AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of
July, 1997 (this "Plan"), by and among MainStreet BankGroup
Incorporated, a Virginia corporation ("MSBC"), and Tysons
dFinancial Corporation, a Virginia corporation ("Tysons").
RECITALS:
(A) MSBC. MSBC is a corporation duly organized and
existing in good standing under the laws of the Commonwealth of
Virginia, with its principal executive offices located in
Martinsville, Virginia. As of the date hereof, MSBC has
20,000,000 authorized shares of Common Stock, each of $5.00 par
value ("MSBC Common Stock"), and 1,000,000 authorized shares of
Preferred Stock, each of $5.00 par value ("MSBC Preferred Stock")
(no other class of capital stock being authorized), of which
11,373,417 shares of MSBC Common Stock and no shares of MSBC
Preferred Stock, respectively, are issued and outstanding as of
June 30, 1997. MSBC has eight (8) wholly owned bank
subsidiaries: Piedmont Trust Bank, a Virginia bank; Bank of
Ferrum, a Virginia bank; Bank of Xxxxxxx, a Virginia bank; First
Community Bank, a Virginia bank; The First Bank of Stuart, a
Virginia bank; First Community Bank of Saltville, a Virginia
bank; Hanover Bank, a Virginia bank; and First National Bank of
Xxxxxxx Forge, a national banking association (each of which is
referred to as a "MSBC Bank Subsidiary" and all of which are
referred to as "MSBC Bank Subsidiaries"). In addition, MSBC has
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one wholly owned nonbanking subsidiary, MainStreet Trust Company
chartered as a limited purpose national banking association to
engage in the business of a trust company and businesses
incidental thereto ("MSBC Trust Subsidiary") and one corporation,
MB Corp. (the "Holding Company"), incorporated under Virginia
law, which will become a wholly owned subsidiary of MSBC. The
MSBC Bank Subsidiaries, MSBC Trust Subsidiary and the Holding
Company (upon formation) are individually referred to as an "MSBC
Subsidiary" and collectively as "MSBC Subsidiaries".
(B) Tysons. Tysons is a corporation duly organized and
existing in good standing under the laws of the Commonwealth of
Virginia, with its principal executive offices located at 0000
Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx and is authorized
to do business as a bank holding company under the federal Bank
Holding Company Act of 1956, as amended, and Chapter 13 of the
Virginia Banking Act. Tysons' only subsidiary is Tysons National
Bank ("TNB"). TNB is a national banking association organized
under the laws of the United States. As of the date hereof,
Tysons has 10,000,000 authorized shares of Common Stock, each of
$5.00 par value ("Tysons Common Stock"), of which 1,071,119
shares were issued and outstanding as of June 30, 1997 (no other
class of capital stock being authorized) and warrants to purchase
up to 228,250 shares of Tysons Common Stock at $10.00 per share,
which expire on July 1, 2001, if unexercised, of which 228,250
are outstanding as of the date of this Agreement ("Tysons
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Warrants"). The holders of Tysons Common Stock have no
preemptive rights. Tysons Common Stock is subject to the
provisions of Section 12, 13, 14(a), 14(c), 14(d), 15(d) and 16
of the Securities Exchange Act of 1934, as amended, (together
with the rules and regulations of the Securities and Exchange
Commission ("SEC") promulgated thereunder, the "Exchange Act").
(C) The Holding Company. The Holding Company is a
corporation duly organized and existing in good standing under
the laws of the Commonwealth of Virginia, having 5,000 authorized
shares of common stock, no par value ("Holding Company Common
Stock") (no other class of capital stock being authorized) of
which as of the Merger Closing 1,000 shares will be issued and
outstanding, all of which shall be held of record and
beneficially by MSBC.
(D) TNB. TNB is a wholly owned subsidiary of Tysons. TNB's
headquarters are located at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
XxXxxx, Xxxxxxxx 00000. TNB has 10,000,000 shares of common
stock, $5.00 par value per share ("TNB Common Stock") authorized
(no other class of capital stock being authorized), of which
575,000 shares are issued and outstanding as of June 30, 1997,
and are held of record and beneficially by Tysons. There are no
shares of TNB Common Stock authorized and reserved for issuance
and there is no commitment to authorize, issue or sell any such
shares or any other securities, warrants or obligations
convertible into or exchangeable for, or giving any right to
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subscribe for or acquire any such shares and no securities,
warrants or obligations representing any such rights are
outstanding. There are no options or share appreciation rights
authorized or granted for TNB Common Stock and no commitment to
grant any such options or share appreciation rights.
With respect to Tysons, any reference herein to "Subsidiary"
or "Subsidiaries" refers to TNB and, with respect to MSBC, any
reference to "Subsidiary" refers to any MSBC Subsidiary and to
"Subsidiaries" refers to the MSBC Subsidiaries, jointly and
severally (unless the context otherwise requires).
