As filed with the Securities and Exchange Commission on February 20, 1996
Registration No. 33-65297
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
AMENDMENT NO. 2
FORM S-4
REGISTRATION STATEMENT
Under the Securities Act of 1933
__________
UNITED BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
West Virginia 6711 55-0641179
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code) Identification No.)
United Center
500 Virginia Street, East
Charleston, West Virginia 25301
(304) 348-8400
(Address and telephone number of principal executive offices)
__________
Joseph William Sowards
United Bankshares, Inc.
514 Market St.
Parkersburg, WV 26102
(304) 424-8761
(Name, address and telephone number of agent for service)
Copy: Deborah A. Sink, Esq. J. Christopher Thomas Gerard L. Hawkins, Esq.
Bowles Rice McDavid President and Chief Operating Officer Elias, Matz, Tiernan & Herrick, L.L.P.
Graff & Love Eagle Bancorp, Inc. 734 15th Street, N.W.
1600 Huntington Square 227 Capitol Street Washington, D.C. 20005
Charleston, WV 25301 Charleston, West Virginia 25301 (202) 347-0300
(304) 347-1124 (304) 340-4632
__________
Approximate date of commencement of the proposed sale of securities to the
public:
As soon as practicable after this Registration Statement becomes effective.
__________
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to Section 8(a) may
determine.
UNITED BANKSHARES, INC.
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(b) OF REGULATION S-K
Form S-4 Section Caption
Item Number and Caption in Prospectus*
- ----------------------- --------------
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus................................ Cross Reference Sheet;
Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus....................... Table of Contents; Available
Information; Information
Incorporated by Reference
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other
Information............................... Summary; The Merger;
Description of UBS Capital
Stock; Comparison of
Shareholders' Rights
4. Terms of the Transaction.................. Summary; The Merger;
Description of UBS Capital
Stock; Comparison of
Shareholders' Rights;
Comparative Per Share Data;
UBS and Eagle Selected Pro
Form Consolidated Financial
Data
5. Pro Forma Financial Information........... Pro Forma Consolidated
Financial Statements
6. Material Contracts with the
Company Being Acquired.................... The Merger
7. Additional Information Required for
Reoffering by Persons and
Parties Deemed to be
Underwriters.............................. Not Applicable
8. Interests of Named Experts
and Counsel............................... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
10. Information with Respect to
S-3 Registrants........................... Information Incorporated by
Reference
11. Incorporation of Certain Information
by Reference.............................. Information Incorporated by
Reference
12. Information with Respect to S-2 or
S-3 Registrants........................... Not Applicable
13. Incorporation of Certain Information
by Reference.............................. Not Applicable
14. Information with Respect to
Registrants Other than S-3
or S-2 Registrants........................ Not Applicable
15. Information with Respect to
S-3 Companies............................. Not Applicable
16. Information with Respect to
S-2 or S-3 Companies...................... Information Incorporated
by Reference
17. Information with Respect to
Companies Other than
S-3 or S-2 Companies...................... Not Applicable
18. Information if Proxies,
Consents or Authorizations
are to be Solicited....................... Special Meeting of Eagle
Bancorp, Inc. Shareholders;
Special Meeting of United
Bankshares, Inc.
Shareholders; Summary;
Information Incorporated by
Reference; Management of
UBS after the Merger
19. Information if Proxies,
Consents or Authorizations
are Not to be Solicited
or in an Exchange Offer................... Not Applicable
* This Registration Statement on Form S-4 contains a prospectus/joint proxy
statement to be sent to the shareholders of the company the Registrant proposes
to acquire via a merger transaction, Eagle Bancorp, Inc., as well as to the
Registrant's shareholders, who must vote on the merger.
[EAGLE BANCORP, INC. LETTERHEAD]
___________, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of Eagle Bancorp, Inc. to be held at the Edgewood Country
Club, 1600 Edgewood Drive, Charleston, West Virginia, on March 28, 1996
at 12:00 p.m., local time. At this meeting, you will be asked to consider
and approve the Agreement and Plan of Merger dated August 18, 1995 (the
"Merger Agreement") between United Bankshares, Inc. ("UBS") and Eagle
Bancorp, Inc. ("Eagle"), which sets forth the terms and conditions under
which Eagle will merge with and into UBS (the "Merger").
Pursuant to the terms of the Merger Agreement and upon the
effective date of the Merger, shareholders of Eagle will be entitled to
receive 1.15 shares of UBS common stock in exchange for each share of
Eagle common stock owned. No fractional shares of UBS common stock will
be issued in connection with the Merger and, in lieu thereof, UBS will
pay Eagle shareholders the value of any fractional shares of UBS common
stock in cash.
The Merger is subject to approval of the holders of a majority
of the outstanding shares of Eagle. Completion of the Merger is also
subject to the approval by the holders of a majority of the issued and
outstanding shares of UBS, receipt of all required regulatory approvals
and other conditions described in the enclosed materials.
A notice of the Special Meeting, a proxy for your use in
connection with that meeting, and a Prospectus/Joint Proxy Statement
describing the proposed transaction in detail accompany this letter. We
urge you to read all of these documents carefully before deciding how to
vote your shares.
Your Board of Directors has unanimously determined that the
Merger is fair to and in the best interests of Eagle and its
shareholders. Accordingly, your Board of Directors unanimously
recommends that you vote "FOR" approval of the Merger Agreement.
We hope that you will attend the Special Meeting. Regardless
of your plans to attend, we urge you, because of the importance of this
matter, to execute and mail the enclosed proxy in the envelope provided.
If you decide to attend the meeting, you may withdraw your proxy and vote
in person on all matters brought before it.
Sincerely,
______________________________________
William W. Wagner
Chairman and Chief Executive
Officer
EAGLE BANCORP, INC.
227 Capitol Street
Charleston, West Virginia 25301
(304) 340-4600
NOTICE OF SPECIAL MEETING OF EAGLE BANCORP, INC. SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that, pursuant to the call of the Board
of Directors, a Special Meeting of Shareholders of Eagle Bancorp, Inc.
will be held at the Edgewood Country Club, 1600 Edgewood Drive,
Charleston, West Virginia on March 28, 1996 at 12:00 p.m., local time,
for the purpose of considering and voting upon the following matter:
To consider and vote upon an Agreement and Plan of Merger dated
August 18, 1995 between United Bankshares, Inc. and Eagle Bancorp, Inc.
A copy of the Agreement is attached as Annex A to the accompanying
Prospectus/Joint Proxy Statement.
The close of business on February 8, 1996, has been fixed by
the Board of Directors as the record date for determining shareholders
entitled to notice of and to vote at this Special Meeting.
The Board of Directors of Eagle has unanimously determined the
Merger to be fair to and in the best interests of Eagle and its
shareholders and unanimously recommends that shareholders vote "FOR"
approval of the Agreement.
Charleston, West Virginia By Order of the Board of Directors
________, 1996
__________________________________
T. Sam Scipio, Jr.
Senior Vice President
and Secretary
- ------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. FAILURE TO
RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL
MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
AGREEMENT. ACCORDINGLY, EVEN IF YOU PLAN TO BE PRESENT AT THE
SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN
THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS
POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE EITHER IN
PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- ------------------------------------------------------------------------
[UNITED BANKSHARES, INC. LETTERHEAD]
___________, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of United Bankshares, Inc. to be held at Fifth Floor, United
Square, Fifth and Avery Streets, Parkersburg, West Virginia, on March 28,
1996 at 10:00 a.m., local time. At this meeting, you will be asked to
consider and approve the Agreement and Plan of Merger dated August 18,
1995 (the "Merger Agreement") among United Bankshares, Inc. ("UBS") and
Eagle Bancorp, Inc. ("Eagle"). Eagle will merge with and into UBS (the
"Merger").
UBS shareholders must vote on the Merger under the West
Virginia Corporation Act. UBS shareholders will continue to hold their
UBS Stock after the Merger, except for those shareholders electing to
exercise dissenters' rights. Dissenting shareholders who follow the
statutory procedures described in the enclosed Prospectus/Joint Proxy
Statement will be entitled to receive the fair value of their shares.
Pursuant to the terms of the Merger Agreement and upon the
effective date of the Merger, shareholders of Eagle will be entitled to
receive 1.15 shares of UBS common stock in exchange for each share of
Eagle common stock owned. No fractional shares of UBS common stock will
be issued in connection with the Merger and, in lieu thereof, UBS will
pay Eagle shareholders the value of any fractional shares of UBS common
stock in cash.
The Merger is subject to approval of the holders of a majority
of the outstanding shares of UBS. Completion of the Merger is also
subject to the approval by the holders of a majority of the issued and
outstanding shares of Eagle, receipt of all required regulatory approvals
and other conditions described in the enclosed materials.
A notice of the Special Meeting, a proxy for your use in
connection with that meeting, and a Prospectus/Joint Proxy Statement
describing the proposed transaction in detail accompany this letter. We
urge you to read all of these documents carefully before deciding how to
vote your shares.
Your Board of Directors has unanimously determined that the
Merger is fair to and in the best interests of UBS and its shareholders.
Accordingly, your Board of Directors unanimously recommends that you vote
"FOR" approval of the Merger Agreement.
We hope that you will attend the Special Meeting. Regardless
of your plans to attend, we urge you, because of the importance of this
matter, to execute and mail the enclosed proxy in the envelope provided.
If you decide to attend the meeting, you may withdraw your proxy and vote
in person on all matters brought before it.
Sincerely,
______________________________________
Richard M. Adams
Chairman and
Chief Executive Officer
UNITED BANKSHARES, INC.
United Center
500 Virginia Street, East
Charleston, West Virginia 25301
(304) 348-8400
NOTICE OF SPECIAL MEETING OF UNITED BANKSHARES, INC. SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that, pursuant to the call of the Board
of Directors, a Special Meeting of Shareholders of United Bankshares,
Inc. will be held at Fifth Floor, United Square, Fifth and Avery Streets,
Parkersburg, West Virginia, on March 28, 1996 at 10:00 a.m., local time,
for the purpose of considering and voting upon the following matter:
To consider and vote upon an Agreement and Plan of Merger dated
August 18, 1995 between United Bankshares, Inc. and Eagle Bancorp, Inc.
A copy of the Agreement is attached as Annex A to the accompanying
Prospectus/Joint Proxy Statement.
The close of business on February 8, 1996, has been fixed by
the Board of Directors as the record date for determining shareholders
entitled to notice of and to vote at this Special Meeting.
The Board of Directors of UBS has unanimously determined the
Merger to be fair to and in the best interests of UBS and its
shareholders and unanimously recommends that shareholders vote "FOR"
approval of the Agreement.
Charleston, West Virginia By Order of the Board of Directors
________, 1996
____________________________
Richard M. Adams
Chairman of the Board and
Chief Executive Officer
- ------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. FAILURE TO
RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL
MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
AGREEMENT. ACCORDINGLY, EVEN IF YOU PLAN TO BE PRESENT AT THE
SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN
THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS
POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE EITHER IN
PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- ------------------------------------------------------------------------
UNITED BANKSHARES, INC.
PROSPECTUS
UNITED BANKSHARES, INC. AND EAGLE BANCORP, INC.
JOINT PROXY STATEMENT
3,138,888 Shares of Common Stock
This Prospectus/Joint Proxy Statement is being furnished in
connection with the solicitation of proxies by the Board of Directors of
United Bankshares, Inc. ("UBS") and the Board of Directors of Eagle
Bancorp, Inc. ("Eagle") to be used at a special meeting of stockholders
of UBS and Eagle, respectively, to be held on March 28, 1996 (the "UBS
Special Meeting" and the "Eagle Special Meeting," respectively, and
together the "Special Meetings"). The purpose of the Special Meetings is
to consider and vote upon an Agreement and Plan of Merger, dated as of
August 18, 1995, between UBS and Eagle (the "Merger Agreement"), which
provides, among other things, for the merger of Eagle with and into UBS
(the "Merger").
Upon consummation of the Merger, each share of common stock of
Eagle, par value $.10 per share ("Eagle Stock") (other than any shares
held by UBS or a subsidiary thereof other than in a fiduciary capacity or
in satisfaction of a debt previously contracted) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted into the right to receive 1.15 shares of common stock of UBS,
par value $2.50 per share ("UBS Stock"), plus cash in lieu of any
fractional share interest, as described in this Prospectus/Joint Proxy
Statement. See "Summary," "The Merger" and Annex A.
This Prospectus/Joint Proxy Statement also constitutes a
prospectus of UBS relating to the shares of UBS Stock issuable to holders
of Eagle Stock upon consummation of the Merger. Based on 2,729,468 shares
of Eagle Stock outstanding on the date hereof, a maximum of 3,138,888
shares of UBS Stock will be issuable upon consummation of the Merger.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION NOR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus/Joint Proxy Statement is
_____________, 1996.
AVAILABLE INFORMATION
Each of UBS and Eagle is subject to the information and
reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance with those requirements, files
reports, proxy and information statements, and other information with the
Securities and Exchange Commission (the "SEC"). The documents filed by
UBS and Eagle with the SEC can be inspected and copied at the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the SEC's Regional Office in New York, which is located at 7
World Trade Center, Suite 1300, New York, New York 10048. Each of the
UBS Stock and the Eagle Stock is quoted on the NASDAQ Stock Market's
National Market ("NASDAQ"). Consequently, reports, proxy statements and
other information relating to UBS and Eagle also may be inspected and
copied at the Public Reference Section of The National Association of
Securities Dealers, Inc. ("NASD") at 1735 K Street, N.W., Washington D.C.
20006-1506. Copies of such documents can be obtained from the public
reference sections at prescribed rates.
This Prospectus/Joint Proxy Statement does not contain all of
the information set forth in the Registration Statement on Form S-4, of
which this Prospectus/Joint Proxy Statement is a part, and exhibits
thereto (together with the amendments thereto, the "Registration
Statement") which has been filed by UBS with the SEC under the Securities
Act of 1933, as amended (the "Securities Act") and the regulations
thereunder, certain portions of which have been omitted pursuant to the
regulations of the SEC and to which portions reference is hereby made for
further information.
No person has been authorized to give any information or make
any representation not contained in this Prospectus/Joint Proxy Statement
in connection with the offer and proxy solicitations contained herein,
and, if given or made, such information or representation must not be
relied upon as having been authorized by UBS. Neither the delivery of
this Prospectus/Joint Proxy Statement nor any distribution of the
securities to which this Prospectus/Joint Proxy Statement relates shall,
under any circumstances, create any implication that there has been no
change in the affairs of UBS or Eagle since the date hereof or that the
information contained herein is correct as of any time subsequent to its
date. This Prospectus/Joint Proxy Statement does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than
the securities to which it relates or an offer to sell or solicitation to
buy such securities in any circumstances in which such an offer or
solicitation is not lawful.
INFORMATION INCORPORATED BY REFERENCE
UBS
The following documents previously filed with the SEC by UBS
(File No.0-13322) are hereby incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, as amended by Form 10-K/A filed on February 8, 1996;
2. Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 1995;
3. Form 8-K filed on July 21, 1995.
4. Form 8-K filed on August 25, 1995.
5. Form 8-K filed on November 30, 1995.
6. Form 8-K filed on December 13, 1995.
All documents filed by UBS pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus/Joint
Proxy Statement and prior to the date of the Special Meetings shall be
deemed to be incorporated by reference in this Prospectus/Joint Proxy
Statement and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus/Joint
Proxy Statement to the extent that a statement contained herein or in any
other such subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus/Joint
Proxy Statement.
This Prospectus/Joint Proxy Statement incorporates documents by
reference which are not presented herein or delivered herewith. These
documents are available without charge upon written or oral request from
Joseph Wm. Sowards, United Bankshares, Inc., 514 Market Street,
Parkersburg, West Virginia 26102 (telephone number (304) 424-8761).
Requested documents will be sent by first class mail within one business
day of receipt of the request. In order to ensure timely delivery of the
documents, any request should be made by March 18, 1996.
Eagle
A copy of Eagle's Annual Report to Shareholders for the year
ended December 31, 1994, and Quarterly Report on Form 10-Q for the three
months ended September 30, 1995, accompanies this Prospectus/Joint Proxy
Statement.
The following documents previously filed with the SEC by Eagle
(File No. 0-17003) are hereby incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1994;
2. Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1995; and
3. Form 8-K filed on August 21, 1995.
All documents filed by Eagle pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus/Joint
Proxy Statement and prior to date of the Special Meetings shall be deemed
to be incorporated by reference in this Prospectus/Joint Proxy Statement
and to be a part hereof from the date of filing of such documents. Any
statement incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus/Joint Proxy Statement to
the extent that a statement contained herein or in any other such
subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus/Joint Proxy
Statement.
This Prospectus/Joint Proxy Statement incorporates documents by
reference which are not presented herein or delivered herewith. These
documents are available without charge upon written or oral request from
Stockholder Relations, Eagle Bancorp, Inc., 227 Capitol Street,
Charleston, West Virginia 25301 (telephone number (304) 340-4600).
Requested documents will be sent by first class mail within one business
day of receipt of the request. In order to ensure timely delivery of the
documents, any request should be made by March 18, 1996.
TABLE OF CONTENTS
SUMMARY ................................................................. 1
The Special Meeting ................................................ 1
Parties to the Merger .............................................. 2
The Merger and the Bank Merger ..................................... 2
Eagle Reasons for the Merger/Opinion of Financial Advisor to Eagle.. 3
UBS Reasons for the Merger ......................................... 3
Interest of Certain Persons ........................................ 3
Accounting Treatment ............................................... 4
Certain Federal Income Tax Consequences ............................ 4
Regulatory Approvals ............................................... 5
Conditions to Consummation of the Merger ........................... 5
Payment of Merger Consideration .................................... 5
Resale of UBS Stock ................................................ 5
Comparison of Shareholders' Rights ................................. 5
Dissenters' Rights ................................................. 6
COMPARATIVE STOCK PRICES AND DIVIDENDS .................................. 6
COMPARATIVE PER SHARE DATA .............................................. 8
UBS AND EAGLE BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL DATA ................................ 9
UBS AND EAGLE
SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA ....................... 14
UBS RECENT DEVELOPMENTS ................................................. 18
EAGLE RECENT DEVELOPMENTS ............................................... 20
PROFORMA RECENT DEVELOPMENTS ............................................ 21
INTRODUCTION ............................................................ 22
SPECIAL MEETING OF EAGLE SHAREHOLDERS ................................... 22
Time and Place ..................................................... 22
Shares Outstanding and Entitled to Vote; Record Date ............... 22
Purpose and Vote Required .......................................... 22
Proxies ............................................................ 23
i
SPECIAL MEETING OF UBS SHAREHOLDERS ..................................... 24
Time and Place ..................................................... 24
Shares Outstanding and Entitled to Vote, Record Date ............... 24
Purpose and Vote Required .......................................... 24
Proxies ............................................................ 24
CERTAIN BENEFICIARY OWNERS OF UBS STOCK ................................. 25
CERTAIN BENEFICIAL OWNERS OF EAGLE STOCK ................................ 28
THE MERGER .............................................................. 29
General ............................................................ 30
The Merger Consideration ........................................... 30
Exchange of Eagle Stock Certificates ............................... 30
Background of and Reasons for the Merger ........................... 31
Opinions of Financial Advisor to Eagle ............................ 33
Effect on the Corporate Parties .................................... 38
Certain Federal Income Tax Consequences ............................ 38
Conditions to Consummation of the Merger ........................... 40
Regulatory Approval ................................................ 41
Business Pending the Merger ........................................ 42
No Solicitation .................................................... 44
Effective Time of the Merger; Termination and Amendment ............ 45
Interests of Certain Persons in the Merger ......................... 46
Certain Employee Matters ........................................... 48
Resale of UBS Stock ................................................ 49
Expenses of the Merger, Termination Fee ............................ 50
Stockholder Agreements ............................................. 51
Accounting Treatment ............................................... 51
COMPARISON OF SHAREHOLDERS' RIGHTS ...................................... 51
Authorized Capital Stock ........................................... 52
Issuance of Capital Stock .......................................... 52
Voting Rights ...................................................... 53
Dividends and Other Distributions .................................. 53
Terms and Size of Board of Directors ............................... 54
Director Vacancies and Removal of Directors ........................ 54
Director Conflict of Interest Transactions ......................... 55
Exculpation of Directors ........................................... 55
Shareholder Nominations ............................................ 55
Shareholder Proposals .............................................. 56
Special Meetings of Shareholders ................................... 56
Shareholder Action without a Meeting ............................... 57
ii
Shareholders' Right to Examine Books and Records ................... 57
Amendment of Governing Instruments ................................. 57
Mergers, Consolidations and Sales of Assets ........................ 58
Business Combinations with Certain Persons ......................... 58
Dissenters' Rights of Appraisal .................................... 59
DISSENTERS' RIGHTS ...................................................... 60
MANAGEMENT OF UBS AFTER THE MERGER ...................................... 62
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ............................. 62
DESCRIPTION OF UBS STOCK ................................................ 70
REGULATION AND SUPERVISION OF UBS ....................................... 71
General ................................................................. 71
Non-banking Activities Permitted to UBS ................................ 72
Credit and Monetary Policies and Related Matters ................... 72
Capital Requirement ................................................ 73
Federal Deposit Insurance Corporation Improvement Act of 1991 ...... 75
Reigle-Neal Interstate Banking Bill ................................ 76
Community Reinvestment Act ......................................... 76
RECENT LEGISLATIVE DEVELOPMENTS ......................................... 77
Recapitalization of SAIF and Potential One-Time Assessment ......... 77
Pending Legislation Regarding Bad Debt Reserves .................... 78
EXPERTS ................................................................. 79
LEGAL MATTERS ........................................................... 79
PROPOSALS FOR THE 1996 ANNUAL MEETING ................................... 79
Annex A Agreement and Plan of Merger, dated as of
August 18, 1995, between UBS and Eagle
Annex B Opinion of Wheat, First Securities, Inc.
Annex C Sections 31-1-122 and 31-1-123 of the
West Virginia Corporation Act
iii
SUMMARY
The following is a summary of the information contained in this
Prospectus/Joint Proxy Statement. This summary is not intended to be a
complete statement of all material contained in this Prospectus/Joint
Proxy Statement and it is qualified in its entirety by reference to the
more detailed discussions contained elsewhere in this document, in the
accompanying Annexes attached hereto and the information incorporated
herein by reference. Shareholders should read this entire
Prospectus/Joint Proxy Statement carefully.
The Special Meetings
The UBS Special Meeting will be held at Fifth Floor, United
Square, Fifth and Avery Streets, Parkersburg, West Virginia, on March 28,
1996, at 10:00 a.m., local time, and the Eagle Special Meeting will be
held at the Edgewood Country Club, 1600 Edgewood Drive, Charleston, West
Virginia, on March 28, 1996, at 12:00 p.m., local time. Only the holders
of record of outstanding shares of UBS Stock and Eagle Stock at the close
of business on February 8, 1996 (the "UBS Record Date") and February 8,
1996 (the "Eagle Record Date"), respectively, are entitled to notice of
and to vote at the UBS Special Meeting and the Eagle Special Meeting,
respectively. At the UBS Record Date, 12,007,051 shares of UBS Stock were
outstanding and entitled to be voted, and at the Eagle Record Date
2,729,468 shares of Eagle Stock were outstanding and entitled to be
voted.
At the Special Meetings and at any adjournment or adjournments
thereof, stockholders of UBS and Eagle will consider and vote upon the
Merger Agreement. The affirmative vote of the holders of a majority of
each of the issued and outstanding UBS Stock and the Eagle Stock, voting
in person or by proxy, is necessary to approve the Merger Agreement on
behalf of UBS and Eagle, respectively.
As of the UBS Record Date, the directors and executive officers
of UBS and their affiliates in the aggregate beneficially owned 1,993,830
shares, or 16.87%, of the outstanding UBS Stock, excluding shares subject
to options. Each of the directors of UBS, who beneficially own 1,839,317
shares, or 15.56% of the outstanding UBS Stock in the aggregate, has
entered into an agreement with Eagle which requires, among other things,
that each such director vote all shares of UBS Stock beneficially owned
in favor of the Merger Agreement. See "Certain Beneficial Owners of UBS
Stock" and "The Merger-Stockholder Agreements."
As of the Eagle Record Date, the directors and executive
officers of Eagle and their affiliates in the aggregate beneficially
owned 738,658 shares, or 27.1%, of the outstanding Eagle Stock. Each of
the directors and executive officers of Eagle has entered into an
agreement with UBS which requires, among other things, that each such
person vote all shares of Eagle Stock beneficially owned in favor of the
Merger Agreement. See "Certain Beneficial Owners of Eagle Stock" and
"The Merger-Stockholder Agreements."
1
Parties to the Merger
Eagle. Eagle is a Delaware corporation and a registered
savings and loan holding company under the Home Owners' Loan Act ("HOLA")
and regulations promulgated thereunder by the Office of Thrift
Supervision ("OTS"). Eagle was incorporated in March 1988 for the
purpose of acquiring all of the capital stock of First Empire Federal
Savings and Loan Association ("First Empire"). First Empire is a
consumer-oriented financial institution which accepts deposits and
utilizes its deposits as the primary source of funds to originate loans.
First Empire focuses its lending activities on first mortgage loans
secured by existing real estate. As of September 30, 1995, Eagle had
consolidated assets of $374.9 million and shareholders' equity of $48.2
million. See "Information Incorporated By Reference" and Eagle's annual
report to shareholders and Form 10-K Report for the year ended December
31, 1994, and Form 10-Q Report for the three months ended September 30,
1995, which accompany this Prospectus/Joint Proxy Statement.
UBS. UBS is a West Virginia corporation and a registered bank
holding company pursuant to the Bank Holding Company Act of 1956, as
amended ("BHCA"). It was incorporated on March 26, 1982, and organized
on September 9, 1982. As a bank holding company, UBS's present business
is the operation of its three bank subsidiaries, United National Bank
("UNB")and United National Bank-South ("UNB-S"), both of which are
national banks headquartered in West Virginia, and First Commercial Bank,
a Virginia state chartered member bank headquartered in Arlington,
Virginia. UBS also owns United Venture Fund, Inc., ("UVF"), a West
Virginia capital company which is primarily engaged in lending activities
consistent with the requirements of the West Virginia Capital Company Act
and the BHCA. UBS also owns UBC Holding Company, a second-tier bank
holding company which owns UNB. As of September 30, 1995, UBS had
consolidated assets of $1,773.3 million and stockholders' equity of
$191.3 million. See "Information Incorporated By Reference".
The Merger and the Bank Merger
In accordance with the terms of and subject to the conditions
set forth in the Merger Agreement, Eagle will be merged with and into
UBS, with UBS as the surviving corporation. Pursuant to the terms of the
Merger Agreement and upon the effective date of the Merger, shareholders
of Eagle will be entitled to receive 1.15 shares of UBS Stock in exchange
for each share of Eagle Stock they own (the "Exchange Ratio"), plus cash
in lieu of any fractional share interest (the "Merger Consideration").
No fractional shares of UBS Stock will be issued in connection with the
Merger and, in lieu thereof, UBS will pay shareholders the value of any
fractional shares of UBS Stock in cash, as described herein. See "THE
MERGER-Merger Consideration."
In connection with the Merger Agreement, First Empire and UNB
entered into an Agreement and Plan of Merger dated as of August 18, 1995
(the "Bank Merger Agreement"). The Bank Merger Agreement sets forth the
terms and conditions, which include consummation of the Merger, pursuant
to which First Empire will merge with and into UNB following consummation
of the Merger.
2
For further information on the Merger Agreement and its terms
and the related Merger and Bank Merger, see "The Merger" and Annex A
hereto.
Eagle Reasons for the Merger/Opinion of Financial Advisor to Eagle
The Board of Directors of Eagle evaluated numerous financial,
legal and market considerations in deciding to approve the Merger
Agreement. See "The Merger-Background of and Reasons for the Merger -
Eagle."
The Board of Directors of Eagle has received a written opinion
from Wheat, First Securities, Inc. ("Wheat First") to the effect that,
based on the factors stated therein, the Exchange Ratio to be received by
stockholders of Eagle pursuant to the Merger Agreement is fair to the
stockholders of Eagle from a financial point of view. For information on
the assumptions made, matters considered and limits of the review by
Wheat First, see "The Merger - Opinion of Financial Advisor to Eagle." A
copy of the opinion of Wheat First is attached hereto as Annex B and
should be read in its entirety.
UBS Reasons for the Merger
UBS' management and Board of Directors view the proposed
transaction as a desirable opportunity to add a high performance company,
new geographic markets and new product markets to the UBS organization.
The Merger will strengthen UBS' current offices in the Charleston,
Morgantown and Beckley areas and will further expand its presence into
southern and western West Virginia, and the Martinsburg and Bridgeport
areas. In addition, UBS will acquire Eagle's presence in the mortgage
banking market and believes that the combined company can further expand
this particular line of business. See "The Merger-Background of and
Reasons for the Merger."
Interests of Certain Persons in the Merger
Pursuant to the Merger Agreement, UBS agreed (i) to take such
action as is necessary to elect J. Christopher Thomas, William W. Wagner
and Paul Clinton Winter, Jr. as directors of UBS upon consummation of the
Merger and to include such persons as nominees for election as directors
of UBS at the first annual meeting of stockholders of UBS following
consummation of the Merger, (ii) to honor the terms of (a) the employment
agreements among Eagle, First Empire and each of Messrs. Thomas and
Wagner and A. Lawrence Crimmins, Jr. and T. Sam Scipio, Jr. and (b) the
Supplemental Retirement Plan maintained by First Empire for certain of
its executive officers, (iii) to continue rights to indemnification and
liability insurance for directors and officers of Eagle and First Empire
for specified periods, (iv) to pay severance payments in accordance with
a schedule to the Merger Agreement to any employee of Eagle or First
Empire (other than any employee who is party to an employment agreement)
whose employment is involuntarily terminated at or during the one-year
period following consummation of the Merger, (v) to offer employment to
(a) J. Christopher Thomas as Executive Vice President of UBS and
President and Chief Executive Officer
3
of a to-be-formed mortgage banking subsidiary ("MBS") of UNB, (b) William
W. Wagner as Executive Vice President of UBS and Chairman of MBS, (c) T.
Sam Scipio, Jr. as Executive Vice President and Chief Operating Officer
of MBS and (d) certain other non-executive officers, in each case with a
base salary equal to the respective employee's base salary with Eagle and
First Empire immediately prior to consummation of the Merger. The
aggregate amount of severance benefits to which Messrs. Wagner, Thomas,
Crimmins and Scipio would be entitled pursuant to his employment
agreement in the event his employment was terminated for good reason
following consummation of the Merger in 1996 is estimated to be $168,750,
$403,650, $281,060 and $266,110, respectively, and the aggregate amount
of annual benefits which Messrs. Wagner, Thomas, Crimmins and Scipio
would be entitled pursuant to the Company's Supplemental Retirement Plan
if such a termination occurred as of December 31, 1995 is estimated to be
approximately $0, $14,000, $4,000 and $22,000, respectively. See "The
Merger - Interests of Certain Persons in the Merger."
Accounting Treatment
The parties expect the Merger to be accounted for under the
pooling of interests method of accounting, and it is a condition to the
respective obligations of the parties that their independent public
accountants issue a letter to them on the closing date that the Merger
shall be accounted for in this manner under generally accepted accounting
principles. See "The Merger -Accounting Treatment."
Certain Federal Income Tax Consequences
The Merger is intended to qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code") and UBS has received an opinion to that effect from Bowles,
Rice, McDavid, Graff & Love. Eagle has received an opinion from Elias,
Matz, Tiernan & Herrick to the effect that, assuming the Merger is
consummated, an Eagle stockholder who receives shares of UBS Stock in
exchange for shares of Eagle Stock pursuant to the Merger will
recognize no gain or loss as a result of the Merger, except that gain
or loss will be recognized with respect to any cash received by an
Eagle stockholder in lieu of any fractional share interests. The
income tax basis of the UBS Stock received will equal the income tax
basis of the Eagle Stock surrendered; and, provided that the surrendered
Eagle Stock was held as a capital asset on the date of the Merger, the
holding period of the UBS Stock received will include the holding period
of the Eagle Stock surrendered. Eagle shareholders are urged to consult
their tax advisors concerning all tax consequences of the consummation
of the Merger as it relates to their own circumstances, including but
not limited to, consequences under federal, state and local income tax
and other tax laws. For a more detailed discussion of the tax
consequences of the Merger, including the tax consequences to UBS
shareholders who elect to exercise dissenters' rights, and the opinions
of counsel to be rendered regarding the federal income tax consequences
of the Merger in connection with the closing thereof, see "The Merger -
Certain Federal Income Tax Consequences."
4
Regulatory Approvals
The Merger and the Bank Merger are subject to the prior
approval or consent of certain federal and state regulatory authorities,
including the Board of Governors of the Federal Reserve System ("FRB"),
the Comptroller of the Currency ("OCC"), the OTS and the West Virginia
Board of Banking and Financial Institutions ("WV Board"). Applications
have been or will be filed with such regulatory authorities for approval
of the Merger and the Bank Merger. While the parties expect regulatory
approval, there can be no assurance that the necessary regulatory
approvals will be obtained or as to the timing or conditions of such
approvals. See "The Merger - Regulatory Approvals."
Conditions to Consummation of the Merger
Consummation of the Merger is subject to various conditions,
including the approval of the Merger Agreement by the requisite Eagle and
UBS shareholder vote, receipt of all necessary regulatory approvals of
the Merger and other requirements set forth in the Merger Agreement. For
further information as to these and the other conditions to consummation
of the Merger, see "The Merger - Regulatory Approvals" and "The Merger -
Conditions to Consummation of the Merger."
Payment of Merger Consideration
As soon as practicable after the consummation of the Merger,
shareholders of Eagle will be mailed written materials with instructions
as to how to exchange their certificates for the Merger Consideration.
Certificates evidencing Eagle Stock should not be returned to Eagle with
the enclosed proxy and should not be forwarded until after receipt of a
letter of transmittal which will be provided to Eagle shareholders upon
consummation of the Merger.
Resale of UBS Stock
The shares of UBS Stock to be issued in connection with the
Merger will be freely tradeable by the holders of such shares, provided
that the resale of shares held by persons who may be deemed to be
"affiliates" of Eagle and UBS under applicable federal securities laws
will be subject to the requirements of such laws and regulations
thereunder, as well as restrictions which are intended to ensure that the
Merger will be accounted for as a pooling of interests under generally
accepted accounting principles. See "The Merger - Resale of UBS Stock."
Comparison of Shareholders' Rights
UBS is a West Virginia corporation subject to the provisions of
the West Virginia Corporation Act ("WVCA") and Eagle is a Delaware
corporation subject to the provisions of the Delaware General Corporation
Law ("DGCL"). Upon consummation of the Merger, shareholders of Eagle
will become shareholders of UBS and their rights will be governed by the
Articles of Incorporation and Bylaws of UBS and the WVCA. The rights of
shareholders of UBS are different
5
in certain respects from the rights of shareholders of Eagle. See
"Comparison of Shareholders' Rights."
Dissenters' Rights
Pursuant to Section 262 of the DGCL, holders of Eagle Stock do
not have the right to dissent from the Merger and obtain an appraised
value of their shares of Eagle Stock. Pursuant to Sections 31-1-122 and
31-1-123 of the WVCA, holders of UBS Stock who (i) file with UBS prior to
or at the UBS Special Meeting a written objection to the Merger Agreement
and (ii) do not vote in favor of the Merger Agreement, may make a written
demand of UBS within ten days after the date of the UBS Special Meeting
for the payment of the fair value of their shares of UBS Stock as of the
day prior to the date on which the vote was taken on the Merger Agreement
at the UBS Special Meeting, excluding any appreciation or depreciation in
anticipation of such corporate action. The written objection and written
demand required to be delivered by a dissenting UBS stockholder is in
addition to and separate from any proxy or vote against the Merger
Agreement. The procedures which must be followed in connection with the
exercise of dissenters' rights by dissenting stockholders of UBS are
described herein under "Dissenters' Rights" and in Sections 31-1-122 and
31-1-123 of the WVCA, copies of which are attached hereto as Annex C to
this Prospectus/Joint Proxy Statement. Failure to take any step in
connection with the exercise of such rights may result in termination or
waiver thereof.
COMPARATIVE STOCK PRICES AND DIVIDENDS
The following table presents the high and low prices of the UBS
Stock and the Eagle Stock and the dividends declared per share during the
periods indicated:
UBS Eagle
------ ---------
Dividends Dividends
Declared Declared
High Low Per Share High Low Per Share
------ ------ --------- ------ --------- ------------
1993
- --------------------
1st Quarter $23.50 $19.25 $.23 $18.00 $14.50 $.35(1)
2nd Quarter 22.75 19.75 .23 22.00 16.50 .10
3rd Quarter 25.75 21.50 .24 29.00 17.00 .12
4th Quarter 28.50 25.25 .25 33.00 25.00 .12
1994
- --------------------
1st Quarter 27.25 25.50 .26 33.00 27.00 .59(1)
2nd Quarter 26.75 25.00 .26 33.00 28.00 .14
3rd Quarter 25.75 24.00 .27 33.00 28.00 .14
4th Quarter 24.75 23.00 .27 33.00 27.00 .14
6
1995
- ----------------------
1st Quarter 26.00 23.25 .29 33.00 27.50 .44(1)
2nd Quarter 27.50 25.25 .29 32.00 28.00 .14
3rd Quarter 30.50 26.25 .29 33.00 29.00 .14
4th Quarter 31.00 29.25 .30 34.00 31.00 .28
1996
- ----------------------
1st Quarter
(through
Jan.31, 1996) 30.00 28.50 31.75 30.75
(1) Includes special dividends of $.25, $.45 and $.30 per share paid
in February 1993, 1994 and 1995, respectively.
The source of stock price information for UBS and Eagle is
NASDAQ. UBS stock is listed under the trading symbol "UBSI." Eagle
stock is also listed on NASDAQ under the symbol "EBCI". The above
quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.
The following table presents the high and low market prices of
UBS and Eagle Stock as well as equivalent per share data, as of August
17, 1995, the closest date immediately before the public announcement of
the proposed Merger for which information is available:
UBS Eagle
(Historical Eagle (Equivalent
Basis) (Historical Basis Share)(1)
- --------------------------------- ----------------- --------------
High Low High Low High Low
- ------------------------- ------ ------- ------- ------ ------
$29.75 $29.50 $34.00 $29.00 $34.21 $33.93
_______________
(1) Equivalent per share prices are calculated by multiplying the
historical prices of UBS Stock by the Exchange Ratio of 1.15
shares of UBS Stock for one (1) share of Eagle Stock.
Stockholders are advised to obtain current market quotations
for the UBS Stock and the Eagle Stock. Because the Exchange Ratio is
fixed, stockholders of Eagle are not assured of receiving a specific
market value of UBS Stock upon consummation of the Merger. The market
price of the UBS Stock upon consummation of the Merger may be higher or
lower than the market price at the time the Merger Agreement was
executed, at the date of mailing of this Prospectus/Joint Proxy Statement
or at the time of the Special Meetings.
7
Comparative Per Share Data (Unaudited)
(Data in dollars, Except shares)
Nine Months Year Ended
Ended December 31
September 30 -------------------------------------
1995 1994 1993 1992
----------- ----------- ----------- -----------
UNITED BANKSHARES, INC. ("UBS")
Historical:
Income from continuing operations $ 1.77 $ 2.08 $ 1.71 $ 1.52
Book value at end of period 16.19 15.21
Cash dividends declared 0.87 1.06 0.95 0.85
Average shares outstanding 11,889,568 11,993,062 11,922,521 10,737,688
EAGLE BANCORP., INC. ("EAGLE")
Historical:
Net income $ 1.53 $ 2.01 $ 2.24 $ 1.67
Book value at end of period 17.66 16.81
Cash dividends declared 0.72 1.01 0.69 0.41
Average shares outstanding 2,729,468 2,729,468 2,718,930 2,650,592
PRO FORMA COMBINED
(UNAUDITED) (1)
Income from continuing operations $ 1.68 $ 2.01 $ 1.76 $ 1.51
Book value at end of period 16.01 15.09
Cash dividends declared 0.87 1.06 0.95 0.85
Average shares outstanding 15,072,863 15,131,950 15,049,291 13,785,869
EAGLE EQUIVALENT PER SHARE
DATA (UNAUDITED) (2)
Income from continuing operations $ 1.93 $ 2.31 $ 2.02 $ 1.74
Book value at end of period 18.41 17.35
Cash dividends declared 1.00 1.22 1.09 0.98
(1) Assumes receipt of 100% of the outstanding shares of Eagle common stock
in exchange for UBS common stock at an exchange ratio of 1.15 to 1.
(2) The equivalent per share amounts are the result of multiplying the cash
dividends declared by UBS, the pro forma combined net income, and pro
forma combined book value by the 1.15 to 1 exchange ratio of UBS
common stock for each common share of EAGLE.
