Party is not then in breach of
any representation or warranty contained in this Agreement
under the applicable standard set forth in Section 9.2(a) of
this Agreement in the case of Mutual and Section 9.3(a) in
the case of ANB or in material breach of any covenant or
other agreement contained in this Agreement) in the event of
a material breach by the other Party of any covenant or
agreement contained in this Agreement which cannot be or has
not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach; or
(d)By the Board of Directors of either Party in the
event (i) any Consent of any Regulatory Authority required
for consummation of the Merger and the other transactions
contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken
by such authority is not appealed within the time limit for
appeal, (ii) the shareholders of Mutual fail to vote their
approval of this Agreement and the transactions contemplated
hereby as required by the HOLA and the regulations of the OTS
at the Mutual Shareholders' Meeting where the transactions
were presented to such shareholders for approval and voted
upon, or (iii) the shareholders of ANB fail to vote their
approval of the Articles of Incorporation Amendment as
required by the Virginia SCA at the ANB Shareholders' Meeting
or any adjournment thereof where the amendment was presented
to such shareholders for approval and voted upon; or
(e)By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by July
31, 1996, in each case only if the failure to consummate the
transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party
electing to terminate pursuant to this Section 10.1(e); or
(f)By the Board of Directors of either Party
(provided that the terminating Party is not then in breach of
any representation or warranty contained in this Agreement
under the applicable standard set forth in Section 9.2(a) of
this Agreement in the case of Mutual and Section 9.3(a) in
the case of ANB or in material breach of any covenant or
other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of
such Party to consummate the Merger (other than as
contemplated by Section 10.1(d) of this Agreement) cannot be
satisfied or fulfilled by the date specified in Section
10.1(e) of this Agreement.
10.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 10.1 of this
Agreement, this Agreement shall become void and have no effect,
except that (i) the provisions of this Section 10.2 and Article
Eleven and Section 8.4(b) of this Agreement shall survive any
such termination, and (ii) a termination pursuant to Sections
10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve
the breaching Party from Liability for an uncured willful breach
of a representation, warranty, covenant, or agreement giving rise
to such termination.
10.3 Non-Survival of Representations and Covenants.
The respective representations, warranties, obligations,
covenants, and agreements of the Parties shall not survive the
Effective Time except this Section 10.3 and Articles Two, Three,
Four, and Eleven and Sections 8.9, 8.10, 8.11, and 8.12 of this
Agreement.
ARTICLE ELEVEN
MISCELLANEOUS
11.1 Definitions. Except as otherwise provided
herein, the capitalized terms set forth below (in their singular
and plural forms as applicable) shall have the following
meanings:
"Acquisition Proposal" with respect to a Party shall
mean any tender offer or exchange offer or any proposal for a
merger, acquisition of all of the stock or assets of, or
other business combination involving such Party or any of its
Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such
Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean (i) any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by, or under common
control with such Person, (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of
any ten percent (10%) or greater equity or voting interest of
such Person, or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of
Reorganization, including the Plan of Merger and the other
Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Allowance" shall have the meaning provided in
Section 5.8 of this Agreement.
"American National Common Stock" shall mean the
$10.00 par value common stock of American National.
"ANB Common Stock" shall mean the $1.00 par value
common stock of ANB.
"ANB Companies" shall mean, collectively, ANB and all
ANB Subsidiaries.
"ANB Disclosure Memorandum" shall mean the written
information entitled "American National Bankshares Inc.
Disclosure Memorandum" delivered prior to the date of this
Agreement to Mutual describing in reasonable detail the
matters contained therein and, with respect to each
disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is
being made. Information disclosed with respect to one
Section shall not be deemed to be disclosed for purposes of
any other Section not specifically referenced with respect
thereto.
"ANB Financial Statements" shall mean (i) the
consolidated statements of condition (including related notes
and schedules, if any) of ANB as of June 30, 1995, and as of
December 31, 1994 and 1993, and the related statements of
income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the six
months ended June 30, 1995, and each of the three years ended
December 31, 1994, 1993, and 1992, as filed by ANB in SEC
Documents and (ii) the consolidated statements of condition
of ANB (including related notes and schedules, if any) and
related statements of income, changes in shareholders'
equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to June 30, 1995.
"ANB Preferred Stock" shall mean the $5.00 par value
preferred stock of ANB.