(E) Rights, Etc. Except as Previously Disclosed or except
in connection with the transactions contemplated by this Plan,
there are no shares of MSBC Common Stock or MSBC Preferred Stock
authorized and reserved for issuance, and MSBC has no commitment
to authorize, issue or sell any such shares or any securities or
obligations convertible into or exchangeable for, or giving any
person any right to subscribe for or acquire from MSBC, any such
shares and no securities or obligations representing any such
rights are outstanding. Except as Previously Disclosed, MSBC has
not granted or made any commitment to grant any options or share
appreciation rights with respect to the MSBC Common Stock or MSBC
Preferred Stock. Except as Previously Disclosed and except for
shares reserved pursuant to the Stock Option Agreement (as
hereinafter defined) and the Tysons Warrants, there are no shares
of Tysons Common Stock authorized and reserved for issuance and
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Tysons has no commitment to authorize, issue or sell any such
shares, or any other securities, warrants or obligations
convertible into or exchangeable for, or giving any right to
subscribe for or acquire from Tysons any such shares, and no
securities, warrants or obligations representing any such rights
are outstanding. Except for options granted to employees and
officers in such capacity to purchase Tysons Common Stock
("ISO's") and options granted to directors in such capacity to
purchase Tysons' Common Stock ("Directors Options"), all as
Previously Disclosed, Tysons has not granted or made any
commitment to grant any options or share appreciation rights with
respect to Tysons Common Stock. The ISO's and Directors Options
are collectively referred to as the "Tysons Options".
(F) This Transaction. The Boards of Directors of MSBC and
Tysons, respectively, deem it advisable and in the best interests
of MSBC and Tysons and their stockholders that Tysons be acquired
by MSBC through a merger of Holding Company into Tysons pursuant
to this Agreement and Plan of Merger.
(G) Stock Option Agreement. As a condition and inducement
to MSBC's willingness to enter into this Plan, Tysons has agreed
that prior to 5:00 p.m., on July 25, 1997, Tysons shall enter
into a Stock Option Agreement with MSBC ("Stock Option
Agreement") in the form attached hereto as Exhibit E pursuant to
which Tysons shall grant to MSBC an option ("Option") to
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purchase, under certain circumstances, shares of Tysons Common
Stock.
(H) Approvals. The Board of Directors of each of MSBC and
Tysons has approved and adopted, at meetings of each of such
Board of Directors, this Plan and the Stock Option Agreement and
has authorized, subject to such further modifications as may be
agreed by a member of the Office of the Chairman of MSBC and by
the President of Tysons, respectively, not inconsistent herewith,
the execution hereof in counterparts. At the meeting of the
Tysons Board of Directors, the Board of Directors of Tysons
recommended the Plan as so executed to its shareholders.
(I) NASDAQ. Trading of the MSBC Common Stock is presently
reported on the National Association of Securities Dealers
("NASD") Quotations System National Market System("NASDAQ/NMS").
Trading of the Tysons Common Stock is presently reflected on
NASD's Small Cap Market ("NASD/SCM"). The Tysons Warrants and
the Tysons Options are not traded on any established market.
(J) Benefits of Plan. MSBC and Tysons believe the Plan and
its consummation are in the respective best interests of each
corporation and its shareholders for the following reasons, among
others: (1) the Merger will allow them to provide banking and
related financial services more effectively and efficiently; (2)
the Merger will expand the range of banking and related financial
services which they can provide; (3) the Merger will enhance the
safety and soundness of their operations; (4) the Merger will
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enable them to expand the market for their banking and related
financial services; (5) the Merger will expand the number and
diversity of Tysons' shareholder base and enhance the liquidity
of equity investments in Tysons; and (6) no gain or loss
generally will be recognized by stockholders of Tysons who
receive shares of MSBC Common Stock in exchange for their shares
of Tysons Common Stock.
NOW, THEREFORE, in consideration of their mutual promises
and obligations, the parties hereto adopt and make this Plan and
prescribe the terms and conditions thereof and the manner and
basis of carrying it into effect, which shall be as follows:
I. THE MERGER
(A) The Continuing Corporation. On the Merger Effective
Date (as hereinafter defined), the Holding Company shall merge
into Tysons (the "Merger"), the separate existence of the Holding
Company shall cease and Tysons (the "Continuing Corporation")
shall survive.
(B) Rights, Etc. Upon consummation of the Merger, the
Continuing Corporation shall thereupon and thereafter possess all
of the rights, privileges, immunities and franchises, of a public
as well as of a private nature, of each of the merging
corporations; and all property, real, personal and mixed, and all
debts due on whatever account, and all other choses in action,
and all and every other interest, of or belonging to or due to
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each of the corporations so merged, shall be deemed to be vested
in the Continuing Corporation without further act or deed; and
the title to any real estate or any interest therein, vested in
any of such corporations, shall not revert or be in any way
impaired by reason of the Merger as provided by the laws of the
Commonwealth of Virginia.
(C) Liabilities. Upon consummation of the Merger, the
Continuing Corporation shall thenceforth be responsible and
liable for all the liabilities, obligations and penalties of each
of the corporations so merged.
(D) Articles of Incorporation; Bylaws; Directors; Officers
of Continuing Corporation. The Articles of Incorporation of the
Continuing Corporation shall be those of the Holding Company, and
the Bylaws of the Continuing Corporation shall be those of the
Holding Company. The officers and directors of Tysons in office
immediately prior to the Merger becoming effective shall be the
officers and directors of the Continuing Corporation, who shall
hold office until such time as their successors are elected and
qualified in accordance with the Articles and Bylaws of the
Continuing Corporation.