8
UBS AND EAGLE BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected historical consolidated financial data
of UBS and Eagle for the five years ended December 31, 1994 is derived
in part from the audited consolidated financial statements. The
historical consolidated financial data of UBS and Eagle for the nine
months ended September 30, 1995 and 1994 is derived from unaudited
consolidated financial statements of each company. The unaudited
consolidated financial statements include all adjustments, consisting of
normal recurring accruals, which are considered necessary by the
managements of UBS and Eagle for a fair presentation of the financial
position and results of operations of UBS and Eagle for these periods,
respectively. Operating results for the nine months ended September 30,
1995 are not necessarily indicative of the results that may be expected
for any other interim period or the entire year ending December 31, 1995.
The UBS selected historical consolidated financial data set
forth below should be read in conjunction with, and is qualified in its
entirety by, the historical consolidated financial statements of UBS,
including the related notes, incorporated herein by reference. See
"Available Information" and "Information Incorporated by Reference."
The Eagle selected historical consolidated financial data set
forth below should be read in conjunction with, and is qualified in its
entirety by, the historical consolidated financial statements of Eagle,
including the related notes, incorporated herein by reference and in the
reports of Eagle that accompany this Prospectus/Joint Proxy Statement.
See "Available Information" and "Information Incorporated by Reference."
9
UNITED BANKSHARES, INC.
SELECTED FINANCIAL DATA
(In Thousands Except for Per Share Data)
Unaudited
September 30
----------------------
1995 1994
--------- --------
Total interest income $ 101,423 $ 89,369
Total interest expense 40,554 32,010
Net interest income 60,869 57,359
Provision for possible
loan losses 1,550 1,368
Other income 9,509 9,076
Other expenses 36,210 36,283
Income taxes 11,492 10,038
Net income 21,126 18,746
Cash dividends 10,274 9,408
Per common share:
Net income 1.77 1.57
Cash dividends 0.87 0.79
Book value per share 16.19 15.00
Return on average
shareholders' equity 15.10% 14.14%
Return on average assets 1.59% 1.44%
Average assets 1,771,007 1,744,375
Investment securities 324,084 391,923
Net loans 1,319,061 1,260,858
Total assets 1,773,289 1,777,496
Total deposits 1,435,348 1,440,238
Long-term borrowings 33,900 68,043
Total borrowings
and other liabilities 146,648 159,042
Shareholders' equity 191,293 178,216
10
UNITED BANKSHARES, INC.
SELECTED FINANCIAL DATA
(In Thousands Except for Per Share Data)
Five Year Summary
--------------------------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
Total interest income $ 121,157 $ 116,505 $ 113,502 $ 126,863 $ 135,712
Total interest expense 43,887 45,009 49,897 64,851 75,926
Net interest income 77,270 71,496 63,605 62,012 59,786
Provision for possible
loan losses 1,818 4,332 4,242 7,635 7,441
Other income 11,222 12,673 11,123 10,051 9,532
Other expenses 48,676 49,690 46,991 45,102 44,999
Income taxes 13,096 9,770 7,136 5,555 4,643
Income before cumulative
effect of accounting
change 24,902 20,377 16,359 13,771 12,235
Net income 24,902 21,706 16,359 13,771 12,235
Cash dividends 12,604 10,918 7,914 7,077 6,244
Per common share:
Income before cumulative
effect of accounting
change 2.08 1.71 1.52 1.31 1.18
Net income 2.08 1.82 1.52 1.31 1.18
Cash dividends 1.06 0.95 0.85 0.81 0.75
Book value per share 15.21 14.34 13.44 12.66 12.03
Return on average
shareholders' equity 13.98% 13.00% 11.60% 10.73% 9.96%
Return on average assets 1.42% 1.27% 1.09% 0.97% 0.85%
Average assets 1,753,324 1,706,639 1,496,148 1,417,506 1,434,057
Investment securities 360,883 430,427 390,017 311,298 334,253
Net loans 1,297,077 1,161,772 1,097,785 940,413 937,491
Total assets 1,787,641 1,720,184 1,688,903 1,425,006 1,443,024
Total deposits 1,434,852 1,430,529 1,411,892 1,212,619 1,220,482
Long-term borrowings 83,972 32,203 28,067 2,025 2,295
Total borrowings
and other liabilities 173,043 118,683 116,791 80,006 96,411
Shareholders' equity 179,746 170,972 160,220 132,381 126,131
11
EAGLE BANCORP, INC.
SELECTED FINANCIAL DATA
(In Thousands Except for Per Share Data)
Unaudited
September 30
------------------
1995 1994
-------- --------
Total interest income $ 22,023 $ 19,369
Total interest expense 11,450 8,420
Net interest income 10,573 10,949
Provision for possible
loan losses 185 303
Other income 1,787 761
Other expenses 6,043 5,281
Income taxes 1,944 1,910
Net income 4,188 4,216
Cash dividends 1,965 2,375
Per common share:
Net income 1.53 1.54
Cash dividends 0.72 0.87
Book value per share 17.66 16.50
Return on average
shareholders' equity 11.93% 12.85%
Return on average assets 1.46% 1.62%
Average assets 382,328 345,985
Investment securities 11,252 9,171
Net loans 343,445 341,204
Total assets 374,926 369,948
Total deposits 306,367 276,104
Long-term borrowings 15,480 44,851
Total borrowings
and other liabilities 20,349 48,799
Shareholders' equity 48,210 45,045
12
EAGLE BANCORP, INC.
SELECTED FINANCIAL DATA
(In Thousands Except for Per Share Data)
Five Year Summary
------------------------------------------------------------------------
1994 1993 1992 1991 1990
------- -------- -------- -------- --------
Total interest income $ 26,480 $ 24,119 $ 22,927 $ 19,183 $ 17,071
Total interest expense 11,785 10,028 10,922 10,671 10,260
Net interest income 14,695 14,091 12,005 8,512 6,811
Provision for possible
loan losses 384 498 566 268 202
Other income 1,016 1,627 766 841 1,262
Other expenses 7,232 6,417 5,635 5,255 4,559
Income taxes 2,613 2,712 2,144 1,319 819
Income before cumulative
effect of accounting
change 5,482 6,091 4,426 2,511 2,493
Net income 5,482 6,091 4,426 2,511 2,493
Cash dividends 2,757 1,859 1,045 824 568
Per common share:
Income before cumulative
effect of accounting
change 2.01 2.24 1.67 0.98 0.98
Net income 2.01 2.24 1.67 0.98 0.98
Cash dividends 1.01 0.69 0.41 0.33 0.23
Book value per share 16.81 15.78 14.20 13.15 12.75
Return on average
shareholders' equity 12.40% 15.10% 12.60% 7.79% 8.13%
Return on average assets 1.55% 2.03% 1.66% 1.21% 1.39%
Average assets 354,152 300,236 266,833 208,085 179,928
Investment securities 11,186 9,272 12,635 10,876 5,693
Net loans 355,198 281,787 249,846 206,233 160,375
Total assets 382,699 315,268 279,373 241,364 189,116
Total deposits 277,663 267,386 236,542 203,024 154,719
Long-term borrowings 402 361 624 692 487
Total borrowings
and other liabilities 58,746 4,446 4,136 4,294 2,417
Shareholders' equity 45,888 43,075 38,071 33,354 31,493
13
UBS AND EAGLE
SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth selected unaudited consolidated
pro forma financial data of UBS and Eagle at the dates and for the
periods indicated, giving effect to the Merger using the pooling of
interests method of accounting. See "The Merger-Accounting Treatment of
the Merger" and "Pro Forma Consolidated Financial Statements."
The selected unaudited consolidated pro forma financial data
set forth below should be read in conjunction with, and is qualified in
its entirety by, the historical consolidated financial statements of UBS
and Eagle, including the related notes, which are incorporated herein by
reference and which are in the reports of Eagle that accompany this
Prospectus/Joint Proxy Statement, and in conjunction with the selected
consolidated historical and other unaudited pro forma combined condensed
consolidated financial information appearing elsewhere herein. See
"Available Information," "Information Incorporated by Reference" and
"Pro Forma Consolidated Financial Statements." The data set forth below
is not necessarily indicative of the results of the future operations of
UBS upon consummation of the Merger or the actual results that would have
been achieved had the Merger been consummated prior to the periods
indicated.
14
UNITED BANKSHARES, INC. and EAGLE BANCORP, INC.
PRO FORMA SELECTED FINANCIAL DATA
(In Thousands Except for Per Share Data)
Unaudited
September 30
---------------------
1995 1994
--------- ----------
Total interest income $ 123,446 $ 108,738
Total interest expense 52,004 40,430
Net interest income 71,442 68,308
Provision for possible
loan losses 1,735 1,671
Other income 11,296 9,837
Other expenses 42,253 41,564
Income taxes 13,436 11,948
Income from continuing operations 25,314 22,962
Cash dividends (1) 10,274 9,408
Per common share:
Income from continuing operations 1.68 1.52
Cash dividends 0.87 0.79
Book value per share 15.74 14.87
Return on average
shareholders' equity 14.43% 13.85%
Return on average assets 1.57% 1.46%
Average assets 2,153,335 2,090,360
Investment securities 335,336 401,094
Net loans 1,662,506 1,602,062
Total assets 2,148,927 2,147,444
Total deposits 1,741,715 1,716,342
Long-term borrowings 49,380 112,894
Total borrowings
and other liabilities 171,796 207,841
Shareholders' equity 235,416 223,261
(1) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation
15
UNITED BANKSHARES, INC. and EAGLE BANCORP, INC.
PRO FORMA SELECTED FINANCIAL DATA
(In Thousands Except for Per Share Data)
Unaudited
Five Year Summary
--------------------------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- -------- ---------
Total interest income $ 147,637 $ 140,624 $ 136,429 $ 146,046 $ 152,783
Total interest expense 55,672 55,037 60,819 75,522 86,186
Net interest income 91,965 85,587 75,610 70,524 66,597
Provision for possible
loan losses 2,202 4,830 4,808 7,903 7,643
Other income 12,238 14,300 11,889 10,892 10,794
Other expenses 55,908 56,107 52,626 50,357 49,558
Income taxes 15,709 12,482 9,280 6,874 5,462
Income from continuing
operations 30,384 26,468 20,785 16,282 14,728
Cash dividends (1) 15,361 12,777 8,959 7,901 6,812
Per common share:
Income from continuing
operations 2.01 1.76 1.51 1.21 1.11
Cash dividends 1.06 0.95 0.85 0.81 0.75
Book value per share 15.09
Return on average
shareholders' equity 13.67% 12.77% 11.80% 10.14% 9.59%
Return on average assets 1.44% 1.32% 1.18% 1.00% 0.91%
Average assets 2,107,476 2,006,875 1,762,981 1,625,591 1,613,985
Investment securities 372,069 439,699 402,652 322,174 339,946
Net loans 1,652,275 1,443,559 1,347,631 1,146,646 1,097,866
Total assets 2,170,340 2,035,452 1,968,276 1,666,370 1,632,140
Total deposits 1,712,515 1,697,915 1,648,434 1,415,643 1,375,201
Long-term borrowings 84,374 32,564 28,691 2,717 2,782
Total borrowings
and other liabilities 231,789 123,129 120,927 84,300 98,828
Shareholders' equity 225,634 214,047 198,291 165,735 157,624
(1) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation.
16
UNITED BANKSHARES, INC.
RECENT DEVELOPMENTS
(In Thousands Except for Per Share Data)
Unaudited
At or for the
Year Ended
December 31
---------------------
1995 1994
--------- ---------
Total interest income $ 136,460 $ 121,157
Total interest expense 54,770 43,887
Net interest income 81,690 77,270
Provision for possible
loan losses 2,075 1,818
Other income 12,616 11,222
Other expenses 48,881 48,676
Income taxes 15,271 13,096
Net income 28,079 24,902
Per common share:
Net income 2.35 2.08
Cash dividends 1.17 1.06
Book value per share 16.75 15.21
Return on average
shareholders' equity 14.81% 13.98%
Return on average assets 1.56% 1.42%
Average assets 1,779,331 1,753,324
Investment securities 309,473 360,883
Net loans 1,374,005 1,297,077
Total assets 1,815,443 1,787,641
Total deposits 1,473,266 1,434,852
Long-term borrowings 33,900 83,972
Total borrowings
and other liabilities 140,955 173,043
Shareholders' equity 201,222 179,746
17
UNITED BANKSHARES, INC.
RECENT DEVELOPMENTS
For the year ended December 31, 1995, net income increased 13% to a record
$28.1 million. Net income per share of $2.35 for 1995 was up 13% over $2.08
for 1994. United's return on average assets of 1.58% and return on average
shareholders' equity of 14.81% both compare excellently with regional and
national peer grouping ratios of 1.7% and 12.56% and national peer grouping
ratios of 1.21% and 13.47%, respectively. (Source of peer group ratios is
Wheat, First Securities, Inc.)
On a tax-equivalent basis, the net interest margin was strong at 5.15% in
1995 compared to 1994 at 4.97%. Higher average loan volumes for 1995 also
contributed to the $4,420,000 increase in net interest income over 1994.
Other income, excluding security transactions, was up $522,000 or 4.32% when
comparing 1995 to 1994. United continued to control costs as other expense
increased only $205,000 or 0.42% when comparing 1995 to 1994. For the year
ended December 31, 1995, income taxes approximated $15,271,000 compared to
$13,096,000 for 1994. This increase is principally the result of lower levels
of tax-exempt income and higher levels of pretax income. For the years ended
December 31, 1995 and 1994, the provision for possible loan losses was
$2,075,000 and $1,818,000, respectively. The $257,000 increase in the
provision for possible loan losses in 1995 was commensurate with the level of
nonperforming loans during the year.
Subsequent to December 31, 1995, United merged two of its banking
subsidiaries. Effective January 27, 1996, United National Bank - South,
Beckley, West Virginia was merged with and into United National Bank,
Parkersburg, West Virginia. The offices of United National Bank - South
became branch offices of United National Bank.
18
EAGLE BANCORP, INC.
RECENT DEVELOPMENTS
(In Thousands Except for Per Share Data)
Unaudited
At or for the
Year Ended
December 31
------------------
1995 1994
-------- --------
Total interest income $ 29,355 $ 26,480
Total interest expense 15,397 11,785
Net interest income 13,958 14,695
Provision for possible
loan losses 245 384
Other income 2,136 1,016
Other expenses 8,600 7,232
Income taxes 2,511 2,613
Net income 4,738 5,482
Per common share:
Net income 1.74 2.01
Cash dividends 1.00 1.01
Book value per share 17.59 16.81
Return on average
shareholders' equity 10.05% 12.40%
Return on average assets 1.24% 1.55%
Average assets 383,429 354,152
Investment securities 11,546 11,186
Net loans 356,452 352,902
Total assets 394,787 382,699
Total deposits 299,743 277,663
Long-term borrowings 597 402
Total borrowings
and other liabilities 47,032 59,148
Shareholders' equity 48,012 45,888
19
EAGLE BANCORP, INC.
RECENT DEVELOPMENTS
For the year ended 31, 1995, net income was $4,738,000, which
represents a 13.57% decrease from the $5,482,000 earned in 1994. This decrease
in net income was primarily a result of decreased net interest and dividend
income and increased other expenses, which were partially offset by increased
other income, primarily gains on sales of loans in the secondary market. Other
income for 1995 included gains on sales of loans of $1,012,000, as compared to
$121,000 for 1994. Gains on sales of loans increased in 1995 due to increased
volume of loan sales and the capitalization of $412,000 in mortgage servicing
rights due to the adoption of FASB Statement No. 122, ``Accounting for Mortgage
Servicing Rights.'' Net interest and dividend income declined due primarily to
increases in both the volume and average interest rate of average
interest-bearing liabilities, which were partially offset by increases in both
the volume and average rate of average interest-earning assets. Other expenses
increased due to expenses of approximately $483,000 associated with the
proposed merger with United, which consisted primarily of investment banker
fees, and to a lesser extent, legal and other advisory fees related to the
proposed merger. Other expenses also increased due to increases in
compensation, data processing, advertising and various other expenses.
20
UNITED BANKSHARES, INC. and EAGLE BANCORP, INC.
PRO FORMA RECENT DEVELOPMENTS
(In Thousands Except for Per Share Data)
Unaudited
At or for the
Year Ended
December 31
--------------------
1995 1994
--------- ---------
Total interest income $ 165,815 $ 147,637
Total interest expense 70,167 55,672
Net interest income 95,648 91,965
Provision for possible
loan losses 2,320 2,202
Other income 14,752 12,238
Other expenses 57,481 55,908
Income taxes 17,782 15,709
Income from continuing operations 32,817 30,384
Per common share:
Income from continuing operations 2.18 2.01
Cash dividends(1) 1.17 1.06
Book value per share 16.21 15.09
Return on average
shareholders' equity 13.86% 13.67%
Return on average assets 1.52% 1.44%
Average assets 2,162,760 2,107,476
Investment securities 321,019 372,069
Net loans 1,730,457 1,649,979
Total assets 2,210,230 2,170,340
Total deposits 1,773,009 1,712,515
Long-term borrowings 34,497 84,374
Total borrowings
and other liabilities 187,987 232,191
Shareholders' equity 245,147 225,634
(1) Cash dividends are the amounts declared by United and do not include cash
dividends of acquired subsidiaries prior to the dates of consummation
21
INTRODUCTION
This Prospectus/Joint Proxy Statement is being furnished to the
holders of UBS Stock and Eagle Stock in connection with the solicitation
of proxies by the Boards of Directors of UBS and Eagle for use at the UBS
Special Meeting and the Eagle Special Meeting, respectively, and at any
adjournment or adjournments thereof. This Prospectus/Joint Proxy
Statement also serves as a prospectus of UBS in connection with the
issuance of UBS Stock to holders of Eagle Stock upon consummation of the
Merger.
This Prospectus/Joint Proxy Statement, the attached notices of
Special Meetings of Stockholders and the form of proxy and other
documents enclosed herewith are being first mailed to stockholders of UBS
and Eagle on or about February __, 1996.
SPECIAL MEETING OF EAGLE SHAREHOLDERS
Time and Place
The Eagle Special Meeting will be held at the Edgewood
Country Club, 1600 Edgewood Drive, Charleston, West Virginia, on
March 28, 1996 at 12:00 p..m., local time.
Shares Outstanding and Entitled to Vote; Record Date
The close of business on February 8, 1995 has been fixed by
the Board of Directors of Eagle as the record date for the determination
of holders of Eagle Stock entitled to notice of and to vote at the Eagle
Special Meeting and any adjournment or adjournments thereof. At the close
of business on the Eagle Record Date, there were 2,729,468 shares of
Eagle Stock outstanding and entitled to vote. At the Eagle Special
Meeting, Eagle shareholders will be entitled to cast one vote for each
share of Eagle Stock they hold on the Eagle Record Date.
Purpose and Vote Required
The purpose of the Special Meeting of Eagle shareholders is to
act upon the Merger Agreement. Pursuant to applicable law and the
articles of incorporation and bylaws of Eagle, no other business may
properly come before the Eagle Special Meeting and any adjournment or
adjournments thereof.
A detailed description of the Merger Agreement is set forth in
this Prospectus/Joint Proxy Statement and the exhibits attached to it.
See the sections of this Prospectus/Joint Proxy Statement titled
"Summary" and "The Merger."
Shareholders are urged to read this entire document carefully before
voting their shares.
Eagle's Board of Directors has unanimously approved the
proposed Merger Agreement and unanimously recommends that the
shareholders of Eagle vote "FOR" approval of the Merger Agreement.
22
The presence in person or by proxy of at least a majority of
the outstanding shares of Eagle Stock entitled to vote is necessary to
constitute a quorum at the Eagle Special Meeting. The affirmative vote
of the holders of a majority of the outstanding Eagle Stock is required
for approval of the Merger Agreement at the Eagle Special Meeting.
Under rules of the New York Stock Exchange, the proposal to
adopt the Merger Agreement is considered a "non-discretionary item"
whereby brokerage firms may not vote in their discretion on behalf of
---
their clients if such clients have not furnished voting instructions.
Abstentions and such broker "non-votes" will be considered in determining
the presence of a quorum at the Eagle Special Meeting but will not be
counted as a vote cast for the Merger Agreement. Because the proposal to
adopt the Merger Agreement is required to be approved by the holders of a
majority of the outstanding shares of Eagle Stock, abstentions and broker
"non-votes" will have the same effect as a vote against this proposal.
Proxies
A proxy for use by Eagle shareholders in connection with the
Eagle Special Meeting is enclosed with this Prospectus/Joint Proxy
Statement. The proxy will be voted as specified thereon by the
shareholder, and where no specification is made on the proxy, a properly
executed proxy will be voted "FOR" approval of the Merger Agreement.
Any stockholder of Eagle giving a proxy has the power to revoke
it at any time before it is exercised by (i) filing with the Secretary of
Eagle written notice thereof (T. Sam Scipio, Jr., Senior Vice President
and Secretary, Eagle Bancorp, Inc., 227 Capitol Street, Charleston, West
Virginia 25301); (ii) submitting a duly-executed proxy bearing a later
date; or (iii) appearing at the Eagle Special Meeting and giving the
Secretary notice of his or her intention to vote in person. Proxies
solicited hereby may be exercised only at the Eagle Special Meeting and
any adjournment thereof and will not be used for any other meeting.
Proxies voting against the proposal may not be used by management to vote
"for" adjournment pursuant to its discretionary authority in order to
permit further solicitation.
Eagle will bear its costs of mailing this Prospectus/Joint
Proxy Statement to its shareholders, as well as all other costs incurred
by it in connection with the solicitation of proxies from its
shareholders on behalf of its Board of Directors. In addition to
solicitation by mail, the directors, officers and employees of Eagle and
its subsidiaries may solicit proxies from Eagle shareholders by
telephone, telegram or in person without compensation other than
reimbursement for their actual expenses. Arrangements also will be made
with brokerage firms and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of stock
held of record by such persons, and Eagle will reimburse such custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in
connection therewith.
23
SPECIAL MEETING OF UBS SHAREHOLDERS
Time and Place
The UBS Special Meeting will be held at Fifth Floor, United
Square, Fifth and Avery Streets, Parkersburg, West Virginia, on
March 28, 1996 at 10:00 a.m., local time.
Shares Outstanding and Entitled to Vote; Record Date
The close of business on February 8, 1996 has been fixed by the
Board of Directors of UBS as the record date for the determination of
holders of UBS Stock entitled to notice of and to vote at the UBS Special
Meeting and any adjournment or adjournments thereof. At the close of
business on the UBS Record Date, there were 12,007,051 shares of UBS
Stock outstanding and entitled to vote. At the UBS Special Meeting, UBS
shareholders will be entitled to cast one vote for each share of UBS
Stock they hold on the UBS Record Date.
Purpose and Vote Required
The purpose of the Special Meeting of UBS shareholders is to
act upon the Merger Agreement. No other business may properly come
before the UBS Special Meeting or any adjournment or adjournments
thereof.
A detailed description of the Merger Agreement is set forth in
this Prospectus/Joint Proxy Statement and the exhibits attached to it.
See the sections of this Prospectus/Joint Proxy Statement titled
"Summary" and "The Merger."
Shareholders are urged to read this entire document carefully before
voting their shares.
UBS' Board of Directors has unanimously approved the proposed
Merger Agreement and unanimously recommends that the shareholders of UBS
vote "FOR" approval of the Merger Agreement.
The presence in person or by proxy of at least a majority of
the outstanding shares of UBS Stock entitled to vote is necessary to
constitute a quorum at the UBS Special Meeting. The affirmative vote of
the holders of a majority of the outstanding UBS Stock is required for
approval of the Merger Agreement at the UBS Special Meeting.
Under rules of the New York Stock Exchange, the proposal to
adopt the Merger Agreement is considered a "non-discretionary item"
whereby brokerage firms may not vote in their discretion on behalf of
their clients if such clients have not furnished voting instructions.
Abstentions and such broker "non-votes" will be considered in determining
the presence of a quorum at the UBS Special Meeting but will not be
counted as a vote cast for the Merger Agreement. Because the proposal to
adopt the Merger Agreement is required to be approved by the holders of a
majority of the outstanding shares of UBS Stock, abstentions and broker
"non-votes" will have the same effect as a vote against this proposal.
24
Proxies
A proxy for use by UBS shareholders in connection with the UBS
Special Meeting is enclosed with this Prospectus/Joint Proxy Statement.
The proxy will be voted as specified thereon by the shareholder, and
where no specification is made on the Proxy, a properly executed proxy
will be voted FOR approval of the Merger Agreement.
Any shareholder has the right to revoke his or her proxy
anytime before it is exercised by: (i) filing with the Secretary of UBS
written notice thereof (Joseph Wm. Sowards, Executive Vice President and
Secretary, United Bankshares, Inc., 514 Market Street, Parkersburg, West
Virginia 26102); (ii) submitting a duly executed proxy bearing a later
date; or (iii) appearing at the UBS Special Meeting and giving the
Secretary notice of his or her intention to vote in person. Proxies
voting against the proposal may not be used by management to vote "for"
adjournment pursuant to its discretionary authority in order to permit
further solicitation.
The proxy solicitation of shareholders of UBS is made by UBS'
Board of Directors and the cost of such solicitation will be paid by UBS.
In addition to soliciting by mail, directors, officers and regular
employees of UBS, who will receive no compensation for their services
other than their regular salaries and fees, may solicit proxies by
telephone, telegraph, mail, or personal interview. Brokerage houses,
nominees, fiduciaries and other custodians have been requested to forward
solicitation materials to the beneficial owners of UBS Stock held in
their names and will be reimbursed by UBS for their expenses in doing so.
In order to facilitate and expedite distribution of these proxy
solicitation materials to brokers, fiduciaries, custodians, nominee
holders and institutional investors, UBS has retained Corporate Investor
Communications, Inc. of Carlstadt, New Jersey ("CIC"). Pursuant to a
retention letter dated February 2, 1996, CIC will contact all broker and
other nominee accounts identified on UBS' shareholder mailing list in
order to facilitate determination of the number of sets of proxy
materials such accounts require for purposes of forwarding the same to
the beneficial owners. CIC will then assist in the delivery of proxy
materials to these accounts for distribution. CIC will also assist in
distribution of proxy materials to institutional investors. CIC will
follow-up with the brokers, other nominee accounts and institutional
investors, requesting return of proxies. UBS is not retaining CIC to
solicit proxies from registered holders or from non-objecting beneficial
owners. CIC's fee for the above services is $3,500, plus reasonable
disbursements which may include the broker search, printing, postage,
courier charges, filing reports, data transmissions and other expenses
approved by UBS.
CERTAIN BENEFICIAL OWNERS OF UBS STOCK
The following table lists each shareholder of United who is the
beneficial owner of more than 5% of United Stock, as of December 31,
1995.
25
Name and Address Amount and Nature of Percent of
Beneficial Ownership Class of Beneficial Owner
- -------------------------------------------------- -------------------- --------------------
(1) United National Bank Trust Department 886,656 7.38%
514 Market Street Parkersburg WV 26101
(855,997 shares or 7.12% are
registered under the nominee name of
Bank of New York)
(1) The voting and investment authority for the shares held by the
Trust Department is exercised by UNB's Board of Directors.
Share ownership of UBS directors is set forth below as of January
31, 1996. Directors have sole voting and investment authority of
directly owned shares. The total of directly owned shares also includes
stock options granted to executive officers pursuant to incentive stock
option plans. For four of the directors who are executive officers,
direct ownership includes options to purchase shares as follows: Richard
M. Adams, 79,500, shares Douglass H. Adams, 10,200 shares, Thomas A.
McPherson, 16,200 shares, and I. N. Smith, Jr., 14,250 shares. The
options to purchase shares included in the direct ownership of all
executive officers as a group total 231,550. Indirect shares for each
individual director include those owned by spouses and immediate family
members, unless otherwise indicated. These shares do not include the
Trust Shares discussed below.
Beneficially
Director Owned Shares Percentage
------------ ------------- -----------
Richard M. Adams 309,399 2.62% (1)
I. N. Smith, Jr. 233,490 1.98 (2)
Douglass H. Adams 43,623 * (3)
Robert G. Astorg 13,140 * (4)
Thomas J. Blair, III 142,960 1.21 (5)
Harry L. Buch 6,063 *
R. Terry Butcher 24,000 * (6)
John W. Dudley 8,703 *
H. Smoot Fahlgren 135,974 1.15
Theodore J. Georgelas 49,666 *
C. E. Goodwin 16,892 * (7)
F. T. Graff, Jr. 8,000 * (8)
Leonard A. Harvey 30,518 * (9)
Andrew J. Houvouras 28,184 * (10)
Russell L. Isaacs 20,958 *
Robert P. McLean 6,032 * (11)
Thomas A. McPherson 64,636 *
G. Ogden Nutting 326,328 2.76 (12)
William C. Pitt, III 5,000 *
Charles E. Stealey 79,030 * (13)
Warren A. Thornhill, III 224,727 1.90 (14)
Harold L. Wilkes 1,977 *
James W. Word, Jr. 60,017 * (15)
Directors and Executive
Officers as a group
(28 persons) 1,993,830 16.87 (16)
--------- -----
26
(1) Mr. Adams owns 218,538 shares of UBS Stock directly and 90,861
shares indirectly. Of the 90,861 shares indirectly owned by Mr. Adams,
25,590 shares are in the Stevenson Trust over which he exercises voting
power, 34,605 shares owned by the members of his immediate family and
30,666 shares are held in two family trusts over which he exercises
voting power but no investment authority. Messrs. Richard M. Adams and
Douglass H. Adams are brothers.
(2) Mr. Smith owns 13,306 shares of UBS Stock directly and 220,184
shares indirectly. Of the 220,184 shares indirectly owned beneficially by
Mr. Smith, 14,700 shares are owned by members of his immediate family and
4,000 shares are owned by the mother of Mr. Smith over which he has power
of attorney. The following shares owned of record by others may be
deemed to be owned by Mr. Smith under the rules and regulations of the
Securities and Exchange Commission: Kanawha City Company 15,000 shares;
Kanawha Company 56,000 shares; Roane Land Company 484 shares;
Roxalana Land Company 75,000 shares; and West Virginia Coal Land Company
55,000 shares.
(3) Mr. Adams owns 41,072 shares of UBS Stock directly and 2,551
shares indirectly. Messrs. Richard M. Adams and Douglass H. Adams are
brothers.
(4) Mr. Astorg owns 12,313 shares of UBS Stock directly and 827
shares indirectly.
(5) Mr. Blair owns 135,860 shares of UBS Stock directly and 7,100
shares indirectly.
(6) Mr. Butcher owns 23,500 shares of UBS Stock directly and 500
shares indirectly.
(7) Mr. Goodwin owns 15,620 shares of UBS Stock directly and 1,272
shares indirectly.
(8) Mr. Graff owns 2,000 shares of UBS Stock directly and 6,000
shares indirectly. The indirectly owned shares are held by a bank in a
trustee account for Mr. Graff over which he exercises voting and
dispositive power.
(9) Mr. Harvey owns 29,659 shares of UBS Stock directly and 859
shares indirectly.
(10) Mr. Houvouras owns 439 shares of UBS Stock directly and 27,745
shares indirectly. The indirect shares are owned by a company in which
Mr. Houvouras is a partner.
(11) Mr. McLean owns 4,633 shares of UBS Stock directly and 1,399
shares indirectly.
(12) Mr. Nutting owns 326,328 shares of UBS Stock indirectly. The
voting and investment authority for the indirectly owned shares of Mr.
Nutting are as follows: he has beneficial ownership, through shared
investment or voting authority of 326,328 shares consisting of 20,952
shares held by Mr. Nutting as co-trustee, and 277,376 shares registered
in the name of The Ogden Newspapers, Inc. of which Mr. Nutting is
President. He is also a settlor and sole beneficiary of a trust which
contains 28,000 shares.
(13) Mr. Stealey owns 30,668 shares of UBS Stock directly and 48,362
shares indirectly. Mr. Stealey's mother holds 7,354 of the indirect
shares over which Mr. Stealey has power of attorney and the other 41,008
indirect shares are held in a trustee account for Mr. Stealey over which
he exercises voting and investment authority.
(14) Mr. Thornhill owns 131,997 shares of UBS Stock directly and
92,730 shares indirectly.
(15) Mr. Word owns 33,680 shares of UBS directly and 26,337 shares
indirectly.
(16) All directors and executive officers of United as a group, 28
persons, own 1,134,331 shares of UBS Stock directly and 859,499 shares
indirectly. Not included in indirectly owned shares are 886,656 shares of
UBS Stock held by UNB's Trust Department serving in a fiduciary or agency
capacity (the "Trust Shares"). The voting and investment authority for
the Trust Shares held by the Trust Department is exercised by UNB's Board
of Directors. The members of UNB's Board of Directors who are also
directors or executive officers of UBS are: Richard M. Adams, I. N.
Smith, Jr., and Gary L. Ellis. In addition, the 24,239 shares are held
by the Trust Department of United National Bank-South in the nominee name
of Big Clock Investment Company and are voted by UNB-S's Board of
Directors. The members of UNB-S's Board who are also directors or
executive officers of UBS are Gary L. Ellis, Warren A. Thornhill, III,
and Robert P. McLean.
27
CERTAIN BENEFICIAL OWNERS OF EAGLE STOCK
The following table sets forth information as of December 31,
1995, concerning (i) the only persons or entities, including any "group"
as that term is used in Section 13(d)(3) of the Exchange Act, who or
which was not affiliated with Eagle and was known to Eagle to be the
beneficial owner of more than 5% of the issued and outstanding Eagle
Stock and (ii) the shares of Eagle Stock beneficially owned by each
director of Eagle and all directors and executive officers of Eagle as a
group. The address of Messrs. J. Christopher Thomas and William W.
Wagner is in care of Eagle, 227 Capitol Street, Charleston, West Virginia
25301, and the address of Mr. Paul C. Winter, Jr. is P.O. Box 386, Logan,
West Virginia 25601.
Name and Address of Eagle Stock Beneficially
Beneficial Owner Owned as of December 31, 1995(1)
------------------- -----------------------------
No. %
---- -----
5% Holders
(other than Directors):
W.W. McDonald Land 166,868 6.1%(2)
Company, Bruce McDonald
Holding Company and
Triadelphia Land Co.(2)
c/o P.O. Box 1706
Logan, West Virginia 25601
Directors:
Willie D. Akers 22,956 0.8(3)
Frank I. Blankinship, Jr. 31,916 1.2(4)
A. Lawrence Crimmins, Jr. 59,289 2.2(5)
John G. Hutchinson -- 0.0(6)
Charles F. Payne 44,032 1.6(7)
J. Christopher Thomas 161,978 5.9(8)
William W. Wagner 216,678 7.9(9)
Paul C. Winter, Jr. 161,620 5.9(10)
Edward J. Wood 7,124 0.3(11)
Directors and executive
officers as a group
(10 persons) 738,658 27.1(12)
___________
28
(1) Pursuant to rules promulgated under the Exchange Act, a person or
entity is considered to beneficially own shares of Eagle Stock if he or
she directly or indirectly has or shares (1) voting power, which includes
the power to vote or to direct the voting of the shares; or (2)
investment power, which includes the power to dispose or direct the
disposition of the shares. Unless otherwise indicated, a director has
sole voting power and sole investment power with respect to the indicated
shares. The number of shares beneficially owned by the directors set
forth above is determined under rules under the Exchange Act, and the
information is not necessarily indicative of beneficial ownership for any
other purpose.
(2) Based on a Schedule 13D filed under the Exchange Act, which indicates
that 132,868 shares are held by the W.W. McDonald Land Company, 26,000
shares are held by the Bruce McDonald Holding Company and 8,000 shares
are held by the Triadelphia Land Co. The companies have common boards of
directors, common management officials and may be deemed to constitute a
group for purposes of beneficial ownership under the Exchange Act.
(3) Includes 7,000 shares owned jointly with Mr. Akers' wife, with whom
voting and dispositive power is shared, and 4,956 shares held by Mr.
Akers' children, which may be deemed to be beneficially owned by Mr.
Akers. Also includes 11,000 shares held by a company which Mr. Akers
owns. Does not include 2,000 shares owned jointly by Mr. Akers' wife and
another relative; Mr. Akers disclaims beneficial ownership of such
shares.
(4) Includes 4,000 shares held by Mr. Blankinship's wife, which may be
deemed to be beneficially owned by Mr. Blankinship.
(5) Includes 9,635 shares held in Eagle's Employee Stock Ownership Plan
("ESOP") which are allocated to Mr. Crimmins' account and 6,132 shares
held by Mr. Crimmins' wife and children.
(6) Does not include 30,856 shares held by Mr. Hutchinson's wife and
children; Mr. Hutchinson disclaims beneficial ownership of such shares.
Also does not include shares held by Mr. Thomas, a cousin by marriage.
(7) Includes 22,050 shares which were transferred by Mr. Payne in
December 1995 but which are subject to the voting requirements contained
in the Stockholder Agreement, dated as of August 18,1995, among UBS and
certain stockholders of Eagle, including Mr. Payne. See "The Merger -
Stockholder Agreements."
(8) Includes 11,978 shares held in the ESOP which are allocated to Mr.
Thomas' account. Does not include shares held by Mr. Hutchinson, a
cousin by marriage.
(9) Includes 77,000 shares held jointly with Mr.. Wagner's wife, with
whom voting and dispositive power is shared, and 11,978 shares held in
the ESOP which are allocated to Mr. Wagner's account. Does not include
shares held by Mr. Winter, a cousin.
(10) Includes 35,753 shares held in trusts for Mr. Winter's mother and
children for which Mr. Winter acts as executor. Also includes 16,000
shares held by a company which Mr. Winter serves as President and 800
shares held by Mr. Winter's wife, which may be deemed to be beneficially
owned by Mr. Winter. Does not include shares held by Mr. Wagner, a
cousin.
(11) Includes 300 shares held in a trust for Mr. Wood's grandchildren,
for which Mr. Wood is custodian. Does not include 14,106 shares held by
Mr. Wood's wife; Mr. Wood disclaims beneficial ownership of such shares.
(12) Includes 41,222 shares of Common Stock which have been allocated to
the accounts of executive officers pursuant to the ESOP.
THE MERGER
The following is a discussion of the material aspects of the
proposed transaction. It includes a summary of the terms of the Merger
Agreement and is qualified in its entirety by reference to the Agreement,
which is attached to this Prospectus/Joint Proxy Statement as Annex A.
29
General
The Boards of Directors of UBS and Eagle have determined that
the Merger is fair to and in the best interests of the stockholders of
UBS and Eagle, respectively, and have unanimously approved the Merger
Agreement. Accordingly, the Boards of Directors of UBS and Eagle
unanimously recommend that the stockholders of UBS and Eagle,
respectively, vote "FOR" approval of the Merger Agreement.
The Merger Consideration
In accordance with the terms of and subject to the conditions
set forth in the Merger Agreement, Eagle will be merged with and into
UBS, with UBS as the surviving corporation of the Merger. The Merger
Agreement provides that at the Effective Time each outstanding share of
Eagle Stock (other than any shares held by UBS or a subsidiary thereof
other than in a fiduciary capacity or in satisfaction of a debt
previously contracted) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive 1.15 shares of UBS Stock.
No fractional shares of UBS Stock will be issued in connection
with the Merger and, in lieu thereof, Eagle shareholders will be entitled
to receive cash based upon the closing per share price of the UBS Stock
on NASDAQ on the business day preceding the consummation of the Merger,
without interest. No shareholder will be entitled to dividends, voting
rights or any other rights in respect of any fractional shares. If the
outstanding shares of UBS Stock are changed into a different number or
class by virtue of any reclassification, split, stock dividend, exchange
of shares or similar event, then the Exchange Ratio will be adjusted
proportionately. The issuance of UBS Stock for other corporate purposes,
such as for other acquisitions or pursuant to stock option plans, will
not result in an adjustment to the Exchange Ratio. From and after the
consummation of the Merger, Eagle shareholders will cease to have any
rights with respect to such shares other than the right to receive the
Merger Consideration, and such shares will thereafter be deemed cancelled
and void. The sole rights of such shareholders will be to receive the
Merger Consideration.
Exchange of Eagle Stock Certificates
Each holder of certificates representing shares of Eagle Stock
will, upon the surrender to UBS, or its agent, of such certificates in
proper form, be entitled to receive a certificate or certificates
representing the number of whole shares of UBS Stock into which the
surrendered certificates shall have been converted by reason of the
Merger. Until surrendered for exchange, each outstanding certificate of
Eagle Stock shall be deemed for all corporate purposes to evidence the
ownership of the full number of shares of UBS Stock into which such
shares have been converted by reason of the Merger.