"ANB Subsidiaries" shall mean the Subsidiaries of ANB
which shall include the ANB Subsidiaries described in Section
6.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary
of ANB in the future and owned by ANB at the Effective Time.
"Articles of Incorporation Amendment" shall mean the
amendment to the Articles of Incorporation of ANB increasing
the number of authorized shares of ANB Common Stock by an
amount which will permit completion of the transactions
contemplated by this Agreement.
"Assets" of a Person shall mean all of the assets,
properties, businesses, and rights of such Person of every
kind, nature, character, and description, whether real,
personal, or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in
part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company
Act of 1956, as amended.
"Business Combination" shall mean an acquisition of,
merger or combination with, share exchange involving any
class of voting stock of, sale of more than twenty-five
percent (25%) of the consolidated assets by, or other
business combination involving, or tender offer for or sale
or issuance of any equity securities involving an acquisition
by a third-party of more than twenty-five percent (25%) of
the voting stock of, Mutual.
"Certificate of Merger" shall mean the Certificate of
Merger or other order to be issued by the OCC approving the
Merger.
"Closing" shall mean the closing of the transactions
contemplated hereby, as described in Section 1.2 of this
Agreement.
"Consent" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or similar
affirmation by any Person pursuant to any Contract, Law,
Order, or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or
other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets, or
business.
"Default" shall mean (i) any breach or violation of
or default under any Contract, Order, or Permit, (ii) any
occurrence of any event that with the passage of time or the
giving of notice or both would constitute a breach or
violation of or default under any Contract, Order, or Permit,
or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a
right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any
Liability under, any Contract, Order, or Permit, except those
Defaults which do not have a Material Adverse Effect on a
Party.
"Effective Time" shall mean the date and time at
which the Merger becomes effective as defined in Section 1.3
of this Agreement.
"Environmental Laws" shall mean all Laws which are
administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies
with jurisdiction over pollution or protection of the
environment.
"ERISA Plan" shall have the meaning provided in
Section 5.14 of this Agreement.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Exchange Agent" shall have the meaning provided in
Section 4.1 of this Agreement.
"Exchange Ratio" shall have the meaning provided in
Section 3.1(c) of this Agreement.
"Exhibits" 1 through 6, inclusive, shall mean the
Exhibits so marked, copies of which are attached to this
Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be referred
to in this Agreement and any other related instrument or
document without being attached hereto.
"FDIC" shall mean the Federal Deposit Insurance
Corporation.
"GAAP" shall mean generally accepted accounting
principles, consistently applied during the periods involved.
"Hazardous Material" shall mean any pollutant,
contaminant, or hazardous substance within the meaning of the
Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. 9601 et seq., or any similar
federal, state, or local Law.
"HOLA" shall mean the Home Owners' Loan Act of 1933,
as amended.
"Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Joint Proxy Statement" shall mean the joint proxy
statement used by Mutual and ANB to solicit the approval of
their respective shareholders of the transactions
contemplated by this Agreement and the Plan of Merger as and
to the extent required by Law or by the provisions of any
governing instruments, and shall include the prospectus of
ANB relating to the shares of ANB Common Stock to be issued
to the shareholders of Mutual.
"Knowledge" as used with respect to a Person shall
mean to the best of the knowledge of the chairman, president,
chief financial officer, chief accounting officer, chief
credit officer, general counsel, any assistant or deputy
general counsel, or any senior or executive vice president of
such Person.
"Law" shall mean any code, law, ordinance,
regulation, reporting, or licensing requirement, rule, or
statute applicable to a Person or its Assets, Liabilities, or
business, including, without limitation, those promulgated,
interpreted, or enforced by any of the Regulatory
Authorities.
"Liability" shall mean any direct or indirect,
primary or secondary, liability, indebtedness, obligation,
penalty, cost, or expense (including, without limitation,
costs of investigation, collection, and defense), claim,
deficiency, guaranty, or endorsement of or by any Person
(other than endorsements of notes, bills, checks, and drafts
presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute, or
contingent, liquidated or unliquidated, matured or unmatured,
or otherwise.