(E) Merger Closing; Merger Effective Date. The Merger
shall become effective on the date and time the Virginia State
Corporation Commission ("Virginia Corporation Authority") issues
a certificate of merger reflecting the Merger (the "Merger
Effective Date"). Unless otherwise agreed upon in writing by the
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chief executive officers of MSBC and Tysons, subject to the
conditions to the obligations of the parties to effect the Merger
as set forth in Article VI, the parties shall use their
reasonable efforts to cause the Merger Effective Date to occur on
an end of the month date as soon as practicable following the
satisfaction of the conditions set forth in Paragraphs (A), (B)
and (C) of Article VI but in no event before December 31, 1997.
All documents required by the terms of this Agreement to be
delivered at or prior to consummation of the Merger will be
exchanged by the parties at the closing of the Merger (the
"Merger Closing"), which shall be held on such date as MSBC shall
designate to Tysons and which is reasonably acceptable to Tysons
after the satisfaction of the condition set forth in Paragraphs
(A), (B) and (C) of Article VI but no later than the Merger
Effective Date. Prior to the Merger Closing, Holding Company and
Tysons shall execute and deliver to the Virginia Corporation
Authority, Articles of Merger containing a Plan of Merger in
substantially the form of Exhibit A hereto (the "Plan of Merger")
for approval.
II. MERGER CONSIDERATION
(A) Outstanding Holding Company Common Stock. The shares
of Holding Company Common Stock issued and outstanding
immediately prior to the Merger Effective Date, on and after the
Merger Effective Date, shall be converted automatically into that
number of shares of common stock of the Continuing Corporation
issued and outstanding immediately prior to the Merger Effective
Date and shall constitute the only issued and outstanding shares
of common stock of the Continuing Corporation.
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(B) Outstanding MSBC Common Stock. The shares of MSBC
Common Stock issued and outstanding immediately prior to the
Merger Effective Date shall, on and after the Merger Effective
Date, remain issued and outstanding shares of MSBC Common Stock.
(C) Outstanding Tysons Common Stock. Each share (excluding
shares held by Tysons or by MSBC or by any of the MSBC
Subsidiaries, in each case other than in a fiduciary capacity or
as a result of debts previously contracted (the "Excluded
Shares")) of Tysons Common Stock issued and outstanding
immediately prior to the Merger Effective Date shall, by virtue
of the Merger, automatically and without any action on the part
of the holder thereof on the Merger Effective Date, become and be
converted into the right to receive that number of shares of MSBC
Common Stock obtained by dividing the Negotiated Price per Tysons
Common Share by the average of the bid/asked price per share for
MSBC Common Stock ("Average MSBC Share Price") as reported on the
NASDAQ/NMS for each of the twenty (20) trading days preceding the
later to occur of (i) the shareholder approvals contemplated by
Paragraph A of Article VI and (ii) the financial institutions
regulatory approvals (but not the associated statutory waiting
periods) contemplated by Paragraph B of Article VI. If the
Exchange Ratio computed in accordance with the immediately
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preceding sentence is less than .507, the Exchange Ratio shall be
.507, and if the Exchange Ratio computed in accordance with the
immediately preceding sentence is greater than .620, the Exchange
Ratio shall be .620 ("Exchange Ratio"). The Negotiated Price per
Tysons Common Share is $14.50.
(D) Stockholder Rights; Stock Transfers. On the Merger
Effective Date, holders of Tysons Common Stock shall cease to be,
and shall have no rights as, stockholders of Tysons other than to
receive the Merger consideration provided under Paragraph (C)
above. After the Merger Effective Date, there shall be no
transfers on the stock transfer books of Tysons or the Continuing
Corporation of the shares of Tysons Common Stock which were
issued and outstanding immediately prior to the Merger becoming
effective.
(E) Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of MSBC Common Stock and no
certificates or scrip therefor, or other evidence of ownership
thereof, will be issued in the Merger; instead, MSBC shall pay to
each holder of Tysons Common Stock who would otherwise be
entitled to a fractional share an amount in cash determined by
multiplying such fractional share by the Average MSBC Share
Price.
(F) Exchange Procedures. As promptly as practicable after
the Merger Effective Date, MSBC shall send or cause to be sent to
each former stockholder of Tysons of record immediately prior to
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the Merger Effective Date transmittal materials for use in
exchanging such stockholder's certificates of Tysons for the
consideration set forth in Paragraph (C) above. Any fractional
share checks which a Tysons stockholder shall be entitled to
receive in exchange for such stockholder's shares of Tysons
Common Stock, and any dividends paid on any shares of MSBC Common
Stock, that such stockholder shall be entitled to receive prior
to the delivery to MSBC of such stockholder's certificates
representing all of such stockholder's shares of Tysons Common
Stock will be delivered to such stockholder only upon delivery to
MSBC of the certificates representing all of such shares (or
indemnity satisfactory to MSBC, in its judgment, if any of such
certificates are lost, stolen or destroyed). No interest will be
paid on any such fractional share checks or dividends which the
holder of such shares shall be entitled to receive upon such
delivery. After the Merger Effective Date, to the extent
permitted by law, former stockholders of record of Tysons shall
be entitled to vote at any meeting of holders of MSBC Common
Stock, the number of whole shares of MSBC Common Stock into which
their respective shares of Tysons Common Stock are converted,
regardless of whether such holders have exchanged their
certificates representing Tysons Common Stock for certificates
representing MSBC Common Stock in accordance with the provisions
of this Plan.
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(G) Shares Held by Tysons or MSBC. Each of the shares of
Tysons Common Stock and any Tysons Warrants held by Tysons, TNB,
MSBC or any MSBC Subsidiary, in each case other than in a
fiduciary capacity or as a result of debts previously contracted,
shall be canceled and retired at the Merger Effective Date and no
consideration shall be issued in exchange therefor.