Until an Eagle shareholder's outstanding certificates have been
surrendered, UBS may, at its sole discretion, withhold, with respect to
such Eagle shareholder, as applicable (i) the
30
certificates representing the shares of UBS Stock into which such Eagle
shares are converted by reason of the Merger; and (ii) the distribution
of any and all dividends and payment for fractional shares with respect
to the UBS Stock to which the Eagle shareholder is entitled. Upon the
delivery to UBS of the outstanding Eagle certificates by an Eagle
shareholder, there will be delivered to the record holder thereof the
certificate representing the shares of the UBS Stock to which the
exchanging Eagle holder is entitled, along with any dividends thereon and
any payment for fractional shares, all without interest.
Certificates evidencing Eagle Stock should not be returned to
Eagle with the enclosed proxy and should not be forwarded until after
receipt of a letter of transmittal which will be provided to Eagle
shareholders by Mellon Bank, N.A., Pittsburgh, Pennsylvania, the exchange
and transfer agent for the UBS Stock, upon consummation of the Merger.
Background of and Reasons for the Merger
Background of the Merger. In early 1994, William W. Wagner,
Chairman and Chief Executive Officer of Eagle, and J. Christopher Thomas,
President and Chief Operating Officer of Eagle, received an oral,
unsolicited expression of interest from another West Virginia-based
financial institution to engage in a business combination, and in May
1994 Eagle retained Wheat First to assist it in connection with the
evaluation of such a business combination. Although informal discussions
ensued between representatives of the managements of Eagle and this
potential acquiror during the summer and fall of 1994, no agreements,
arrangements or understandings were reached by the parties in this
regard, primarily due to an inability of the parties to agree on an
appropriate price given the then-existing market values of their
respective common stocks.
As a result of this inquiry and in light of the general status
of and consolidation trends in the financial services industry, the
Executive Committee of the Board of Directors of Eagle decided to
formally consider and analyze Eagle's strategic alternatives in January,
1995. On February 21, 1995, representatives of Wheat First met with the
Executive Committee to discuss various strategic alternatives available
to Eagle, including acquisitions of and by Eagle, special dividends to
stockholders of Eagle and repurchases of Eagle Stock by Eagle. On June
15, 1995, Eagle retained Wheat First to formally evaluate the prospects
of a sale of Eagle as a means of enhancing shareholder value.
During July 1995, Wheat First contacted nine bank holding
companies, selected by Eagle and reviewed by Wheat First, which might
have the interest in and capability of acquiring Eagle. Subsequently,
Wheat First provided a memorandum containing certain information relating
to Eagle to eight of these companies which indicated an interest in
reviewing such memorandum.
Potential acquirors were instructed to provide Wheat First with
non-binding indications of interest in acquiring Eagle by August 2, 1995,
and on such date three bank holding companies submitted such indications
of interest. On August 4, 1995, the Board of Directors met with
representatives of Wheat First to consider the indications of interest.
At this meeting, the Board
31
of Directors of Eagle instructed management of Eagle and Wheat First to
proceed with negotiations with UBS because one indication of interest was
materially lower than that of United and because the other indication of
interest, although slighter higher, was not by an entity which was deemed
to have the size and strength of UBS and there were other factors which
favored UBS' indication of interest, such as the depth and liquidity of
the market for the UBS stock. In the ensuing days, the parties and
their respective representatives and advisors negotiated the terms of the
transaction, conducted due diligence activities and prepared and
negotiated the required documentation.
On August 18, 1995, the Board of Directors of Eagle met to
consider the offer of UBS and the definitive Merger Agreement and related
documentation. At this meeting, Eagle's financial advisor (Wheat First)
and legal advisors (Elias, Matz, Tiernan & Herrick, L.L.P. and Hamb &
Poffenbarger) detailed the negotiations which had taken place since the
prior meeting of the Board of Directors and the due diligence activities
conducted on behalf of Eagle. Representatives of Wheat First presented
an updated financial analysis of the proposed transaction, discussed in
detail the negotiations which resulted in the agreed upon Exchange Ratio
and stated their oral opinion that the Exchange Ratio was fair to the
stockholders of Eagle from a financial point of view. Legal counsel to
Eagle reviewed the Merger Agreement and related documentation with the
Board of Directors, as well as other legal considerations. The Merger
Agreement was unanimously approved by the Board of Directors of Eagle at
this meeting.
Reasons for the Merger - Eagle. The Board of Directors of
Eagle, with the assistance of its outside legal and financial advisors
(as identified above), evaluated the financial, legal and other
considerations bearing on the decision to approve the Merger Agreement.
The terms of the Merger Agreement, including the Exchange Ratio, are a
result of arm's-length negotiations between representatives of UBS and
Eagle. In reaching its determination to approve the Merger Agreement,
the Board of Directors considered a number of factors, including the
following: (i) the Exchange Ratio in relation to the market value, book
value and earnings per share of the Eagle Stock, (ii) information
relating to the financial condition, results of operations, capital
levels, asset quality and prospects of UBS and Eagle, as well as the
ability of the combined enterprise to compete in relevant banking
markets, (iii) the current and prospective environment for financial
institutions generally, and the trend toward consolidation in the
financial services industry, (iv) the general structure of the
transaction, including the generally tax-free nature of the transaction
to stockholders of Eagle, (v) the opinion of Wheat First as to the
fairness, from a financial point of view, of the Exchange Ratio to be
paid to the holders of the Eagle Stock, (vi) the results of the
solicitation of potential acquirors of Eagle, as discussed above, (vii) a
review of alternatives to the Merger, including the alternative of
remaining independent and growing internally, with and without a
distribution of a portion of Eagle's capital as a special dividend to
stockholders, (viii) a review of the terms of the Merger Agreement with
Eagle's financial and legal advisors and (ix) the impact of the Merger
and related transactions on the employees of Eagle and the customers and
communities served by it. In making its determination, the Board of
Directors did not attempt to prioritize or weight the foregoing factors.
32
Reasons for the Merger - UBS. In the opinion of the Management
of UBS, the proposed transactions will be in the best interests of UBS
shareholders. UBS' Management and Board of Directors view the proposed
transaction as a desirable opportunity to add a high performance company,
new geographic markets and new product markets to the UBS organization.
The Merger will strengthen UBS' current offices in the Charleston,
Morgantown and Beckley areas and will further expand its presence into
southern West Virginia and the Martinsburg and Bridgeport areas. In
addition, UBS will acquire Eagle's presence in the mortgage banking
market and believes that the combined company can further expand this
particular line of business.
Opinion of Financial Advisor to Eagle
Eagle retained Wheat First to act as its financial advisor in
connection with the Merger and to render a written opinion to the Eagle
Board of Directors as to the fairness, from a financial point of view, to
the holders of Eagle Stock of the Exchange Ratio. Wheat First is a
nationally recognized investment banking firm regularly engaged in the
valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. The
Eagle Board of Directors selected Wheat First to serve as its financial
advisor in connection with the Merger on the basis of such firm's
expertise and reputation and Eagle's prior experience with such firm.
Representatives of Wheat First attended the meeting of the
Eagle Board of Directors on August 18, 1995, at which the Merger
Agreement was considered and approved. At the meeting, Wheat First
issued its oral opinion that, as of such date, the Exchange Ratio was
fair, from a financial point of view, to the holders of Eagle Common
Stock. A written opinion dated as of the date of this Prospectus/Joint
Proxy Statement has been delivered to the Eagle Board of Directors to the
effect that, as of such date, the Exchange Ratio is fair, from a
financial point of view, to the holders of Eagle Stock.
The full text of Wheat First's opinion as of the date of this
Prospectus/Joint Proxy Statement, which sets forth certain assumptions
made, matters considered and limitations on review undertaken, is
attached as Annex B to this Prospectus/Joint Proxy Statement, and should
be read in its entirety. Wheat First's opinion is directed only to the
fairness, from a financial point of view, of the Exchange Ratio the
holders of Eagle Stock and does not constitute a recommendation to any
shareholder of Eagle as to how such shareholder should vote on the Merger
Agreement.
In arriving at its opinion, Wheat First reviewed certain
publicly available business and financial information relating to Eagle
and UBS and certain other information provided to it, including, among
other things the following: (i) Eagle's Annual Reports to Stockholders,
Annual Reports on Form 10-K and related financial information for the
three fiscal years ended December 31, 1994; (ii) Eagle's Quarterly
Reports on Form 10-Q and related financial information for the three
months ended September 30, 1995, June 30, 1995 and March 31, 1995; (iii)
UBS'
33
Annual Reports to Stockholders, Annual Reports on Form 10-K and related
financial information for the three fiscal years ended December 31, 1994;
(iv) UBS's Quarterly Reports on Form 10-Q and related financial
information for the three months ended September 30, 1995, June 30,
1995, and March 31, 1995; (v) certain publicly-available information with
respect to historical market prices and trading activity for the Eagle
Stock and the UBS Stock and for certain publicly-traded financial
institutions which Wheat First deemed relevant; (vi) certain publicly-
available information with respect to banking companies and the financial
terms of certain other mergers and acquisitions which Wheat First deemed
relevant; (vii) the Merger Agreement; (viii) the Registration Statement,
including this Prospectus/Joint Proxy Statement; (ix) other financial
information concerning the businesses and operations of Eagle and UBS,
including certain audited financial information and certain internal
financial analyses and forecasts for Eagle prepared by the senior
management of these companies; and (x) such financial studies, analyses,
inquiries and other matters as it deemed necessary. In addition, Wheat
First met with members of senior management of Eagle and UBS to discuss
the business and prospects of each company.
In connection with its review, Wheat First relied upon and
assumed the accuracy and completeness of all of the foregoing information
provided to it or publicly-available, including representations and
warranties of Eagle and UBS included in the Merger Agreement, and Wheat
First has not assumed any responsibility for independent verification of
such information. Wheat First relied upon the managements of Eagle and
UBS as to the reasonableness and achievability of their financial and
operational forecasts and projections, and the assumptions and bases
therefore, provided to it, and assumed that such forecasts and
projections reflect the best currently available estimates and judgments
of such managements and that such forecasts and projections will be
realized in the amounts and in the time periods currently estimated by
such managements. Wheat First also assumed, without independent
verification, that the aggregate allowances for loan losses and other
contingencies for Eagle and UBS are adequate to cover such losses. Wheat
First did not review any individual credit files of Eagle or UBS, nor did
it make an independent evaluation or appraisal of the assets or
liabilities of Eagle or UBS.
Additionally, Wheat First considered certain financial and
stock market data of Eagle and UBS and compared that data with similar
data for certain publicly-held financial institutions and considered the
financial terms of certain other comparable transactions that recently
have been announced or effected, as further discussed below. Wheat First
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria as it deemed
relevant.
In connection with rendering its opinion, Wheat First performed
a variety of financial analyses. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. Moreover, the
evaluation of the fairness, from a financial point of view, of the
Exchange Ratio to holders of Eagle Stock was to some extent a subjective
one based on the experience and judgment of Wheat First and not merely
the result of mathematical analysis of
34
financial data. Accordingly, notwithstanding the separate factors
summarized below, Wheat First believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of
the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process
underlying its opinion. The ranges of valuations resulting from any
particular analysis described below should not be taken to be Wheat
First's view of the actual value of Eagle or UBS.
In performing its analyses, Wheat First made numerous
assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the control of
Eagle or UBS. The analyses performed by Wheat First are not necessarily
indicative of actual values or future results, which may be significantly
more or less favorable than suggested by such analyses. Additionally,
analyses relating to the values of businesses do not purport to be
appraisals or to reflect the prices at which businesses actually may be
sold. In rendering its opinion, Wheat First assumed that, in the course
of obtaining the necessary regulatory approvals for the Merger, no
conditions will be imposed that will have a material adverse effect on
the contemplated benefits of the Merger, on a pro forma basis, to UBS.
Wheat First's opinion is just one of the many factors taken
into consideration by the Eagle Board of Directors in determining to
approve the Merger Agreement. Wheat First's opinion does not address the
relative merits of the Merger as compared to alternative business
strategies that might exist for Eagle, nor does it address the effect of
any other business combination in which Eagle might engage.
The following is a summary of the analyses performed by Wheat
First in connection with its oral opinion delivered to the Eagle Board of
Directors on August 18, 1995:
Comparison of Selected Companies. Wheat First compared the
financial performance and market trading information of UBS to that of a
group of regional bank holding companies (the "Group"). This group
included: BT Financial Corporation, Centura Banks, Inc., CCB Financial
Corporation, City Holding Company, FNB Corporation, First Commonwealth
Financial Corporation, F & M National Corporation, First Western
Bancorp, Inc., Jefferson Bankshares, Inc., Mid Am, Inc., One Valley
Bancorp of WV, Inc., Pikeville National Corporation, S&T Bancorp, Inc.,
Trans Financial, Inc., USBANCORP, Inc., United Carolina Bancshares
Corporation and WesBanco, Inc.
Based on financial data as of and for the three-month period
ended March 31, 1995, or June 30, 1995, UBS had: (i) equity to assets of
10.59% compared to an average of 8.93% of the Group; (ii) nonperforming
assets to loans and real estate owned of 0.40% compared to an average of
0.86% for the Group; (iii) reserves for loan losses to nonperforming
assets of 379.64% compared to an average of 214.98% for the Group; (iv)
returns on average assets before extraordinary items of 1.59% compared to
an average of 1.07% for the Group; and (v) returns on average equity
before extraordinary items of 15.06% compared to an average of 12.10% for
the Group.
35
Based on the market values as of August 17, 1995, and financial
data as of June 30, 1995, UBS had: (i) a stock price to book value
multiple of 182.73% compared to an average of 154.44% for the Group; (ii)
a stock price to "First Call" (as hereinafter defined) 1995 estimated
earnings per share before extraordinary items multiple of 12.34x compared
to an average of 12.07x for the Group; (iii) a stock price to "First
Call" 1996 estimated earnings per share multiple of 11.24x compared to an
average of 10.80x for the Group; and (iv) an indicated dividend yield of
4.00% compared to an average of 3.25% for the Group. "First Call" is a
data service that monitors and publishes a compilation of earnings
estimates produced by selected research analysts regarding companies of
interest to institutional investors. In evaluating UBS in comparison
with the Selected Companies, Wheat First concluded that UBS's financial
performance fell within or above the range of financial performance of
the Selected Companies, and UBS's market valuation fell within the range
of market valuation measures of the Selected Companies.
Analysis of Selected Transactions. Wheat First performed an
analysis of premiums paid in 17 selected pending or recently completed
acquisitions of thrifts or thrift holding companies headquartered in the
Southeast and Mid-Atlantic, with a return on average assets of 0.95% or
greater for the last quarter prior to the announcement of the respective
transaction and announced between January 1, 1994, and August 11, 1995
(the "Selected Transactions"). Multiples of book value, tangible book
value, trailing twelve months earnings and annualized latest quarter
earnings, as well as deposit premiums paid in the Selected Transactions
were compared to the multiples and premiums implied by the consideration
offered by UBS in the Merger. The Selected Transactions included the
following pending transactions: CitFed Bancorp, Inc./PSB Holdings
Corporation and First American Corporation/Heritage Federal Bancshares,
Inc. The Selected Transactions included the following completed
transactions: Valley National Bancorp/Lakeland First Financial Group,
Inc.; UJB Financial Corporation/Bancorp New Jersey; NBD Bancorp,
Inc./DeerBank Corporation; Fifth Third Bancorp/Falls Financial, Inc.;
Centura Banks, Inc./First Southern Bancorp, Inc.; First National
Bancorp/FF Bancorp, Inc.; First Financial Corporation/FirstRock Bancorp,
Inc.; Bank South Corporation/Gwinnett Bancshares, Inc.; Integra Financial
Corporation/Lincoln Savings Bank; Sovereign Bancorp, Inc./Charter FSB
Bancorp, Inc.; UJB Financial Corporation/Palisade Savings Bank;
Huntington Bancshares Incorporated/FirstFed Northern Kentucky Bancorp,
Inc.; NBD Bancorp, Inc./AmeriFed Financial Corporation; First
Commonwealth Financial Corporation/Reliable Financial Corporation; and
Union Planters Corporation/BNF Bancorp.
Based on the market value of the UBS Stock on August 17, 1995,
and financial data as of June 30, 1995, the analysis yielded ratios of
the implied consideration to be paid by UBS to Eagle: (i) to book value
of 193.33% compared to an average of 166.13% of the Selected
Transactions; (ii) to tangible book value of 193.33%, compared to an
average of 166.73% for the Selected Transactions; (iii) to trailing
twelve months earnings of 16.76x compared to an average of 14.84x for the
Selected Transactions; and (iv) to latest quarter earnings annualized of
16.03x compared to an average of 14.64x for the Selected Transactions.
Additionally, Wheat First examined the implied consideration less
tangible equity as a function of total deposits, yielding a ratio of
14.29% compared to an average of 8.85% for the Selected Transactions. In
evaluating the comparison to the Selected Transactions, Wheat First
concluded that the implied consideration to
36
be paid by UBS to Eagle fell within the range of the implied
consideration paid in the Selected Transactions.
Discounted Dividends Analysis. Using discounted dividends
analysis, Wheat First estimated the present value of the future stream of
dividends that Eagle could produce over the next five years, under
various circumstances, assuming the company performed in accordance with
the earnings forecasts of management and an assumed level of expense
savings were achieved. Wheat First then estimated the terminal values
for the Eagle Stock at the end of the period by applying multiples
ranging from 11x to 13x earnings projected in year five. The dividend
streams and terminal values were then discounted to present values using
different discount rates (ranging from 8% to 11%) chosen to reflect
different assumptions regarding the required rates of return to holders
or prospective buyers of Eagle Stock. This discounted dividend analysis
indicated reference ranges of between $21.96 and $28.40 per share for
Eagle Stock. These values compare to the implied consideration to be
offered by UBS to Eagle in the Merger of $33.35 based on the market value
of Common Stock on August 17, 1995.
In connection with its written opinion as of the date hereof,
Wheat First confirmed the appropriateness of its reliance on the analyses
used to render its August 18, 1995, opinion by performing procedures to
update certain of such analyses and by reviewing the assumptions on which
such analyses were based and the factors considered in connection
therewith.
No company or transaction used as a comparison in the above
analysis is identical to Eagle, UBS or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and
operating characteristics of the companies and other factors that could
affect the public trading value of the companies used for comparison in
the above analysis.
The Wheat First opinion dated the date of this Prospectus/Joint
Proxy Statement is based solely upon the information available to Wheat
First and the economic, market and other circumstances as they existed as
of such date. Events occurring after that date could materially affect
the assumptions and conclusions contained in our opinion. Wheat First
has not undertaken to reaffirm or revise its opinion or otherwise comment
on any events occurring after the date hereof.
As compensation for Wheat First's rendering of its fairness
opinion and for its financial advisory services, Eagle has agreed to pay
Wheat First fees equal to the sum of (i) $200,000 and (ii) the dollar
amount equal to 5.0% of the total consideration received by Eagle
shareholders in excess of $28.00 per share times the number of shares of
Eagle Stock outstanding or subject to options or warrants. Eagle has
agreed to reimburse Wheat First for its out-of-pocket expenses incurred
in connection with the activities contemplated by its engagement,
regardless whether the Merger is consummated. Eagle has further agreed
to indemnify Wheat First against all losses, claims, damages and
liabilities to which it may become subject under any federal or state law
or otherwise, related to, based upon or arising out of the Merger, its
engagement or its services pursuant thereto, excluding losses, claims,
damages and liabilities that arise primarily out of or are based
37
primarily upon any action or failure to act by Wheat First not undertaken
at the request of Eagle or with its written consent which is found in a
final judgment by a court to have constituted willful misconduct, bad
faith or negligence on the part of Wheat First. The payment of the above
fees is not contingent upon Wheat First rendering a favorable opinion
with respect to the Merger.
Effect on the Corporate Parties
Subject to the terms and conditions set forth in the Merger
Agreement, Eagle will merge with and into UBS, which will survive the
Merger. Subject to the terms and conditions set forth in the Bank Merger
Agreement, immediately following the merger of Eagle into UBS, First
Empire will merge into UNB, with UNB surviving. Eagle and First Empire
will cease to exist as corporate entities upon consummation of the Merger
and the Bank Merger, respectively, and each of its respective assets,
liabilities and operations will transfer to UBS and UNB, respectively.
UNB will continue to operate as a national bank with its principal office
in Parkersburg, West Virginia. The present offices of First Empire will
become branch offices or loan production offices of UNB. Under the terms
of the Merger Agreement, UNB will cause the formation of a mortgage
banking company. Its officers and board of directors will include
certain of the executive officers and board members of Eagle.
Certain Federal Income Tax Consequences
General. The following is a summary description of the
-------
material federal income tax consequences of the Merger to shareholders of
Eagle. This summary is not a complete description of all of the
consequences of the Merger and, in particular, may not address federal
income tax considerations that may affect the treatment of a shareholder
which, at the Effective Time, already owns some UBS Stock, is not a U.S.
citizen, is a tax-exempt entity or an individual who acquired Eagle Stock
pursuant to an employee stock option, or exercises some form of control
over Eagle. In addition, no information is provided herein with respect
to the tax consequences of the Merger under applicable foreign, state or
local laws. Consequently, each shareholder of Eagle is urged to consult a
tax advisor as to the specific tax consequences of the transaction to
that shareholder. The following discussion is based on the Code, as in
effect on the date of this Prospectus/Joint Proxy Statement, without
consideration of the particular facts or circumstances of any holder of
Eagle Stock.
The Merger. Eagle has received an opinion from Elias, Matz,
--- ------
Tiernan & Herrick, L.L.P., special counsel to Eagle, to the effect that,
assuming the Merger is consummated, the material federal income tax
consequences of the Merger to the shareholders of Eagle will be as
follows:
No gain or loss will be recognized to shareholders of Eagle
upon the exchange of their Eagle Stock solely for shares of UBS Stock
(including any fractional share interest to which they may be entitled)
pursuant to the Merger. The basis of the UBS Stock to be received by an
Eagle shareholder receiving solely UBS Stock will be the same as his or
her basis in the Eagle Stock surrendered in exchange therefor. The
holding period of the shares of UBS Stock to be received by
38
an Eagle shareholder receiving solely UBS Stock will include the period
during which such Eagle shareholder held the Eagle Stock surrendered in
exchange therefor, provided the surrendered Eagle Stock was held by such
shareholder as a capital asset on the date of the Merger.
Shareholders of Eagle will receive cash in lieu of a fractional
share of UBS Stock and such fractional share interest will be treated as
if the shareholders actually received the fractional share from UBS and
then UBS redeemed it for cash. Such cash payments will be treated by the
former Eagle shareholders as having been received as full payment in
exchange for the fractional share interests so redeemed. Gain or loss
will be realized and recognized by each such Eagle shareholder equal to
the difference between the amount of cash received for the fractional
share and the tax basis of the fractional share. If the fractional share
is a capital asset in the hands of an Eagle shareholder, then the gain or
loss recognized will constitute a capital gain or loss.
Each party's obligation to effect the Merger is conditioned on
the delivery of an opinion to Eagle from Elias, Matz, Tiernan & Herrick,
L.L.P., with respect to the foregoing federal income tax consequences of
the Merger, and an opinion to UBS from Bowles Rice McDavid Graff & Love,
counsel to UBS, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code. Both
opinions have been received. Each is dated February 19, 1996 and is based
upon certain customary representations and assumptions set forth therein,
with respect to certain federal income tax consequences of the Merger.
The Bowles, Rice opinion letter also addresses certain tax
consequences to UBS Shareholders who elect to exercise dissenters'
rights, as follows:
The receipt of cash for shares of UBS Stock pursuant to the
exercise of dissenters' rights will be a taxable transaction. A UBS
shareholder who exercises dissenters' rights and consequently receives
cash for his or her shares will be treated as receiving the cash in
redemption of such shares. Such a dissenting shareholder ordinarily will
recognize gain or loss equal to the difference between the amount of cash
received and such shareholder's basis in the shares, and such gain or
loss generally will be a capital gain or loss if the shares are held as a
capital asset. The application of constructive ownership rules under
section 318 of the Code, under certain circumstances, could result in the
entire amount of cash received being taxed as a dividend. Any UBS
shareholder considering the exercise of dissenters' rights is urged to
consult his or her tax advisor about the tax consequences of receiving
cash giving consideration to his or her particular circumstances.
THE MERGER MAY HAVE CONSEQUENCES AFFECTING TAXES OTHER THAN THE
FEDERAL INCOME TAX CONSEQUENCES DISCUSSED ABOVE. SHAREHOLDERS ARE URGED
TO CONSULT THEIR TAX ADVISORS CONCERNING ALL TAX CONSEQUENCES OF THE
CONSUMMATION OF THE MERGER AS IT RELATES TO THEIR OWN CIRCUMSTANCES,
INCLUDING BUT NOT LIMITED TO CONSEQUENCES UNDER FEDERAL, STATE AND LOCAL
INCOME TAX AND OTHER TAX LAWS.
39
Conditions to Consummation of the Merger
The Merger Agreement provides that consummation of the Merger
is subject to the satisfaction of certain conditions, or the waiver of
such conditions by the party or parties entitled to do so, at or before
the Effective Time. Each of the parties' obligations under the Merger
Agreement is subject to the following conditions: (i) all corporate
action (including approval of shareholders) necessary to authorize the
execution and delivery of the Merger Agreement and the Bank Merger
Agreement and consummation of the transactions contemplated thereby shall
have been duly and validly taken; (ii) the receipt of all necessary
regulatory approvals, consents or waivers required to consummate the
Merger and the Bank Merger by any governmental authority, and the
expiration of all notice periods and waiting periods with respect
thereto, provided, however, that no required approval, consent or waiver
shall be deemed to have been received if it shall include any condition
or requirement that, individually or in the aggregate, would (a) result
in a material adverse effect on the financial condition, results of
operations, business or prospects of UBS on a consolidated basis, or (b)
reduce the economic or business benefits of the transactions contemplated
by the Agreement to UBS in so significant a manner that UBS, in its
reasonable judgment, would not have entered into the Agreement; (iii)
none of UBS, Eagle or their respective subsidiaries shall be subject to
any statute, rule, regulation, order or decree which prohibits, restricts
or makes illegal the consummation of the Merger or the Bank Merger; (iv)
the Registration Statement shall have become effective under the
Securities Act, and UBS shall have received all permits, authorizations
or exemptions necessary under all state securities laws to issue UBS
Stock in connection with the Merger, and neither the Registration
Statement nor any such permit, authorization or exemption shall be
subject to a stop order or threatened stop order by any governmental
authority; (v) the shares of UBS Stock to be issued in connection with
the Merger shall have been approved for listing on NASDAQ; (vi) each of
UBS and Eagle shall have received an opinion of its respective counsel to
the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code and with respect to certain other
related federal income tax considerations; and (vii) Ernst & Young, LLP,
shall have issued letters, dated as of the Effective Time (as defined
below), to UBS and Eagle to the effect that, based upon the Merger
Agreement and related agreements and the facts and circumstances then
known to it, the Merger shall be accounted for as a pooling of interests
under generally accepted accounting principles.
In addition to the foregoing conditions, the obligations of UBS
under the Agreement are conditioned upon (i) the accuracy in all material
respects as of the date of the Merger Agreement and as of the Effective
Time of the representations and warranties of Eagle set forth in the
Merger Agreement, except as to any representation or warranty which
specifically relates to an earlier date and except as otherwise
contemplated by the Merger Agreement; (ii) the performance of all
material covenants and obligations required to be complied with and
satisfied by Eagle; (iii) the receipt of a certificate from a specified
officer of Eagle with respect to compliance with the conditions relating
to (i) and (ii) immediately above as set forth in the Merger Agreement;
(iv) the receipt of certain legal opinions from Eagle's legal counsel;
and (v) Eagle shall have furnished to UBS such certificates of its
officers or others and such other documents to evidence fulfillment of
the conditions relating to it as UBS may reasonably request. Any of the
foregoing conditions may be waived by UBS.
40
In addition to the other conditions set forth above, Eagle's
obligations under the Agreement are conditioned upon (i) the accuracy in
all material respects as of the date of the Merger Agreement and as of
the Effective Time of the representations and warranties of UBS set forth
in the Merger Agreement, except as to any representation or warranty
which specifically relates to an earlier date and except as otherwise
contemplated by the Merger Agreement; (ii) the performance of all
material covenants and obligations required to be complied with and
satisfied by UBS; (iii) the receipt of a certificate from a specified
officer of UBS with respect to compliance with the conditions relating to
(i) and (ii) immediately above as set forth in the Merger Agreement; (iv)
the receipt of certain legal opinions from legal counsel to UBS; (v) the
receipt of an opinion of Wheat First to the effect that the consideration
to be provided by UBS to shareholders of Eagle pursuant to the Merger
Agreement is fair to such shareholders from a financial point of view, a
copy of which is included as Annex B to this Prospectus/Joint Proxy
Statement, which opinion shall not have been withdrawn prior to the
meeting of shareholders of Eagle at which the Merger Agreement is
considered by such shareholders; and (vi) UBS shall have furnished to
Eagle such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions relating to them as
Eagle may reasonably request. Any of the foregoing conditions may be
waived by Eagle.
Regulatory Approvals
Consummation of the Merger is subject to prior receipt of all
required approvals, consents or waivers of the Merger and the Bank Merger
by all applicable federal and state regulatory authorities. In order to
consummate the Merger and the Bank Merger, UBS, Eagle, First Empire
and/or UNB must obtain the prior consent, approval or waiver, as
applicable, of the FRB, the OCC, the OTS and the WV Board.
The Merger is subject to the prior approval of the FRB under
the BHCA and the Bank Merger is subject to the prior approval of the OCC
under the Bank Merger Act provisions of the Federal Deposit Insurance Act
("BMA"). Pursuant to the applicable provisions of the BHCA and the BMA,
the FRB may not approve the Merger and the OCC may not approve the Bank
Merger if (i) such transaction would result in a monopoly or would be in
furtherance of any combination or conspiracy or monopolize or attempt to
monopolize the business of banking in any part of the United States; or
(ii) the effect of such transaction, in any section of the country, may
be to substantially lessen competition, or tend to create a monopoly, or
in any other manner to restrain trade, in each case unless the FRB or the
OCC, as applicable, finds that the anticompetitive effects of the
proposed transaction are clearly outweighed in the public interests by
the probable effect of the transaction in meeting the convenience and
needs of the community to be served. In conducting its review of any
application for approval, each of the FRB and the OCC is required to
consider whether the financial and managerial resources of the acquiring
bank holding company and acquiring bank are adequate (including
consideration by a variety of means of the competence, experience and
integrity of the applicant's directors, officers and principal
stockholders and compliance with, among other things, fair lending laws).
Each of the FRB and the OCC has the authority to deny an application if
it concludes that the combined organization would have an inadequate
capital position or if the
41
acquiring organization does not meet the requirements of the Community
Reinvestment Act of 1977, as amended.
Each of the BHCA and the BMA provides that a transaction
approved by the applicable federal banking agency generally may not be
consummated until 30 days after approval by such agency. If the U.S.
Department of Justice and the relevant agency otherwise agree, this 30-
day period may be reduced to as few as 15 days. During such period, the
U.S. Department of Justice may commence a legal action challenging the
transaction under the antitrust laws. The commencement of an action
would stay the effectiveness of the approval of the federal banking
agency unless a court specifically orders otherwise. If, however, the
U.S. Department of Justice does not commence a legal action during such
waiting period, it may not thereafter challenge the transaction except in
an action commenced under Section 2 of the Sherman Antitrust Act.
Regulations of the OTS require that it be notified of the Bank
Merger at least 30 days prior to the effective date of the transaction,
but not later than the date on which an application relating to the
proposed transaction is filed with the OCC. Such notification must
demonstrate compliance with applicable stockholder approval requirements.
The approval of the WV Board also is required for consummation
of the Merger. Under West Virginia law, the WV Board will not approve an
application for such a transaction unless it determines, after a
consideration of all relevant evidence, that it would contribute to the
financial strength and success of the applicant and promote the
convenience and needs of the public. The WV Board will also consider the
record of performance of the parties in serving the credit needs of the
communities in which they have operated in the past. The factors to be
considered by the WV Board in this regard are substantially similar to
those to be considered by federal banking agencies, as discussed above.
Applications have been or will be filed with applicable
regulatory authorities for approval of the Merger and the Bank Merger.
Although neither UBS nor Eagle is aware of any basis for disapproving the
Merger and the Bank Merger, there can be no assurance that all requisite
approvals will be obtained, that such approvals will be received on a
timely basis or that such approvals will not impose conditions or
requirements which, individually or in the aggregate, would (i) result in
a material adverse effect on the financial condition, results of
operations, business or prospects of UBS on a consolidated basis or (ii)
reduce the economic or business benefits of the transactions contemplated
by the Agreement to UBS in so significant a manner that UBS, in its
reasonable judgment, would not have entered into the Merger Agreement.
If any such condition or requirement is imposed, the Merger Agreement
permits the Board of Directors of UBS to terminate the Merger Agreement.
Business Pending the Merger
Pursuant to the Merger Agreement, Eagle has agreed to use all
reasonable efforts to (i) preserve its business organization and that of
its subsidiaries intact, (ii) keep available to itself
42
and UBS the present services of the employees of Eagle and its
subsidiaries and (iii) preserve for itself and UBS the goodwill of the
customers of Eagle and its subsidiaries and others with whom business
relationships exist. In addition, under the terms of the Merger
Agreement, Eagle has agreed not to take certain actions, nor permit its
subsidiaries to take certain actions, without the prior written consent
of UBS, including, among other things, the following: (i) declare, set
aside, make or pay any dividend or other distribution in respect of Eagle
Stock or the capital stock of any subsidiary of Eagle, except for regular
quarterly cash dividends at a rate per share of Eagle Stock not in excess
of $.14 per share, provided that if the Merger does not occur prior to
the record date for the dividend which relates to the second quarter of
1996 (June 14, 1996), the regular per share quarterly dividend on the
Eagle Stock shall be increased to an amount determined by multiplying the
per share dividend on the UBS Stock for such quarter by 1.15; (ii) issue,
grant or authorize any capital stock of Eagle or rights to acquire the
same or effect any recapitalization, reclassification, stock dividend,
stock split or like change in capitalization; (iii) amend its articles of
incorporation, charter or bylaws; impose, or suffer the imposition of,
any material lien, charge or encumbrance on any share of stock held by
Eagle in any subsidiary, or permit any such lien to exist; or waive or
release any material right or cancel or compromise any material debt or
claim; (iv) increase the rate of compensation of, pay or agree to pay any
bonus or severance to, or provide any other new employee benefit or
incentive to, any of its directors, officers or employees, except (a) as
may be required pursuant to binding commitments as of the date of the
Agreement and disclosed to UBS and (b)such as may be granted in the
ordinary course of business consistent with past practice; (v) enter into
or modify any employee benefit plan or make any contributions to Eagle's
defined benefit pension plan or ESOP, other than in the ordinary course
of business consistent with past practice; (vi) enter into (a) any
agreement, arrangement or commitment not made in the ordinary course of
business, (b) any agreement, indenture or other instrument relating to
the borrowing of money by Eagle or any subsidiary thereof or guarantee by
Eagle or any subsidiary thereof of any such obligation, except for
borrowings in the ordinary course of business consistent with past
practice, (c) any employment, consulting or severance contracts or
agreements, or amend any such existing agreement, or (d) any contract,
agreement or understanding with a labor union; (vii) change its methods
of accounting or tax reporting, except as may be required by changes in
generally accepted accounting principles or applicable law; (viii) make
any capital expenditures in excess of $50,000 individually or $250,000 in
the aggregate, other than pursuant to binding commitments existing on the
date of the Merger Agreement and other than expenditures necessary to
maintain existing assets in good repair; (ix) file any applications or
make any contract with respect to branching or site location or
relocation; (x) acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) any business or entity; (xi) enter
into any futures contract, option contract, interest rate caps, interest
rate floors, interest rate exchange agreement or other agreement for
purposes of hedging interest rate risk; (xii) enter or agree to enter
into any agreement or arrangement granting any preferential right to
purchase any of its assets or rights or requiring the consent of any
party to the transfer and assignment of any such assets or rights; (xiii)
take any action that would result in any of the representations and
warranties of Eagle contained in the Merger Agreement not to be true and
correct in any material respect at the Effective Time; or (xiv) agree to
do any of the foregoing.
43
Pursuant to the Merger Agreement, UBS agreed that during the
period from the date of the Merger Agreement to the Effective Time,
except as expressly contemplated or permitted by the Agreement or with
the prior written consent of Eagle, UBS and its subsidiaries shall carry
on their respective businesses in the ordinary course consistent with
past practice and use all reasonable efforts to preserve intact their
present business organizations and relationships. In addition, under the
terms of the Merger Agreement, UBS agreed not to take the following
actions, nor permit its subsidiaries to take the following actions,
without the prior written consent of Eagle: (i) declare, set aside, make
or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of the UBS Stock, other
than regular quarterly cash dividends which are not in excess of $.30 per
share of UBS Stock; (ii) issue any shares of its capital stock other than
pursuant to (a) rights granted pursuant to the UBS employee stock benefit
plans, (b) the Merger Agreement or (c) any acquisition to the extent
permitted under section (v) below; (iii) effect any recapitalization,
reclassification, stock split or like change in capitalization; (iv)
amend its articles of incorporation, charter or bylaws in a manner which
would adversely affect the terms of the UBS Stock or the ability of UBS
and UNB to consummate the Merger and the Bank Merger; (v) make any
acquisition (including acquisitions of branch offices and related deposit
liabilities) or take any other action that individually or in the
aggregate could materially adversely affect the ability of UBS to
consummate the transactions contemplated by the Merger Agreement in a
reasonably timely manner, or participate in any merger, consolidation or
other transaction in which UBS is not the surviving corporation; (vi)
take any action that would result in any of the representations and
warranties of UBS contained in the Merger Agreement not to be true and
correct in any material respect at the Effective Time; or (vii) agree to
do any of the foregoing.
Furthermore, each party agreed to provide the other party and
its representatives with such financial data and other information with
respect to its business and properties as such party shall from time to
time reasonably request. Each party will cause all non-public financial
and business information obtained by it from the other to be treated
confidentially. If the Merger is not consummated, each party will return
to the other all non-public financial statements, documents and other
materials previously furnished by such party.
No Solicitation
Pursuant to the Agreement, neither Eagle nor any subsidiary of
Eagle, nor any of the directors, officers, employees, representatives or
agents of Eagle or other persons controlled by Eagle, shall solicit or
encourage inquiries or proposals with respect to, furnish any information
relating to, or participate in any negotiations or discussions
concerning, any acquisition, lease or purchase of all or a substantial
portion of the assets of, or any equity interest in, Eagle or any
subsidiary of Eagle, or any business combination with Eagle or any
subsidiary of Eagle, other than as contemplated by the Merger Agreement
(except where the failure to furnish such information or participate in
such negotiations or discussions would in the reasonable advice of
counsel to Eagle constitute a breach of the fiduciary or legal
obligations of Eagle's Board of Directors). Eagle is required to
immediately notify UBS orally and in writing if any such inquiries or
proposals are
44
received by, and such information is required from, or any such
negotiations or discussions are sought to be initiated with, Eagle or any
subsidiary of Eagle.
Effective Time of the Merger; Termination and Amendment
The Effective Time of the Merger shall be the date and time of
the filing of (i) articles of merger with the Secretary of State of West
Virginia and (ii) a certificate of merger with the Secretary of State of
Delaware, unless a different date and time is specified as the effective
time in such articles of merger and certificate of merger. The Effective
Time shall be as set forth in such articles of merger and certificate of
merger, which will be filed only after the receipt of all requisite
regulatory approvals of the Merger and the Bank Merger, approval of the
Merger Agreement by the requisite vote of UBS shareholders and Eagle's
shareholders and the satisfaction or waiver of all other conditions to
the Merger and the Bank Merger.
A closing (the "Closing") shall take place immediately prior to
the Effective Time on a day within 31 calendar days following the
satisfaction or waiver (to the extent permitted) of all the conditions to
consummation of the Merger specified in the Merger Agreement (other than
the delivery of certificates, opinions and other instruments and
documents to be delivered at the Closing), or on such other date as the
parties may mutually agree upon.