"Lien" shall mean any conditional sale agreement,
default of title, easement, encroachment, encumbrance,
hypothecation, infringement, lien, mortgage, pledge, reserva
tion, restriction, security interest, title retention, or
other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than
(i) Liens for current property Taxes not yet due and payable,
(ii) for depository institutions, pledges to secure deposits
and other Liens incurred in the ordinary course of the
banking business, and (iii) Liens which are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on a Party.
"Litigation" shall mean any action, arbitration,
cause of action, claim, complaint, criminal prosecution,
governmental examination, investigation, hearing, inquiry,
administrative proceeding, or notice (written or oral) by any
Person alleging the aforesaid, but shall not include regular,
periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"Loan Property" shall mean any property owned by the
Party in question or by any of its Subsidiaries or in which
such Party or Subsidiary holds a security interest, and,
where required by the context, includes the owner or operator
of such property, but only with respect to such property.
"Material Adverse Effect" on a Party shall mean an
event, change, or occurrence which, individually or together
with any other event, change, or occurrence, has a material
adverse impact on (i) the financial position, business, or
results of operations of such Party and its Subsidiaries,
taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this
Agreement, provided 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, or (b) changes
in GAAP or regulatory accounting principles generally
applicable to banks and savings associations and their
holding companies, (c) actions and omissions of a Party (or
any of its Subsidiaries) taken with the prior informed
consent of the other Party in contemplation of the
transactions contemplated hereby, or (d) the Merger and
compliance with the provisions of this Agreement on the
operating performance of the Parties.
"material" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the
matter in question; provided that any specific monetary
amount stated in this Agreement shall determine materiality
in that instance.
"Merger" shall mean the merger of Mutual with and
into American National referred to in Section 1.1 of this
Agreement.
"Mutual Benefit Plans" shall have the meaning set
forth in Section 5.14 of this Agreement.
"Mutual Common Stock" shall mean the $1.00 par value
common stock of Mutual.
"Mutual Companies" shall mean, collectively, Mutual
and all Mutual Subsidiaries.
"Mutual Disclosure Memorandum" shall mean the written
information entitled "Mutual Savings Bank, F.S.B. Disclosure
Memorandum" delivered prior to the date of this Agreement to
ANB describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed
with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically
referenced with respect thereto.
"Mutual Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and
schedules, if any) of Mutual as of June 30, 1995, and as of
September 30, 1994 and 1993, and the related statements of
income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the nine
months ended June 30, 1995, and for each of the three fiscal
years ended September 30, 1994, 1993, and 1992, as disclosed
by Mutual in the Mutual Disclosure Memorandum, and (ii) the
consolidated balance sheets of Mutual (including related
notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) with respect
to periods ended subsequent to June 30, 1995.
"Mutual Preferred Stock" shall mean the $1.00 par
value preferred stock of Mutual.
"Mutual Stock Plans" shall mean Mutual Savings Bank,
F.S.B. 1987 Stock Option Plan.
"Mutual Subsidiaries" shall mean the Subsidiaries of
Mutual which shall include the Mutual Subsidiaries described
in Section 5.4 of this Agreement and any corporation, bank,
savings association, or other organization acquired as a
Subsidiary of Mutual in the future and owned by Mutual at the
Effective Time.
"NASD" shall mean the National Association of
Securities Dealers, Inc.
"1933 Act" shall mean the Securities Act of 1933, as
amended.
"1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
"OCC" shall mean Office of the Comptroller of the
Currency.
"Order" shall mean any administrative decision or
award, decree, injunction, judgment, order, quasi-judicial
decision or award, ruling, or writ of any federal, state,
local, or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or Regulatory Authority.
"OTS" shall mean the Office of Thrift Supervision
(including its predecessor, the Federal Home Loan Bank
Board).
"Participation Facility" shall mean any facility in
which the Party in question or any of its Subsidiaries
participates in the management and, where required by the
context, includes the owner or operator or such property, but
only with respect to such property.
"Party" shall mean either Mutual or ANB and "Parties"
shall mean both Mutual and ANB.
"Permit" shall mean any federal, state, local, and
foreign governmental approval, authorization, certificate,
easement, filing, franchise, license, notice, permit, or
right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its
securities, Assets, or business.
"Person" shall mean a natural person or any legal,
commercial, or governmental entity, such as, but not limited
to, a corporation, general partnership, joint venture,
limited partnership, limited liability company, trust,
business association, group acting in concert, or any person
acting in a representative capacity.