(H) Anti-Dilution Provisions. In the event MSBC changes
the number of shares of MSBC Common Stock issued and outstanding
prior to the Merger Effective Date as a result of a stock split,
stock dividend, recapitalization or similar transaction with
respect to the outstanding MSBC Common Stock (but not including
shares issued in connection with a merger, share exchange or
similar transaction) and the record date therefor shall be prior
to the Merger Effective Date, the Exchange Ratio shall be
proportionately adjusted.
(I) Dividends. Tysons shareholders shall not under any
circumstances be entitled to any dividend (cash or otherwise)
declared by MSBC with a record date prior to the Merger Effective
Date.
(J) ISO's and Stock Appreciation Rights. From and after
the Merger Effective Date, all ISO's to purchase shares of Tysons
Common Stock which are then outstanding and unexercised, shall be
converted into and become options with respect to MSBC Common
Stock, and MSBC shall assume each such option and right, in
accordance with the terms of the plan and agreement by which it
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is evidenced. From and after the Merger Effective Date, (i) each
such ISO assumed by MSBC may be exercised solely for shares of
MSBC Common Stock, (ii) the number of shares of MSBC Common Stock
subject to each ISO shall be equal to the number of shares of
Tysons Common Stock subject to such ISO immediately prior to the
Merger Effective Date multiplied by the Exchange Ratio, and (iii)
the per share exercise price under each such ISO shall be
adjusted by dividing the per share exercise price of each such
ISO by the Exchange Ratio, and rounding to the nearest cent. The
maximum number of shares of Tysons Common Stock which are
issuable upon exercise of such ISO's as of the date hereof are
Previously Disclosed. No stock appreciation rights are
outstanding and unexercised as of the date hereof.
III. ACTIONS PENDING MERGER
A. Tysons Actions. Without the prior written consent or
approval of a proper officer of MSBC, Tysons will not and will
cause its Subsidiary not to:
(1) Stock Distributions. Make, declare or pay any dividend
other than cash dividends on Tysons Common Stock or TNB Common
Stock, as the case may be, consistent with past practice and in
an amount not greater than the last previous cash dividend paid
prior hereto by Tysons or TNB, respectively, or declare or make
any distribution on, or directly or indirectly combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its
17
capital stock (other than in a fiduciary capacity in the ordinary
course of its business and consistent with past practice or in
connection with stock received on a debt previously contracted
basis) or authorize the creation or issuance of, or issue (except
as may be required to comply with Tysons' obligations under the
Tysons Warrants or Tysons Options), any additional shares of it
capital stock, or any options, calls, warrants or commitments
relating to its capital stock or any securities or obligations
convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire from its shares of its capital
stock or any securities or obligations convertible into or
exchangeable for shares of its capital stock, or issue any long-
term debt;
(2) Employment Contracts. Enter into any employment
contracts with, increase the rate of compensation of (except in
accordance with existing policy consistent with past practice or
pursuant to any agreement existing and as in effect on the date
hereof and Previously Disclosed), or pay or agree to pay any
bonus to, any of its directors, officers or employees, except in
accordance with plans or agreements existing and as in effect on
the date hereof and Previously Disclosed;
(3) Employee Benefit Plans. Enter into or modify (except
as may be required by applicable law to change the voting
provisions of the Tysons Financial Corporation Employee Stock
Ownership Plan ("Tysons ESOP") to comply with the provisions of
18
this Agreement) any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors,
officers or other employees, including without limitation taking
any action that accelerates (1) the vesting or exercise of any
benefits payable thereunder, or (2) the right to exercise any
employee stock options or stock appreciation rights outstanding
thereunder;
(4) Asset Disposition. Dispose of, grant an encumbrance
against or discontinue any portion of its assets, business
operations or properties, which is material to Tysons or TNB or
merge or consolidate with, or acquire all or any substantial
portion of, the business or property of any other entity (except
foreclosures, acquisitions of control in its fiduciary capacity
or securitization transactions, in each case in the ordinary
course of business consistent with past practice);
(5) Constituent Documents. Amend its Articles of
Incorporation or Bylaws as delivered to MSBC in connection with
this Plan;
(6) Material Transactions. (a) Settle any material
litigation or (b) enter into any material transaction or make any
material commitment relating to its assets and business,
19
otherwise than as contemplated hereby or in the ordinary course
of business consistent with past practice;
(7) Actions Not in Ordinary Course. Take any other action
not in the ordinary course of business consistent with past
practice; or
(8) Agreements. Agree to take any of the foregoing actions
(except to the extent Tysons' Board of Directors is required to
authorize any such agreement on behalf of Tysons in order to
comply with the directors' fiduciary duties as advised in writing
by counsel).
IV. REPRESENTATIONS AND WARRANTIES
Tysons hereby represents and warrants to MSBC and, upon
Holding Company's execution of this Agreement, to Holding
Company, and MSBC hereby represent and warrant to Tysons and
Holding Company upon its execution of this Agreement hereby
represents and warrants as applicable to MSBC, as follows:
(A) Recitals. The facts set forth in the Recitals of this
Plan with respect to it and its respective Subsidiaries are true
and correct;
(B) Capitalization. The outstanding shares of it and its
respective Subsidiaries are validly issued and outstanding, fully
paid and nonassessable, and subject to no preemptive rights;
(C) General Corporate Power and Ownership of Properties.