The Merger Agreement may be terminated, either before or after
approval by the shareholders of Eagle and UBS, as follows: (i) at any
time on or prior to the Effective Time by the mutual consent in writing
of the parties; (ii) at any time on or prior to the Effective Time in the
event of a material breach by the other party of any representation,
warranty, material covenant or agreement, which breach has not been cured
within the time period specified in the Merger Agreement; (iii) at any
time by either party in writing if any application for any required
federal or state regulatory approval has been denied or is approved with
any condition or requirement which would prevent satisfaction of the
regulatory condition to UBS's obligation to consummate the Merger, and
the time period for appeals and requests for reconsideration has run;
(iv) at any time by either party in writing if the shareholders of Eagle
or UBS fail to approve the Merger Agreement at a meeting duly called for
the purpose, unless the failure of such occurrence is due to the failure
of the party seeking to terminate to perform or observe in any material
respect its agreements set forth in the Merger Agreement; (v) by either
party in writing in the event that the Merger is not consummated by June
30, 1996, provided that this right to terminate shall not be available to
any party whose failure to perform an obligation under the Merger
Agreement resulted in the failure of the Merger to be consummated by such
date; (vi) by Eagle in the event that the average closing price of the
UBS Stock on the NASDAQ over the 20 trading days commencing on the first
business day following the receipt of the required approval of the FRB or
the OCC, whichever is later, is less than $25.00; and (vii) at any time
by either party in writing if such party is not in default under the
Merger Agreement and such party determines in good faith that any
condition precedent to such party's obligations to consummate the Merger
is or would be impossible to satisfy, and such condition is not waived by
the other party. In the event of termination, the Merger Agreement shall
become null and void, except that certain provisions thereof relating to
expenses, termination fee and
45
confidentiality shall survive any such termination and any such
termination shall not relieve any breaching party from liability for any
willful breach of any covenant, undertaking, representation or warranty
giving rise to such termination.
To the extent permitted under applicable law, the Merger
Agreement may be amended or supplemented at any time by written agreement
of the parties whether before or after the approval of UBS' or Eagle's
shareholders, provided that after any such approval the Merger Agreement
may not be amended or supplemented in a manner which modifies either the
amount or form of the consideration to be received by Eagle's
shareholders or otherwise materially adversely affects Eagle or UBS
shareholders without further approval by those shareholders who are so
affected.
Interests of Certain Persons in the Merger
Certain members of the Board of Directors of Eagle who are
executive officers of Eagle and an executive officer of Eagle who is not
a director as identified below, may be deemed to have interests in the
Merger in addition to their interests as stockholders generally, as
discussed below. The Board of Directors of Eagle was aware of these
factors and considered them, among other matters, in approving the
Agreement and the transactions contemplated thereby.
Election of Directors of UBS. Pursuant to the Merger
Agreement, UBS agreed that it will take such action as is necessary to
cause J. Christopher Thomas, William W. Wagner and Paul Clinton Winter,
Jr. to be elected as directors of UBS upon consummation of the Merger for
a term which expires at the annual meeting of the shareholders of UBS
following their initial election. In addition, UBS agreed to include
such persons as nominees for election as directors of UBS at the first
annual meeting of stockholders of UBS following the Effective Time.
Indemnification and Insurance. Pursuant to the Merger
Agreement, UBS agreed, from and after the Effective Time through the
sixth anniversary of the Effective Time, to cause UBS to indemnify and
hold harmless each present and former director or officer of Eagle or any
Eagle subsidiary determined as of the Effective Time (the "Indemnified
Parties") against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities incurred
in connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the
fullest extent to which such Indemnified Parties were entitled under the
Bylaws of Eagle or First Empire, respectively, in each case as in effect
on the date of the Merger Agreement.
Pursuant to the Merger Agreement, UBS also agreed to permit
Eagle to purchase insurance coverage on substantially the same terms and
conditions as the liability insurance provided by Eagle for its directors
and officers as of the date of the Merger Agreement for a period of two
years following the Effective Time, provided that in no event shall Eagle
expend, in order to obtain such insurance, any amount per annum in excess
of 125% of the amount of the actual premiums paid as of the date of the
Merger Agreement by Eagle for such insurance (the "Maximum Amount"). If
46
the amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, Eagle shall use all
reasonable efforts to maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal
to the Maximum Amount.
Employment Agreements. Pursuant to the Merger Agreement, UBS
and UNB agreed to honor the terms of the employment agreements among
Eagle, First Empire and each of Messrs. Wagner, Thomas, Crimmins and
Scipio. The agreements involving Messrs. Wagner and Thomas provide for
five-year terms and the agreements involving Messrs. Crimmins and Scipio
provide for three-year terms; and in each case the term of the contract
will be extended for an additional year on each anniversary of the
agreement unless a party otherwise gives notice of an intent not to renew
the agreement in accordance with its terms. The contracts provide for
current salary levels for Messrs. Wagner, Thomas, Crimmins and Scipio of
$135,000, $135,000, $94,000 and $89,000, respectively, which may be
increased from time to time in the discretion of the Board of Directors
of the Employers and are currently under review for calendar 1996. The
agreements are terminable with or without cause by the Employers. The
officer shall have no right to compensation or other benefits for any
period after voluntary termination or termination by the Employers for
"just cause" or "total and permanent disability," as defined, provided,
however, that in the event that the officer terminates his employment
prior to a change in control of the Company, as defined, because of
failure of the Employers to comply with any material provision of the
agreement or the Employers terminate the officer's employment without
adequate notice prior to such a change in control, the officer shall be
entitled to severance pay in an amount which is equal to his base salary
as in effect on the date of termination multiplied by the greater of the
number of years (including partial years) remaining in the term of
employment or 2.99. In addition, in the event that an agreement is
terminated by the Employers other than for just cause or total and
permanent disability or by the officer as a result of certain adverse
actions which are taken with respect to his employment following a change
in control of the Company, as set forth in the definition of "good
reason," the officer will be entitled to severance pay in an amount which
is equal to three times the average annual salary paid to the officer, as
reflected on Internal Revenue Service Form W-2, for the five years
immediately preceding the termination, less one dollar. The aggregate
amount of severance payments to which Messrs. Wagner, Thomas, Crimmins
and Scipio would be entitled pursuant to his employment agreement in the
event his employment was terminated for good reason following
consummation of the Merger in 1996 is estimated to be $168,750, $403,650,
$281,060, and $266,110, respectively.
Supplemental Employment Retirement Plan. Pursuant to the
Merger Agreement, UBS and UNB also agreed to honor the terms of the
Supplemental Employment Retirement Plan maintained by First Empire for
certain designated executive officers of Eagle, consisting solely of
Messrs. Wagner, Thomas, Crimmins and Scipio. The Supplemental Employment
Retirement Plan is a non-qualified defined benefit plan. Participants
with 15 years of service are eligible to receive, upon retirement, an
amount which, when combined with amounts payable under First Empire's
defined benefit Retirement Plan, Profit Sharing Plan, Employee Stock
Ownership Plan and any other defined benefit or contribution plan of
First Empire, would raise total retirement benefits to 70% of
47
the participant's "Final Average Pay," which is defined as the average of
the highest five consecutive calendar years of earnings (including
bonuses) during the ten years prior to retirement at age 65. At December
31, 1994, Messrs. Wagner, Thomas, Crimmins and Scipio had 36, 25, 21 and
19 years of credited service under the defined benefit Retirement Plan
and Supplemental Employee Retirement Plan, respectively. If the
employment of a participant in this plan is involuntarily terminated
without cause or if certain adverse actions are taken with respect to his
employment without his consent, then the participant shall be entitled to
benefits commencing at age 55 computed as though the participant had
continued in the service of Eagle and First Empire until such time and as
though the participant continued to earn the annualized earnings for the
calendar year during which such termination of employment occurs.
Assuming an involuntary termination of employment without cause as of
December 31, 1995, the aggregate amount of annual benefits which Messrs.
Wagner, Thomas, Crimmins and Scipio would be entitled under the
Supplemental Retirement Plan is estimated to be $0, $14,000, $4,000 and
$22,000 respectively.
Employment. Pursuant to the Merger Agreement, UBS agreed to
offer employment to (a) Mr. Thomas as Executive Vice President of UBS and
President and Chief Executive Officer of MBS, (b) Mr. Wagner as Executive
Vice President of UBS and Chairman of MBS, (c) Mr. Scipio as Executive
Vice President and Chief Operating Officer of MBS and (d) certain other
non-executive officers, in each case with a base salary equal to the
respective employee's base salary with Eagle and First Empire immediately
prior to consummation of the Merger.
Certain Employee Matters
Pursuant to the Merger Agreement, UBS agreed to pay specified
severance payments to any employee of Eagle or First Empire (other than
any employee who is party to an employment agreement) who is
involuntarily terminated at or during the one-year period following
consummation of the Merger as a result of the elimination of a job
position. Severance pay (including benefits) is estimated to be
approximately $350,000.
Pursuant to the Merger Agreement, each person employed by Eagle
or an Eagle subsidiary prior to the Effective Time who becomes an
employee of UBS or a subsidiary of UBS following the Effective Time (each
a "Continued Employee") shall be entitled, as an employee of UBS or a
subsidiary of UBS, to participate in such employee benefit plans as may
be in effect generally for employees of UBS and its subsidiaries from
time to time (the "UBS Plans"), if such Continued Employee shall be
eligible or selected for participation therein and otherwise shall not be
participating in a similar plan formerly maintained by Eagle or an Eagle
subsidiary which continues to be maintained by UBS and its subsidiaries
following the Effective Time. Continued Employees will be eligible to
participate on the same basis as similarly situated employees of UBS or
UBS's subsidiaries. All such participation shall be subject to the terms
of the UBS plans as may be in effect from time to time. Notwithstanding
the foregoing, participation by Continued Employees in employee benefit
plans of UBS or its subsidiaries with respect to which eligibility to
participate is at the discretion of the employer shall be discretionary
with such employer.
48
UBS and its subsidiaries shall, solely for purposes of vesting
and eligibility to begin participation with respect to the UBS Plans,
recognize credit for each Continued Employee's term of service with Eagle
and its subsidiaries as such service is recognized by Eagle and its
subsidiaries for purposes of its benefit plans.
UBS has agreed to give employees of Eagle and its subsidiaries
the same priority for open positions at UBS or any UBS subsidiary for a
period of one (1) year for which they qualify as existing employees of
UBS and UBS's subsidiaries, provided that any decision to offer
employment shall be made in the sole discretion of UBS.
The Merger Agreement provides that Eagle's ESOP shall be
terminated in accordance with its terms and applicable laws and
regulations upon consummation of the Merger or as soon thereafter as is
practicable.
Resale of UBS Stock
The UBS Stock issued pursuant to the Merger will be freely
transferable under the Securities Act, except for shares issued to any
Eagle shareholder who may be deemed to be an affiliate of UBS for
purposes of Rule 144 promulgated under the Securities Act ("Rule 144") or
an affiliate of Eagle for purposes of Rule 145 promulgated under the
Securities Act ("Rule 145") (each an "Affiliate"). Affiliates will
include persons (generally executive officers, directors and 10%
shareholders) who control, are controlled by or are under common control
with (i) UBS or Eagle at the time of the Eagle Special Meeting or (ii)
UBS at or after the Effective Time.
Rules 144 and 145 will restrict the sale of UBS Stock received
in the Merger by Affiliates and certain of their family members and
related interests. Generally speaking, during the two years following the
Effective Time, those persons who are Affiliates of UBS at or following
the Effective Time, may publicly resell any UBS Stock received by them in
the Merger, subject to certain limitations as to, among other things, the
amount of UBS Stock sold by them in any three-month period and as to the
manner of sale. After the two-year period, such Affiliates may resell
their shares without such restrictions so long as there is adequate
current public information with respect to UBS as required by Rule 144.
Persons who are Affiliates of UBS after the Effective Time may publicly
resell the UBS Stock received by them in the Merger subject to similar
limitations and subject to certain filing requirements specified in Rule
144.
The ability of Affiliates to resell shares of UBS Stock
received in the Merger under Rule 144 or 145 as summarized herein
generally will be subject to UBS's having satisfied its Exchange Act
reporting requirements for specified periods prior to the time of sale.
Affiliates also would be permitted to resell UBS Stock received in the
Merger pursuant to an effective registration statement under the
Securities Act or another available exemption from the Securities Act
registration requirements. This Prospectus/Joint Proxy Statement does not
cover any resales of UBS Stock received by persons who may be deemed to
be Affiliates of UBS or Eagle in the Merger.
49
SEC guidelines regarding qualifying for the pooling of
interests method of accounting also limit sales of shares of the
acquiring and acquired company by affiliates of either company in a
business combination. SEC guidelines indicate further that the pooling of
interests method of accounting generally will not be challenged on the
basis of sales by affiliates of the acquiring or acquired company if they
do not dispose of any of the shares of the corporation they received in
connection with a merger during the period beginning 30 days before the
merger and ending when financial results covering at least 30 days of
post-merger operations of the combined entity have been published.
Eagle agreed in the Merger Agreement to use its best efforts to
cause each person who may be deemed to be an Affiliate of Eagle to
deliver to UBS a letter agreement intended to preserve the ability to
treat the Merger as a pooling of interests and ensure compliance with the
Securities Act.
For information concerning additional resale restrictions which
are applicable to the directors and executive officers of Eagle, see "The
Merger - Stockholder Agreements."
Expenses of the Merger; Termination Fee
The Merger Agreement provides that each party thereto shall
each bear and pay all costs and expenses incurred by it in connection
with the transactions contemplated by the Merger Agreement, including
fees and expenses of its own financial consultants, accountants and
counsel.
The Merger Agreement also provides that, notwithstanding any
provision to the contrary, if the Merger Agreement is terminated in
accordance with its terms (other than if terminated by Eagle pursuant to
Section 7.1(b) thereof as a result of a breach by UBS of its obligations
under the Merger Agreement) and prior to such termination a Termination
Event, as defined, shall have occurred, Eagle will upon demand pay to UBS
in immediately available funds $1,500,000. For purposes of the Merger
Agreement, a Termination Event means either of the following:
(i) Eagle or any Eagle Subsidiary, without having received UBS's
prior written consent, shall have entered into an agreement to engage in
an Acquisition Transaction with any person (as defined in the Merger
Agreement) other than UBS or any affiliate of UBS or the Board of
Directors of Eagle shall have recommended that the shareholders of Eagle
approve or accept any Acquisition Transaction with any person other than
UBS or any affiliate of UBS. For purposes of the Agreement, "Acquisition
Transaction" means (a) a merger or consolidation, or any similar
transaction, involving Eagle or any Eagle Subsidiary, (b) a purchase,
lease or other acquisition of all or substantially all of the assets of
Eagle or any Eagle Subsidiary or (c) a purchase or other acquisition of
any equity securities of Eagle or any Eagle Subsidiary; or
(ii) After a bona fide proposal is made by any person other than UBS
or any affiliate of UBS to Eagle or its shareholders to engage in an
Acquisition Transaction, either (i) Eagle shall have breached any
covenant or obligation contained in the Merger Agreement
50
and such breach would entitle UBS to terminate the Merger Agreement, or
(ii) the holders of Eagle Stock shall not have approved the Merger
Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been held or
shall have been canceled prior to termination of the Merger Agreement.
Stockholder Agreements
In conjunction with the Merger Agreement, UBS entered into a
Stockholder Agreement, dated as of August 18, 1995, with the directors
and executive officers of Eagle, and Eagle entered into a Stockholder
Agreement, dated as of the same date, with the directors of UBS. Each
such director or executive officer of Eagle or UBS, in his capacity as a
shareholder of Eagle or UBS agreed, among other things, not to sell,
pledge, transfer or otherwise dispose of his shares of Eagle Stock or UBS
Stock prior to the Special Meetings of shareholders, respectively, at
which the Merger Agreement is considered and to vote such shares of stock
in favor of the Merger Agreement.
Accounting Treatment
Consummation of the Merger is conditioned upon the receipt by
UBS and Eagle of a letter, dated as of the Effective Time, from Ernst &
Young LLP, the independent public accountants of UBS and Eagle, to the
effect that the Merger shall be accounted for as a pooling of interests.
Under the pooling of interests method of accounting, the assets and
liabilities of Eagle would be added to those of UBS at their recorded
book values and the shareholders' equity accounts of UBS and Eagle would
be combined on UBS's consolidated balance sheet. On a pooling of
interests accounting basis, income and other financial statements of UBS
issued after consummation of the Merger would be restated retroactively
to reflect the consolidated combined financial position and results of
operations of UBS and Eagle as if the Merger had taken place prior to the
periods covered by such financial statements. The unaudited pro forma
financial information contained in this Prospectus/Joint Proxy Statement
has been prepared using the pooling of interests accounting method to
account for the Merger. See "UBS and Eagle Selected Pro Forma
Consolidated Financial Data" and "Pro Forma Consolidated Financial
Statements."
COMPARISON OF SHAREHOLDERS' RIGHTS
UBS is a West Virginia corporation subject to the provisions of
the WVCA and Eagle is a Delaware corporation subject to the provisions of
the DGCL. Upon consummation of the Merger, shareholders of Eagle will
become shareholders of UBS and their rights as shareholders of UBS will
be governed by the Articles of Incorporation ("Articles") and Bylaws of
UBS and the WVCA.
The following summary is not intended to be a complete
statement of the differences affecting the rights of Eagle's
shareholders, but rather summarizes the more significant differences
affecting the rights of such shareholders and certain important
51
similarities; the summary is qualified in its entirety by reference to
the Articles and Bylaws of UBS, the Certificate of Incorporation and
Bylaws of Eagle and applicable laws and regulations.
Authorized Capital Stock
Eagle. Eagle's Certificate of Incorporation authorizes the
-----
issuance of up to 5,000,000 shares of Eagle Stock, of which 2,729,468
were outstanding as of the Eagle Record Date, and up to 2,500,000 shares
of preferred stock, par value $.10 per share ("Eagle Preferred Stock"),
of which no shares are issued and outstanding. The Eagle Preferred Stock
is issuable in series, each series having such rights and preferences as
Eagle's Board of Directors may fix and determine by resolution.
UBS. UBS' Articles authorize the issuance of up to 20,000,000
---
shares of UBS Stock and no shares of preferred stock.
Issuance of Capital Stock
Eagle. Under the DGCL, Eagle may issue shares of Eagle capital
-----
stock and rights or options for the purchase of shares of capital stock
of Eagle on such terms and for such consideration as may be determined by
the Board of Directors of Eagle. Neither the DGCL nor the Certificate of
Incorporation and Bylaws of Eagle require shareholder approval of any
such actions. However, the Bylaws of the NASD generally require
corporations, such as Eagle, with securities which are quoted on NASDAQ
to obtain shareholder approval of certain issuances of common stock and
most stock compensation plans for directors, officers and key employees
of the corporation. Shareholder approval of stock-related compensation
plans also may be sought in certain instances in order to comply with the
DGCL or to qualify such plans for favorable federal income tax and
securities law treatment under current laws and regulations.
UBS. Under the WVCA, UBS may issue shares of UBS capital stock
---
and rights or options for the purchase of shares of capital stock of UBS
on such terms and for such consideration as may be determined by the
Board of Directors of UBS. Neither the WVCA nor the Articles and Bylaws
of UBS require shareholder approval of any such actions. However, the
Bylaws of the NASD generally require corporations, such as UBS, with
securities which are quoted on NASDAQ to obtain shareholder approval of
certain issuances of common stock and most stock compensation plans for
directors, officers and key employees of the corporation. Shareholder
approval of stock-related compensation plans also may be sought in
certain instances in order to qualify such plans for favorable federal
income tax and securities law treatment under current laws and
regulations.
52
Voting Rights
Eagle. Each share of Eagle Stock is entitled to one vote per
-----
share on all matters properly presented at meetings of shareholders of
Eagle. Eagle's Certificate of Incorporation and Bylaws do not permit
shareholders to cumulate their votes in an election of directors.
UBS. Each share of UBS Stock is entitled to one vote per share
---
on all matters properly presented at meetings of shareholders of UBS.
Pursuant to the WVCA and the West Virginia Constitution, holders of UBS
Stock have cumulative voting rights in elections of directors. Cumulative
voting enables each shareholder to give one nominee for director as many
votes as is equal to the total number of nominees multiplied by the
number of shares voted, or to distribute such votes on the same basis
among two or more nominees.
Dividends and Other Distributions
Eagle. The DGCL generally provides that, subject to any
-----
restrictions in the corporations's certificate of incorporation,
dividends may be declared from the corporation's surplus or, if there is
no surplus, from its net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. However, if the
corporation's capital (generally defined in the DGCL as the sum of the
aggregate par value of all shares of the corporation's capital stock,
where all such shares have a par value and the board of directors has not
established a higher level of capital) has been diminished to an amount
less than the aggregate amount of the capital represented by the issued
and outstanding stock of all classes having a preference upon the
distribution of assets, dividends may not be declared and paid out of
such net profits until the deficiency in such capital has been repaired.
UBS. The WVCA generally provides that UBS may pay dividends in
---
cash or property out of unreserved and unrestricted earned surplus. Only
under certain very limited circumstances could UBS distribute from
capital surplus.
Eagle and UBS. Each of Eagle and UBS is a legal entity
-------------
separate and distinct from its respective banking/thrift subsidiaries.
Eagle's and UBS' principal source of revenue for general corporate
purposes, such as the payment of dividends on Eagle Stock and UBS Stock,
respectively, consists of dividends from First Empire in the case of
Eagle and dividends from UBS's banking subsidiaries in the case of UBS.
The payment of dividends by a bank holding company such as UBS and by the
banking/thrift subsidiaries of Eagle and UBS is subject to various
regulatory requirements, such as the maintenance of adequate capital in
accordance with the requirements of applicable laws and regulations. For
example, the Federal Deposit Insurance Act generally prohibits an
undercapitalized depository institution from paying dividends. In
addition, if, in the opinion of the applicable federal banking agency, a
bank holding company or a bank under its jurisdiction is engaged in or is
about to engage in an unsafe or unsound practice (which, depending on the
financial condition of the institution, could include the payment of
dividends), such authority may require, after notice and hearing, that
such organization cease and desist from such practice. The federal
banking agencies also have issued policy statements which provide that
bank holding companies and insured depository institutions should
generally only pay dividends out of current operating earnings. Similar
authority exists in the case of the OTS and savings associations under
its jurisdiction.
53
Terms and Size of Board of Directors
Eagle. The Bylaws of Eagle provide that the number of
-----
directors shall not be less than five nor more than 15. The Bylaws of
Eagle also provide that the number of directors may at any time be
increased or decreased by a vote of a majority of the whole Board of
Directors and a majority of the Continuing Directors, as defined in
Eagle's Certificate of Incorporation.
Pursuant to the Certificate of Incorporation and Bylaws of
Eagle, the Board of Directors of Eagle is divided into three classes as
nearly equal in number as possible and approximately one-third of the
directors are elected annually to serve three-year terms.
UBS. The Bylaws of UBS provide that the number of directors
---
shall be not less than five nor more than thirty-five. The Bylaws also
provide that the number may be increased or decreased by an amendment to
the Bylaws.
Director Vacancies and Removal of Directors
Eagle. Eagle's Certificate of Incorporation provides that any
-----
vacancy occurring in the Board of Directors, including any vacancy
created by reason of an increase in the number of directors, shall be
filled by a majority vote of the directors then in office, whether or not
a quorum is present, or by a sole remaining director, and any director so
chosen shall hold office for the remainder of the term to which the
director has been selected and until his or her successor shall have been
elected and qualified.
Eagle's Certificate of Incorporation provides that any director
may be removed from office only with cause by an affirmative vote of not
less than two thirds of the votes eligible to be cast by stockholders at
a duly constituted meeting of stockholders called expressly for such
purpose.
UBS. UBS' Bylaws provide that any vacancy occurring in the
---
Board of Directors, including any vacancy created by reason of an
increase in the number of directors, shall be filled by a majority vote
of the directors then in office, whether or not a quorum is present, and
any director so chosen shall hold office for the remainder of the term to
which the director has been selected and until his or her successor shall
have been elected and qualified.
Removal of directors is governed by the WVCA, which provides
that one or more directors, or the entire board, may be removed, with or
without cause, by the shareholders at a meeting called for that purpose
by a vote of the holders of a majority of the shares then entitled to
vote at an election of directors.
54
Director Conflict of Interest Transactions
Eagle. The DGCL generally provides that contracts or
-----
transactions involving a Delaware corporation and an interested director
(or officer) of that corporation are not void or voidable solely because
of such director's (or officer's) interest if: (i) the material facts
are disclosed and a majority of disinterested directors on the board of
directors or a committee thereof authorize the contract or transaction in
good faith, (ii) the material facts are disclosed and shareholders of the
corporation approve the contract or transaction in good faith, or (iii)
the contract or transaction is fair to the corporation at the time it is
authorized, approved or ratified by the board of directors, a committee
or the shareholders.
UBS. Director conflicts of interest are governed by the WVCA,
---
which provides that no contract or other transaction between UBS and one
or more of its directors or between UBS and an entity in which one or
more of its directors are financially interested will be void or voidable
simply because of the relationship or because such directors may be
present at a meeting of the UBS board which authorizes such contract or
transaction, as long as certain disclosures as to the relationships have
made to those voting on the contract or transactions, there is a
sufficient vote to approve the same without the vote of the interested
director or directors, and the contract or transaction is fair and
reasonable to UBS.
Exculpation of Directors
Eagle. Eagle's Certificate of Incorporation provides that no
-----
director of Eagle shall be personally liable to Eagle or its stockholders
for monetary damages for any breach of fiduciary duty by such director as
a director, provided that a director shall be liable to the extent
provided by applicable law (i) for a breach of the director's duty of
loyalty to Eagle or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
This provision of the Certificate of Incorporation of Eagle is based on a
virtually identical provision in the DGCL.
UBS. The WVCA does not provide for director exculpation or
---
limitation of directors' liability.
Shareholder Nominations
Eagle. Eagle's Bylaws provide that nominations by shareholders
-----
for election as a director must be made in writing and delivered to or
mailed and received by the Secretary of Eagle not less than 60 days prior
to the anniversary date of the immediately preceding annual meeting; and
with respect to an election to be held at a special meeting of
shareholders, notice by the shareholder must be so delivered or mailed
and received not later than the close of business on the 10th day
following the day on which the notice of the special meeting was mailed.
Such shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a
director and as to the shareholder giving the notice (i) the name, age,
business address and residence address of such person, (ii) the principal
occupation or employment of such person,
55
(iii) the class and number of shares of Eagle Stock which are
beneficially owned by such person on the date of such shareholders'
notice and (iv) any other information relating to such person that is
required to be disclosed in solicitations of proxies with respect to
nominees for election as directors, pursuant to Regulation 14A under the
Exchange Act; and (b) as to the shareholder giving the notice (i) the
name and address, as they appear on Eagle's books, of such shareholder
and any other shareholders known by such shareholder to be supporting
such nominees and (ii) the class and number of shares of Eagle Stock
which are beneficially owned by such shareholder to be supporting such
nominees on the date of such shareholder notice.
UBS. UBS' Bylaws provide that shareholder nominations of
---
directors must be made in writing, signed by the shareholder and received
by the Chairman or President no later than ten days from the date the
notice of meeting of shareholders was mailed. The Bylaws also make
provision for nominations if notices are mailed with less than thirteen
days' time prior to the meeting.
Shareholder Proposals
Eagle. Eagle's Bylaws provide that a proposal by shareholders
-----
for submission to a vote of shareholders at an annual meeting must be
made in writing and delivered to or mailed and received by the Secretary
of Eagle not less than 60 days prior to the anniversary date of the
immediately preceding annual meeting. A shareholders' notice to the
Secretary shall set forth as to each matter the shareholder proposes to
bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting, (ii) the name and
address, as they appear on Eagle's books, of the shareholder proposing
such business, (iii) the class and number of shares of Eagle Stock which
are beneficially owned by the shareholder and (iv) any material interest
of the shareholder in such business.
UBS. UBS' corporate governance documents are silent as to
---
shareholder proposals. Proposals must be made in accordance with
applicable SEC regulations and instructions regarding the same are
included in UBS' shareholder proxy materials.
Special Meetings of Shareholders
Eagle. Eagle's Certificate of Incorporation provides that,
-----
except as otherwise required by law, special meetings of the shareholders
of Eagle may be called only by (i) the Board of Directors pursuant to a
resolution approved by the affirmative vote of the directors then in
office, (ii) the Chairman of the Board or (iii) the President.
UBS. UBS' Bylaws provide that special meetings of UBS
---
shareholders may be called by the Board of Directors, the Chairman, the
President, or the holders of not less than one-tenth of the UBS Stock
outstanding.
56
Shareholder Action without a Meeting
Eagle. Eagle's Certificate of Incorporation provides that no
-----
action required by the DGCL to be taken at any annual or special meeting
of shareholders, nor any action which may be taken at any annual or
special meeting of shareholders, may be taken without a meeting, without
prior notice and without a vote of such shareholders.
UBS. UBS' Bylaws would permit shareholder action without a
---
meeting upon the unanimous written consent of all shareholders.
Shareholders' Right to Examine Books and Records
Eagle. Eagle's Bylaws provide that a list of shareholders of
-----
Eagle shall be available for inspection by any shareholder entitled to
vote for a period of not less than 10 days before and during each such
meeting of shareholders. The DGCL generally provides that a shareholder,
in person or by his attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual
hours for business to inspect for any proper purpose the corporation's
stock ledger, a list of its shareholders and its other books and records,
and to make copies or extracts therefrom. The DGCL authorizes a
shareholder of a Delaware corporation to bring a legal action in the
Delaware Court of Chancery for an order to compel such inspection if the
shareholder's demand is denied by the corporation or it is not replied to
by the corporation within five business days.
UBS. UBS' Bylaws provide that the books and records may be
---
examined at any time by any director, any committee of the shareholders
appointed by the shareholders for that purpose or by the holders of one-
tenth of the UBS Stock outstanding. The WVCA provides that any
shareholder, after having been a shareholder for six months, or the owner
of five percent of UBS Stock, without regard to the length of ownership,
may, upon written demand, for any proper purpose, inspect the relevant
books and records and make extracts therefrom. The WVCA also affords
legal remedies to a shareholder improperly denied access, including a
penalty equal to ten percent of the value of the shares held by the
shareholder.
Amendment of Governing Instruments
Eagle. No amendment may be made to Eagle's Certificate of
-----
Incorporation unless it is first approved by the Board of Directors of
Eagle and thereafter it is approved by the holders of a majority of the
shares of Eagle entitled to vote generally in an election of directors,
provided that (i) the affirmative vote of the holders of a least two
thirds of such shares shall be required to amend any provision which is
inconsistent with Article 6 (Preemptive Rights), Article 7 (Directors),
Article 8 (Meetings of Stockholders and Bylaws) and Article 10
(Amendments) and (ii) Articles 9.1 and 9.2 of the Certificate of
Incorporation (dealing with certain business combinations, as described
below) shall be amended in the manner set forth in Article 9.2(d).
57
Eagle's Certificate of Incorporation and Bylaws provide that
the Bylaws of Eagle may be amended by (i) a majority of directors then in
office or (ii) two thirds of the total votes eligible to be cast by
shareholders at a duly constituted meeting of shareholders called
expressly for such purpose.
UBS. Pursuant to the WVCA, UBS' Articles may be amended,
---
following approval of the amendment by the Board of Directors, by the
affirmative vote of the holders of a majority of the UBS Stock entitled
to vote thereon. UBS' Bylaws may be amended by the majority of the Board
of Directors voting at a duly called meeting at which a quorum is
present. Such amendment is subject to repeal or change by the affirmative
vote of the holders of a majority of the outstanding UBS Stock.
Mergers, Consolidations and Sales of Assets
Eagle. The DGCL requires the approval of the Board of
-----
Directors and the holders of a majority of the outstanding stock of Eagle
entitled to vote thereon for mergers or consolidations, and for sales,
leases or exchanges of all or substantially all of the assets of Eagle.
The DGCL generally permits Eagle to merge with another corporation
without obtaining the approval of Eagle's shareholders if: (i) Eagle is
the surviving corporation of the merger; (ii) the merger agreement does
not amend Eagle's Certificate of Incorporation; (iii) each share of
Eagle's stock outstanding immediately prior to the effective date of the
merger is to be an identical outstanding or treasury share of Eagle after
the merger; and (iv) any authorized but unissued shares or treasury
shares of Eagle Stock to be issued or delivered under the plan of merger
plus those initially issuable upon conversion of any other securities or
obligations to be issued or delivered under such plan do not exceed 20%
of the shares of Eagle Stock outstanding immediately prior to the
effective date of the merger.
UBS. The WVCA requires the approval of the Board of
---
Directors and the holders of a majority of the outstanding stock of UBS
entitled to vote thereon for mergers, consolidations, and sales, leases,
exchanges, or other dispositions of all or substantially all the assets
of UBS.
Business Combinations with Certain Persons
Eagle. Eagle's Certificate of Incorporation contains a
-----
provision which requires that mergers and certain other business
combinations with a "related person," as defined, be approved by the
holders of not less than 80% of the outstanding voting stock of Eagle and
an "independent majority of stockholders," as defined, unless certain
price and procedural requirements are met or the Board of Directors
approves the merger or other business combination in the manner provided
therein. A "related person" for this purpose generally includes any
person, firm or entity which is the beneficial owner of ten percent or
more of the voting shares of Eagle.
58
Section 203 of the DGCL imposes certain restrictions on
business combinations between Eagle and large shareholders.
Specifically, Section 203 provides that a Delaware corporation shall not
engage in any "business combination" (as defined in Section 203,
generally including mergers, sales and leases of assets, issuances of
securities and similar transactions) with any "interested stockholder"
(as defined in Section 203, generally the beneficial owner of 15% or more
of the corporation's voting stock) for a period of three years following
the time that such stockholder became an interested stockholder, unless
(i) prior to such time the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation
of the transaction which resulted in the interested stockholder becoming
such, the interested stockholder owned at least 85% of the voting stock
of the corporation (excluding shares held by persons who are both
officers and directors and shares held by certain employee benefit plans)
or (iii) at or subsequent to such time the business combination is
approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative
vote of at least two-thirds of the outstanding voting stock which is not
owned by the interested stockholder.
UBS. Neither the corporate governance documents of UBS nor the
---
WVCA contain comparable provisions regarding business combinations.
Dissenters' Rights of Appraisal
Eagle. Under the DGCL, a shareholder of a Delaware corporation
-----
generally has the right to dissent from any merger or consolidation
involving the corporation or sale of all or substantially all of the
corporation's assets, subject to specified procedural requirements.
However, no such appraisal rights are available for the shares of any
class or series of a corporation's capital stock if (i) as of the record
date fixed to determine the shareholders entitled to receive notice of
and to vote at the meeting of shareholders to act upon the agreement of
merger or consolidation, such shares were either listed on a national
securities exchange, designated as a national market system security on
an interdealer system by the NASD or held of record by more than 2,000
shareholders, or (ii) the corporation is the surviving corporation of a
merger and the merger did not require the approval of the corporation's
shareholders, unless in either case, the holders of such stock are
required by an agreement of merger or consolidation to accept for that
stock something other than: (a) shares of stock of the corporation
surviving or resulting from the merger or consolidation; (b) shares of
stock of any other corporation that, at the effective date of the merger,
will be listed on a national securities exchange, designated as a
national market system security on an interdealer system by the NASD or
held of record by more than 2,000 shareholders; (c) cash in lieu of
fractional shares of a corporation described in clause (a) or (b) above;
or (d) any combination of the shares of stock and cash in lieu of
fractional shares described in clauses (a) through (c) above.
Shareholders of Eagle do not have the right to dissent from the Merger
pursuant to the DGCL. See "Dissenters' Rights."
UBS. Under the WVCA, a shareholder of a West Virginia
---
corporation has the right to dissent from any merger, consolidation or
sale of substantially all of the corporation's assets.
59
These rights and how they are to be exercised are described in this
Prospectus/Joint Proxy Statement at the section captioned "Dissenters'
Rights."
DISSENTERS' RIGHTS
Pursuant to Section 262 of the DGCL, stockholders of Eagle do
not have the right to dissent from the Merger and obtain an appraised
value of their shares of Eagle Stock.
UBS shareholders eligible to vote on the Merger Agreement have
certain statutory rights to dissent and to elect to receive cash for
their shares under Sections 31-1-122 and 31-1-123 of the WVCA, copies of
which are included as Annex C hereto. A brief description of these
rights follows. This discussion does not purport to cover every aspect
of the applicable statutes and shareholders of USB are referred to Annex
C for the complete text of the relevant statutory provisions.
UBS shareholders who object to the Merger and who comply with
the provisions of (S) 31-1-123 of the WVCA may demand the right to
receive a cash payment from UBS for the "fair value" of their stock as
determined as of the day prior to the date on which the Merger was
approved by the UBS shareholders. Under (S) 31-1-123 of the WVCA, such
"fair value" of UBS Stock shall not include any appreciation or
depreciation of the price of shares of UBS Stock resulting from
anticipation of the Merger.
To exercise their dissenters' rights, UBS shareholders electing
to dissent ("Dissenting UBS Shareholders") must file with UBS at United
Center, 500 Virginia Street, East, Charleston, West Virginia 25301,
Attention: Secretary, prior to or at the UBS Special Meeting, a written
objection to the proposed merger. A Dissenting Shareholder may dissent
as to less than all of shares of UBS Stock owned beneficially by him. If
the Merger is approved by the UBS shareholders, and a Dissenting
Shareholder did not vote the related shares in favor of the Merger, he
must then, within ten days after the date on which the vote was taken,
file with UBS a written demand for payment of the fair value of such
shares.
Within 20 days after demanding payment for his shares, each
Dissenting Shareholder must submit the certificate or certificates
representing his shares to UBS for notation thereon that such demand has
been made. His failure to do so shall, at the option of UBS, terminate
his rights under Section 3-1-122 and 31-1-123 of the WVCA unless a court
of general civil jurisdiction, for good and sufficient cause shown, shall
otherwise direct. If shares of UBS Stock represented by a certificate on
which notation has been so made shall be transferred, each new
certificate issued therefor shall bear similar notation, together with
the name of the original dissenting holder of such shares, and a
transferee of such shares shall acquire by such transfer no rights in
UBS, as applicable, other than those which the original Dissenting
Shareholder had after making demand for payment under Section 31-1-123 of
the WVCA.
60
A demand filed by a Dissenting Shareholder may not be withdrawn
unless UBS consents. Within ten days after the Effective Date of the
Merger, UBS shall give written notice thereof to each Dissenting
Shareholder who has made a demand as required by the WVCA, and shall make
a written offer to each such Dissenting Shareholder to pay for his
related shares at a specified price deemed by UBS to be the fair value
thereof. Such notice and offer shall be accompanied by a balance sheet
of UBS as of the latest available date and not more than 12 months prior
to the making of such offer, and a profit and loss statement for the 12
months period ended on the date of such balance sheet. If within 30 days
after the Effective Date, the fair value of such shares is agreed upon
between any Dissenting Shareholder and UBS, payment therefor shall be
made within 90 days after the Effective Date, upon surrender of the
certificate(s) representing such share(s). Upon payment of the agreed
value a Dissenting Shareholder shall cease to have any interest in such
shares.
If within the 30-day period described above, a Dissenting
Shareholder and UBS do not agree as to the fair value of the shares, UBS
shall within 30 days after receipt of written demand from any Dissenting
Shareholder, which written demand must be given within 60 days after the
Effective Date, file a complaint in a court of general civil jurisdiction
in the county where UBS' principal office is located requesting that the
fair value of such shares be determined, or UBS may file such a complaint
within such 60-day period at its own election. If UBS fails to bring
such action within the 60-day period, and at this time cannot predict
whether it would file such a complaint, any Dissenting Shareholder may do
so in the name of UBS. If no complaint is filed, Dissenting Shareholders
may be deemed to have waived their rights under the WVCA. All Dissenting
Shareholders, except those who have agreed upon a price to be paid for
their shares by UBS, may be made parties to the proceeding and may
receive a copy of the petition or summons. All Dissenting Shareholders
who are parties to the proceeding shall be entitled to judgment against
UBS for the amount of the fair value of their shares plus accrued
interest except any Dissenting Shareholder whom the court determines not
to be entitled to receive payment for his shares. The judgment shall be
payable only upon and concurrently with the surrender to UBS of the
certificate(s) representing such share(s).
Section 31-1-123(e) of the WVCA provides that any costs and
expenses of any such proceeding shall be determined by the court and
assessed against UBS, except that all or any part of such costs and
expenses may be assessed against all or some Dissenting Shareholders, in
amounts the court finds equitable, to the extent the court finds the
Dissenting Shareholders did not act in good faith in contesting UBS'
offer. Such expenses shall not include experts' or attorneys' expenses
and fees unless the court, in its discretion, awards such fees and
expenses.
Reference is made to Annex C attached hereto for the complete
text of the provisions of Section 31-1-122 and 33-1-123 of the WVCA
relating to the rights of dissenting shareholders. The statements made in
this summary of such provisions are qualified in their entirety by
reference to Annex C. The provisions of Section 31-1-123 of the WVCA are
technical and complex and it is suggested that any shareholder who
desires to exercise his or her right to dissent consult counsel because
failure to comply strictly with such provisions may defeat his
dissenters' rights.
61
MANAGEMENT OF UBS AFTER THE MERGER
Upon consummation of the Merger, the directors and executive
officers of UBS will be the directors and executive officers of UBS
immediately prior to the Merger, except certain directors and executive
officers of Eagle will become directors and executive officers of UBS, as
described under "The Merger - Interests of Certain Persons in the
Merger."