"Plan of Merger" shall mean the Plan of Merger and
Combination, in substantially the form of Exhibit 1 to this
Agreement, to be entered into by Mutual and American National
setting forth the terms of the Merger.
"Registration Statement" shall mean the Registration
Statement on Form S-4, or other appropriate form, filed with
the SEC by ANB under the 1933 Act in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively,
the Federal Trade Commission, the United States Department of
Justice, the Board of the Governors of the Federal Reserve
System, the OTS, the OCC, the FDIC, all state regulatory
agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NASD, and the SEC.
"Resulting Association" shall mean American National
as the surviving association resulting from the Merger.
"SEC Documents" shall mean all reports and
registration statements filed, or required to be filed, by a
Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934
Act, the Investment Company Act of 1940, as amended, the
Investment Advisors Act of 1940, as amended, the Trust
Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated
thereunder including the regulations of the OTS included in
12 C.F.R. Part 563g.
"Shareholders' Meetings" shall mean the respective
meetings of the shareholders of Mutual and ANB to be held
pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"Subsidiary" or collectively "Subsidiaries" shall
mean all those corporations, banks, associations, or other
entities of which the entity in question owns or controls
fifty percent (50%) or more of the outstanding equity
securities either directly or through an unbroken chain of
entities as to each of which fifty percent (50%) or more of
the outstanding equity securities is owned directly or
indirectly by ANB; provided, however, there shall not be
included any such entity acquired through foreclosure or any
such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
"Tax" or "Taxes" shall mean any federal, state,
county, local or foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property,
withholding, excise, occupancy, and other taxes, assessments,
charges, fares, or impositions, of any nature whatsoever,
including interest, penalties, and additions imposed thereon
or with respect thereto.
"Virginia SCA" shall mean the Virginia Stock
Corporation Act.
11.2 Expenses.
(a)Except as otherwise provided in this Section
11.2, each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including filing,
registration, and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that ANB shall bear and
pay the filing fees payable in connection with the Registration
Statement and the Joint Proxy Statement and printing costs
incurred in connection with the printing of the Registration
Statement and the Joint Proxy Statement.
(b)Notwithstanding the foregoing, if, after the date
of this Agreement and within twelve (12) months following:
(1)any termination of this Agreement
(i)by ANB pursuant to Sections 10.1(b)
(but only in the case of a willful breach by Mutual
of a representation or warranty), 10.1(c), or 10.1(f)
(but only on the basis of the failure to satisfy any
of the conditions enumerated in Sections 9.1(a) (but
only in the case of Mutual shareholder approval) and
(d) or 9.2(a) (but only in the case of a willful
breach by Mutual of a representation or warranty),
(b), (c), (d), or (f)) of this Agreement, or
(ii) by Mutual pursuant to Section
10.1(f) (but only on the basis of the failure to
satisfy any of the conditions enumerated in Section
9.1(a) (but only in the case of Mutual shareholder
approval) or (d) or 9.3(e)) of this Agreement, or
(iii) by either Party pursuant to
Section 10.1(d)(ii) (but only in the case of Mutual
shareholder approval) of this Agreement, or
(2)failure to consummate the Merger by
reason of any failure to satisfy the conditions
enumerated in Sections 9.1(a) (but only in the case of
Mutual shareholder approval) or (d), 9.2(a) (but only in
the case of a willful breach by Mutual of a
representation or warranty), (b), (c), (d), or (f) or
9.3(e) of this Agreement,
Mutual covenants, acknowledges, and agrees that it shall be a
specific, absolute, and unconditional binding condition to
Mutual's entering into a letter of intent, agreement in
principle, or definitive agreement (whether or not considered
binding, non-binding, or conditional) with respect to, or
recommending shareholder acceptance of, any Business Combination
with any third-party, that such third-party that is a party to
the Business Combination shall pay to ANB, prior to the time the
Business Combination is announced to the public by press release
or otherwise,, an amount in cash equal to $1,000,000, which sum
represents the direct costs and expenses (including, without
limitation, fees and expenses of ANB's financial or other
consultants, printing costs, investment bankers, accountants, and
counsel) incurred by ANB in negotiating and carrying out the
transactions contemplated by this Agreement, and the indirect
costs and expenses incurred by ANB in connection with the
transactions contemplated by this Agreement including ANB's
management time devoted to negotiation and preparation for such
transaction. In the event such third-party shall refuse to pay
such amounts, the amounts shall be an obligation of Mutual and
shall be paid by Mutual promptly upon notice to Mutual by ANB.