It and its respective Subsidiaries have the corporate power and
authority to carry on their respective business as now being
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conducted and to own all of their respective material properties
and assets and have good and marketable title to or a valid
leasehold interest in all of the material properties and assets
thereof reflected as owned or leased in its balance sheet as of
December 31, 1996, and included in the Financial Reports (as
hereinafter defined) and in all material properties and assets
acquired or leased by it or its respective Subsidiaries, since
December 31, 1996. In the case of Tysons and its Subsidiary
only, none of such properties is subject to any mortgage, pledge,
lien, security interest, encumbrance, restriction or charge of
any kind except: (1) mechanic's, carrier's, worker's or similar
liens arising in the ordinary course of business; (2) as
Previously Disclosed; (3) imperfections of title, if any, none of
which is material in amount or materially detracts from the value
or impairs the existing use of the property subject thereto or
the operations of Tysons or its Subsidiary; and (4) liens of
current taxes not due and payable;
(D) Specific Corporate Authority. Subject to any necessary
receipt of approval by its stockholders and the regulatory
approvals referred to in Paragraphs (B) and (C) of Article VI,
this Plan has been authorized by all necessary corporate action
of it and is a valid and binding agreement of it enforceable
against it in accordance with its terms, subject to (1)
bankruptcy, insolvency and other laws of general applicability
relating to or affecting creditors' rights; and (2) general
21
equity principles and, in the case of Tysons, it represents and
warrants to MSBC that the Stock Option Agreement has been
authorized by all necessary corporate action of it and is a valid
and binding agreement of it enforceable against it in accordance
with its terms subject only to conditions (1) and (2) in the
immediately preceding sentence.
(E) No Default. The execution, delivery and performance of
this Plan and, in the case of Tysons, the Stock Option Agreement
and the consummation of the transactions contemplated hereby and
thereby by it, will not constitute: (1) a breach of violation
of, or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license,
franchise or agreement, indenture, instrument or authorization
applicable to, of or held by it or its Subsidiaries, or to which
it, its Subsidiaries or its or its Subsidiaries' respective
properties are subject or bound, which breach, violation or
default is reasonably likely to have a Material Adverse Effect on
it; or (2) a breach or violation of, or a default under, its or
its Subsidiaries' respective Articles of Incorporation or Bylaws;
(F) Financial Reports. Except as Previously Disclosed, (1)
its Annual Report on Form 10-K, for the fiscal year ended
December 31, 1996, and all other documents filed or to be filed
subsequent to December 31, 1996 under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act in the form filed with the SEC, all
of which have been Previously Disclosed (all of the foregoing
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reports and documents of MSBC and Tysons, respectively, are
hereinafter referred to as its "Financial Reports") did not and
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and
each of the balance sheets in or incorporated by reference into
the Financial Reports (including the related notes and schedules
thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its
date and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in
the Financial Reports (including any related notes and schedules
thereto) fairly presents and will fairly present the results of
operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein, in each case in
accordance with generally accepted accounting principles
consistently applied, except as may be noted therein, subject to
normal and recurring year-end audit adjustments in the case of
unaudited statements;
(G) Regulatory Reports. In the case of Tysons only, it has
Previously Disclosed to MSBC copies of (1) TNB's "Annual Report
of Condition and Income" on Form FFIEC 033, as delivered to the
appropriate bank regulatory authority for the years ended
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December 31, 1994, December 31, 1995, and December 31, 1996 and
for the period ending March 31, 1997; and (2) all other material
reports and documents filed with or sent to any federal or state
regulatory authority by it or TNB during 1995, 1996 and 1997; and
(3) to the extent not prohibited by law, all reports of any state
or federal regulatory authority relating to it or TNB and
received during or relating to matters in 1995, 1996 or 1997 (all
of the foregoing reports and documents are hereinafter referred
to as "Regulatory Reports"). Tysons represents and warrants to
MSBC that, as of their respective dates the Regulatory Reports
referred to in (1) and (2) above complied in all material
respects with all legal and regulatory requirements applicable
thereto and the Regulatory Reports referred to in (1) above are
accurate in all material respects and fairly present the
financial condition and income of the reporting entity for the
period(s) covered thereby.