The following table sets forth certain information about each
director and executive officer of Eagle who will become a director and,
in the case of Messrs. Thomas and Wagner, an executive officer of UBS
upon consummation of the Merger.
Position with Eagle and
Principal Occupation
Name Age During the Past Five Years Since(1)
- ------------------------------ --- --------------------------- --------
J. Christopher Thomas 46 Director, President and 1978
Chief Operating Officer of
Eagle and First Empire
William W. Wagner 63 Chairman and Chief 1959
Executive Officer of Eagle
and First Empire
Paul C. Winter, Jr. 48 Director of Eagle and First 1977
Empire; President, Bray &
Oakley Insurance Agency,
Inc., Logan, West Virginia
__________________
(1) Includes service with predecessor institutions.
Additional information about the foregoing persons is contained
in Eagle's Proxy Statement for its 1995 annual meeting of stockholders,
relevant portions of which are incorporated by reference in this
Prospectus/Joint Proxy Statement pursuant to Eagle's Annual Report on
Form 10-K for the year ended December 31, 1994. See "Information
Incorporated by Reference" and "Available Information."
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed
consolidated balance sheet combines the consolidated historical balance
sheets of UBS and Eagle, assuming the Merger was consummated as of the
beginning of the earliest period presented on a pooling of interests
accounting basis.
62
The following unaudited pro forma combined condensed
consolidated statements of operations present the combined consolidated
statements of operations of UBS and Eagle, assuming UBS and Eagle had
been combined at the beginning of each period presented on a pooling of
interests basis.
For a description of the pooling of interests accounting
method, see "The Merger -Accounting Treatment."
The pro forma financial data does not give effect to
anticipated cost savings in connection with the Merger.
The pro forma information presented is not necessarily
indicative of the results of operations or the combined financial
position that would have resulted had the Merger been consummated at the
beginning of the applicable periods indicated, nor is it necessarily
indicative of the results of operations in future periods or the future
financial position of the combined entities.
The pro forma information should be read in conjunction with
the historical consolidated financial statements of UBS and Eagle,
including the related notes, which are incorporated by reference in this
Prospectus/Joint Proxy Statement, and in conjunction with the selected
consolidated historical and other pro forma financial information,
including the notes thereto, appearing elsewhere in this Prospectus/Joint
Proxy Statement. See "Information Incorporated by Reference."
63
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
UNITED BANKSHARES, INC. AND SUBSIDIARIES
September 30, 1995
(in thousands) UBS & EAGLE
As Reported Pro Forma Pro Forma
---------------------------------
UBS EAGLE Adjustments Consolidated
------------------- ------------ --------------- -------------
ASSETS
Cash and due from bank $ 73,757 $ 15,773 $ 89,530
Federal funds sold 12,425 12,425
Investment securities 324,084 11,252 335,336
Loans (net of unearned income) 1,319,061 343,445 1,662,506
Less: allowance for loan losses (20,044) (2,484) (22,528)
---------- -------- ----------
Net loans 1,299,017 340,961 1,639,978
Bank premises and equipment 29,646 4,200 33,846
Goodwill 7,039 7,039
Other intangible assets 2,044 2,044
Other assets
25,277 2,740 712(2) 28,729
Total Assets ---------- -------- ---------- ----------
$1,773,289 $374,926 $ 712 $2,148,927
========== ======== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 224,666 $ 13,376 $ 238,042
Interest-bearing deposits 1,210,682 292,991 1,503,673
---------- -------- ----------
Total deposits 1,435,348 306,367 1,741,715
Short-term borrowings 92,151 92,151
Federal Home Loan Bank borrowings 33,900 15,480 49,380
Other liabilities 20,597 4,869 4,799(2) 30,265
---------- -------- ---------- ----------
Total Liabilities 1,581,996 326,716 4,799 1,913,511
Stockholders' equity:
Common stock 29,886 273 7,574 (1) 37,733
Surplus 31,972 11,969 (7,574)(1) 36,367
Treasury stock (3,425) (3,425)
Retained earnings l32,170 35,890 (4,087)(2) 163,973
Net unrealized holding gain on available for
sale securities 690 78 768
---------- -------- ---------- ----------
Total Stockholders' Equity 191,293 48,210 (4,087) 235,416
---------- -------- ---------- ----------
Total Liabilities and
Stockholders' Equity $1,773,289 $374,926 $ 712 $2,148,927
========== ======== ========== ==========
______________________________
See Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
64
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
UNITED BANKSHARES, INC. AND SUBSIDIARIES
For the Nine Months Ended September 30, 1995
(Dollars in thousands, except per share)
UBS & EAGLE
As Reported Pro Forma Pro Forma
-------------------------
UBS EAGLE Adjustments Consolidated
- ------------------------------------------------- ----------- ----------- ----------- ------------
Interest income $101,423 $22,023 $123,446
Interest expense 40,554 11,450 52,004
-------- -------- --------
Net interest income 60,869 10,573 71,442
Provision for possible loan losses 1,550 185 1,735
-------- -------- --------
Net interest income after provision
for possible loan losses 59,319 10,388 69,707
Other income 9,509 1,787 11,296
Other expenses 36,210 6,043 42,253
-------- -------- --------
Income before income taxes 32,618 6,132 38,750
Income taxes 11,492 1,944 13,436
-------- -------- --------
Income from continuing operations $ 21,126 $ 4,188 $ 25,314
======== ======== ========
Earnings per common share:
--------------------------
Income from continuing operations $1.77 $1.53 $1.68
Average outstanding shares 11,933,975 2,729,468 15,072,863
65
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
UNITED BANKSHARES, INC. AND SUBSIDIARIES
For the Year Ended December 31, 1994
(Dollars in thousands, except per share)
UBS & EAGLE
As Reported Pro Forma Pro Forma
------------------------
UBS EAGLE Adjustments Consolidated
- ------------------------------------------------- ----------- ----------- ----------- ------------
Interest income $121,157 $26,480 $147,637
Interest expense 43,887 11,785 55,672
-------- ------- --------
Net interest income 77,270 14,695 91,965
Provision for possible loan losses 1,818 384 2,202
-------- ------- --------
Net interest income after provision
for possible loan losses 75,452 14,311 89,763
Other income 11,222 1,016 12,238
Other expenses 48,676 7,232 55,908
-------- ------- --------
Income before income taxes 37,998 8,095 46,093
Income taxes 13,096 2,613 15,709
-------- ------- --------
Income from continuing operations $ 24,902 $ 5,482 $ 30,384
======== ======= ========
Earnings per common share:
--------------------------
Income from continuing operations $2.08 $2.01 $2.01
Average outstanding shares 11,993,062 2,729,468 15,131,950
66
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
UNITED BANKSHARES, INC. AND SUBSIDIARIES
For the Year Ended December 31, 1993
(Dollars in thousands, except per share)
UBS & EAGLE
As Reported Pro Forma Pro Forma
------------------------
UBS EAGLE Adjustments Consolidated
- ------------------------------------------------- ----------- ----------- ----------- ------------
Interest income $116,505 $24,119 $140,624
Interest expense 45,009 10,028 55,037
-------- ------- --------
Net interest income 71,496 14,091 85,587
Provision for possible loan losses 4,332 498 4,830
-------- ------- --------
Net interest income after provision
for possible loan losses 67,164 13,593 80,757
Other income 12,673 1,627 14,300
Other expenses 49,690 6,417 56,107
-------- ------- --------
Income before income taxes 30,147 8,803 38,950
Income taxes 9,770 2,712 12,482
-------- ------- --------
Income from continuing operations $ 20,377 $ 6,091 $ 26,468
======== ======= ========
Earnings per common share:
--------------------------
Income from continuing operations $1.71 $2.24 $1.76
======== ======= ========
Average outstanding shares 11,922,521 2,718,930 15,049,291
67
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
UNITED BANKSHARES, INC. AND SUBSIDIARIES
For the Year Ended December 31, 1992
(Dollars in thousands, except per share)
UBS & EAGLE
As Reported Pro Forma Pro Forma
------------------------
UBS EAGLE Adjustments Consolidated
- ------------------------------------------------- ----------- ----------- ----------- ------------
Interest income $113,502 $22,927 $136,429
Interest expense 49,897 10,922 60,819
-------- ------- --------
Net interest income 63,605 12,005 75,610
Provision for possible loan losses 4,242 566 4,808
-------- ------- --------
Net interest income after provision
for possible loan losses 59,363 11,439 70,802
Other income 11,123 766 11,889
Other expenses 46,991 5,635 52,626
-------- ------- --------
Income before income taxes 23,495 6,570 30,065
Income taxes 7,136 2,144 9,280
-------- ------- --------
Income from continuing operations $ 16,359 $ 4,426 $ 20,785
======== ======= ========
Earnings per common share:
--------------------------
Income from continuing operations $1.52 $1.67 $1.51
Average outstanding shares 10,737,688 2,650,592 13,785,869
68
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNITED BANKSHARES, INC. AND SUBSIDIARIES
Notes to Pro Forma Condensed Balance Sheet
------------------------------------------
1) The stockholders' equity accounts are adjusted to reflect the
issuance of 3,138,888 shares of United common stock at $2.50 par value.
The Exchange Ratio is 1.15 shares of UBS Stock for each share of Eagle
Stock outstanding. At September 30, 1995, there were 2,729,468 shares of
Eagle Stock outstanding.
2) To reflect nonrecurring charges and related tax effects which will
result directly from the Merger and be included in the consolidated
income statement of UBS within the year after the merger as follows:
Recapture of pre-1987 bad debt reserve $3,000
Investment banker fee 1,087
------
Net nonrecurring charges $4,087
======
69
DESCRIPTION OF UBS STOCK
The authorized capital stock of UBS consists of 20,000,000
shares of UBS Stock. The UBS Stock does not represent or constitute a
deposit account and is not insured by the FDIC.
The authorized but unissued shares of UBS Stock are available
for issuance in future mergers or acquisitions, in a future public
offering or private placement or for other general corporate purposes.
Except as otherwise required to approve the transaction in which the
additional authorized shares of UBS Stock would be issued, shareholder
approval generally would not be required pursuant to the requirements for
continued listing of the UBS Stock on NASDAQ or the requirements of any
exchange on which the UBS Stock may then be listed.
The following description of the UBS Stock does not purport to
be complete and is qualified in all respects by reference to the Articles
and Bylaws of UBS and the WVCA.
General. Each share of UBS Stock has the same relative rights
-------
and is identical in all respects with each other share of UBS Stock. The
UBS Stock is not subject to call for redemption and, upon receipt by UBS
of the shares of Eagle Stock surrendered in exchange for UBS Stock, each
share of UBS Stock offered hereby will be fully paid and non-assessable.
Voting Rights. The holders of UBS Stock possess exclusive
-------------
voting rights in UBS. Each holder of UBS Stock is entitled to one vote
for each share held on all matters voted upon by shareholders, and
shareholders are permitted to cumulate votes in elections of directors.
Dividends. The holders of the UBS Stock are entitled to such
---------
dividends as may be declared from time to time by the Board of Directors
of UBS out of funds legally available therefor.
Preemptive Rights. Holders of UBS Stock do not have any
-----------------
preemptive rights with respect to any shares which may be issued by UBS
in the future; thus; UBS may sell shares of UBS Stock without first
offering them to the then holders of the UBS Stock.
Liquidation. In the event of any liquidation, dissolution or
-----------
winding up of UBS, the holders of the UBS Stock would be entitled to
receive, after payment of all debts and liabilities of UBS, all assets of
UBS available for distribution.
70
REGULATION AND SUPERVISION OF UBS
General
UBS, as a bank holding company, is subject to the restrictions
of the BHCA, and is registered pursuant to its provisions. As a
registered bank holding company, UBS is subject to the reporting
requirements of the FRB, and is subject to examination by the FRB.
The BHCA prohibits the acquisition by a bank holding company of
direct or indirect ownership of more than five percent of the voting
shares of any bank within the United States without prior approval of the
FRB. With certain exceptions, a bank holding company is prohibited from
acquiring direct or indirect ownership or control or more than five
percent of the voting shares of any company which is not a bank, and from
engaging directly or indirectly in business unrelated to the business of
banking or managing or controlling banks.
The FRB, in its Regulation Y, permits bank holding companies to
engage in non- banking activities closely related to banking or managing
or controlling banks. Approval of the FRB is necessary to engage in these
activities or to make acquisitions of corporations engaging in these
activities as the FRB determines whether these acquisitions or activities
are in the public interest. In addition, by order, and on a case by case
basis, the FRB may approve other non-banking activities.
As a bank holding company doing business in West Virginia, UBS
is also subject to regulation by the WV Board and must submit annual
reports to the West Virginia Division of Banking.
Federal law restricts subsidiary banks of a bank holding
company from making certain extensions of credit to the parent bank
holding company or to any of its subsidiaries, from investing in the
holding company stock, and limits the ability of a subsidiary bank to
take its parent company stock as collateral for the loans of any
borrower. Additionally, federal law prohibits a bank holding company and
its subsidiaries from engaging in certain tie-in arrangements in
conjunction with the extension of credit or furnishing of services.
The operations of UBS' banking subsidiaries, which are national
banking subsidiaries, are subject to federal statutes which apply to
national banks. UBS' national banking subsidiaries are primarily
regulated by the OCC. UBS' national bank subsidiaries are also subject
to regulations promulgated by the FRB and the FDIC. UBS' Virginia
subsidiary is a Virginia chartered state member bank and is subject to
regulation by the FRB, the Virginia Corporation Commission's Bureau of
Financial Institutions and the FDIC. As members of the FDIC, the
deposits of UBS' subsidiaries are insured as required by federal law.
The OCC regularly examines revenues, loans, investments, management
practices, and other aspects of UBS' subsidiaries. These examinations
are conducted primarily to protect depositors and not shareholders. In
addition to these regular
71
examinations, UBS' subsidiary banks each must furnish to the OCC a
quarterly report containing a full and accurate statement of its affairs.
Non-banking Activities Permitted to UBS
The FRB permits, within prescribed limits, bank holding
companies to engage in non-banking activities closely related to banking
or to managing or controlling banks. Such activities are not limited to
the state of West Virginia. Some examples of non-banking activities which
presently may be performed by a bank holding company are: making or
acquiring, for its own account or the account of others, loans and other
extensions of credit; operating as an industrial bank, or industrial loan
company, in the manner authorized by state law; servicing loans and other
extensions of credit; performing or carrying on any one or more of the
functions or activities that may be performed or carried on by a trust
company in the manner authorized by federal or state law; acting as an
investment or financial advisor; leasing real or personal property;
making equity or debt investments in corporations or projects designed
primarily to promote community welfare, such as the economic
rehabilitation and the development of low income areas; providing
bookkeeping services or financially oriented data processing services for
the holding company and its subsidiaries; acting as an insurance agent or
a broker, to a limited extent, in relation to insurance directly related
to an extension of credit; acting as an underwriter for credit life
insurance which is directly related to extensions of credit by the bank
holding company system; providing courier services for certain financial
documents; providing management consulting advice to nonaffiliated banks;
selling retail money orders having a face value of not more than $1,000,
traveler's checks and U. S. savings bonds; performing appraisals of real
estate; arranging commercial real estate equity financing under certain
limited circumstances; providing securities brokerage services related to
securities credit activities; underwriting and dealing in government
obligations and money market instruments; providing foreign exchange
advisory and transactional services; and acting under certain
circumstances, as futures commission merchant for nonaffiliated persons
in the execution and clearance on major commodity exchanges of futures
contracts and options.
Credit and Monetary Policies and Related Matters
UBS' subsidiary banks are affected by the fiscal and monetary
policies of the federal government and its agencies, including the FRB.
An important function of these policies is to curb inflation and control
recessions through control of the supply of money and credit. The
operations of UBS' subsidiary banks are affected by the policies of
government regulatory authorities, including the FRB which regulates
money and credit conditions through open market operations in United
States Government and federal agency securities, adjustments in the
discount rate on member bank borrowings, and requirements against
deposits and regulation of interest rates payable by member banks on time
and savings deposits. These policies have a significant influence on the
growth and distribution of loans, investments and deposits, and interest
rates charged on loans, or paid for time and savings deposits, as well as
yields on investments. The FRB has had a significant effect on the
operating results of commercial banks in the past and is expected to
continue to do so in the future.
72
Future policies of the FRB and other authorities and their effect on
future bank earnings cannot be predicted.
The FRB has a policy to the effect that a bank holding company
is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. Under the source of strength doctrine, the FRB may
require a bank holding company to contribute capital to a troubled
subsidiary bank, and may charge the bank holding company with engaging in
unsafe and unsound practices for failure to commit resources to such a
subsidiary bank. This capital injection may be required at times when
UBS may not have the resources to provide it. Any capital loans by a
holding company to any of the subsidiary banks are subordinate in right
of payment to deposits and to certain other indebtedness of such
subsidiary bank. In addition, the Crime Control Act of 1990 provides that
in the event of a bank holding company's bankruptcy, any commitment by
such holding company to a federal bank or thrift regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the
bankruptcy trustee and entitled to a priority of payment.
In 1989, the United States Congress enacted the Financial
Institutions Reform, Recovery and Enforcement Act ("FIRREA"). Under
FIRREA depository institutions insured by the FDIC may now be liable for
any losses incurred by, or reasonably expected to be incurred by, the
FDIC after August 9, 1989, in connection with (i) the default of a
commonly controlled FDIC-insured depository institution, or (ii) any
assistance provided by the FDIC to commonly controlled FDIC-insured
depository institution in danger of default. "Default" is defined
generally as the appointment of a conservator or receiver and "in danger
of default" is defined generally as the existence of certain conditions
indicating that a "default" is likely to occur in the absence of
regulatory assistance. Accordingly, in the event that any insured bank
or subsidiary of UBS causes a loss to the FDIC, other bank subsidiaries
of UBS could be liable to the FDIC for the amount of such loss.
Under federal law, the OCC may order the pro rata assessment of
shareholders of a national bank whose capital stock has become impaired,
by losses or otherwise, to relieve a deficiency in such national bank's
capital stock. This statute also provides for the enforcement of any
such pro rata assessment of shareholders of such national bank to cover
such impairment of capital stock by sale, to the extent necessary, of the
capital stock of any assessed shareholder failing to pay the assessment.
Similarly, the laws of certain states provide for such assessment and
sale with respect to the subsidiary banks chartered by such states. UBS
as the sole stockholder of its subsidiary banks, is subject to such
provisions. Virginia law does not provide for assessment of fully paid
shares of bank stock.
Capital Requirements
As a holding company UBS is subject to FRB risk-based capital
guidelines. The guidelines establish a systematic analytical framework
that makes regulatory capital requirements
73
more sensitive to differences in risk profiles among banking
organizations, takes off-balance sheet exposures into explicit account in
assessing capital adequacy, and minimizes disincentives to holding
liquid, low-risk assets. Under the guidelines and related policies, bank
holding companies must maintain capital sufficient to meet both a risk-
based asset ratio test and leverage ratio test on a consolidated basis.
The risk-based ratio is determined by allocating assets and specified
off-balance sheet commitments into four weighted categories, with higher
levels of capital being required for categories perceived as representing
greater risk. All of UBS' depository institution subsidiaries are
subject to substantially similar capital requirements adopted by
applicable regulatory agencies.
Generally, under the applicable guidelines, the financial
institution's capital is divided into two tiers. "Tier 1," or core
capital, includes common equity, noncumulative perpetual preferred stock
(excluding auction rate issues) and minority interests in equity accounts
of consolidated subsidiaries, less goodwill and other intangibles. "Tier
2," or supplementary capital, includes, among other things, cumulative
and limited-life preferred stock, hybrid capital instruments, mandatory
convertible securities, qualifying subordinated debt, and the allowance
for loan losses, subject to certain limitations, less required
deductions. "Total capital" is the sum of Tier 1 and Tier 2 capital.
Bank holding companies are subject to substantially identical
requirements, except that cumulative perpetual preferred stock can
constitute up to 25% of a bank holding company's Tier 1 capital.
Bank holding companies are required to maintain a risk-based
ratio of 8%, of which 4% must be Tier 1 capital. The appropriate
regulatory authority may set higher capital requirements when an
institution's particular circumstances warrant.
For purposes of the leverage ratio, the numerator is defined as
Tier 1 capital and the denominator is defined as adjusted total assets
(as specified in the guidelines). The guidelines provide for a minimum
leverage ratio of 3% for bank holding companies that meet certain
specified criteria, including excellent asset quality, high liquidity,
low interest rate exposure and the highest regulatory rating. Bank
holding companies not meeting these criteria are required to maintain a
leverage ratio which exceeds 3% by a cushion of at least 1 to 2 percent.
The guidelines also provide that bank holding companies
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
Furthermore, the FRB's guidelines indicate that the FRB will continue to
consider a "tangible Tier 1 leverage ratio" in evaluating proposals for
expansion or new activities. The tangible Tier 1 leverage ratio is the
ratio of an institution's Tier 1 capital, less all intangibles, to total
assets, less all intangibles.
On August 2, 1995, the FRB and other banking agencies issued
their final rule to implement the portion of Section 305 of FDICIA that
requires the banking agencies to revise their risk-based capital
standards to ensure that those standards take adequate account of
interest rate risk. This final rule amends the capital standards to
specify that the banking agencies will include, in their
74
evaluations of a bank's capital adequacy, an assessment of the exposure
to declines in the economic value of the bank's capital due to changes in
interest rates.
Failure to meet applicable capital guidelines could subject the
bank holding company to a variety of enforcement remedies available to
the federal regulatory authorities, including limitations on the ability
to pay dividends, the issuance by the regulatory authority of a capital
directive to increase capital and termination of deposit insurance by the
FDIC, as well as to the measures described under the "Federal Deposit
Insurance Corporation Improvement Act of 1991" as applicable to
undercapitalized institutions.
As of September 30, 1995, the pro forma regulatory capital
ratios of UBS were as set forth in the following table, assuming the
Merger was consummated as of such date on a pooling of interests
accounting basis as follows:
UBS/
EAGLE
PRO FORMA
CONSOLIDATED UBS
------------- ------
Risk-based Capital:
Actual Tier 1 15.87% 14.76%
Actual Total 17.10% 16.01%
Reg Minimum Tier 1 4.00% 4.00%
Reg Minimum Total 8.00% 8.00%
Excess over Minimum:
Tier 1 11.87% 10.76%
Total 9.10% 8.01%
Leverage 10.56% 10.24%
Federal Deposit Insurance Corporation Improvement Act of 1991
In December, 1991, Congress enacted the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), which
substantially revised the bank regulatory and funding provisions of the
Federal Deposit Insurance Corporation Act and made revisions to several
other banking statues.
75
FDICIA establishes a new regulatory scheme, which ties the
level of supervisory intervention by bank regulatory authorities
primarily to a depository institution's capital category.
Among other things, FDICIA authorizes regulatory authorities to take
"prompt corrective action" with respect to depository institutions that
do not meet minimum capital requirements. FDICIA establishes five
capital tiers: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically under
capitalized.
By regulation, an institution is "well-capitalized" if it has a
total risk-based capital ratio of 10% or greater, a Tier 1 risk-based
capital ratio of 6% or greater and a Tier 1 leverage ratio of 5% or
greater and is not subject to a regulatory order, agreement or directive
to meet and maintain a specific capital level for any capital measure.
Each of the banking subsidiaries of UBS was a "well capitalized"
institution as of September 30, 1995. As well-capitalized institutions,
the banking subsidiaries of UBS are permitted to engage in a wider range
of banking activities, including among other things, the accepting of
"brokered deposits," and the offering of interest rates on deposits
higher than the prevailing rate in their respective markets.
Another requirement of FDICIA is that federal banking agencies
must prescribe regulations relating to various operational areas of banks
and bank holding companies. These include standards for internal audit
systems, loan documentation, information systems, internal controls,
credit underwriting, interest rate exposure, asset growth, compensation,
a maximum ratio of classified assets to capital, minimum earnings
sufficient to absorb losses, a minimum ratio of market value to book
value for publicly traded shares and such other standards as the agency
deems appropriate.
Reigle-Neal Interstate Banking Bill
In 1994, Congress passed the Reigle-Neal Interstate Banking
Bill (the "Interstate Bill"). The Interstate Bill permits certain
interstate banking activities through a holding company structure,
effective September 30, 1995. It permits interstate branching by merger
effective June 1, 1997 unless states "opt-in" sooner, or "opt-out" before
that date. States may elect to permit de novo branching by specific
legislative election. West Virginia has taken no action in this regard
to date. The Interstate Bill will permit consolidation of banking
institutions across state lines and, perhaps, de novo entry. As its
provisions become effective, it is likely that the resulting
restructurings and interstate activities will result in the realization
of economies of scale within those institutions with entities in more
than one state. One result could be increased competitiveness, due to
the realization of economies of scale and/or, where permitted, due to de
novo market entrants.
Community Reinvestment Act
Bank holding companies and their subsidiary banks are also
subject to the provisions of the Community Reinvestment Act of 1977
("CRA"). Under the CRA, the Federal Reserve Board (or other appropriate
bank regulatory agency) is required, in connection with its examination
of a bank, to assess such bank's record in meeting the credit needs of
the communities served by that bank, including low and moderate income
neighborhoods. Further such assessment is also required of any bank
holding company which has applied to (i) charter a national bank, (ii)
obtain deposit insurance coverage for a newly chartered institution,
(iii) establish a new branch office that will
76
accept deposits, (iv) relocate an office, or (v) merge or consolidate
with, or acquire the assets or assume the liabilities of a federally-
regulated financial institution. In the case of a bank holding company
applying for approval to acquire a bank or other bank holding company,
the Federal Reserve Board will assess the record of each subsidiary of
the applicant bank holding company, and such records may be the basis for
denying the application or imposing conditions in connection with
approval of the application. On December 8, 1993, the federal regulators
jointly announced proposed regulations to simplify enforcement of the CRA
by substituting the present twelve categories with three assessment
categories for use in calculating CRA ratings (the "December 1993
Proposal"). In response to comments received by the regulators regarding
the December 1993 Proposal, the federal bank regulators issued revised
CRA proposed regulations on September 26, 1994 (the "Revised CRA
Proposal"). The Revised CRA Proposal, compared to the December 1993
Proposal, would essentially broaden the scope of CRA performance
examinations and more explicitly consider community development
activities. Moreover, in 1994, the Department of Justice, became more
actively involved in enforcing fair lending laws.
In its most recent CRA examination by the Federal Reserve
Board, UBS and its bank subsidiaries were given a "satisfactory" CRA
rating. Eagle is also examined for compliance under the CRA by the OTS
and its current rating is "outstanding."
RECENT LEGISLATIVE DEVELOPMENTS
Recapitalization of SAIF and Potential One-Time Assessment
The deposits of First Empire are currently insured by the
Savings Association Insurance Fund ("SAIF") of the FDIC. The deposits of
the subsidiary banks of UBS are insured by the Bank Insurance Fund
("BIF") of the FDIC. Both the SAIF and the BIF are required by law to
maintain a reserve ratio of 1.25% of insured deposits. The BIF has
achieved a fully funded status in contrast to the SAIF and, therefore, as
discussed below, the FDIC recently substantially reduced the average
deposit insurance premium paid by commercial banks, including the
subsidiary banks of UBS, to a level approximately 75% below the average
premium paid by saving institutions. SAIF reserves have not grown as
quickly as the BIF reserves due to a number of factors, including the
fact that a significant portion of SAIF premiums have been and are
currently being used to make payments on bonds issued in the late 1980s
by the Financing Corporation ("FICO") to recapitalize the now defunct
Federal Savings and Loan Insurance Corporation. The subsidiaries
of UBS and Eagle presently pay the lowest insurance premium rates paid by
BIF insured and SAIF insured institutions. The subsidiary banks of UBS
are assessed at the rate of .0% of insured deposits and pay only the
minimum premium of $500 per quarter per bank. The depository subsidiary
of Eagle, First Empire, is assessed a premium rate of .23% of insured
deposits.
The House of Representatives and the Senate of the United
States have provided for a resolution of the recapitalization of the SAIF
in the Balanced Budget Act of 1995, which was sent to the President of
the United States on November 29, 1995 and vetoed by him on December 6,
1995 for reasons unrelated to the recapitalization of the SAIF. The
Reconciliation Bill provides that all SAIF member institutions will pay a
special one-time assessment to recapitalize the SAIF, which in the
aggregate will be sufficient to bring the reserve ratio in the SAIF Fund
to 1.25% of insured deposits. Based on the current level of reserves
maintained by the SAIF Fund, it is currently anticipated that the amount
of the special assessment required to recapitalize the SAIF is estimated
77
to be approximately 80 to 85 basis points of the SAIF-assessable
deposits. The special assessment would be payable on January 1, 1996,
based on the amount of SAIF deposits on March 31, 1995. It is anticipated
that after the recapitalization of the SAIF, that premiums of SAIF-
insured institutions would be reduced so that they are comparable to
those currently being assessed BIF-insured commercial banks.
The Reconciliation Bill also provides for the merger of the BIF
and SAIF on January 1, 1998, with such merger being conditioned upon the
prior elimination of the thrift charter. The Banking Committees of the
House of Representatives and the Senate in adopting the Reconciliation
Bill agreed that Congress should consider and act upon separate
legislation as early as possible in 1996 to eliminate the thrift charter.
Although the outcome of the proposed legislation cannot be
predicted with certainty, it is likely that some kind of legislative or
regulatory action will be undertaken that will impact First Empire's
insured deposits. A one-time special assessment of 80 basis points would
result in First Empire paying approximately $2.5 million.
In light of the different proposals currently under
consideration and the uncertainty of the legislative process generally,
the managements of UBS and Eagle cannot predict whether legislation
reducing SAIF premiums and/or imposing a special one-time assessment will
be adopted, or, if adopted, the amount of the assessment, if any, that
would be imposed on First Empire.
Pending Legislation Regarding Bad Debt Reserves
Under Section 593 of the Code, thrift institutions such as
First Empire, which meet certain definitional tests primarily relating to
their assets and the nature of their business, are permitted to establish
a tax reserve for bad debts and to make annual additions thereto, which
additions may, within specified limitations, be deducted in arriving at
their taxable income. First Empire's deduction with respect to
"qualifying loans," which are generally loans secured by certain
interests in real property, may currently be computed using an amount
based on First Empire's actual loss experience (the "experience method"),
or a percentage equal to 8.0% of First Empire's taxable income (the
"percentage of taxable income method"), computed without regard to this
deduction and with additional modifications and reduced by the amount of
any permitted addition to a non-qualifying reserve.
Under the Reconciliation Bill, the percentage of taxable income
method would be repealed and thrift institutions such as First Empire
would be permitted to deduct bad debts only as they occur. In addition,
First Empire would be required to recapture (i.e., take into income) over
a multi-year period the excess of the balance of such reserves as of
December 31, 1995, over the greater of (a) the balance of such reserves
as of December 31, 1987 or (b) an amount that would have been the balance
of such reserves as of December 31, 1995 had First Empire always computed
the additions to its reserves using the experience method. However,
under the proposed legislation, such recapture requirements would be
suspended for each of two successive taxable years beginning
78
January 1, 1996, in which First Empire originates a minimum amount of
certain residential loans based upon the average of the principal amounts
of such loans made by First Empire during its six taxable years preceding
1996.
The effect of the foregoing provisions, were they to be adopted
as proposed, would be for First Empire (or UNB as its successor upon
consummation of the Bank Merger) to not have to recapture (i.e., take
into income) the balance of its bad debt reserves as of December 31,
1987. Absent such legislation, approximately $3.0 million of taxes would
have to be paid by UNB upon consummation of the Bank Merger due to the
recapture of the bad debt reserves established by First Empire under
Section 593 of the Code.
It is not possible to predict whether the above-described
legislation relating to taxation of thrift institutions will be enacted
into law.
EXPERTS
The consolidated financial statements of UBS and Eagle at
December 31, 1994 and 1993, and for each of the three years in the period
ended December 31, 1994, incorporated by reference in this
Prospectus/Joint Proxy Statement and the Registration Statement, have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon incorporated by reference herein. As to the UBS
financial statements for the year ended December 31, 1992, Ernst & Young
LLP's report is based in part on the report of Somerville & Company,
independent auditors.
The financial statements referred to above are included or are
incorporated in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
LEGAL MATTERS
The legality of the shares of UBS Stock to be issued upon
consummation of the Merger will be passed upon by the law firm of Bowles
Rice McDavid Graff & Love, with offices in Charleston, West Virginia.
Bowles Rice McDavid Graff & Love has acted as counsel to UBS in
connection with the Merger and the preparation of this Prospectus/Joint
Proxy Statement.
One of UBS' directors, F. T. Graff, Jr., is a partner in the
law firm of Bowles Rice McDavid Graff & Love.
PROPOSALS FOR THE 1996 ANNUAL MEETING
In the case of each of UBS and Eagle, the deadline set forth in
Rule 14a-8 under the Exchange Act for the submission of proposals by
shareholders for inclusion in the proxy statement
79
and form of proxy to be used by UBS and Eagle in connection with its
annual meeting of shareholders to be held in April 1996 has passed.
80
ANNEX A
AGREEMENT AND PLAN OF MERGER
BETWEEN
UNITED BANKSHARES, INC.
AND
EAGLE BANCORP, INC.
DATED AS OF AUGUST 18, 1995
A-1
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................... 1
ARTICLE II THE MERGER AND THE BANK MERGER........................ 5
2.1 The Merger............................................ 5
2.2 Effects of the Merger................................. 5
2.3 Effective Time; Closing............................... 6
2.4 Treatment of Acquiror Common Stock.................... 6
2.5 Conversion of Company Common Stock.................... 7
2.6 Exchange of Shares.................................... 7
2.7 Additional Actions.................................... 8
2.8 The Bank Merger....................................... 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......... 9
3.1 Capital Structure..................................... 9
3.2 Organization, Standing and Authority of the Company... 9
3.3 Ownership of the Company Subsidiaries................. 10
3.4 Organization, Standing and Authority of the
Company Subsidiaries................................. 10
3.5 Authorized and Effective Agreement.................... 10
3.6 Securities Documents and Regulatory Reports........... 12
3.7 Financial Statements.................................. 12
3.8 Material Adverse Change............................... 13
3.9 Environmental Matters................................. 13
3.10 Tax Matters........................................... 14
3.11 Legal Proceedings..................................... 15
3.12 Compliance with Laws.................................. 15
3.13 Deposit Insurance and Other Regulatory Matters........ 16
3.14 Certain Information................................... 16
3.15 Employee Benefit Plans................................ 16
3.16 Certain Contracts..................................... 18
3.17 Brokers and Finders................................... 19
3.18 Insurance............................................. 19
3.19 Properties............................................ 19
3.20 Labor................................................. 19
3.21 Required Vote and Status of the Acquiror.............. 20
3.22 Accounting for the Merger............................. 20
3.23 Disclosures........................................... 20
A-2
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE ACQUIROR....................................... 20
4.1 Capital Structure..................................... 20
4.2 Organization, Standing and Authority of the Acquiror.. 21
4.3 Ownership of the Acquiror Subsidiaries................ 21
4.4 Organization, Standing and Authority of the
Acquiror Subsidiaries................................ 21
4.5 Authorized and Effective Agreement.................... 22
4.6 Securities Documents and Regulatory Reports........... 23
4.7 Financial Statements.................................. 24
4.8 Material Adverse Change............................... 24
4.9 Environmental Matters................................. 25
4.10 Tax Matters........................................... 25
4.11 Legal Proceedings..................................... 25
4.12 Compliance with Laws.................................. 26
4.13 Deposit Insurance..................................... 26
4.14 Certain Information................................... 27
4.15 Employee Benefit Plans................................ 27
4.16 Brokers and Finders................................... 28
4.17 Insurance............................................. 28
4.18 Required Vote......................................... 28
4.19 Accounting for the Merger............................. 29
4.20 Disclosures........................................... 29
ARTICLE V COVENANTS............................................. 29
5.1 Shareholder Meetings.................................. 29
5.2 Regulatory Matters.................................... 29
5.3 Investigation and Confidentiality..................... 30
5.4 Press Releases........................................ 31
5.5 Business of the Parties............................... 31
5.6 Current Information................................... 34
5.7 Indemnification; Insurance, Etc....................... 35
5.8 Directors, Officers and Employees..................... 36
5.9 Mortgage Banking Company.............................. 38
5.10 Certain Policies of the Company....................... 38
5.11 Restrictions on Resale................................ 39
5.12 Disclosure Supplements................................ 39
5.13 Failure to Fulfill Conditions......................... 40
A-3
ARTICLE VI. CONDITIONS PRECEDENT.................................. 40
6.1 Conditions Precedent - The Acquiror and the Company... 40
6.2 Conditions Precedent - The Company.................... 41
6.3 Conditions Precedent - The Acquiror................... 42
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT..................... 43
7.1 Termination........................................... 43
7.2 Effect of Termination................................. 44
7.3 Survival of Representations, Warranties
and Covenants........................................ 44
7.4 Waiver................................................ 45
7.5 Amendment or Supplement............................... 45
ARTICLE VII MISCELLANEOUS......................................... 45
8.1 Expenses; Termination Fee............................. 45
8.2 Entire Agreement...................................... 46
8.3 No Assignment......................................... 47
8.4 Notices............................................... 47
8.5 Interpretation........................................ 48
8.6 Counterparts.......................................... 48
8.7 Governing Law......................................... 48
Annex I Form of Affiliate's Letter
Annex II Form of Opinion of Counsel to the Acquiror
Annex III Form of Opinion of Counsel to the Company
Schedule I Severance Policy
A-4
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement"), dated as of August 18,
1995, by and among United Bankshares, Inc. (the "Acquiror"), a West Virginia
corporation, and Eagle Bancorp, Inc. (the "Company"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to provide for the Acquiror's
acquisition of the Company on the terms and conditions herein contained; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, simultaneously with the execution of this Agreement, certain
stockholders of the Company are entering into a Stockholder Agreement dated as
of the date hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
"Association" shall mean First Empire Federal Savings and Loan Association.
"Acquiror Closing Price" shall mean the average closing price of the
Acquiror Common Stock on the Nasdaq Stock Market's National Market over the 20
trading days commencing on the first business day following the receipt of the
required approval of the FRB and the OCC, whichever is later, as reported by the
Nasdaq Stock Market's National Market or other authoritative source.
"Acquiror Common Stock" shall mean the common stock, par value $2.50 per
share, of the Acquiror.
"Acquiror Employee Stock Benefit Plans" shall mean the following employee
benefit plans of the Acquiror: 1988 Incentive Stock Option Plan, 1991 Incentive
Stock Option Plan, United Savings and Stock Investment Plan and United Dividend
Reinvestment Plan.
"Acquiror Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of the
Acquiror as of December 31, 1994, 1993 and 1992 and the
A-5
consolidated statements of operations, shareholders' equity and cash flows
(including related notes and schedules, if any) of the Acquiror for each of the
three years ended December 31, 1994, 1993 and 1992 as filed by the Acquiror in
its Securities Documents, and (ii) the consolidated statements of financial
condition of the Acquiror (including related notes and schedules, if any) and
the consolidated statements of operations, shareholders' equity and cash flows
(including related notes and schedules, if any) of the Acquiror included in the
Securities Documents filed by the Acquiror with respect to the quarterly and
annual periods ended subsequent to December 31, 1994.
"Bank" shall mean United National Bank.
"Bank Merger" shall have the meaning set forth in Section 2.8 hereof.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BIF" means the Bank Insurance Fund administered by the FDIC or any
successor thereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Company Common Stock" shall mean the common stock, par value $0.10 per
share, of the Company.
"Company Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of the
Company as of December 31, 1994, 1993 and 1992 and the consolidated statements
of operations, shareholders' equity and cash flows (including related notes and
schedules, if any) of the Company for each of the three years ended December 31,
1994, 1993 and 1992 as filed by the Company in its Securities Documents, and
(ii) the consolidated statements of financial condition of the Company
(including related notes and schedules, if any) and the consolidated statements
of operations, shareholders' equity and cash flows (including related notes and
schedules, if any) of the Company included in the Securities Documents filed by
the Company with respect to the quarterly and annual periods ended subsequent to
December 31, 1994.
"Company Preferred Stock" shall mean the shares of preferred stock, par
value $.10 per share, of the Company.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Dissenting Shares" shall have the meaning set forth in Section 2.4(b)
hereof.
"Effective Time" shall mean the date and time specified pursuant to Section
2.3 hereof as the effective time of the Merger.
A-6
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environment Concern.