(c)Nothing contained in this Section 11.2 shall
constitute or shall be deemed to constitute liquidated damages
for the willful breach by a Party of the terms of this Agreement
or otherwise limit the rights of the nonbreaching Party.
11.3 Brokers and Finders. Except for Baxter Fentriss
and Company as to Mutual and Scott & Stringfellow, Inc. as to
ANB, each of the Parties represents and warrants that neither it
nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any
financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event
of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or
being retained by Mutual or ANB, each of Mutual and ANB, as the
case may be, agrees to indemnify and hold the other Party
harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly
provided herein, this Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement
between the Parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral. Nothing in this
Agreement, expressed or implied, is intended to, or shall, confer
upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, other than as provided in
Sections 8.10 and 8.12 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by each
of the Parties upon the approval of the Boards of Directors of
each of the Parties; provided, however, that after any such
approval by the holders of Mutual Common Stock, there shall be
made no amendment decreasing the consideration to be received by
Mutual shareholders without the further approval of such
shareholders.
11.6 Waivers.
(a)Prior to or at the Effective Time, ANB, acting
through its Board of Directors, chief executive officer, or other
authorized officer, shall have the right to waive on behalf of it
and American National any Default in the performance of any term
of this Agreement by Mutual to waive or extend the time for the
compliance or fulfillment by Mutual of any and all of its
obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of ANB under this
Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer
of ANB.
(b)Prior to or at the Effective Time, Mutual acting
through its Board of Directors, chief executive officer, or other
authorized officer, shall have the right to waive any Default in
the performance of any term of this Agreement by ANB, to waive or
extend the time for the compliance or fulfillment by ANB or
American National of any and all of their obligations under this
Agreement, and to waive any or all of the conditions precedent to
the obligations of Mutual under this Agreement, except any
condition which, if not satisfied, would result in the violation
of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Mutual.
11.7 Assignment. Except as expressly contemplated
hereby, neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any Party hereto
(whether by operation of Law or otherwise) without the prior
written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the Parties and their
respective successors and assigns.
11.8 Notices. All notices or other communications
which are required or permitted hereunder shall be in writing and
sufficient if delivered by hand, by facsimile transmission, by
registered or certified mail, postage pre-paid, or by courier or
overnight carrier, to the persons at the addresses set forth
below (or at such other address as may be provided hereunder),
and shall be deemed to have been delivered as of the date so
received:
Mutual:Mutual Savings Bank, F.S.B.
103 Tower Drive
Danville, Virginia 24543-1001
Telecopy Number: (804) 791-0249
Attention: H. Dan Davis
President and Chief
Executive Officer
Copy to Counsel: Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W., Suite 400
Washington, D.C. 20016
Telecopy Number: (202) 966-9409
Attention: Leslie A. Murphy and
John R. Hall
ANB: American National Bankshares Inc.
628 Main Street
Danville, Virginia 24541
Telecopy Number: (804) 792-5681
Attention: Charles H. Majors
President and Chief Executive Officer
Copy to Counsel: Alston & Bird
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Telecopy Number: (202) 508-3333
Attention: Frank M. Conner III
11.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the Laws of the Commonwealth
of Virginia, without regard to any applicable conflicts of Laws,
except to the extent that the federal Laws of the United States
may apply to the Merger.
11.10Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
11.11Captions. The captions contained in this Agreement
are for reference purposes only and are not part of this
Agreement.
11.12Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf and its corporate seal to
be hereunto affixed and attested by officers thereunto as of the
day and year first above written.
ATTEST: MUTUAL SAVINGS BANK, F.S.B.
By: /s/ Barbara N. Hobgood By: /s/ H. Dan Davis
Barbara N. Hobgood H. Dan Davis
Corporate Secretary President and Chief Executive
Officer
[CORPORATE SEAL]
ATTEST: AMERICAN NATIONAL BANKSHARES INC.
By: /s/ David Hyler By: /s/ Charles H. Majors
David Hyler Charles H. Majors
Corporate Secretary President and Chief Executive
Officer
[CORPORATE SEAL]