(H) Material Events. Except as Previously Disclosed, since
December 31, 1996, no event has occurred which is reasonably
likely to have a Material Adverse Effect on it;
(I) Litigation. Except as Previously Disclosed, no
litigation, proceeding or controversy before any court or
governmental agency is pending which is reasonably likely to have
a Material Adverse Effect on it and, to the best of its
knowledge, no such litigation, proceeding or controversy has been
threatened;
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(J) Material Contracts. Except as Previously Disclosed or
as previously disclosed in the Financial Reports and except for
this Plan and the Stock Option Agreement, neither it nor any
Subsidiary is bound by any material contract (as to it and its
Subsidiaries taken as a whole) to be performed after the date
hereof;
(K) Commissions. All negotiations relative to this Plan
and the transactions contemplated hereby have been carried on by
it directly with the other parties hereto and no action has been
taken by it that would give rise to any valid claim against any
party hereto for a brokerage commission, finder's fee or other
like payment, excluding a fee in an amount Previously Disclosed
to be paid to Xxxxx & Xxxxxxxxxxxx, who have acted as financial
advisors to Tysons;
(L) ERISA. Except as Previously Disclosed:
(1) all "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), covering employees or former
employees of it and/or its Subsidiaries (the "Employees") are
Previously Disclosed, true and complete copies of which have been
made available to the other party;
(2) all employee benefit plans covering Employees, to
the extent subject to ERISA (the "ERISA Plans"), are in
compliance with ERISA, except for failure to so comply which are
not reasonably likely, individually or in the aggregate, to have
25
a Material Adverse Effect on it; each ERISA Plan which is an
"employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Pension Plan") and which is intended to be
qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), has either (a) received a
favorable determination letter from the Internal Revenue Service,
or (b) is or will be the subject of an application for a
favorable determination letter, and it is not aware of any
circumstances likely to result in the revocation or denial of any
such favorable determination letter; there is no pending or, to
the best of its knowledge, threatened litigation relating to the
ERISA Plans which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it; and neither
it nor any Subsidiary has engaged in a transaction with respect
to any ERISA Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject it or
the Subsidiary to a tax or penalty imposed by either Section 4975
of the Code or Section 502(i) of ERISA in an amount which is
reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on it;
(3) no liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by it or any
Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any of them or any
26
entity which is considered one "employer" with it or any
Subsidiary under Section 4001(a)(14) of ERISA or Section 414 of
the Code (an "ERISA Affiliate"), which liability is reasonably
likely to have a Material Adverse Effect on it; neither it nor
any Subsidiary has incurred and does not expect to incur any
withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA; and to its knowledge no notice
of a "reportable event" within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or the
Pension Plan of an ERISA Affiliate within the 12-month period
ending on the date hereof;
(4) during the current plan year and the immediately
preceding three plan years of such ERISA Plan, all contributions
required to be made under the terms of any ERISA Plan of it or an
ERISA Affiliate have been timely made; and no pension plan of it
or an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA which is reasonably likely,
individually or in the aggregate, to have a Material Adverse
Effect on it;
(5) under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior
to the date hereof, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section
27
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the ERISA Plan's most recent actuarial
valuation) did not exceed the then current value of the assets of
such ERISA Plan, and there has been no material adverse change in
the financial position of such ERISA Plan since the last day of
the most recent plan year; and
(6) there are no material current or projected
liabilities for retiree health or life insurance benefits;
(M) Regulatory Approvals. It knows of no reason why the
regulatory approvals referred to in Paragraphs (B) and (C) of
Article VI should not be obtained without the imposition of any
condition of the type referred to in the proviso following such
Paragraph (C).
(N) Agreements with Bank Regulators. Except as Previously
Disclosed neither MSBC or Tysons, respectively, are a party to
any written agreement or memorandum of understanding with, or a
party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or a recipient of any
extraordinary supervisory letter from, any bank regulator which
restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve
policies or its management, nor has either party been advised by
any bank regulator that it is contemplating issuing or requesting
any such order, decree, agreement, memorandum of understanding,
28
extraordinary supervisory letter, commitment letter or similar
submission.
(O) Subsidiaries. In the case of Tysons only, it has no
subsidiaries other than TNB, all of the outstanding shares of
which are validly issued, fully paid and nonassessable (except
pursuant to 12 USC Section 55) and are owned by it free and clear
of all liens, claims, encumbrances and restrictions on transfer
whatsoever. In the case of MSBC only, its only Subsidiaries are
the MSBC Subsidiaries, all of the outstanding shares of which
(with the exception of the Holding Company as of the date hereof)
are validly issued, fully paid and nonassessable (except pursuant
to 12 USC Section 55 or comparable state law) and are owned by it
free and clear of all liens, claims, encumbrances and restrictions
on transfer whatsoever.
(P) Collective Bargaining Contracts. Neither it nor any
Subsidiary is a party to or is bound by any collective bargaining
agreement, contract or other agreement or understanding with a
labor union or labor organization or is the subject of a
proceeding asserting that it or the Subsidiary has committed an
unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel it or the Subsidiary to
bargain with any labor organization as to wages and conditions of
employment. There is not any strike or other labor dispute
involving it or any Subsidiary and to the best of its knowledge
none is threatened. It is not aware of any activity involving
29
the employees of it or any Subsidiary seeking to certify a
collective bargaining unit or engaging in any other organization
activity;
(Q) Classified Assets. Tysons has Previously Disclosed a
list of the loans, extensions of credit or other assets of TNB
that were classified by the examiners of the Office of the
Comptroller of the Currency ("OCC") in its last respective
preceding examination ("TNB Asset Classification") and has
Previously Disclosed a list of its loans and extensions of credit
by TNB in the respective initial principal amount of $50,000 or
more, any payment of which is, as of the date so disclosed,
delinquent ("TNB Delinquent Loan List"). The TNB Asset
Classification and the TNB Delinquent Loan List are,
respectively, accurate and complete in all material respects and
no amounts of loans, extensions of credit or other assets that
have been classified as of the respective date of the TNB Asset
Classification by any regulatory examiner as "Other Loans
Specially Mentioned", "Substandard", "Doubtful", "Loss", or words
of similar import are excluded from the amounts disclosed in the
TNB Asset Classification as of the respective date thereof other
than amounts of loans, extensions of credit or other assets that
were charged off by TNB prior to the respective date of the TNB
Asset Classification;
(R) Affiliates. In the case of Tysons only, except as
Previously Disclosed, to the best of its knowledge, there is no
30
person who, as of the date of this Plan, may be deemed to be an
"affiliate" of it as that term is used in Rule 145 under the
Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the "Securities Act"; hereinafter the
Securities Act and the Exchange Act are referred to as the
"Federal Securities Laws");
(S) Insurance Policies. In the case of Tysons only, it has
made available to MSBC correct and complete copies of all of its
or its Subsidiary's insurance policies respecting the properties,
operations, liabilities, officers, directors and employees
thereof, all of which are in full force and effect or provide
coverage to it or its Subsidiary and their respective officers,
directors and employees.