The term Environmental Law includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
(S)9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
-- ---
U.S.C. (S)6901, et seq; the Clean Air Act, as amended, 42 U.S.C. (S)7401, et
-- --- --
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. (S)1251, et
- --- --
seq; the Toxic Substances Control Act, as amended, 15 U.S.C. (S)9601, et seq;
- --- -- ---
the Emergency Planning and Community Right to Know Act, 42 U.S.C. (S)1101, et
--
seq; the Safe Drinking Water Act, 42 U.S.C. (S)300f, et seq; and all comparable
- --- -- ---
state and local laws, and (2) any common law (including without limitation
common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIA" shall mean the Federal Deposit Insurance Act.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FEFS" means First Empire Federal Services, Inc.
"FHLB" shall mean Federal Home Loan Bank.
"FRB" means the Board of Governors of the Federal Reserve System or any
successor thereto.
"Form S-4" shall mean the registration statement on Form S-4 (or on any
successor or other appropriate form) to be filed by the Acquiror in connection
with the issuance of shares of Acquiror Common Stock pursuant to the Merger, as
amended and supplemented.
A-7
"Governmental Entity" shall mean any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HOLA" shall mean the Home Owners' Loan Act.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"MBS" shall mean the mortgage banking subsidiary to be established by the
Acquiror pursuant to the terms of Section 5.9 hereof.
"Merger" shall mean the merger of the Company with and into the Acquiror
pursuant to the terms hereof.
"OCC" shall mean the Office of the Comptroller of the Currency of the U.S.
Department of the Treasury, or any successor thereto.
"OTS" shall mean the Office of Thrift Supervision of the U.S. Department of
the Treasury and its predecessor, the Federal Home Loan Bank Board, or any
successor thereto.
"Previously Disclosed" shall mean disclosed (i) in a letter dated the date
hereof delivered from the disclosing party to the other party specifically
referring to this Agreement and describing in reasonable detail the matters
contained therein, or (ii) a letter dated after the date hereof from the
disclosing party specifically referring to this Agreement and describing in
reasonable detail the matters contained therein and delivered by the other party
pursuant to Section 5.12 hereof.
"Proxy Statement" shall mean the prospectus/proxy statement contained in
the Form S-4, as amended or supplemented, and to be delivered to shareholders of
the Acquiror and the Company in connection with the solicitation of their
approval of this Agreement and the transactions contemplated hereby.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests.
"SAIF" means the Savings Association Insurance Fund administered by the
FDIC or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or required
to be filed, pursuant to the Securities Laws.
A-8
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"WVCA" shall mean the West Virginia Corporation Act.
"WVBB" shall mean the West Virginia Board of Banking and Financial
Institutions.
"Subsidiaries" shall mean any corporation, bank, savings association,
partnership, joint venture or other organization more than 10% of the stock or
ownership interest of which is owned, directly or indirectly, by an entity.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II
THE MERGER AND THE BANK MERGER
2.1 The Merger
----------
Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 2.3 hereof), the Company shall be merged with and
into the Acquiror (the "Merger") in accordance with the applicable provisions of
the DGCL and the WVCA. Acquiror shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") of the Merger, and shall continue
its corporate existence under the laws of the State of West Virginia. The name
of the Surviving Corporation shall continue to be "United Bankshares, Inc." The
Articles of Incorporation and Bylaws of Acquiror, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation, respectively, until altered, amended or repealed in
accordance with their terms and applicable law. Upon consummation of the
Merger, the separate corporate existence of the Company shall terminate.
2.2 Effects of the Merger
---------------------
Upon consummation, the Merger shall have the following effects, in addition
to the effects set forth elsewhere herein and in applicable law:
(i) The Surviving Corporation will possess all of the rights,
privileges, immunities and franchises of both the Acquiror and the Company.
(ii) All property, real, personal and mixed, and all debts due in
whatever amount, and all other choses in action, and all other interests
belonging to or due to the Company will be taken and deemed to be transferred to
and vested in the Acquiror as the Surviving Corporation and all property, real,
personal and mixed, and all debts due in whatever amount, and all other choses
in action, and all other interests belonging to or due to the Acquiror shall
remain in the Surviving Corporation
A-9
without further act; and the title to any real estate, or any interest therein,
vested in the Acquiror or the Company shall not revert or be in any way impaired
by reason of the Merger.
(iii) The Surviving Corporation will be responsible and liable for all of
the liabilities and obligations of the Acquiror or the Company and neither the
rights of creditors nor liens upon the property of the Acquiror and the Company
shall be impaired by the Merger.
2.3 Effective Time; Closing
-----------------------
The Merger shall become effective upon the occurrence of the filing of (i)
Articles of Merger with the Secretary of State of the State of West Virginia
pursuant to the WVCA and (ii) a Certificate of Merger with the Secretary of
State of the State of Delaware pursuant to the DGCL, unless a later date and
time is specified as the effective time in such Articles of Merger and
Certificate of Merger (the "Effective Time"). A closing (the "Closing") shall
take place immediately prior to the Effective Time at 10:00 a.m., on the fifth
business day following the satisfaction or waiver, to the extent permitted
hereunder, of the conditions to the consummation of the Merger specified in
Article VI of this Agreement (other than the delivery of certificates, opinions
and other instruments and documents to be delivered at the Closing), at the
principal executive offices of the Acquiror in Charleston, West Virginia or at
such other place, at such other time, or on such other date as the parties may
mutually agree upon. At the Closing, there shall be delivered to the Acquiror
and the Company the opinions, certificates and other documents required to be
delivered under Article VI hereof.
2.4 Treatment of Acquiror Common Stock
----------------------------------
(a) Each share of Acquiror Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
be unchanged by the Merger, subject to paragraph (b) of this Section 2.4.
(b) Each holder of Acquiror Common Stock shall be entitled to dissent
from the Merger and obtain the fair value of such holder's shares of Acquiror
Common Stock ("Dissenting Shares") in accordance with Sections 31-1-122 and
31-1-123 of the WVCA. The Acquiror shall give the Company prompt notice upon
receipt by the Acquiror of any such written demands for payment of the fair
value of such shares of Acquiror Common Stock and of withdrawals of such demands
and any other instruments provided pursuant to the WVCA (any shareholder duly
making such demand being hereinafter called a "Dissenting Shareholder"). Any
payments made in respect of Dissenting Shares shall be made by the Surviving
Corporation.
A-10
2.5 Conversion of Company Common Stock
----------------------------------
(a) At the Effective Time, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than any shares
held by the Acquiror or any wholly-owned subsidiary thereof other than in a
fiduciary capacity or in satisfaction of a debt previously contracted) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive 1.15 shares of Acquiror Common Stock,
plus the right to receive cash in lieu of any fractional share, as determined in
accordance with paragraph (b) of this Section 2.5.
(b) Notwithstanding any other provision hereof, no fractional shares of
Acquiror Common Stock shall be issued to holders of Company Common Stock. In
lieu thereof, each holder of shares of Company Common Stock entitled to a
fraction of a share of Acquiror Common Stock shall, at the time of surrender of
the certificate or certificates representing such holder's shares, receive an
amount of cash equal to the product arrived at by multiplying such fraction of a
share of Acquiror Common Stock by the closing price of the Acquiror Common Stock
on the Nasdaq Stock Market's National Market on the business day preceding the
Effective Time, as reported by the Nasdaq Stock Market's National Market or
other authoritative source. No such holder shall be entitled to dividends,
voting rights or any other rights in respect of any fractional share.
2.6 Exchange of Shares
------------------
(a) At or after the Effective Time, each holder of a certificate or
certificates theretofore evidencing issued and outstanding shares of Company
Common Stock, upon surrender of the same to an agent, duly appointed by the
Acquiror ("Exchange Agent"), shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of full shares of Acquiror
Common Stock for which the shares of Company Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
converted as provided in Section 2.5 hereof. The Exchange Agent shall mail to
each holder of record of an outstanding certificate which immediately prior to
the Effective Time evidenced shares of Company Common Stock, and which is to be
exchanged for Acquiror Common Stock as provided in Section 2.5 hereof, a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to such certificate shall pass, only upon delivery of
such certificate to the Exchange Agent) advising such holder of the terms of the
exchange effected by the Merger and of the procedure for surrendering to the
Exchange Agent such certificate in exchange for a certificate or certificates
evidencing Acquiror Common Stock.
(b) No holder of a certificate theretofore representing shares of
Company Common Stock shall be entitled to receive any dividends in respect of
the Acquiror Common Stock into which such shares shall have been converted by
virtue of the Merger until the certificate representing such shares is
surrendered in exchange for certificates representing shares of Acquiror Common
Stock. In the event that dividends are declared and paid by the Acquiror in
respect of Acquiror Common Stock after the Effective Time but prior to surrender
of certificates representing shares of Company
A-11
Common Stock, dividends payable in respect of shares of Acquiror Common Stock
not then issued shall accrue (without interest). Any such dividends shall be
paid (without interest) upon surrender of the certificates representing such
shares of Company Common Stock. The Acquiror shall be entitled, after the
Effective Time, to treat certificates representing shares of Company Common
Stock as evidencing ownership of the number of full shares of Acquiror Common
Stock into which the shares of Company Common Stock represented by such
certificates shall have been converted, notwithstanding the failure on the part
of the holder thereof to surrender such certificates.
(c) The Acquiror shall not be obligated to deliver a certificate or
certificates representing shares of Acquiror Common Stock to which a holder of
Company Common Stock would otherwise be entitled as a result of the Merger until
such holder surrenders the certificate or certificates representing the shares
of Company Common Stock for exchange as provided in this Section 2.6, or, in
default thereof, an appropriate affidavit of loss and indemnity agreement and/or
a bond as may be required in each case by the Acquiror. If any certificates
evidencing shares of Acquiror Common Stock is to be issued in a name other than
that in which the certificate evidencing Company Common Stock surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
certificate for shares of Acquiror Common Stock in any name other than that of
the registered holder of the certificate surrendered or otherwise establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) If, between the date hereof and the Effective Time, the shares of
Acquiror Common Stock shall be changed into a different number or class of
shares by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon
shall be declared with a record date within said period, the exchange ratio set
forth in Section 2.5(a) hereof shall be adjusted accordingly. Nothing contained
herein shall be deemed to permit any action which may be proscribed by this
Agreement.
2.7 Additional Actions
------------------
If, at any time after the Effective Time, the Surviving Corporation shall
consider that any further assignments or assurances in law or any other acts are
necessary or desirable to (i) vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation its rights, title or interest in, to or under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger, or
(ii) otherwise carry out the purposes of this Agreement, the Company and its
proper officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the Company or
otherwise to take any and all such action.
A-12
2.8 The Bank Merger
---------------
The Acquiror and the Company shall take all action necessary and
appropriate, including causing the entering into of a merger agreement by the
Bank and the Association (the "Bank Merger Agreement"), to cause the Association
to merge with and into the Bank (the "Bank Merger") immediately after
consummation of the Merger in accordance with the applicable laws of the United
States and regulations of the OCC and the OTS thereunder. The Bank shall be the
surviving corporation in the Bank Merger, and shall continue its corporate
existence under the laws of the United States as a wholly-owned subsidiary of
the Acquiror. Upon consummation of the Bank Merger, the separate corporate
existence of the Association shall cease.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Acquiror as follows:
3.1 Capital Structure
-----------------
The authorized capital stock of the Company consists of 5,000,000 shares of
Company Common Stock and 2,500,000 shares of Company Preferred Stock. As of the
date hereof, there are 2,729,468 shares of Company Common Stock issued and
outstanding and no shares of Company Common Stock are directly or indirectly
held as treasury stock by the Company and no shares of Company Preferred Stock
are issued and outstanding. All outstanding shares of Company Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable.
Except for issued and outstanding shares of Company Common Stock which may be
acquired by employees of the Company and its Subsidiaries pursuant to the
Company's Employee Stock Ownership Plan, which holds 147,682 shares of Company
Common Stock as of the date hereof, there are no Rights authorized, issued or
outstanding with respect to the capital stock of the Company. None of the
shares of the Company capital stock has been issued in violation of the
preemptive rights of any person, firm or entity.
3.2 Organization, Standing and Authority of the Company
---------------------------------------------------
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or qualification
and where the failure to be so licensed, qualified or in good standing would
have a material adverse effect on the financial condition, results of operations
or business of the Company on a consolidated basis. The Company is duly
registered as a savings and loan holding company under the HOLA and the
regulations of the OTS thereunder. The Company has heretofore delivered to the
Acquiror true and complete copies of the Certificate of Incorporation and Bylaws
of the Company as in effect as of the date hereof.
A-13
3.3 Ownership of the Company Subsidiaries
-------------------------------------
The only Company Subsidiaries are the Association and FEFS. Except for the
Company Subsidiaries, stock in the FHLB of Pittsburgh and securities and other
interests taken in consideration of debts previously contracted, the Company
does not own or have the right to acquire, directly or indirectly, any
outstanding capital stock or other voting securities or ownership interests of
any corporation, bank, savings association, partnership, joint venture or other
organization. The outstanding shares of capital stock or other ownership
interests of each of the Company Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable, and are directly or indirectly
owned by the Company free and clear of all liens, claims, encumbrances, charges,
restrictions or rights of third parties of any kind whatsoever. Except as
Previously Disclosed, no Rights are authorized, issued or outstanding with
respect to the capital stock or other ownership interests of any Company
Subsidiaries and there are no agreements, understandings or commitments relating
to the right of the Company to vote or to dispose of said shares or other
ownership interests.
3.4 Organization, Standing and Authority of the Company Subsidiaries
----------------------------------------------------------------
The Association is a savings association duly organized, validly existing
and in good standing under the laws of the United States, and FEFS is a
corporation duly organized, validly existing and in good standing under the laws
of the State of West Virginia. Each of the Company Subsidiaries (i) has full
power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, and (ii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the financial condition,
results of operations or business of the Company on a consolidated basis. The
Company has heretofore delivered to the Acquiror true and complete copies of the
Charter or Articles of Incorporation and Bylaws of each Company Subsidiary as in
effect as of the date hereof.
3.5 Authorized and Effective Agreement
----------------------------------
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and (subject to receipt of all necessary governmental
approvals and the approval of the Company's shareholders of this Agreement) to
perform all of its obligations under this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of the Company, except for the approval of this
Agreement by the Company's shareholders. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company which is enforceable against the Company in
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
A-14
(b) Neither the execution and delivery of this Agreement, nor consummation
of the transactions contemplated hereby (including the Merger and the Bank
Merger), nor compliance by the Company with any of the provisions hereof (i)
conflict with or result in a breach of any provisions of the Certificate of
Incorporation or Bylaws of the Company or the equivalent documents of any
Company Subsidiary, (ii) except as Previously Disclosed, violate, conflict with
or result in a breach of any term, condition or provision of, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of the Company or any
Company Subsidiary pursuant to, any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which the Company or any Company Subsidiary is a party, or by which any of their
respective properties or assets may be bound or affected, or (iii) subject to
receipt of all required governmental approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or any
Company Subsidiary.
(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the FRB, the OCC, the OTS and the
WVBB, (ii) the filing and effectiveness of the Form S-4 with the Commission,
(iii) compliance with applicable state securities or "blue sky" laws in
connection with the issuance of Acquiror Common Stock pursuant to this
Agreement, (iv) the approval of this Agreement by the requisite vote of the
shareholders of the Company and the Acquiror, (v) the filing of Articles of
Merger with the Secretary of State of West Virginia pursuant to the WVCA in
connection with the Merger and (vi) the filing of a Certificate of Merger with
the Secretary of State of Delaware pursuant to the DGCL in connection with the
Merger, and except for such filings, authorizations or approvals which are
Previously Disclosed, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary on the part
of the Company or any Company Subsidiary in connection with (i) the execution
and delivery by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby and (ii) the execution and
delivery by the Association of the Bank Merger Agreement and the consummation by
the Association of the transactions contemplated thereby.
(d) As of the date hereof, neither the Company nor any of the Company
Subsidiaries is aware of any reasons relating to the Company or any of the
Company Subsidiaries (including without limitation Community Reinvestment Act
compliance) why all consents and approvals shall not be procured from all
regulatory agencies having jurisdiction over the transactions contemplated by
this Agreement as shall be necessary for (i) consummation of the transactions
contemplated by this Agreement and (ii) the continuation by the Acquiror after
the Effective Time of the business of the Company as such business is carried on
immediately prior to the Effective Time, free of any conditions or requirements
which, in the reasonable opinion of the Company, could have a material adverse
effect upon the financial condition, results of operations or business of the
Acquiror on a consolidated basis or materially impair the value of the Company
and the Company Subsidiaries to the Acquiror.
3.6 Securities Documents and Regulatory Reports
-------------------------------------------
A-15
(a) The Company has previously delivered or made available to the
Acquiror a complete copy of all Securities Documents filed by the Company
pursuant to the Securities Laws or mailed by the Company to its shareholders as
a class since January 1, 1993. The Company has timely filed with the Commission
all Securities Documents required by the Securities Laws and such Securities
Documents complied in all material respect with the Securities Laws and did not
contain any untrue statement of a material fact or omit to state any 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, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
(b) Since January 1, 1993, each of the Company and the Association has
duly filed with the OTS and the FDIC in correct form the reports required to be
filed under applicable laws and regulations and such reports were in all
material respects complete and accurate and in compliance with the requirements
of applicable laws and regulations, provided that information as of a later date
shall be deemed to modify information as of an earlier date; and the Company has
previously delivered or made available to the Acquiror accurate and complete
copies of all such reports. In connection with the most recent examinations of
the Company and the Association by the OTS, neither the Company nor the
Association was required to correct or change any action, procedure or
proceeding which the Company or the Association believes has not been corrected
or changed as required.
3.7 Financial Statements
--------------------
(a) The Company has previously delivered or made available to the
Acquiror accurate and complete copies of the Company Financial Statements which,
in the case of the consolidated statements of financial condition of the Company
as of December 31, 1994, 1993 and 1992 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years
ended December 31, 1994, 1993 and 1992, are accompanied by the audit reports of
Ernst & Young LLP, independent public accountants with respect to the Company.
The Company Financial Statements referred to herein, as well as the Company
Financial Statements to be delivered pursuant to Section 5.6 hereof, fairly
present or will fairly present, as the case may be, the consolidated financial
condition of the Company as of the respective dates set forth therein, and the
consolidated results of operations, shareholders' equity and cash flows of the
Company for the respective periods or as of the respective dates set forth
therein.
(b) Each of the Company Financial Statements referred to in Section
3.7(a) has been or will be, as the case may be, prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as stated therein. The audits of the Company and the Company
Subsidiaries have been conducted in accordance with generally accepted auditing
standards. The books and records of the Company and the Company Subsidiaries are
being maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of the Company and the Company Subsidiaries.
A-16
(c) Except and to the extent (i) reflected, disclosed or provided for
in the consolidated statement of financial condition of the Company as of June
30, 1995 (including related notes) and (ii) of liabilities incurred since June
30, 1995 in the ordinary course of business, neither the Company nor any Company
Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, material to the financial condition, results of operations or
business of the Company on a consolidated basis.
3.8 Material Adverse Change
-----------------------
There has not occurred any material adverse change in the Company's
consolidated financial condition, results of operations or business since June
30, 1995, other than changes resulting from or attributable to (i) changes in
laws or regulations, generally accepted accounting principles, or
interpretations thereof, that affect the banking or savings industries generally
(including without limitation prospective changes which result in assessments of
all SAIF-insured institutions which are intended to recapitalize the SAIF), (ii)
changes in the general level of interest rates or (iii) expenses incurred in
connection with the transactions contemplated by this Agreement.
3.9 Environmental Matters
---------------------
(a) To the best of the Company's knowledge, the Company and the Company
Subsidiaries are in compliance with all Environmental Laws, except for any
violations of any Environmental Law which would not, singly or in the aggregate,
have a material adverse effect on the consolidated financial condition, results
of operations or business of the Company. Neither the Company nor any Company
Subsidiary has received any communication alleging that the Company or any
Company Subsidiary is not in such compliance and, to the best knowledge of the
Company, there are no present circumstances that would prevent or interfere with
the continuation of such compliance.
(b) To the best of the Company's knowledge, none of the properties
owned, leased or operated by the Company or the Company Subsidiaries has been or
is in violation of or liable under any Environmental Law, except any such
violations or liabilities which would not singly or in the aggregate have a
material adverse effect on the financial condition, results of operations or
business of the Company on a consolidated basis.
(c) To the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against the Company or any Company
Subsidiary or against any person or entity whose liability for any Environmental
Claim the Company or any Company Subsidiary has or may have retained or assumed
either contractually or by operation of law, except such which would not have a
material adverse effect on the financial condition, results of operations or
business of the Company on a consolidated basis.
A-17
(d) The Company has not conducted any environmental studies during the
past five years with respect to any properties owned by it or any Company
Subsidiary as of the date hereof.
3.10 Tax Matters
-----------
(a) The Company and the Company Subsidiaries, and each of their
predecessors, have timely filed all federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real property, personal
property and other tax returns required by applicable law to be filed by them
(including, without limitation, estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and have paid,
or where payment is not required to have been made, have set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Effective Time. Neither the Company nor any
of the Company Subsidiaries will have any material liability for any such taxes
in excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by the Company and the Company Subsidiaries are complete and accurate in
all material respects. Neither the Company nor any of the Company Subsidiaries
is delinquent in the payment of any tax, assessment or governmental charge
(other than non-material real and personal property taxes), and except as
Previously Disclosed none of them has requested any extension of time within
which to file any tax returns in respect of any fiscal year or portion thereof
which have not since been filed. Except as Previously Disclosed, the federal,
state and local income tax returns of the Company and the Company Subsidiaries
have been examined by the applicable tax authorities (or are closed to
examination due to the expiration of the applicable statute of limitations) and
no deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or otherwise) against the Company or
any Company Subsidiary as a result of such examinations or otherwise which have
not been settled and paid. There are currently no agreements in effect with
respect to the Company or any Company Subsidiary to extend the period of
limitations for the assessment or collection of any tax. As of the date hereof,
no audit, examination or deficiency or refund litigation with respect to such
return is pending or, to the best of the Company's knowledge, threatened.
(c) Except as Previously Disclosed, none of the Company or the Company
Subsidiaries (i) is a party to any agreement providing for the allocation or
sharing of taxes, (ii) is required to include in income any adjustment pursuant
to Section 481(a) of the Code by reason of a voluntary change in accounting
method initiated by the Company or the Company Subsidiaries (nor does the
Company have any knowledge that the Internal Revenue Service has proposed any
such adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
3.11 Legal Proceedings
-----------------
A-18
Except as Previously Disclosed, there are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of the Company, threatened against the Company or any Company
Subsidiary or against any asset, interest or right of the Company or any Company
Subsidiary, or against any officer, director or employee of any of them that in
any such case, if decided adversely, would have a material adverse effect on the
financial condition, results of operations or business of the Company on a
consolidated basis. Neither the Company nor any of the Company Subsidiaries is a
party to any order, judgment or decree which has or would have a material
adverse effect on the financial condition, results of operations or business of
the Company on a consolidated basis.
3.12 Compliance with Laws
--------------------
(a) Each of the Company and each of the Company Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are required in order to permit
it to carry on its business as it is presently being conducted and the absence
of which could have a material adverse effect on the financial condition,
results of operations or business of the Company on a consolidated basis; all
such permits, licenses, certificates of authority, orders and approvals are in
full force and effect; and to the best knowledge of the Company, no suspension
or cancellation of any of the same is threatened.
(b) Neither the Company nor any of the Company Subsidiaries is in
violation of its respective Certificate of Incorporation, Charter or other
chartering instrument or Bylaws, or of any applicable federal, state or local
law or ordinance or any order, rule or regulation of any federal, state, local
or other governmental agency or body (including, without limitation, all banking
(including without limitation all regulatory capital requirements), securities,
municipal securities, safety, health, environmental, zoning, anti-
discrimination, antitrust, and wage and hour laws, ordinances, orders, rules and
regulations), or in default with respect to any order, writ, injunction or
decree of any court, or in default under any order, license, regulation or
demand of any governmental agency, any of which violations or defaults could
have a material adverse effect on the financial condition, results of operations
or business of the Company on a consolidated basis; and neither the Company nor
any Company Subsidiary has received any notice or communication from any
federal, state or local governmental authority asserting that the Company or any
Company Subsidiary is in violation of any of the foregoing which could have a
material adverse effect on the financial condition, results of operations or
business of the Company on a consolidated basis. Neither the Company nor any
Company Subsidiary is subject to any regulatory or supervisory cease and desist
order, agreement, written directive, memorandum of understanding or written
commitment (other than those of general applicability to all savings
associations or holding companies thereof issued by governmental authorities),
and none of them has received any written communication requesting that they
enter into any of the foregoing.
3.13 Deposit Insurance and Other Regulatory Matters
----------------------------------------------
A-19
(a) The deposit accounts of the Association are insured by the SAIF to
the maximum extent permitted by the FDIA, and the Association has paid all
premiums and assessments required by the FDIA and the regulations thereunder.
(b) The Association is a member in good standing of the FHLB of
Pittsburgh and owns the requisite amount of stock in the FHLB of Pittsburgh.
(c) The Association is a "qualified thrift lender," as such term is
defined in the HOLA and the regulations thereunder.
(d) The Association has at all times qualified as a "domestic building
and loan association," as such term is defined in Section 7701(a)(19) of the
Code, for purposes of Section 593 of the Code.
3.14 Certain Information
-------------------
None of the information relating to the Company and the Company
Subsidiaries to be contained in (i) the Form S-4 will, at the time the Form S-4
becomes effective, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) the Proxy
Statement, as of the date(s) such Proxy Statement is mailed to shareholders of
the Company and the Acquiror and up to and including the date(s) of the meetings
of shareholders to which such Proxy Statement relates, will contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date. The Proxy Statement mailed
by the Company to its shareholders in connection with the meeting of
shareholders at which this Agreement will be considered by such shareholders
will comply as to form in all material respects with the Exchange Act and the
rules and regulations promulgated thereunder.
3.15 Employee Benefit Plans
----------------------
(a) The Company has Previously Disclosed all stock option, employee
stock purchase and stock bonus plans, qualified pension or profit-sharing plans,
any deferred compensation, consultant, bonus or group insurance contract or any
other incentive, welfare or employee benefit plan or agreement maintained for
the benefit of employees or former employees of the Company or any Company
Subsidiary (the "Company Employee Plans"), and the Company has previously
furnished or made available to the Acquiror accurate and complete copies of the
same together with (i) the most recent actuarial and financial reports prepared
with respect to any qualified plans, (ii) the most recent annual reports filed
with any governmental agency, and (iii) all rulings and determination letters
and any open requests for rulings or letters that pertain to any qualified plan.
(b) None of the Company, any Company Subsidiary, any pension plan
maintained by any of them and qualified under Section 401 of the Code or, to the
best of the Company's knowledge,
A-20
any fiduciary of such plan has incurred any material liability to the Pension
Benefit Guaranty Corporation or the Internal Revenue Service with respect to any
employees of the Company or any Company Subsidiary. To the best of the Company's
knowledge, no reportable event under Section 4043(b) of ERISA has occurred with
respect to any such pension plan.
(c) Neither the Company nor any Company Subsidiary participates in or
has incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Company Employee Plan which is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (a "Company Pension
Plan") which is intended to qualify under Section 401 of the Code to the effect
that such plan is qualified under Section 401 of the Code and the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the best of the Company's
knowledge, is threatened to be revoked and the Company does not know of any
ground on which such revocation may be based. Neither the Company nor any
Company Subsidiary has any liability under any such plan that is not reflected
on the consolidated statement of financial condition of the Company at June 30,
1995 included in the Company Financial Statements, other than liabilities
incurred in the ordinary course of business in connection therewith subsequent
to the date thereof.
(e) To the best of the Company's knowledge, no prohibited transaction
(which shall mean any transaction prohibited by Section 406 of ERISA and not
exempt under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Company Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax under Section 4975 of the Code
or otherwise have a material adverse effect on the financial condition, results
of operations or business of the Company on a consolidated basis.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Company Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, exists with respect to
any Company Pension Plan, and there is no "unfunded current liability" (as
defined in Section 412 of the Code) with respect to any Company Pension Plan.
(g) To the best of the Company's knowledge, the Company Employee Plans
have been operated in compliance in all material respects with the applicable
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder and all other applicable governmental laws and
regulations.
A-21
(h) There are no pending or, to the best knowledge of the Company,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Company Employee Plans or any trust related thereto or any
fiduciary thereof.
3.16 Certain Contracts
-----------------
(a) Except as Previously Disclosed, neither the Company nor any Company
Subsidiary is a party to, is bound or affected by, receives, or is obligated to
pay, benefits under (i) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to the
borrowing of money by the Company or any Company Subsidiary or the guarantee by
the Company or any Company Subsidiary of any obligation, (ii) any agreement,
arrangement or commitment relating to the employment of a consultant or the
employment, election or retention in office of any present or former director or
officer of the Company or any Company Subsidiary, (iii) any agreement,
arrangement or understanding pursuant to which any payment (whether of severance
pay or otherwise) became or may become due to any director, officer or employee
of the Company or any of the Company Subsidiaries upon execution of this
Agreement or upon or following consummation of the transactions contemplated by
this Agreement (either alone or in connection with the occurrence of any
additional acts or events); (iv) any agreement, arrangement or understanding to
which the Company or any of the Company Subsidiaries is a party or by which any
of the same is bound which limits the freedom of the Company or any of the
Company Subsidiaries to compete in any line of business or with any person, (v)
any assistance agreement, supervisory agreement, memorandum of understanding,
consent order, cease and desist order or condition of any regulatory order or
decree with or by the OTS, the FDIC, or any other regulatory agency, or (vi) any
other agreement, arrangement or understanding which would be required to be
filed as an exhibit to the Company's Annual Report on Form 10-K under the
Exchange Act and which has not been so filed.
(b) Neither the Company nor any Company Subsidiary is in default or in
non-compliance, which default or non-compliance would have a material adverse
effect on the financial condition, results of operations or business of the
Company on a consolidated basis or the transactions contemplated hereby, under
any contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party or by which its assets, business or
operations may be bound or affected, whether entered into in the ordinary course
of business or otherwise and whether written or oral, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a default or non-compliance.
3.17 Brokers and Finders
-------------------
Except as Previously Disclosed, neither the Company nor any Company
Subsidiary, nor any of their respective directors, officers or employees, has
employed any broker or finder or incurred any liability for any broker or finder
fees or commissions in connection with the transactions contemplated hereby.
3.18 Insurance
---------
A-22
The Company and each Company Subsidiary is insured for reasonable amounts
with financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations.
3.19 Properties
----------
All real and personal property owned by the Company or any of the Company
Subsidiaries or presently used by any of them in their respective business is in
an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on the business of the Company and the Company Subsidiaries in the
ordinary course of business consistent with their past practices. The Company
and the Company Subsidiaries have good and marketable title free and clear of
all liens, encumbrances, charges, defaults or equities (other than equities of
redemption under applicable foreclosure laws) to all of the material properties
and assets, real and personal, reflected on the consolidated statement of
financial condition of the Company as of June 30, 1995 included in the Company
Financial Statements or acquired after such date, except (i) liens for current
taxes not yet due or payable (ii) pledges to secure deposits and other liens
incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of the Company as of June 30, 1995 included in
the Company Financial Statements. All real and personal property which is
material to the Company's business on a consolidated basis and leased or
licensed by the Company or any Company Subsidiary is held pursuant to leases or
licenses which are valid and enforceable in accordance with their respective
terms and such leases will not terminate or lapse prior to the Effective Time.
3.20 Labor
-----
No work stoppage involving the Company or any Company Subsidiary is
pending or, to the best knowledge of the Company, threatened. Neither the
Company nor any Company Subsidiary is involved in, or threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving the employees of the Company or any Company Subsidiary
which could materially and adversely affect the financial condition, results of
operations or business of the Company on a consolidated basis. Employees of the
Company and the Company Subsidiaries are not represented by any labor union nor
are any collective bargaining agreements otherwise in effect with respect to
such employees, and to the best of the Company's knowledge, there have been no
efforts to unionize or organize any employees of the Company or any Company
Subsidiary during the past five years.
3.21 Required Vote and Status of the Acquiror
----------------------------------------
(a) The affirmative vote of the holders of a majority of the issued and
outstanding shares of Company Common Stock is necessary to approve this
Agreement and the transactions contemplated hereby (assuming the accuracy of the
representation and warranty of the Acquiror contained in the first sentence of
Section 4.3 hereof).
A-23
(b) The Acquiror is not an "interested stockholder," as defined in
Section 203(c)(5) of the DGCL (assuming the accuracy of the representation and
warranty of the Acquiror contained in the first sentence of Section 4.3 hereof),
and as a result the provisions of Section 203 of the DGCL do not apply to the
Merger and the other transactions contemplated hereby. The Acquiror is not a
"Related Person," as defined in Article 9.1(i) of the Company's Certificate of
Incorporation (assuming the accuracy of the representation and warranty of the
Acquiror contained in the first sentence of Section 4.3 hereof), and as a result
Article 9.2 of such Certificate does not apply to the Merger and the other
transactions contemplated hereby.
3.22 Accounting for the Merger
-------------------------
The Company has taken no action that would cause the Merger to fail to
qualify for pooling-of-interests accounting treatment under generally accepted
accounting principles.
3.23 Disclosures
-----------
None of the representations and warranties of the Company or any of the
written information or documents furnished or to be furnished by the Company to
the Acquiror in connection with or pursuant to this Agreement or the
consummation of the transactions contemplated hereby, when considered as a
whole, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to be stated or necessary
to make any such information or document, in light of the circumstances, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
The Acquiror represents and warrants to the Company as follows:
4.1 Capital Structure
-----------------
The authorized capital stock of the Acquiror consists of 20,000,000 shares
of Acquiror Common Stock. As of the date hereof, there are 11,954,453 shares of
Acquiror Common Stock issued and outstanding and 138,520 shares of Acquiror
Common Stock are held as treasury stock. All outstanding shares of Acquiror
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except for (i) shares of Acquiror Common Stock issuable pursuant
to the Acquiror Employee Stock Benefit Plans, now or hereafter, and (ii) shares
of Acquiror Common Stock issuable pursuant to the Agreement and Plan of Merger
dated March 6, 1995 among the Acquiror, First Commercial Bank and Commercial
Interim Bank, there are no Rights authorized, issued or outstanding with respect
to the capital stock of the Acquiror. None of the shares of the Acquiror
capital stock has been issued in violation of the preemptive rights of any
person, firm or entity.
4.2 Organization, Standing and Authority of the Acquiror
----------------------------------------------------
A-24
The Acquiror is a corporation duly organized, validly existing and in good
standing under the laws of the State of West Virginia with full corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted and is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of property or the conduct of its business requires such licensing or
qualification and where the failure to be so licensed, qualified or in good
standing would have a material adverse effect on the financial condition,
results of operations or business of the Acquiror on a consolidated basis. The
Acquiror is duly registered as a bank holding company under the BHCA and the
regulations of the FRB thereunder. The Acquiror has heretofore delivered to the
Company true and complete copies of the Articles of Incorporation and Bylaws of
the Acquiror as in effect as of the date hereof.
4.3 Ownership of the Acquiror Subsidiaries
--------------------------------------
The Acquiror has Previously Disclosed each Acquiror Subsidiary, and except
for the Acquiror Subsidiaries and securities and other interests held in a
fiduciary capacity or taken in consideration of debts previously contracted, the
Acquiror does not own or have the right to acquire, directly or indirectly, any
outstanding capital stock or other voting securities or ownership interests of
any corporation, bank, savings association, partnership, joint venture or other
organization. The outstanding shares of capital stock or other ownership
interests of each of the Acquiror Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable (except as otherwise provided
with respect to the capital stock of national bank subsidiaries of the Acquiror
by the National Bank Act) and are directly or indirectly owned by the Acquiror
free and clear of all liens, claims, encumbrances, charges, restrictions or
rights of third parties of any kind whatsoever. No Rights are authorized,
issued or outstanding with respect to the capital stock or other ownership
interests of any Acquiror Subsidiaries and there are no agreements,
understandings or commitments relating to the right of the Acquiror to vote or
to dispose of said shares or other ownership interests.
4.4 Organization, Standing and Authority of the Acquiror Subsidiaries
-----------------------------------------------------------------
Each Acquiror Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the United States or the laws of the
jurisdiction in which it is organized, as applicable. Each of the Acquiror
Subsidiaries (i) has full power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted, and (ii) is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such qualification and where the failure to be so licensed,
qualified or in good standing would have a material adverse effect on the
financial condition, results of operations or business of the Acquiror on a
consolidated basis. The Acquiror has heretofore delivered to the Company true
and complete copies of the Articles of Incorporation, Charter or other governing
instrument and Bylaws of each Acquiror Subsidiary which is a "significant
subsidiary," as defined in Regulation S-X of the Commission as in effect as of
the date hereof.
4.5 Authorized and Effective Agreement
----------------------------------
A-25
(a) The Acquiror has all requisite corporate power and authority to
enter into this Agreement and (subject to receipt of all necessary governmental
approvals and the approval of the Acquiror's shareholders of this Agreement) to
perform all of its obligations under this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of the Acquiror, except for the approval of this
Agreement by the Acquiror's shareholders. This Agreement has been duly and
validly executed and delivered by the Acquiror and constitutes a legal, valid
and binding obligation of the Acquiror which is enforceable against the Acquiror
in accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger), nor compliance by the Acquiror with any of the provisions
hereof (i) conflict with or result in a breach of any provisions of the Articles
of Incorporation or Bylaws of the Acquiror, (ii) violate, conflict with or
result in a breach of any term, condition or provision of, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of the Acquiror or any
Acquiror Subsidiary pursuant to, any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which the Acquiror or any Acquiror Subsidiary is a party, or by which any of
their respective properties or assets may be bound or affected, or (iii) subject
to receipt of all required governmental approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Acquiror or
any Acquiror Subsidiary.
(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the FRB, the OCC, the OTS and the
WVBB, (ii) the filing and effectiveness of the Form S-4 with the Commission,
(iii) compliance with applicable state securities or "blue sky" laws in
connection with the issuance of Acquiror Common Stock pursuant to this
Agreement, (iv) the approval of this Agreement by the requisite vote of the
shareholders of the Company and the Acquiror, (v) the filing of Articles of
Merger with the Secretary of State of West Virginia pursuant to the WVCA in
connection with the Merger and (vi) the filing of a Certificate of Merger with
the Secretary of State of Delaware pursuant to the DGCL in connection with the
Merger, no consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary on the part of the
Acquiror or any Acquiror Subsidiary in connection with (i) the execution and
delivery by the Acquiror of this Agreement and the consummation by the Acquiror
of the transactions contemplated hereby and (ii) the execution and delivery by
the Bank of the Bank Merger Agreement and the consummation by the Bank of the
transactions contemplated thereby.
(d) As of the date hereof, neither the Acquiror nor any of the Acquiror
Subsidiaries is aware of any reasons relating to the Acquiror or any of the
Acquiror Subsidiaries (including without limitation Community Reinvestment Act
compliance) why all consents and approvals shall not be
A-26
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement as shall be necessary for (i) consummation of the
transactions contemplated by this Agreement and (ii) the continuation by the
Acquiror after the Effective Time of the business of the Acquiror as such
business is carried on immediately prior to the Effective Time, free of any
conditions or requirements which, in the reasonable opinion of the Acquiror,
could have a material adverse effect upon the financial condition, results of
operations or business of the Acquiror on a consolidated basis or materially
impair the value of the Company and the Company Subsidiaries to the Acquiror.
4.6 Securities Documents and Regulatory Reports
-------------------------------------------
(a) The Acquiror has previously delivered or made available to the
Company a complete copy of all Securities Documents filed by the Acquiror
pursuant to the Securities Laws or mailed by the Acquiror to its shareholders as
a class since January 1, 1993. The Acquiror has timely filed with the Commission
all Securities Documents required by the Securities Laws and such Securities
Documents complied in all material respect with the Securities Laws and did not
contain any untrue statement of a material fact or omit to state any 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, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
(b) Since January 1, 1993, the Acquiror and each Acquiror Subsidiary
which is an insured depository institution under the FDIA has duly filed with
the FRB, the OCC, the FDIC and each other appropriate federal or state banking
agency in correct form the reports required to be filed under applicable laws
and regulations and such reports were in all material respects complete and
accurate and in compliance with the requirements of applicable laws and
regulations, provided that information as of a later date shall be deemed to
modify information as of an earlier date; and the Acquiror has previously
delivered or made available to the Company accurate and complete copies of such
reports. In connection with the most recent examinations of the Acquiror or an
Acquiror Subsidiary by the FRB, the OCC or another applicable Governmental
Entity, neither the Acquiror nor any Acquiror Subsidiary was required to correct
or change any action, procedure or proceeding which the Acquiror or the Acquiror
Subsidiary believes has not been corrected or changed as required.
4.7 Financial Statements
--------------------
(a) The Acquiror has previously delivered or made available to the
Company accurate and complete copies of the Acquiror Financial Statements which,
in the case of the consolidated statements of financial condition of the
Acquiror as of December 31, 1994, 1993 and 1992 and the consolidated statements
of operations, shareholders' equity and cash flows for each of the three years
ended December 31, 1994, 1993 and 1992, are accompanied by the audit reports of
Ernst & Young LLP, independent public accountants with respect to the Acquiror.
The Acquiror Financial Statements referred to herein, as well as the Acquiror
Financial Statements to be delivered pursuant to Section 5.6 hereof, fairly
present or will fairly present, as the case may be, the consolidated financial
condition of the Acquiror as of the respective dates set forth therein, and the
consolidated
A-27
results of operations, shareholders' equity and cash flows of the Acquiror for
the respective periods or as of the respective dates set forth therein.
(b) Each of the Acquiror Financial Statements referred to in Section
4.7(a) has been or will be, as the case may be, prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as stated therein. The audits of the Acquiror and the Acquiror
Subsidiaries have been conducted in accordance with generally accepted auditing
standards. The books and records of the Acquiror and the Acquiror Subsidiaries
are being maintained in material compliance with applicable legal and accounting
requirements, and all such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of the Acquiror and the Acquiror Subsidiaries.
(c) Except and to the extent (i) reflected, disclosed or provided for
in the consolidated statement of financial condition of the Acquiror as of June
30, 1995 (including related notes) and (ii) of liabilities incurred since June
30, 1995 in the ordinary course of business, neither the Acquiror nor any
Acquiror Subsidiary has any liabilities, whether absolute, accrued, contingent
or otherwise, material to the financial condition, results of operations or
business of the Acquiror on a consolidated basis.
4.8 Material Adverse Change
-----------------------
There has not occurred any material adverse change in the Acquiror's
consolidated financial condition, results of operations or business since June
30, 1995, other than changes resulting from or attributable to (i) changes in
laws or regulations, generally accepted accounting principles, or
interpretations thereof, that affect the banking or savings industries
generally, (ii) changes in the general level of interest rates or (iii) expenses
incurred in connection with the transactions contemplated by this Agreement.
A-28
4.9 Environmental Matters
---------------------
(a) To the best of the Acquiror's knowledge, the Acquiror and the
Acquiror Subsidiaries are in compliance with all Environmental Laws, except for
any violations of any Environmental Law which would not, singly or in the
aggregate, have a material adverse effect on the consolidated financial
condition, results of operations or business of the Acquiror. Neither the
Acquiror nor any Acquiror Subsidiary has received any communication alleging
that the Acquiror or any Acquiror Subsidiary is not in such compliance and, to
the best knowledge of the Acquiror, there are no present circumstances that
would prevent or interfere with the continuation of such compliance.
(b) To the best of the Acquiror's knowledge, none of the properties
owned, leased or operated by the Acquiror or the Acquiror Subsidiaries has been
or is in violation of or liable under any Environmental Law, except any such
violations or liabilities which would not singly or in the aggregate have a
material adverse effect on the financial condition, results of operations or
business of the Acquiror on a consolidated basis.
(c) Except as Previously Disclosed, to the best of the Acquiror's
knowledge, there are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim or other claim or action or governmental investigation that
could result in the imposition of any liability arising under any Environmental
Law against the Acquiror or any Acquiror Subsidiary or against any person or
entity whose liability for any Environmental Claim the Acquiror or any Acquiror
Subsidiary has or may have retained or assumed either contractually or by
operation of law, except such which would not have a material adverse effect on
the financial condition, results of operations or business of the Acquiror on a
consolidated basis.
4.10 Tax Matters
-----------
The Acquiror and the Acquiror Subsidiaries, and each of their
predecessors, have timely filed all federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real property, personal
property and other tax returns required by applicable law to be filed by them
(including, without limitation, estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and have paid,
or where payment is not required to have been made, have set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Effective Time. Neither the Acquiror nor any
of the Acquiror Subsidiaries will have any material liability for any such taxes
in excess of the amounts so paid or reserves or accruals so established. Except
as Previously Disclosed, as of the date hereof, no audit, examination or
deficiency or refund litigation with respect to any federal, state and local
(and, if applicable, foreign) income, franchise, bank, excise, real property,
personal property and other tax returns filed by the Acquiror and the Acquiror
Subsidiaries is pending or, to the best of the Acquiror's knowledge, threatened.
4.11 Legal Proceedings
-----------------
A-29
Except as Previously Disclosed, there are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of the Acquiror threatened against the Acquiror or any Acquiror
Subsidiary or against any asset, interest or right of the Acquiror or any
Acquiror Subsidiary, or against any officer, director or employee of any of them
that in any such case, if decided adversely, would have a material adverse
effect on the financial condition, results of operations or business of the
Acquiror on a consolidated basis. Neither the Acquiror nor any of the Acquiror
Subsidiaries is a party to any order, judgment or decree which has or would have
a material adverse effect on the financial condition, results of operations or
business of the Acquiror on a consolidated basis.
4.12 Compliance with Laws
--------------------
(a) Each of the Acquiror and each of the Acquiror Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are required in order to permit
it to carry on its business as it is presently being conducted and the absence
of which could have a material adverse effect on the financial condition,
results of operations or business of the Acquiror on a consolidated basis; all
such permits, licenses, certificates of authority, orders and approvals are in
full force and effect; and to the best knowledge of the Acquiror, no suspension
or cancellation of any of the same is threatened.
(b) Neither the Acquiror nor any of the Acquiror Subsidiaries is in
violation of its respective Articles of Incorporation, Charter or other
chartering instrument or Bylaws, or of any applicable federal, state or local
law or ordinance or any order, rule or regulation of any federal, state, local
or other governmental agency or body (including, without limitation, all banking
(including without limitation all regulatory capital requirements), securities,
municipal securities, safety, health, environmental, zoning, anti-
discrimination, antitrust, and wage and hour laws, ordinances, orders, rules and
regulations), or in default with respect to any order, writ, injunction or
decree of any court, or in default under any order, license, regulation or
demand of any governmental agency, any of which violations or defaults could
have a material adverse effect on the financial condition, results of operations
or business of the Acquiror on a consolidated basis; and neither the Acquiror
nor any Acquiror Subsidiary has received any notice or communication from any
federal, state or local governmental authority asserting that the Acquiror or
any Acquiror Subsidiary is in violation of any of the foregoing which could have
a material adverse effect on the financial condition, results of operations or
business of the Acquiror on a consolidated basis. Neither the Acquiror nor any
Acquiror Subsidiary is subject to any regulatory or supervisory cease and desist
order, agreement, written directive, memorandum of understanding or written
commitment (other than those of general applicability to all banks, savings
associations or holding companies thereof, as applicable, issued by governmental
authorities), and none of them has received any written communication requesting
that they enter into any of the foregoing.
4.13 Deposit Insurance
-----------------
The deposit accounts of each Acquiror Subsidiary which is an insured
depository institution under the FDIA are insured by the BIF to the maximum
extent permitted by the FDIA, and each such entity has paid all premiums and
assessments required by the FDIA and the regulations thereunder.
A-30
4.14 Certain Information
-------------------
None of the information relating to the Acquiror and the Acquiror
Subsidiaries to be contained in (i) the Form S-4 will, at the time the Form S-4
becomes effective, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) the Proxy
Statement, as of the date(s) such Proxy Statement is mailed to shareholders of
the Acquiror and the Company and up to and including the date(s) of the meetings
of shareholders to which such Proxy Statement relates, will contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date. The Proxy Statement mailed
by the Acquiror to shareholders of the Company and the Acquiror in connection
with the meetings of shareholders at which this Agreement will be considered by
such shareholders will comply as to form in all material respects with the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder.
4.15 Employee Benefit Plans
----------------------
(a) The Acquiror has Previously Disclosed all stock option, employee
stock purchase and stock bonus plans, qualified pension or profit-sharing plans,
any deferred compensation, consultant, bonus or group insurance contract or any
other incentive, welfare or employee benefit plan or agreement maintained for
the benefit of employees or former employees of the Acquiror or any Acquiror
Subsidiary (the "Acquiror Employee Plans").
(b) None of the Acquiror, any Acquiror Subsidiary, any pension plan
maintained by any of them and qualified under Section 401 of the Code or, to the
best of the Acquiror's knowledge, any fiduciary of such plan has incurred any
material liability to the Pension Benefit Guaranty Corporation or the Internal
Revenue Service with respect to any employees of the Acquiror or any Acquiror
Subsidiary. To the best of the Acquiror's knowledge, no reportable event under
Section 4043(b) of ERISA has occurred with respect to any such pension plan.
(c) Neither the Acquiror nor any Acquiror Subsidiary participates in or
has incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Acquiror Employee Plan which is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a
"Acquiror Pension Plan") which is intended to qualify under Section 401 of the
Code to the effect that such plan is qualified under Section 401 of the Code and
the trust associated with such employee pension plan is tax exempt under Section
501 of the Code. No such letter has been revoked or, to the best of the
Acquiror's knowledge, is threatened to be revoked and the Acquiror does not know
of any ground on which such revocation may be based. Neither the Acquiror nor
any Acquiror Subsidiary has any liability under any such plan that is not
reflected on the consolidated statement of financial condition of the Acquiror
at June 30, 1995 included in the Acquiror Financial Statements, other than
liabilities incurred in the ordinary course of business in connection therewith
subsequent to the date thereof.
A-31
(e) To the best of the Acquiror's knowledge, no prohibited transaction
(which shall mean any transaction prohibited by Section 406 of ERISA and not
exempt under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Acquiror Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax under Section 4975 of the Code
or otherwise have a material adverse effect on the financial condition, results
of operations or business of the Acquiror on a consolidated basis.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Acquiror
Employee Plan or ERISA; no accumulated funding deficiency (as defined in Section
302 of ERISA or Section 412 of the Code), whether or not waived, exists with
respect to any Acquiror Pension Plan, and there is no "unfunded current
liability" (as defined in Section 412 of the Code) with respect to any Acquiror
Pension Plan.
(g) To the best of the Acquiror's knowledge, the Acquiror Employee
Plans have been operated in compliance in all material respects with the
applicable provisions of ERISA, the Code, all regulations, rulings and
announcements promulgated or issued thereunder and all other applicable
governmental laws and regulations.
(h) There are no pending or, to the best knowledge of the Acquiror,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Acquiror Employee Plans or any trust related thereto or any
fiduciary thereof.
4.16 Brokers and Finders
-------------------
Except as Previously Disclosed, neither the Acquiror nor any Acquiror
Subsidiary, nor any of their respective directors, officers or employees, has
employed any broker or finder or incurred any liability for any broker or finder
fees or commissions in connection with the transactions contemplated hereby.
4.17 Insurance
---------
The Acquiror and each Acquiror Subsidiary is insured for reasonable
amounts with financially sound and reputable insurance companies against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured and has maintained all insurance
required by applicable laws and regulations.
4.18 Required Vote
-------------
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Acquiror Common Stock is necessary to approve this
Agreement and the transactions contemplated hereby (assuming the accuracy of the
representation and warranty of the Company contained in the first sentence of
Section 3.3 hereof).
A-32
4.19 Accounting for the Merger
-------------------------
The Acquiror has taken no action that would cause the Merger to fail to
qualify for pooling-of-interests treatment under generally accepted accounting
principles.
4.20 Disclosures
-----------
None of the representations and warranties of the Acquiror or any of the
written information or documents furnished or to be furnished by the Acquiror to
the Company in connection with or pursuant to this Agreement or the consummation
of the transactions contemplated hereby, when considered as a whole, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE V
COVENANTS
5.1 Shareholder Meetings
--------------------
Each of the Acquiror and the Company shall take all action necessary to
properly call and convene a meeting of its shareholders as soon as practicable
after the date hereof. The Board of Directors of the Acquiror and, except to
the extent legally required for the discharge of its fiduciary duties as advised
by counsel, the Board of Directors of the Company will recommend that the
shareholders of the Acquiror and the Company, respectively, approve this
Agreement and the transactions contemplated hereby. The Acquiror agrees to
cause the Board of Directors of the Bank to vote the shares of Acquiror Common
Stock held in a fiduciary capacity by the Bank's Trust Department in favor of
the Agreement at the meeting of stockholders of the Acquiror to be held pursuant
to this Section 5.1, except to the extent otherwise required for the discharge
of the Bank's fiduciary duties as advised by counsel.
5.2 Regulatory Matters
------------------
(a) The parties hereto shall promptly cooperate with each other in the
preparation and filing of the Form S-4, including the Proxy Statement. Each of
the Acquiror and the Company shall use its best efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and the Acquiror and the Company shall thereafter promptly mail the
Proxy Statement to its respective shareholders. The Acquiror also shall use its
best efforts to obtain all necessary state securities law or "blue sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement, and the Company shall furnish all information concerning the Company
and the holders of the Company Common Stock as may be reasonably requested in
connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all
Governmental Entities and third parties which are necessary or advisable to
A-33
consummate the transactions contemplated by this Agreement (including without
limitation the Merger). The Acquiror and the Company shall have the right to
review in advance, and to the extent practicable each will consult with the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information which appears in any filing made with or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) The Acquiror and the Company shall, upon request, furnish each
other with all information concerning themselves, their respective Subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement, the Form S-4 or
any other statement, filing, notice or application made by or on behalf of the
Acquiror, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated hereby.
(d) The Acquiror and the Company shall promptly furnish each other with
copies of written communications received by the Acquiror or the Company, as the
case may be, or any of their respective Subsidiaries from, or delivered by any
of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
5.3 Investigation and Confidentiality
---------------------------------
(a) Each party shall permit the other party and its representatives
reasonable access to its properties and personnel, and shall disclose and make
available to such other party all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and liabilities of
it and its Subsidiaries, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) and shareholders, organizational
documents, bylaws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, loan files,
plans affecting employees, and any other business activities or prospects in
which the other party may have a reasonable interest, provided that such access
shall be reasonably related to the transactions contemplated hereby and not
unduly interfere with normal operations. Each party and its Subsidiaries shall
make their respective directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with the other party and its representatives, provided that such
access shall be reasonably related to the transactions contemplated hereby and
not unduly interfere with normal operations.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby and, if such transactions shall not
occur, the party receiving the information shall return to the party which
furnished such information all documents or other materials containing,
reflecting or referring to
A-34
such information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for five years from the date the
proposed transactions are abandoned but shall not apply to (i) any information
which (x) the party receiving the information can establish by convincing
evidence was already in its possession prior to the disclosure thereof by the
party furnishing the information; (y) was then generally known to the public; or
(z) became known to the public through no fault of the party receiving the
information; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction, provided that the
party which is the subject of any such legal requirement or order shall use its
best efforts to give the other party at least ten business days prior notice
thereof.
5.4 Press Releases
--------------
The Acquiror and the Company shall agree with each other as to the form and
substance of any press release related to this Agreement or the transactions
contemplated hereby, and consult with each other as to the form and substance of
other public disclosures which may relate to the transactions contemplated by
this Agreement, provided, however, that nothing contained herein shall prohibit
either party, following notification to the other party, from making any
disclosure which is required by law or regulation.
5.5 Business of the Parties
-----------------------
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of the Acquiror, the Company and the
Company Subsidiaries shall carry on their respective businesses in the ordinary
course consistent with past practice. The Company will use all reasonable
efforts to (x) preserve its business organization and that of the Company
Subsidiaries intact, (y) keep available to itself and the Acquiror the present
services of the employees of the Company and the Company Subsidiaries and (z)
preserve for itself and the Acquiror the goodwill of the customers of the
Company and the Company Subsidiaries and others with whom business relationships
exist. Without limiting the generality of the foregoing, except with the prior
written consent of the Acquiror, as expressly contemplated hereby or as
Previously Disclosed as of the date hereof, between the date hereof and the
Effective Time, the Company shall not, and shall cause each the Company
Subsidiary not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of the Company Common Stock, except for regular
quarterly cash dividends at a rate per share of Company Common Stock not in
excess of $0.14 per share, which shall have the same record and payment
dates as the record and payment dates relating to dividends on the Acquiror
Common Stock (as Previously Disclosed by the Acquiror), it being the
intention of the parties that the shareholders of the Company receive
dividends for any particular quarter on either the Company Common Stock or
the Acquiror Common Stock but not both, provided that if the Effective Time
does not occur prior to the record date for the dividend which relates to
the second quarter
A-35
of 1996 (June 14, 1996), the regular per share quarterly dividend on the Company
Common Stock for such quarter shall be increased to an amount determined by
multiplying the per share dividend declared on the Acquiror Common Stock for
such quarter by 1.15.
(ii) issue any shares of its capital stock; purchase any shares of
Company Common Stock; issue, grant, modify or authorize any Rights; or
effect any recapitalization, reclassification, stock dividend, stock split
or like change in capitalization;
(iii) amend its Certificate of Incorporation, Charter or other
governing instrument or Bylaws; impose, or suffer the imposition, on any
share of stock held by the Company in any Company Subsidiary of any
material lien, charge or encumbrance or permit any such lien to exist; or
waive or release any material right or cancel or compromise any material
debt or claim;
(iv) increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus or severance to, or
provide any other new employee benefit or incentive to, any of its
directors, officers or employees, except (i) as may be required pursuant to
binding commitments existing on the date hereof and (ii) such as may be
granted in the ordinary course of business consistent with past practice;
(v) enter into or, except as may be required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or employees;
or make any contributions to the Company's defined benefit Pension Plan or
Employee Stock Ownership Plan not in the ordinary course of business
consistent with past practice;
(vi) enter into (w) any agreement, arrangement or commitment not
made in the ordinary course of business, (x) any agreement, indenture or
other instrument relating to the borrowing of money by the Company or any
Company Subsidiary or guarantee by the Company or any Company Subsidiary of
any such obligation, except for deposits and FHLB advances in the ordinary
course of business consistent with past practice, (y) except as Previously
Disclosed, any agreement, arrangement or commitment relating to the
employment of an employee, or amend any such existing agreement, provided
that the Company and any Company Subsidiary may employ an employee if
necessary to operate the business of the Company or a Company Subsidiary in
the ordinary course of business consistent with past practice and if the
employment of such employee is terminable by the Company and any successor
at will without liability, other than as required by law; or (z) any
contract, agreement or understanding with a labor union;
(vii) change its method of accounting in effect for the year ended
December 31, 1994, except as required by changes in laws or regulations or
generally accepted accounting principles, or change any of its methods of
reporting income and deductions for federal
A-36
income tax purposes from those employed in the preparation of its federal
income tax return for the year ended December 31, 1994, except as required
by changes in laws or regulations;
(viii) make any capital expenditures in excess of $50,000
individually or $250,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and other than expenditures
necessary to maintain existing assets in good repair;
(ix) file any applications or make any contract with respect to
branching or site location or relocation;
(x) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity;
(xi) enter into any futures contract, option contract, interest
rate caps, interest rate floors, interest rate exchange agreement or other
agreement for purposes of hedging the exposure of its interest-earning
assets and interest-bearing liabilities to changes in market rates of
interest (other than forward commitments to sell loans in the ordinary
course of business);
(xii) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights or
requiring the consent of any party to the transfer and assignment of any
such assets or rights;
(xiii) take any action that would result in any of the
representations and warranties of the Company contained in this Agreement
not to be true and correct in any material respect at the Effective Time;
or
(xiv) agree to do any of the foregoing.
(b) Neither the Company nor any Company Subsidiary, nor any of the
directors, officers, employees, representatives or agents of the Company or
other persons controlled by the Company, shall solicit or encourage inquiries or
proposals with respect to, furnish any information relating to, or participate
in any negotiations or discussions concerning, any acquisition, lease or
purchase of all or a substantial portion of the assets of, or any equity
interest in, the Company or any Company Subsidiary or any business combination
with the Company or any Company Subsidiary other than as contemplated by this
Agreement (except where the failure to furnish such information or participate
in such negotiations or discussions would in the reasonable advice of counsel to
the Company constitute a breach of the fiduciary or legal obligations of the
Company's Board of Directors). The Company will immediately notify the Acquiror
orally and in writing if any such inquiries or proposals are received by, and
such information is required from, or any such negotiations or discussions are
sought to be initiated with, the Company or any Company Subsidiary.
(c) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of the Company, the Acquiror and the
Acquiror Subsidiaries shall carry on their respective
A-37
businesses in the ordinary course consistent with past practice and use all
reasonable efforts to preserve intact their present business organizations and
relationships. Without limiting the generality of the foregoing, except with the
prior written consent of the Company or as expressly contemplated hereby,
between the date hereof and the Effective Time, the Acquiror shall not, and
shall cause each Acquiror Subsidiary not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of the Acquiror Common Stock, other than regular
quarterly cash dividends which are not in excess of $.30 per share of
Acquiror Common Stock;
(ii) issue any shares of its capital stock other than pursuant to
(i) Rights granted pursuant to the Acquiror Employee Stock Benefit Plans,
(ii) the Agreement and Plan of Merger referred to in the second sentence of
Section 4.1 or (iii) any acquisition to the extent permitted under
subsection (v) below;
(iii) effect any recapitalization, reclassification, stock split or
like change in capitalization;
(iv) amend its Articles of Incorporation, Charter or other
governing instrument or Bylaws in a manner which would adversely affect in
any manner the terms of the Acquiror Common Stock or the ability of the
Acquiror to consummate the transactions contemplated hereby;
(v) make any acquisition (including acquisitions of branch offices
and related deposit liabilities) or take any other action that individually
or in the aggregate could materially adversely affect the ability of the
Acquiror to consummate the transactions contemplated hereby in a reasonably
timely manner, or participate in any merger, consolidation or other
transaction in which the Acquiror is not the surviving corporation;
(vi) take any action that would result in any of the
representations and warranties of the Acquiror contained in this Agreement
not to be true and correct in any material respect at the Effective Time;
or
(vii) agree to do any of the foregoing.
5.6 Current Information
-------------------
During the period from the date of this Agreement to the Effective Time,
each party shall, upon the request of the other party, cause one or more of its
designated representatives to confer on a monthly or more frequent basis with
representatives of the other party regarding its financial condition, operations
and business and matters relating to the completion of the transactions
contemplated hereby. As soon as reasonably available, but in no event more than
45 days after the end of each calendar quarter ending after the date of this
Agreement (other than the last quarter of each fiscal year ending December 31),
each party will deliver to the other party its quarterly report
A-38
on Form 10-Q under the Exchange Act, and, as soon as reasonably available, but
in no event more than 90 days after the end of each fiscal year, each party will
deliver to the other party its Annual Report on Form 10-K. Within 25 days after
the end of each month, each party will deliver to the other party a consolidated
balance sheet and a consolidated statement of operations, without related notes,
for such month prepared in accordance with generally accepted accounting
principles.
5.7 Indemnification; Insurance, Etc.
--------------------------------
(a) From and after the Effective Time through the sixth anniversary of
the Effective Time, the Acquiror (the "Indemnifying Party") shall indemnify and
hold harmless each present and former director, officer, employee or agent of
the Company or any Company Subsidiary determined as of the Effective Time (the
"Indemnified Parties") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent to which such Indemnified Parties were entitled
under the Bylaws of the Company as in effect on the date hereof. From and after
the Effective Time, the Acquiror also shall honor the limitation on liability of
directors of the Company contained in Article 7E of the Company's Certificate of
Incorporation.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.7(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the appropriate Indemnifying Party thereof,
but the failure to so notify shall not relieve the Indemnifying Party of any
liability it may have to such Indemnified Party if such failure does not
materially prejudice the Indemnifying Party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Indemnifying Party shall have the right to assume the
defense thereof and the Indemnifying Party 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 the Indemnifying Party elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between the Indemnifying Party and the
Indemnified Parties, the Indemnified Parties may retain counsel which is
reasonably satisfactory to the Indemnifying Party, and the Indemnifying Party
shall pay, promptly as statements therefor are received, the reasonable fees and
expenses of such counsel for the Indemnified Parties (which may not exceed one
firm in any jurisdiction unless the use of one counsel for such Indemnified
Parties would present such counsel with a conflict of interest), (ii) the
Indemnified Parties will cooperate in the defense of any such matter and (iii)
the Indemnifying Party shall not be liable for any settlement effected without
its prior written consent.
(c) On or prior to the Effective Time, the Company shall purchase
insurance coverage on substantially the same terms and conditions as the
liability insurance provided by the Company for its directors and officers as of
the date hereof for a period of two years following the Effective Time,
provided, however, that in no event shall the Company expend, in order to obtain
such insurance, any amount per annum in excess of 125% of the amount of the
actual premiums paid as
A-39
of the date hereof by the Company for such insurance (the "Maximum Amount"). If
the amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, the Company shall use all
reasonable efforts to maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Amount.
(d) In the event that the Acquiror or any of its respective successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision shall be made so
that the successors and assigns of such entity shall assume the obligations set
forth in this Section 5.7, which obligations are expressly intended to be for
the irrevocable benefit of, and shall be enforceable by, each director and
officer covered hereby.
(e) The obligations of the Acquiror under this Section 5.7 are intended
to benefit, and be enforceable against the Acquiror directly by, the Indemnified
Parties and their respective heirs and representatives, and shall be binding on
all successors and permitted assigns of the Acquiror.
5.8 Directors, Officers and Employees
---------------------------------
(a) The Acquiror agrees to take all action necessary to elect,
effective as of the Effective Time, J. Christopher Thomas, William W. Wagner and
Paul Clinton Winter, Jr. as directors of the Acquiror. Such persons shall serve
until the first annual meeting of shareholders of the Acquiror following the
Effective Time and until their successors are elected and qualified. The
Acquiror shall include such persons on the list of nominees for director
presented by the Board of Directors of the Acquiror and for which said Board
shall solicit proxies at the first annual meeting of shareholders of the
Acquiror following the Effective Time.
(b) Following the Merger, the Acquiror and the Bank shall honor the
terms of (i) the Supplemental Employment Retirement Plan maintained by the
Association for its executive officers, as in effect on the date of this
Agreement, and (ii) the employment agreements among the Company, the Association
and each of Messrs. William W. Wagner, J. Christopher Thomas, A. Lawrence
Crimmins, Jr. and T. Sam Scipio, Jr., as in effect on the date of this
Agreement.
(c) The Acquiror and its Subsidiaries shall have the right, but not the
obligation, to offer employment, as officers and employees of the Acquiror or
its Subsidiaries, immediately following the Effective Time, to any persons who
are officers and employees of the Company or any Company Subsidiary immediately
before the Effective Time. To the extent that the employment of any employee of
the Company or any Company Subsidiary (other than any employee who is party to
an employment agreement) is involuntarily terminated at or during the one-year
period following the Effective Time as a result of the elimination of a job
position, such employee will be entitled to receive severance payments in
accordance with, and to the extent provided in, Schedule I hereto. For purposes
of determining severance benefits, each employee whose employment is terminated
will be credited with his or her years of service with the Company or a Company
Subsidiary (and
A-40
any entities acquired by the Company or the Association to the same extent as
they recognize such service) prior to the Effective Time.
(d) Notwithstanding the first sentence of Section 5.8(c) hereof, the
Acquiror agrees as follows: (i) to offer employment to J. Christopher Thomas as
Executive Vice President of the Acquiror and President and Chief Executive
Officer of MBS with a base annual salary equal to his base annual salary with
the Company and the Association immediately prior to the Effective Time; (ii) to
offer employment to William W. Wagner as Executive Vice President of the
Acquiror and Chairman of MBS with a base annual salary equal to his base annual
salary with the Company and the Association immediately prior to the Effective
Time; (iii) to offer employment to T. Sam Scipio, Jr. as Executive Vice
President and Chief Operating Officer of MBS with a base annual salary equal to
his base annual salary with the Company and the Association immediately prior to
the Effective Time; and (iv) to offer employment to Lonnie R. Stringer, Cindy S.
McGhee and Alecia J. Tyson in such capacities with the Acquiror or an Acquiror
Subsidiary as may be selected by the Acquiror with a base annual salary equal to
the respective employee's base annual salary with the Association immediately
prior to the Effective Time.
(e) During the one-year period following the Effective Time, the
Acquiror shall give employees of the Company and the Company Subsidiaries the
same priority for open positions at the Acquiror or any Acquiror Subsidiary for
which they may qualify as existing employees of the Acquiror and the Acquiror
Subsidiaries, provided that any decision to offer employment shall be made in
the sole discretion of the Acquiror.
(f) Each person employed by the Company or a Company Subsidiary prior
to the Effective Time who becomes an employee of the Acquiror or an Acquiror
Subsidiary following the Effective Time (each a "Continued Employee") shall be
entitled, as an employee of the Acquiror or an Acquiror Subsidiary, to
participate in such employee benefit plans as may be in effect generally for
employees of the Acquiror and its Subsidiaries from time to time (the "Acquiror
Plans"), if such Continued Employee shall be eligible or selected for
participation therein and otherwise shall not be participating in a similar plan
formerly maintained by the Company or a Company Subsidiary which continues to be
maintained by the Acquiror and its Subsidiaries following the Effective Time.
Continued Employees will be eligible to participate on the same basis as
similarly-situated employees of the Acquiror or its Subsidiaries. All such
participation shall be subject to the terms of the Acquiror Plans as may be in
effect from time to time. Notwithstanding anything in this Section 5.8(f) to the
contrary, participation by Continued Employees in employee benefit plans of the
Acquiror or its Subsidiaries with respect to which eligibility to participate is
at the discretion of the employer shall be discretionary with such employer, and
any Continued Employee who is party to an employment agreement with the Company
or a Company Subsidiary which is assumed by the Acquiror or any of its
Subsidiaries shall not be permitted to participate in the Acquiror severance
plan.
(g) The Acquiror and its Subsidiaries shall, solely for purposes of
vesting and eligibility to begin participation with respect to the Acquiror
Plans, recognize credit for each Continued Employee's term of service with the
Company and the Company Subsidiaries as such service is recognized by the
Company and its Subsidiaries for purposes of its benefit plans. The Acquiror
will
A-41
waive all pre-existing condition limitations for Continued Employees with
respect to its health and dental plans, provided that such Continued Employees
shall have been employed with the Company or its Subsidiaries for at least one-
year prior to the Effective Time.
(h) The parties hereto agree that the Company's Employee Stock
Ownership Plan shall be terminated in accordance with the terms thereof and
applicable laws and regulations effective as of the Effective Time, or as soon
thereafter as practicable. In the event of the merger of the Company's defined
benefit pension plan (the "Company Pension Plan") into the defined benefit
pension plan maintained by or on behalf of the Acquiror or one of its
subsidiaries (the "Acquiror Pension Plan"), the accrued benefit immediately
following the merger of each participant in the Company Pension Plan who was an
employee of the Company or a Company Subsidiary shall be no less than the
accrued benefit of each such participant in the Company Pension Plan immediately
prior to the merger of the Company Pension Plan.
(i) The obligations of the Acquiror under this Section 5.8 are intended
to benefit, and be enforceable against the Acquiror directly by, each person
covered thereby and his or her heirs and representatives, and shall be binding
on all successors and permitted assigns of the Acquiror.
5.9 Mortgage Banking Company
------------------------
In order to take advantage of the Association's expertise in the
origination of single-family residential loans, the Acquiror agrees to
establish, as soon as practicable after the Effective Time, a subsidiary of the
Bank which shall be engaged in the mortgage banking business ("MBS"). The
initial number and composition of the Board of Directors of MBS shall be
determined by mutual agreement between the Company and the Acquiror. The
executive officers of MBS shall include William W. Wagner, Chairman; J.
Christopher Thomas, President and Chief Executive Officer; T. Sam Scipio,
Executive Vice President and Chief Operating Officer. Other employees of MBS
shall be determined by mutual agreement by the Acquiror and MBS. MBS will seek
to develop a business which emphasizes the origination of single-family
residential loans throughout the geographic areas served by the resulting
banking subsidiaries of the Acquiror, as well as related loan servicing and
secondary market activities. The Acquiror agrees that it will initially provide
MBS with a level of capitalization and funding which is appropriate to the goals
and objectives of MBS as mutually agreed to by the Acquiror and MBS.
5.10 Certain Policies of the Company
-------------------------------
At the request of the Acquiror, the Company shall, prior to the Effective
Time, (i) establish and take such reserves and accruals as the Acquiror shall
reasonably request to conform, on a mutually satisfactory basis, the Company's
loan, real estate, accrual and reserve policies to the Acquiror's policies and
(ii) establish and take such accruals, reserves and charges in order to
implement such policies in respect of severance costs, write-off or write-down
of various assets and other appropriate accounting adjustments in connection
with the Merger, provided, however, that (i) the Company shall not be obligated
to take any such action pursuant to this Section 5.10 unless and until the
Acquiror specifies its request in a writing delivered by the Acquiror to the
Company and acknowledges therein that all conditions to its obligations to
consummate the Merger set forth
A-42
in Sections 6.1 and 6.3 have been satisfied or waived (if waivable) by the
Acquiror, (ii) the Company acknowledges that the conditions to its obligation to
consummate the Merger set forth in Sections 6.1 and 6.2 have been satisfied or
waived (if waivable) by the Company, (iii) the Company shall not be required to
take any action that is inconsistent with any requirement applicable to the
Company or any Company Subsidiary by any bank regulatory agency and (iv) the
Company shall not be required to take any such action that is not consistent
with generally accepted accounting principles. The representations, warranties
and covenants of the Company contained in this Agreement shall not be deemed to
be untrue or breached in any respect for any purpose as a consequence of any
action undertaken on account of this Section 5.10.
5.11 Restrictions on Resale
----------------------
The Company has Previously Disclosed to the Acquiror all persons who are
deemed by it to be "affiliates" of the Company for purposes of Rule 145 under
the Securities Act and shall use its best efforts to cause each of such persons
to promptly execute and deliver to the Acquiror a written agreement,
substantially in the form of I hereto, providing that such person will not
sell, pledge, transfer or otherwise dispose of (i) the shares of Acquiror Common
Stock or Company Common Stock owned by such person during the period commencing
30 business days prior to the Effective Time (the anticipated date of which
shall be set forth in a notice by the Company to such persons as soon as such
information is available) and continuing to the date on which financial results
covering at least 30 days combined operations of the Acquiror and the Company
have been published within the meaning of Topic 2-E of the Staff Accounting
Bulletin Series of the Commission or (ii) any shares of Acquiror Common Stock
received by such person in the Merger except in compliance with the applicable
provisions of the Securities Act and the rules and regulations thereunder. The
Acquiror shall use its best efforts to comply with Rule 144(c) under the
Securities Act in order that all such persons may resell such Acquiror Common
Stock pursuant to Rule 145(d) under the Securities Act.
5.12 Disclosure Supplements
----------------------
From time to time prior to the Effective Time, each party shall promptly
supplement or amend any materials Previously Disclosed and delivered to the
other party pursuant hereto with respect to any matter hereafter arising which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in materials Previously Disclosed to the
other party or which is necessary to correct any information in such materials
which has been rendered materially inaccurate thereby; no such supplement or
amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied, provided that the receiving party's obligations to consummate the
Merger shall not be deemed to be affected by any such supplement or amendment
unless such party, within 20 days after receipt thereof, objects and exercises
its right to terminate this Agreement pursuant to Section 7.1(b) hereof.
5.13 Failure to Fulfill Conditions
-----------------------------
A-43
In the event that either of the parties hereto determines that a condition
to its respective obligations to consummate the transactions contemplated hereby
cannot be fulfilled on or prior to the termination of this Agreement, it will
promptly notify the other party. Each party will promptly inform the other
party of any facts applicable to it that would be likely to prevent or
materially delay approval of the Merger or the Bank Merger by any Governmental
Entity or third party or which would otherwise prevent or materially delay
completion of the Merger or the Bank Merger.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - The Acquiror and the Company
---------------------------------------------------
The respective obligations of the Acquiror and the Company to effect the
transactions contemplated by this Agreement shall be subject to satisfaction of
the following conditions at or prior to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Acquiror and the Company,
including approval by the requisite vote of the shareholders of the Acquiror and
the Company of this Agreement, and all corporate and shareholder action
necessary to authorize the execution and delivery of the Bank Merger Agreement
and consummation of the transactions contemplated thereby shall have been duly
and validly taken by the Bank and the Association.
(b) All approvals and consents for the transactions contemplated hereby
and the Bank Merger Agreement from the FRB, the OCC, the OTS, the WVBB and any
other Governmental Entity the approval or consent of which is required for the
consummation of the Merger, the Bank Merger and the other transactions
contemplated hereby shall have been received and all statutory waiting periods
in respect thereof shall have expired; and the Acquiror and the Company shall
have procured all other approvals, consents and waivers of each person (other
than the Governmental Entities referred to above) whose approval, consent or
waiver is necessary to the consummation of the Merger, the Bank Merger and the
other transactions contemplated hereby and the failure of which to obtain would
have the effects set forth in clauses (i) or (ii) to the following proviso
clause; provided, however, that no approval, consent or waiver referred to in
this Section 6.1(b) shall be deemed to have been received if it shall include
any condition or requirement that, individually or in the aggregate, would (i)
result in a material adverse effect on the financial condition, results of
operations or business of the Acquiror on a consolidated basis or (ii) reduce
the economic or business benefits of the transactions contemplated by this
Agreement to the Acquiror in so significant a manner that the Acquiror, in its
reasonable judgment, would not have entered into this Agreement.
(c) None of the Acquiror, the Company or their respective Subsidiaries
shall be subject to any statute, rule, regulation, order or decree which shall
have been enacted, entered, promulgated or enforced by any governmental or
judicial authority which prohibits, restricts or makes illegal
A-44
consummation of the Merger and the Bank Merger or any of the other transactions
contemplated hereby.
(d) The Form S-4 shall have become effective under the Securities Act,
and the Acquiror shall have received all state securities laws or "blue sky"
permits and other authorizations or there shall be exemptions from registration
requirements necessary to issue the Acquiror Common Stock in connection with the
Merger, and neither the Form S-4 nor any such permit, authorization or exemption
shall be subject to a stop order or threatened stop order by the Commission or
any state securities authority.
(e) The shares of Acquiror Common Stock to be issued in connection with
the Merger shall have been approved for listing on the Nasdaq Stock Market's
National Market.
(f) Ernst & Young LLP, the Acquiror's independent public accountants,
shall have issued letters, dated as of the Effective Time, to the Acquiror and
to the Company to the effect that, based on a review of this Agreement and
related agreements and the facts and circumstances then known to it, the Merger
shall be accounted for as a pooling-of-interests under generally accepted
accounting principles.
6.2 Conditions Precedent - The Company
----------------------------------
The obligations of the Company to effect the transactions contemplated by
this Agreement shall be subject to satisfaction of the following conditions at
or prior to the Effective Time unless waived by the Company pursuant to Section
7.4 hereof.
(a) The representations and warranties of the Acquiror as set forth in
Article IV hereof shall be true and correct as of the date of this Agreement and
as of the Effective Time as though made on and as of the Effective Time (or on
the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.2(a) shall be
deemed to have been satisfied even if such representations or warranties are not
true and correct unless the failure of any of the representations or warranties
to be so true and correct would have, individually or in the aggregate, a
material adverse effect on the financial condition, results of operations or
business of the Acquiror on a consolidated basis or on the ability of the
Acquiror or the Company to consummate the transactions contemplated hereby.
(b) The Acquiror shall have performed all material obligations and
covenants required to be performed by it on or prior to the Effective Time.
(c) The Acquiror shall have delivered to the Company a certificate,
dated the date of the Closing and signed by its Chairman or President, to the
effect that the conditions set forth in Sections 6.2(a) and 6.2(b) have been
satisfied.
(d) The Company shall have received the written opinion of Bowles Rice
McDavid Graff & Love that addresses the matters set forth in II hereto.
A-45
(e) The Company shall have received the written opinion of Elias, Matz,
Tiernan & Herrick L.L.P. to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code and that, except
for cash received in lieu of fractional shares, holders of Company Common Stock
who receive Acquiror Common Stock in the Merger will not recognize income, gain
or loss for federal income tax purposes, the basis of such Acquiror Common Stock
will equal the basis of the Company Common Stock for which it is exchanged, and
the holding period of such Acquiror Common Stock will include the holding period
of the Company Common Stock for which it is exchanged, assuming that such stock
is a capital asset in the hands of the holder thereof at the Effective Time,
which opinion shall be based on such written representations from the Acquiror
and the Company as such counsel shall reasonably request as to factual matters.
(f) An opinion shall have been received by the Company from Wheat First
Butcher Singer, dated as of the date of the Proxy Statement, to the effect that
the consideration to be received by the Company's shareholders pursuant to this
Agreement is fair to the shareholders of the Company from a financial point of
view, and such opinion shall not have been withdrawn or materially modified
prior to the vote of the shareholders of the Company on this Agreement.
(g) The Acquiror shall have furnished the Company with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 6.1 and 6.2 as such
conditions relate to the Acquiror as the Company may reasonably request.
6.3 Conditions Precedent - The Acquiror
-----------------------------------
The obligations of the Acquiror to effect the transactions contemplated by
this Agreement shall be subject to satisfaction of the following conditions at
or prior to the Effective Time unless waived by the Acquiror pursuant to Section
7.4 hereof.