(T) MSBC Stock. In the case of MSBC only, the shares of
MSBC Common Stock to be issued in exchange for shares of Tysons
Common Stock and for the Directors Options upon consummation of
the Merger and upon exercise of the ISO's after the Merger
Effective Date will have been duly authorized and, when issued in
accordance with the terms of this Plan, will be validly issued,
fully paid and nonassessable and subject to no preemptive rights;
(U) Takeover Laws. In the case of Tysons only, it has
taken all necessary action to exempt the transactions
contemplated by this Plan and the Stock Option Agreement from, or
the transactions contemplated by this Plan and the Stock Option
Agreement are otherwise exempt from, any applicable state
31
takeover laws in effect as of the date of this Plan, including,
without limitation, Articles 14 and 14.1 of the Virginia Stock
Corporation Act.
(V) Approval of This Transaction. In the case of Tysons
only, it has taken all action so that the entering into of this
Plan and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby (including without
limitation the Merger) or any other action or combination of
actions, or any other transactions, contemplated hereby or
thereby do not and will not (1) require a vote of stockholders
(other than as set forth in Paragraph (A) of Article VI); or (2)
result in the grant of any rights to any person under its
Articles of Incorporation or Bylaws or, except as Previously
Disclosed, under any agreement; or (3) except as set forth in
Paragraphs (B) and (C) of Article VI, and Section 8 of the Stock
Option Agreement and except for consents required to be obtained
from the holders of Tysons Warrants and Tysons Options, require
any consent or approval under any law, rule, regulation,
judgment, decree, order, governmental permit or license or,
except as Previously Disclosed, the consent or approval of any
other party to any agreement, indenture or instrument; or (4)
restrict or impair in any way the ability of MSBC to exercise the
rights granted hereunder or under the Stock Option Agreement.
(W) Environmental Laws. As to Tysons only,
(1) To its knowledge, it, its Subsidiary, the
Participation Facilities and the Loan Properties (each as
32
defined below) are, and have been, in compliance with all
Environmental Laws (as defined below), except for instances of
noncompliance which are not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on it;
(2) there is no proceeding pending or, to its
knowledge, threatened before any court, governmental agency or
board or other forum in which it, its Subsidiary, or any
Participation Facility has been, or with respect to threatened
proceedings, reasonably would be expected to be, named as a
defendant or potentially responsible party (a) for alleged
noncompliance (including by any predecessor) with any
Environmental Law or (b) relating to the release or threatened
release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site owned,
leased or operated by it, its Subsidiary or any Participation
Facility, except for such proceedings pending or threatened that
are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on it;
(3) to its knowledge, there is no proceeding pending
or threatened before any court, governmental agency or board or
other forum in which any Loan Property, it or its Subsidiary is
or with respect to threatened proceedings, reasonably would be
expected to be, named as a defendant or potentially responsible
party (a) for alleged noncompliance (including by any
33
predecessor) with any Environmental Law or (b) relating to the
release or threatened release into the environment of any
Hazardous Material, except for such proceedings pending or
threatened that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it;
(4) to its knowledge, there is no reasonable basis for
any proceeding of a type described in subparagraphs (2) or (3)
above;
(5) to its knowledge, during the period of its or its
Subsidiary's (a) ownership or operation of any of their
respective current properties, (b) participation in the
management of any Participation Facility, or (c) holding of a
security interest in a Loan Property, there have been no releases
of Hazardous Material in, on, under or affecting any such
property, Participation Facility or Loan Property, except for
such releases that are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on it;
(6) to its knowledge, prior to the period of its or
its Subsidiary's: (a) ownership or operation of any of their
respective current properties, (b) participation in the
management of any Participation Facility, or (c) holding of a
security interest in a Loan Property, there were no releases of
Hazardous Material in, on, under or affecting any such property,
Participation Facility or Loan Property, except for such releases
34
that are not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on it;
(7) the following definitions apply for purposes of
this Paragraph (V): "to its knowledge" means the actual
knowledge of any officer of Tysons, any information contained in
the business records of Tysons and, with respect to any "Loan
Property", any information contained in a Phase I or Phase II
environmental assessment furnished to Tysons; "Loan Property"
means any property owned by it or its Subsidiary or in which it
or its Subsidiary holds a security interest, and, where required
by the context, includes the owner or operator of such property,
but only with respect to such property; "Participation Facility"
means any facility in which it or its Subsidiary participates in
the management and, where required by the context, includes the
owner or operator or such property, but only with respect to such
property; "Environmental Law" means (a) any federal, state and
local law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, relating to (i) the protection, preservation
or restoration of the environment (including, without limitation,
air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or safety, or
(ii) the exposure to, or the use, storage, recycling, treatment,
35
generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Material, in each
case as amended and as now in effect and includes, without
limitation, the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Superfund Amendments
and Reauthorization Act, the Federal Water Pollution Control Act
of 1972, the federal Clean Air Act, the Federal Clean Water Act,
the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the