(a) The representations and warranties of the Company set forth in
Article III hereof shall be true and correct as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.3(a) shall be
deemed to have been satisfied even if such representations or warranties are not
true and correct unless the failure of any of the representations or warranties
to be so true and correct would have, individually or in the aggregate, a
material adverse effect on the financial condition, results of operations or
business of the Company on a consolidated basis or on the ability of the
Acquiror or the Company to consummate the transactions contemplated hereby.
(b) The Company shall have performed all material obligations and
covenants required to be performed by it on or prior to the Effective Time.
(c) The Company shall have delivered to the Acquiror a certificate,
dated the date of the Closing and signed by its Chairman or President, to the
effect that the conditions set forth in Sections 6.3(a) and 6.3(b) have been
satisfied.
A-46
(d) The Acquiror shall have received the written opinions of Elias,
Matz, Tiernan & Herrick L.L.P. and Hamb & Poffenbarger, dated the date of the
Closing, that collectively address the matters set forth in III hereto.
(e) The Acquiror shall have received the written opinion of Bowles Rice
McDavid Graff & Love to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code and that no income,
gain or loss will be recognized by the Acquiror, the Company or the Association
in connection therewith, which opinion shall be based on such written
representations from the Acquiror, the Company and the Association as such
counsel shall reasonably request as to factual matters.
(f) The Acquiror shall have received from each affiliate of the Company
the affiliates letter referred to in Section 5.11 hereof, to the extent
necessary to assure in the reasonable judgment of the Acquiror that the
transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
(g) The Company shall have furnished the Acquiror with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.3 as such
conditions relate to the Company as the Acquiror may reasonably request.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
-----------
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by the Acquiror in
writing if the Company has, or by the Company in writing if the Acquiror has, in
any material respect, breached (i) any material covenant or undertaking
contained herein or (ii) any representation or warranty contained herein, in any
case if such breach has not been cured by the earlier of 30 days after the date
on which written notice of such breach is given to the party committing such
breach or the Effective Time;
(c) at any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.2 hereof are denied or
are approved in a manner which does not satisfy the requirements of Section
6.1(b) hereof, and the time period for appeals and requests for reconsideration
has run;
(d) at any time, by either party hereto in writing, if the shareholders
of the Acquiror or the Company do not approve this Agreement after a vote taken
thereon at a meeting duly called for such purpose unless the failure of such
occurrence shall be due to the failure of the party seeking to
A-47
terminate to perform or observe in any material respect its agreements set forth
herein to be performed or observed by such party at or before the Effective
Time;
(e) by either party hereto in writing, if the Effective Time has not
occurred by the close of business on June 30, 1996, provided that this right to
terminate shall not be available to any party whose failure to perform an
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Merger and the other transactions contemplated hereby to be
consummated by such date;
(f) by the Company in the event that the Acquiror Closing Price is less
than $25.00; and
(g) at any time by either party hereto in writing if such party is not
in default hereunder and such party determines in good faith that any condition
precedent to such party's obligations to consummate the Merger and the other
transactions contemplated hereby is or would be impossible to satisfy, and such
condition is not waived by the other party.
7.2 Effect of Termination
---------------------
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i) the
provisions relating to confidentiality and expenses set forth in Section 5.3 and
Section 8.1, respectively, shall survive any such termination and (ii) a
termination pursuant to Section 7.1(b), (d) or (e) shall not relieve the
breaching party from liability for willful breach of any covenant, undertaking,
representation or warranty giving rise to such termination.
7.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 5.7, 5.8 and 5.9 hereof),
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive the Acquiror or the Company
(or any director, officer or controlling person thereof) of any defense at law
or in equity which otherwise would be available against the claims of any
person, including, without limitation, any shareholder or former shareholder of
either the Acquiror or the Company, the aforesaid representations, warranties
and covenants being material inducements to consummation by the Acquiror and the
Company of the transactions contemplated hereby.
7.4 Waiver
------
Each party hereto by written instrument signed by an executive officer of
such party, may at any time (whether before or after approval of this Agreement
by the shareholders of the Acquiror and the Company) extend the time for the
performance of any of the obligations or other acts of the other party hereto
and may waive (i) any inaccuracies of the other party in the representations or
A-48
warranties contained in this Agreement or any document delivered pursuant
hereto, (ii) compliance with any of the covenants, undertakings or agreements of
the other party or, to the extent permitted by law, satisfaction of any of the
conditions precedent to its obligations contained herein or (iii) the
performance by the other party of any of its obligations set forth herein,
provided that any such waiver granted, or any amendment or supplement pursuant
to Section 7.5 hereof executed, after shareholders of the Acquiror or the
Company have approved this Agreement shall not modify either the amount or form
of the consideration to be provided hereby to the holders of Company Common
Stock upon consummation of the Merger or otherwise materially adversely affect
either of such shareholders without the approval of the shareholders who are so
affected.
7.5 Amendment or Supplement
-----------------------
This Agreement may be amended or supplemented at any time by mutual
agreement of the Acquiror and the Company, subject to the proviso to Section 7.4
hereof. Any such amendment or supplement must be in writing and approved by
their respective Boards of Directors.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses; Termination Fee
-------------------------
(a) Each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated by this
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel.
(b) Notwithstanding any provision in this Agreement to the contrary, in
order to induce the Acquiror to enter into this Agreement and as a means of
compensating the Acquiror for the substantial direct and indirect monetary and
other costs incurred and to be incurred in connection with this Agreement and
the transactions contemplated hereby, the Company agrees that if this Agreement
is terminated in accordance with its terms (other than if terminated by the
Company pursuant to Section 7.1(b) hereof) and prior to such termination a
Termination Event, as defined in paragraph (c) below, shall have occurred, the
Company will upon demand pay to the Acquiror in immediately available funds
$1,500,000.
(c) For purposes of this Agreement, a Termination Event shall mean
either of the following:
(i) The Company or any Company Subsidiary, without having
received the Acquiror's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as defined below) with
any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act, and the rules and regulations thereunder) other than the Acquiror or
any affiliate of the Acquiror (the term "affiliate" for purposes of this
Agreement having the meaning assigned thereto in Rule 405 under the
Securities Act) or the Board of Directors of the Company shall have
recommended that the shareholders of the Company approve or
A-49
accept any Acquisition Transaction with any person other than the Acquiror
or any affiliate of the Acquiror. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or consolidation, or any
similar transaction, involving the Company or any Company Subsidiary, (y) a
purchase, lease or other acquisition of all or substantially all of the
assets of the Company or any Company Subsidiary or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of any equity securities of the Company or any Company
Subsidiary; or
(ii) After a bona fide proposal is made by any person other than
the Acquiror or any affiliate of the Acquiror to the Company or its
shareholders to engage in an Acquisition Transaction, either (i) the
Company shall have breached any covenant or obligation contained in this
Agreement and such breach would entitle the Acquiror to terminate this
Agreement, or (ii) the holders of the Company Common Stock shall not have
approved this Agreement at the meeting of such shareholders held for the
purpose of voting on this Agreement, such meeting shall not have been held
or such meeting shall have been canceled prior to termination of this
Agreement.
8.2 Entire Agreement
----------------
This Agreement contains the entire agreement among the parties with respect
to the transactions contemplated hereby and supersedes all prior arrangements or
understandings with respect thereto, written or oral, other than documents
referred to herein or therein. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and thereto and
their respective successors. Nothing in this Agreement, expressed or implied,
is intended to confer upon any party, other than the parties hereto, and their
respective successors, any rights, remedies, obligations or liabilities other
than as set forth in Sections 5.7 and 5.8 hereof.
A-50
8.3 No Assignment
-------------
Neither of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
8.4 Notices
-------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
overnight express or by registered or certified mail, postage prepaid, addressed
as follows:
If to the Acquiror:
United Bankshares, Inc.
P.O. Box 1508
United Square
Fifth and Avery Streets
Parkersburg, West Virginia 26102
Attention: Steven E. Wilson
With a required copy to:
Bowles Rice McDavid Graff & Love
1600 Commerce Square
P.O. Box 1386
Charleston, West Virginia 25325-1386
Attention: Deborah A. Sink, Esq.
If to the Company:
Eagle Bancorp, Inc.
P.O. Box 233
227 Capital Street
Charleston, West Virginia 25321-0233
Attn: Chairman and President
With a required copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, DC 20005
Attn: Gerard L. Hawkins, Esq.
and
A-51
Hamb & Poffenbarger
515 Bank One Center
P.O. Box 1671
Charleston, West Virginia 25326-1671
Attention: William E. Hamb, Esq.
8.5 Interpretation
--------------
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
8.6 Counterparts
------------
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.7 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of West Virginia applicable to agreements made and entirely to
be performed within such jurisdiction except to the extent federal law may be
applicable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
Attest: UNITED BANKSHARES, INC.
/s/ Joseph W. Sowards By: /s/ Richard M. Adams
- ----------------------- -------------------------------
Name: Joseph W. Sowards Name: Richard M. Adams
Title: Executive Vice President Title: Chairman, President and
Chief Executive Officer
Attest: EAGLE BANCORP, INC.
/s/ J. Christopher Thomas By: /s/ William W. Wagner
- --------------------------- --------------------------
Name: J. Christopher Thomas Name: William W. Wagner
Title: President and Chief Title: Chairman and Chief
Operating Officer Executive Officer
A-52
SCHEDULE I
SEVERANCE POLICY
ELIGIBILITY:
. Available only to those employees whose position has been
eliminated.
. All regular full-time and regular part-time employees who are not
party to an employment agreement.
. Severance paid in installments, regular bi-weekly pay periods.
. Subject to federal and state tax deductions and withholding.
. Policy does not apply if an employee is offered a position at the
same level and salary and the commute is 40 miles or less.
SALARY AND BENEFIT CONTINUANCE:
. 2 weeks base salary and benefits for each year of service.
Minimum - 4 weeks
Maximum - 13 weeks
VACATION:
. Paid in lump sum at beginning of severance period.
ANNEX I
_______________ __, 1995
United Bankshares, Inc.
P. O. Box 1508
United Square
Fifth and Avery Streets
Parkersburg, West Virginia 26102
Gentlemen:
Pursuant to Section 5.11 of the Agreement and Plan of Merger, dated as
of August 18, 1995 (the "Agreement"), between United Bankshares, Inc. (the
"Acquiror") and Eagle Bancorp, Inc. (the "Company"), I hereby agree as follows:
1. I will not sell, pledge, transfer or otherwise dispose of the
shares of Acquiror Common Stock or Company Common Stock (both as defined in the
Agreement) owned by me during the period commencing 30 business days prior to
the Effective Time (as defined in the Agreement) (the anticipated date of which
shall be set forth in a notice by the Company to me as soon as such information
is available) and continuing to the date on which financial results covering at
least 30 days combined operations of the Acquiror and the Company have been
published within the meaning of Topic 2-E of the Staff According Bulletin Series
of the Securities and Exchange Commission.
2. I will company with paragraph (d) of Rule 145 under the
Securities Act of 1933 and will not sell, pledge, transfer or otherwise dispose
of any shares of Acquiror Common Stock received by me in exchange for shares of
Company Common Stock pursuant to the Merger (as defined in the Agreement),
except upon the Acquiror's receipt of an opinion of counsel, at the Acquiror's
expense, that the proposed disposition will not violate paragraph (d) of Rule
145.
The Acquiror's transfer agent shall be given an appropriate stop
transfer order and shall not be required to register any attempted transfer of
shares of Acquiror Common Stock acquired by me in exchange for Company Common
Stock pursuant to the Merger, unless the transfer has been effected in
compliance with the terms of this letter agreement. In addition, the
certificates evidencing such shares of Acquiror Common Stock shall bear a legend
noting the restrictions on transfer set forth in this letter agreement.
Very truly yours,
_________________________________
Name:
Agreed and accepted this
_____ day of _________ 1995 by
United Bankshares, Inc.
By: __________________________
Name:
Title:
I-1
ANNEX II
[MATTERS TO BE COVERED IN OPINION(S) OF COUNSEL TO BE DELIVERED TO THE COMPANY
PURSUANT TO SECTION 6.2(D) OF THE AGREEMENT]
(a) The Acquiror and each Acquiror Subsidiary which is a "significant
subsidiary" as defined in Regulation S-X of the Commission is duly incorporated,
validly existing and in good standing under the laws of the United States of the
laws of the jurisdiction of its incorporation, as applicable, and the Acquiror
is duly registered as a bank holding company under the BHCA.
(b) The authorized capital stock of the Acquiror consists of 20,000,000
shares of Acquiror Common Stock, of which ______ are issued and outstanding of
record as of the date hereof. All of the outstanding shares of Acquiror Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable, and the shareholders of the Acquiror have no preemptive rights
with respect to any shares of capital stock of the Acquiror. All of the
outstanding shares of capital stock of each Acquiror Subsidiary which is a
"significant subsidiary" as defined in Regulation S-X of the Commission have
been duly authorized and validly issued, are fully paid and nonassessable
(except as otherwise provided with respect to the capital stock of national bank
subsidiaries of the Acquiror by the National Bank Act) and, to the knowledge of
such counsel, are directly or indirectly owned by the Acquiror free and clear of
all liens, claims, encumbrances, charges, restrictions or rights of third
parties of any kind whatsoever. To such counsel's knowledge, except for (i)
shares of Acquiror Common Stock issuable pursuant to the Acquiror Employee Stock
Benefit Plans and (ii) shares of Acquiror Common Stock issuable pursuant to the
Agreement and Plan of Merger dated March 6, 1995 among the Acquiror, First
Commercial Bank and Commercial Interim Bank, there are no Rights authorized,
issued or outstanding with respect to the capital stock of the Acquiror.
(c) The Agreement has been duly authorized, executed and delivered by
the Acquiror and constitutes a valid and binding obligation of the Acquiror
enforceable in accordance with its terms, except that the enforceability of the
obligations of the Acquiror may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors,
(ii) equitable principles limiting the right to obtain specific performance or
other similar equitable relief and (iii) considerations of public policy, and
except that certain remedies may not be available in the case of a nonmaterial
breach of the Agreement.
(d) The Bank Merger Agreement has been duly authorized, executed and
delivered by the Bank and constitutes a valid and binding obligation of the Bank
enforceable in accordance with its terms, except that enforceability of the
obligations of the Bank may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or transfer or similar laws
affecting the rights of creditors, (ii) equitable principles limiting the right
to obtain specific performance or other similar equitable relief and (iii)
considerations of public policy, and except that certain remedies may not be
available in the case of a nonmaterial breach of the Bank Merger Agreement.
II-1
(e) All corporate and shareholder actions required to be taken by the
Acquiror by law and its Articles of Incorporation and Bylaws to authorize the
execution and delivery of the Agreement and consummation of the Merger have been
taken, and all corporate and shareholder actions required to be taken by the
Bank by law and its Articles of Association and Bylaws to authorize the
execution and delivery of the Bank Merger Agreement and Consummation of the Bank
Merger have been taken.
(f) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity which are necessary to be obtained by
(i) the Acquiror to permit the execution, delivery and performance of the
Agreement and consummation of the Merger have been obtained, and (ii) the Bank
to permit the execution, delivery and performance of the Bank Merger Agreement
and consummation of the Bank Merger have been obtained.
(g) The shares of Acquiror Common Stock to be issued pursuant to the
terms of the Agreement have been duly authorized by all necessary corporate
action on the part of the Acquiror and, when issued in accordance with the terms
of the Agreement, will be validly issued, fully paid and nonassessable.
(h) To such counsel's knowledge, there are no material legal or
governmental proceedings pending to which the Acquiror or any Acquiror
Subsidiary is a party or to which any property of the Acquiror or any Acquiror
Subsidiary is subject and no such proceedings are threatened by governmental
authorities or by others.
Such counsel also shall state that it has no reason to believe that the
information relating to the Acquiror or any Acquiror Subsidiary contained in (i)
the Form S-4, at the time the Form S-4 became effective, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) the Proxy Statement, as of the date(s) such Proxy
Statement was mailed to shareholders of the Acquiror and the Company and up to
and including the date(s) of the meetings of shareholders to which such Proxy
Statement relates, contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers of
the Acquiror or any Acquiror Subsidiary. The opinion of such counsel need refer
only to matters of West Virginia and federal law, and may add other
qualifications and explanations of the basis of their opinion as may be
reasonably acceptable to the Company.
II-2
ANNEX III
[MATTERS TO BE COLLECTIVELY COVERED IN OPINIONS OF COUNSEL TO BE DELIVERED TO
THE ACQUIROR PURSUANT TO SECTION 6.3(D) OF THE AGREEMENT]
(a) Each of the Company and each of the Company Subsidiaries is
duly incorporated and validly existing under the laws of the United States or
the laws of the jurisdiction of its incorporation, as applicable, and the
Company is duly registered as a savings and loan holding company under the HOLA.
(b) The authorized capital stock of the Company consists of
5,000,000 share of Company Common Stock, of what 2,729,468 shares are issued and
outstanding of record as of the date hereof. All of the outstanding shares of
Company Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable, and the shareholders of the Company have no preemptive
rights with respect to any shares of capital stock of the Company. All of the
outstanding shares of capital stock of each of the Company Subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable, and,
to the knowledge of such counsel, are directly or indirectly owned by the
Company free and clear or all liens, claims, encumbrances, charges, restrictions
or rights of third parties of any kind whatsoever. To such counsel's knowledge,
except for issued and outstanding shares of Company Common Stock which may be
acquired by employees of the Company and its Subsidiaries pursuant to the
company's Employee Stock Ownership Plan, there are no Rights authorized, issued
or outstanding with respect to the Capital stock of the Company.
(c) The Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except that the enforceability of the
obligations of the Company may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors,
(ii) equitable principles limiting the right to obtain specific performance or
other similar equitable relief and (iii) considerations of public policy, and
except that certain remedies may not be available in the case of a nonmaterial
breach of the Agreement.
(d) The Bank Merger Agreement has been duly authorized, executed
and delivered by the Association and constitutes a valid and binding obligation
of the Association enforceable in accordance with its terms, except that
enforceability of the obligations of the Association may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors, (ii) equitable principles limiting the right to obtain
specific performance or other similar equitable relief and (ii) considerations
of public policy, and except that certain remedies may not be available in the
case of a nonmaterial breach of the Bank Merger Agreement.
(e) All corporate and shareholder actions required to be taken by
the Company by law and the Certificate of Incorporation and Bylaws of the
Company to authorize the execution
III-1
and delivery of the Agreement and consummation of the Merger have been taken,
and all corporate and shareholder actions required to be taken by the
Association by law and its Charter and Bylaws to authorize the execution and
delivery of the Bank Merger Agreement and consummation of the Bank Merger have
been taken.
(f) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity which are necessary to be obtained by
(i) the Company to permit the execution, delivery and performance of the
Agreement and consummation of the Merger have been obtained, and (ii) the
Association to permit the execution, delivery and performance of the Bank Merger
Agreement and consummation of the Bank Merger have been obtained.
(g) To such counsel's knowledge, there are no material legal or
governmental proceedings pending to which the Company or any Company Subsidiary
is a party or to which any property of the Company or any the Company Subsidiary
is subject and no such proceedings are threatened by governmental authorities or
by others.
Such counsel shall also state that it has no reason to believe that
the information relating to the Company or a Company Subsidiary contained in (i)
the Form S-4, at the time the Form S-4 became effective, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) the Proxy Statement, as of the date(s) such Proxy
Statement was mailed to shareholders of the Acquiror and the Company and up to
and including the date(s) of the meetings of shareholders to which such Proxy
Statement relates, contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matter of fact, certificates of officers of
the Company or any Company Subsidiary. The opinion of such counsel need refer
only to matters of Delaware, West Virginia and federal law and may add other
qualifications and explanations of the basis of their opinion as may be
reasonably acceptable to the Acquiror.
III-2
ANNEX B
DATE
Board of Directors
Eagle Bancorp, Inc.
227 Capitol Street
Charleston, West Virginia 25301
Members of the Board:
Eagle Bancorp, Inc. ("Eagle") and United Bankshares, Inc. ("UBS") have
entered into an Agreement and Plan of Merger, dated as of August 18, 1995 (the
"Agreement"), pursuant to which Eagle will combine with UBS by means of the
merger (the "Merger") of Eagle with and into UBS. Upon consummation of the
Merger, each of the outstanding shares of the $.10 par value common stock of
Eagle ("Eagle Stock") will be converted into 1.15 of a shares of the $2.50 par
value common stock of UBS ("UBS Stock"), as adjusted in accordance with the
terms of the Agreement (the "Exchange Ratio").
Wheat, First Securities, Inc. ("Wheat First") as part of its
investment banking business, is regularly engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. In the ordinary course of our business as a broker-dealer, we
may, from time to time, have a long or short position in, and buy or sell, debt
or equity securities of Eagle or UBS for our own account or for the accounts of
our customers. Wheat First will also receive a fee from Eagle for rendering this
opinion.
You have asked us whether, in our opinion, the Exchange Ratio is fair,
from a financial point of view, to the holders of Eagle Stock.
In arriving at the opinion set forth below, we have conducted
discussions with members of senior management of Eagle and UBS concerning their
businesses and prospects and have reviewed certain publicly available business
and financial information and certain other information prepared or provided to
us in connection with the Merger, including, among other things, the following:
(1) Eagle's Annual Reports to Stockholders, Annual Reports on Form
10-K and related financial information for the three fiscal
years ended December 31, 1994;
B-1
(2) Eagle's Quarterly Reports on Form 10-Q and related financial
information for the three months ended September 30, 1995, June
30, 1995 and March 31, 1995;
(3) UBS' Annual Reports to Stockholders, Annual Reports on Form 10-K
and related financial information for the three fiscal years
ended December 31, 1994;
(4) UBS' Quarterly Reports on Form 10-Q and related financial
information for the three months ended September 30, 1995, June
30, 1995 and March 31, 1995;
(5) Certain publicly available information with respect to
historical market prices and trading activities for Eagle Stock
and UBS Stock and for certain publicly traded financial
institutions which Wheat First deemed relevant;
(6) Certain publicly available information with respect to banking
companies and the financial terms of certain other mergers and
acquisitions which Wheat First deemed relevant;
(7) The Agreement;
(8) The Registration Statement, including the Prospectus/Joint Proxy
Statement;
(9) Other financial information concerning the businesses and
operations of Eagle and UBS, including certain audited financial
information and certain internal financial analyses and
forecasts for Eagle prepared by the senior management of these
companies; and
(10) Such financial studies, analyses, inquiries and other matters as
we deemed necessary.
In preparing our opinion, we have relied on and assumed the accuracy
and completeness of all information provided to us or publicly available,
including the representations and warranties of Eagle and UBS included in the
Agreement, and we have not assumed any responsibility for independent
verification of such information. We have relied upon the managements of Eagle
and UBS as to the reasonableness and achievability of their financial and
operational forecasts and projections, and the assumptions and bases therefore,
provided to us, and we have assumed that such forecasts and projections reflect
the best currently available estimates and judgments of such managements and
that such forecasts and projections will be realized in the amounts and in the
time periods currently estimated by such managements. We also assumed, without
independent verification, that the aggregate allowances for loan losses and
other contingencies for Eagle and UBS are adequate to cover such losses. Wheat
First did not review any individual credit files of Eagle or UBS, nor did it
make an independent evaluation or appraisal of the assets or liabilities of
Eagle or UBS. We also assumed that, in the course of obtaining the necessary
regulatory approvals for the Merger, no conditions will be imposed that will
have a material adverse effect on the contemplated benefits of the Merger, on a
pro forma basis, to Eagle.
B-2
Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof. Events occurring
after that date could materially affect the assumptions and conclusions
contained in our opinion. We have not undertaken to reaffirm or revise this
opinion or otherwise comment on any events occurring after the date hereof.
Wheat First's opinion is directed only to the fairness, from a financial point
of view, of the Exchange Ratio to the holders of Eagle Stock and does not
address any other aspect of the Merger or constitute a recommendation to any
shareholder of Eagle as to how such shareholder should vote with respect to the
Merger. Wheat First's opinion does not address the relative merits of the
Merger as compared to any alternative business strategies that might exist for
Eagle, nor does it address the effect of any other business combination in which
Eagle might engage.
It is understood that this opinion may be included in its entirety in
the Prospectus/Joint Proxy Statement. This opinion may not, however, be
summarized, excerpted from or otherwise publicly referred to without our prior
written consent.
On the basis of and subject to the foregoing, we are of the opinion
that as of the date hereof the Exchange Ratio is fair, from a financial point of
view, to the holders of Eagle Stock.
Very truly yours,
WHEAT, FIRST SECURITIES, INC.
`
B-3
ANNEX C
31-1-122. RIGHTS OF SHAREHOLDERS TO DISSENT.
Any shareholder of a corporation shall have the right to dissent from
any of the following corporate actions:
(a) Any plan of merger or consolidation to which the corporation
is a party; or
(b) Any sale or exchange of all or substantially all of the
property and assets of the corporation not made in the usual and regular course
of its business, including a sale in dissolution, but not including a sale
pursuant to an order of a court having jurisdiction in the premises or a sale
for cash on terms requiring that all or substantially all of the net proceeds of
sale be distributed to the shareholders in accordance with their respective
interests within one year after the date of sale.
A shareholder may dissent as to less than all of the shares
registered in his name. In that event, his rights shall be determined as if the
shares as to which he has dissented and his other shares were registered in the
names of different shareholders.
31-1-123. RIGHTS OF DISSENTING SHAREHOLDERS; PROCEDURE FOR PURCHASING OF
DISSENTING SHAREHOLDERS' SHARES; CIVIL ACTION FOR DETERMINING VALUE OF SHARES;
PROCEDURE FOR TRANSFERRING OF SUCH SHARES TO CORPORATION AND PAYMENT THEREFOR.
(a) Any shareholder electing to exercise his right to dissent,
pursuant to section one hundred twenty-two [(S) 31-1-122] of this article, shall
file with the corporation, prior to or at the meeting of shareholders at which
such proposed corporate action is submitted to a vote, a written objection to
such proposed corporate action. If such proposed corporate action be approved by
the required vote and such shareholder shall not have voted in favor thereof,
such shareholder may, within ten days after the date on which the vote was taken
or if a corporation is to be merged without a vote of its shareholders into
another corporation, any of its shareholders may, within fifteen days after the
plan of such merger shall have been mailed to such shareholders, make written
demand on the corporation, or, in the case of a merger or consolidation, on the
surviving or new corporation, domestic or foreign, for payment of the fair value
of such shareholder's shares, and, if such proposed corporate action is
effected, such corporation shall pay to such shareholder, upon surrender of the
certificate or certificates representing such shares, the fair value thereof as
of the day prior to the date on which the vote was taken approving the proposed
corporate action, excluding any appreciation or depreciation in anticipation of
such corporate action. Any shareholder failing to make demand within the ten-day
period shall be bound by the terms of the proposed corporate action. Any
shareholder making such demand shall thereafter be entitled only to payment as
in this section provided and shall not be entitled to vote or to exercise any
other rights of a shareholder.
(b) No such demand may be withdrawn unless the corporation shall
consent thereto. If, however, such demand shall be withdrawn upon consent, or if
the proposed corporate action shall be abandoned or rescinded or the
shareholders shall revoke the authority to effect such
C-1
action, or if, in the case of a merger, on the date of the filing of the
articles of merger the surviving corporation, is the owner of all the
outstanding shares of the other corporations, domestic and foreign, that are
parties to the merger, or if no demand or petition for the determination of fair
value by a court of general civil jurisdiction have been made or filed within
the time provided in subsection (e) of this section, or if a court of general
civil jurisdiction shall determine that such shareholder is not entitled to the
relief provided by this section, then the right of such shareholder to be paid
the fair value of his shares shall cease and his status as a shareholder shall
be restored, without prejudice to any corporate proceedings which may have been
taken during the interim.
(c) Within ten days after such corporate action is effected, the
corporation, or, in the case of a merger or consolidation, the surviving or new
corporation, domestic or foreign, shall give written notice thereof to each
dissenting shareholder who has made demand as herein provided, and shall make a
written offer to each shareholder to pay for such shares at a specified price
deemed by such corporation to be fair value thereof. Such notice and offer
shall be accompanied by a balance sheet of the corporation the shares of which
the dissenting shareholder holds, as of the latest available date and not more
than twelve months prior to the making of such offer, and a profit and loss
statement of such corporation for the twelve months' period ended on the date of
such balance sheet.
(d) If within thirty days after the date on which such corporate
action is effected the fair value of such shares is agreed upon between any such
dissenting shareholder and the corporation, payment therefor shall be made
within ninety days after the date on which such corporate action was effected,
upon surrender of the certificate or certificates representing such shares. Upon
payment of the agreed value the dissenting shareholder shall cease to have any
interest in such shares.
(e) If within such period of thirty days, a dissenting shareholder
and the corporation do not so agree, then the corporation shall within thirty
days after receipt of written demand from any dissenting shareholder, which
written demand must be given within sixty days after the date on which such
corporate action was effected, file a complaint in a court of general civil
jurisdiction requesting that the fair value of such shares be found and
determined, or the corporation may file such complaint at any time within such
sixty-day period at its own election. Such complaint shall be filed in any court
of general civil jurisdiction in the county in which the principal office of the
corporation is situated, or, if there be no such office in this State, in the
county in which any dissenting shareholder resides or is found or in which the
property of such corporation, or any part of it, may be. If the corporation
shall fail to institute such proceedings, any dissenting shareholder may do so
in the name of the corporation. All dissenting shareholders wherever residing,
may be made parties to the proceedings as an action against their shares quasi
in rem. A copy of the complaint shall be served on each dissenting shareholder
who is a resident of this State in the same manner as in other civil actions.
Dissenting shareholders who are nonresidents of this State shall be served a
copy of the complaint by registered or certified mail, return receipt requested.
In addition, service upon such nonresident shareholders shall be made by
publication, as provided in Rule 4 (e) (2) of the West Virginia Rules of Civil
Procedure. All shareholders who are parties to the proceeding shall be entitled
to judgment against the corporation for the amount of the fair value of their
shares. The court may, if it so elects, appoint one or more persons as
appraisers to receive
C-2
evidence and recommend a decision on the question of fair value. The appraiser
shall have such power and authority as shall be specified in the order of their
appointment or any subsequent appointment. The judgment shall be payable only
upon and concurrently with the surrender to the corporation of the certificate
or certificates representing such shares. Upon payment of the judgment, the
dissenting shareholder shall cease to have any interest in such shares.
The judgment shall include an allowance for interest at such rate as
the court may find to be fair and equitable in all the circumstances, from the
date on which the vote was taken on the proposed corporate action to the date of
payment.
The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court may deem
equitable against any and all of the dissenting shareholders who are parties to
the proceeding to whom the corporation shall have made an offer to pay for the
shares if the court shall find that the action of such shareholders in failing
to accept such offer was arbitrary or vexations or not in good faith. Such
expenses shall include reasonable compensation for and reasonable expenses of
the appraisers, but shall exclude the fees and expenses of counsel for and
experts employed by any party; but if the fair value of the shares as determined
materially exceeds the amount which the corporation offered to pay therefor, or
if no offer was made, the court in its discretion may award to any shareholder
who is a party to the proceeding such sum as the court may determine to be
reasonable compensation to any expert or experts employed by the shareholder in
the proceeding. Any part to the proceeding may appeal any judgment or ruling of
the court as in other civil cases.
(f) Within twenty days after demanding payment for his shares,
each shareholder demanding payment shall submit the certificate or certificates
representing his shares to the corporation for notation thereon that such demand
has been made. His failure to do so shall, at the option of the corporation,
terminate his rights under this section unless a court of general civil
jurisdiction, for good and sufficient cause shown, shall otherwise direct. If
shares represented by a certificate on which notation has been so made shall be
transferred, each new certificate issued therefor shall bear similar notation,
together with the name of the original dissenting holder of such shares, and a
transferee of such shares shall acquire by such transfer no rights in the
corporation other than those which the original dissenting shareholder had after
making demand for payment of the fair value thereof.
(g) Shares acquired by a corporation pursuant to payment of the
agreed value therefor or to payment of the judgment entered therefor, as in this
section provided, may be held and disposed of by such corporation as in the case
of other treasury shares, except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.
C-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 31-1-9 of the West Virginia Code of 1931, as amended,
permits indemnification of present or former officers or directors who are named
or threatened to be named as parties to a legal action arising out of their
activities as officers or directors under certain circumstances.
The Amended and Restated Articles of Incorporation of United
Bankshares, Inc., contains the following provision with regard to the
indemnification of its directors and officers:
Each director and officer of this corporation, or former
director or officer of this corporation, or any person who may
have served at its request as a director or officer of another
corporation, his heirs and personal representative shall be
indemnified by this corporation against costs and expenses at any
time reasonably incurred by him arising out of or in connection
with any claim, action, suit or proceeding, civil or criminal,
against him or which he may be made apart by reason of his being
or having been such director or officer except in relation to
matters as to which he shall be adjudged in such action, suit or
proceeding to be liable for gross negligence or willful
misconduct in the performance of a duty to the corporation. If in
the judgment of the Board of Directors of this corporation a
settlement of any claim, action, suit or proceeding so arising be
deemed in the best interest of the corporation, any such director
or officers shall be reimbursed for any amounts paid by him in
effecting such settlement and reasonable expenses incurred in
connection therewith. The foregoing right of indemnification
shall be in addition to any and all other rights to which any
director or officer may be entitled as a matter of law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 21. Exhibits and Financial Statement Schedules.
Exhibits required to be filed with this Registration Statement by
Item 601 of Regulations S-K follow the execution pages of the Registration
Statement. The required exhibit index precedes these documents. Required
exhibits which are a part of the preceding Prospectus/Joint Proxy Statement are
incorporated by reference to their location.
Item 22. Undertakings.
(1) The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters in addition to the
information called for by other Items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415 (230.415), will be filed as a
part of an amendment is effective, and that, for purposes of determining any
liability of the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(4) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporation documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
II-2
(5) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration when it became effective.
(6) The undersigned registrant hereby undertakes:
(a) To file during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, present a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(b) That for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at this time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from the registration by means of post-
effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly issued this registration
statement or amendment thereto to be signed on its behalf by the undersigned
hereunto duly authorized, in the City of Charleston, State of West Virginia, on
the 19th day of February, 1996.
UNITED BANKSHARES, INC.
By /s/Richard M. Adams
Richard M. Adams
Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Richard M. Adams and Joseph Wm. Sowards,
and each of them, his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in the about the premises, as fully to all intents and purposes as he
might do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or their substitutes, may lawfully do or cause to be done by
virtue hereof.
/s/ Richard M. Adams
_________________________________________
Richard M. Adams,
Chairman of the Board,
Director, Chief Executive Officer
________________________________________
I. N. Smith, Jr., President and Director
/s/ Joseph Wm. Sowards, attorney-in-fact
_________________________________________
Steven E. Wilson, Chief Financial Officer
and Chief Accounting Officer
_________________________________________
II-4
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Robert G. Astorg, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Douglass H. Adams, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Thomas J. Blair, III, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Harry L. Buch, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
R. Terry Butcher, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
John W. Dudley, Director
____________________________________________
H. Smoot Fahlgren, Director
____________________________________________
Theodore J. Georgelas, Director
____________________________________________
C. E. Goodwin, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
F. T. Graff, Jr., Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Leonard A. Harvey, Director
II-5
____________________________________________
Andrew J. Houvouras, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Russell L. Isaacs, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Robert P. McLean, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Thomas A. McPherson, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
G. Ogden Nutting, Director
____________________________________________
William C. Pitt, III, Director
____________________________________________
Charles E. Stealey, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Warren A. Thornhill, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
Harold C. Wilkes, Director
/s/ Joseph Wm. Sowards, attorney-in-fact
____________________________________________
James W. Word, Jr., Director
II-6
UNITED BANKSHARES, INC.
FORM S-4
INDEX TO EXHIBITS
S-B ITEM
601 SEQUENTIAL
TABLE PAGE
DESCRIPTION REFERENCE NUMBER (A)
- ----------- --------- ----------
Underwriting agreement (1) N/A
Agreement and Plan of Merger (2)
Stockholder Agreements dated August 18, 1995, (2) (l)
among UBS and certain Eagle Stockholders
Stockholder Agreement dated August 18, 1995, (2) (l)
among Eagle and certain UBS Stockholders
Articles of Incorporation and Bylaws: (3)
(a) Bylaws
(b) Articles of Incorporation
Instruments Defining the Rights of Security Holders (4) N/A
Opinions Re: Legality (5) *
Opinion Re: Liquidation Preference (7) N/A
Opinion Re: Tax Matters
(a) Elias Matz Tierman & Herrick (8)
(b) Bowles Rice McDavid Graff & Love (8)
Voting Trust Agreement (9) N/A
Material Contracts (10)
(a) Employment Agreement with
I. N. Smith, Jr. (b)
(b) Employment Agreement with
Richard M. Adams (e)
(c) Lease on Branch Office in
Charleston Town Center, (b)
Charleston, West Virginia
(d) Lease on United Center, (h)
Charleston, West Virginia
(e) Lease with Polymerland, Inc. (h)
on UNB Square
(f) Lease and Agreement between (c)
Valley Savings and Loan
Company (Lessor) and Dorothy D.
Adams, Richard M. Adams and
Douglas H. Adams
(Lessees)
(g) Agreement between Dorothy D. (c)
Adams, Richard M. Adams and
Douglas H. Adams (Lessors) and
Valley Savings and Loan Company
(Lessees)
(h) Employment Contract with
Douglas H. Adams (d)
(i) Employment Contract with
Thomas A. McPherson (d)
(j) Data Processing contract with
FISERV (k)
(k) Supplemental Retirement Contract with
Richard M.Adams (i)
(l) Supplemental Retirement
Contract with (i)
Douglas H. Adams
(m) Executive Officer Change in
Control Agreements (j)
Statement Re: Computation of Per Share Earnings (11) N/A
Annual Report to Security Holders, et al. (13) N/A
Material Foreign Patents (14) N/A
Letter Re: Unaudited Interim Financial Information (15) N/A
Letter Re: Changes in Certifying Accountant (16) N/A
Subsidiaries of the Registrant (21) *
Consents:
(a) Consent of Ernst & Young, LLP - UBS (23)
(b) Consent of Ernst & Young, LLP - Eagle (23)
(c) Consent of Sommerville & Company (23)
(d) Consent of Wheat First Securities, Inc. (23) *
(e) Consent of Bowles Rice McDavid (23) (Included in
Graff & Love Exhibit 5 and
Exhibit 8(b))
(f) Consent of Elias Matz Tiernan & Herrick, (23) (Included in
L.L.P Exhibit 8(a))
Power of Attorney (24) *
Statement of Eligibility of Trustee (25) N/A
Invitation for Competitive Bids (26) N/A
Financial Data Schedule (27) N/A
Information From Reports Furnished To State (28) N/A
Insurance Regulatory Authorities
Additional Exhibits: (29) *
(a) Form of Proxy for UBS *
(b) Form of Proxy for Eagle *
(c) Form of Agreement Regarding *
Affiliate
(d) Consent of William W. Wagner to be named as *
prospective director
(e) Consent of J. Christopher Thomas to be named *
as prospective director
(f) Consent of Paul C. Winter, Jr. to be named *
as prospective director
Footnotes:
*Previously filed.
(a) N/A = Not Applicable.
(b) Incorporated into this filing by reference to Exhibit 10 of the 1985 Form
10-K for Intermountain Bankshares, Inc., File No. 0-12356.
(c) Incorporated into this filing by reference to Exhibit 10 of the 1986 Form
10-K for United Bankshares, inc., File No. 2-86947.
(d) Incorporated into this filing by reference to part II of Form S-4
Registration Statement of United Bankshares, Inc., Registration No. 33-
19968 filed February 3, 1988.
(e) Incorporated into this filing by reference to Exhibits to the 1988 10-K for
United Bankshares, Inc., File No. 0-13322.
(f) Incorporated into this filing by reference to the 1989 10-K for United
Bankshares, Inc., File No. 0-1322.
(g) Incorporated into this filing by reference to the 1990 10-K for United
Bankshares, Inc., File No. 0-13322.
(h) Incorporated into this filing by reference to the 1991 10-K for United
Bankshares, Inc., File No. 0-13322.
(i) Incorporated into this filing by reference to the 1992 10-K for United
Bankshares, Inc.,File No. 0-13322.
(j) Incorporated into this filing by reference to the 1993 10-K for United
Bankshares, Inc., File No. 0-13322.
(k) Incorporated into this filing by reference to the 1994 10-K for United
Bankshares, Inc., File No. 0-13322, as amended by Form 10K/A filed
February 8, 1996.
(l) Incorporated into this filing by reference to the 8-K filing dated August
25, 1995, for United Bankshares, Inc., File No. 0-13322.