Federal Solid Waste Disposal Act and the Federal Toxic Substances
Control Act, and the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act
of 1970, each as amended and as now in effect, and (b) any common
law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence,
nuisance, trespass and 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
Hazardous Material; "Hazardous Material" means any substance
presently listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, under
any Environmental Law, whether by type or quantity, and includes,
without limitation, any oil or other petroleum product, toxic
waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste or petroleum or any
36
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl;
(X) Taxes. Except as Previously Disclosed, to the best of
its knowledge (1) all reports and returns with respect to Taxes
(as defined below) that are required to be filed by or with
respect to it or its Subsidiaries, including without limitation
consolidated federal income tax returns of it and its
Subsidiaries (collectively, the "Tax Returns"), have been duly
filed, or requests for extensions have been timely filed and have
not expired, for periods ended on or prior to June 30, 1997, and
on or prior to the date of the most recent fiscal year end
immediately preceding the Merger Effective Date, except to the
extent all such failures to file, taken together, are not
reasonably likely to have a Material Adverse Effect on it, and
such Tax Returns were true, complete and accurate in all material
respects, (2) all material taxes (which shall mean federal,
state, local or foreign income, gross receipts, windfall profits,
severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes imposed on
the income, properties or operations of it and its Subsidiaries,
together with any interest, additions, or penalties with respect
thereto and any interest in respect of such additions or
penalties, collectively the "Taxes") shown to be due on the Tax
Returns have been paid in full, (3) all Taxes due with respect to
37
completed and settled examinations have been paid in full, (4) no
issues have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns which
are reasonably likely to result in a determination that would
have a Material Adverse Effect on it, except as reserved against
in its Financial Reports, and (5) no waivers of statutes of
limitations (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service) have
been given by or requested with respect to any Taxes of it or its
Subsidiaries;
(Y) Legal Compliance. Except as Previously Disclosed, it
and its Subsidiaries are in substantial compliance with all
applicable laws relating to their respective business or
employment practices or the ownership of their respective
properties and are in substantial compliance with each applicable
law, ordinance, order, decree or resolution of any governmental
entity applicable to the conduct thereof or the ownership of the
properties thereto in each case which either alone or in the
aggregate have or would have a Material Adverse Effect on it.
(Z) Certain Interests. Except in arm's length transactions
pursuant to normal commercial terms and conditions, no executive
officer or director of it or its Subsidiaries has any material
interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of it and its
Subsidiaries, except for the usual rights of a shareholder in it;
38
no such person is indebted to it, except for normal business
expense advances and for loans made, in the case of MSBC, by an
MSBC Bank Subsidiary, and in the case of Tysons, by TNB, in each
case in full compliance with the law, including but not limited
to, Regulation O of the Board of Governors of the Federal Reserve
System ("FRB") and in the ordinary course of business; and it is
not indebted to such person except for amounts due under normal
and disclosed compensation arrangements or reimbursement of
ordinary business expenses.
(AA) Licenses. It and its Subsidiaries have in effect all
approvals, authorizations, consents, licenses, clearances, and
orders of and registrations with all governmental and regulatory
authorities the failure to have and comply with which either
alone or in the aggregate would have a Material Adverse Effect on
it.
(BB) Liabilities. Except to the extent reflected or
reserved against in its Financial Reports and except as
Previously Disclosed or incurred in the ordinary course of
business since the date of its most recent Financial Report, it
and its Subsidiaries have no material liability or obligation of
any nature whether accrued, absolute, contingent or otherwise and
whether due or to become due;
(CC) Ten Percent Shareholders. It has no shareholder who
owns of record or beneficially 10% or more of the outstanding
shares of Tysons Common Stock, or MSBC Common Stock, as the case
39
may be, and there is no person known to it who, directly or
indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares (1) voting power which
includes the power to vote or to direct the voting of, such
shares and/or (2) investment power, which includes the power to
dispose or to direct the disposition, of 10% or more of the
outstanding shares of Tysons Common Stock or MSBC Common Stock,
as the case may be (all of the foregoing, "10% Ownership").
There is no person to its knowledge who, directly or indirectly,
has created or uses a trust, proxy, power of attorney, pooling
arrangement or any other contract, arrangement or device with the
purpose or effect of divesting such person of 10% Ownership or
preventing the vesting of 10% Ownership. A person shall also be
deemed to be a beneficial owner for purposes of the foregoing if
that person has the right to acquire beneficial of such shares
within 60 days;
(DD) Option Shares. In the case of Tysons only, the Option
Shares (as defined in the Stock Option Agreement) when issued
upon exercise of the Option, will be validly issued, fully paid
and nonassessable and subject to no preemptive rights.
(EE) Articles and Bylaws. In the case of Tysons only,
true, correct and current copies of its and its Subsidiary's
Articles of Incorporation (or Association) and bylaws have been
delivered to MSBC.
40
(FF) Dissenters Rights. In the case of Tysons only, the
holders of shares of Tysons Common Stock have no dissenters
rights of appraisal in accordance with Article 15 of the Virginia
Stock Corporation Act.
(GG) MSBC Shareholder Approval. In the case of MSBC, the
approval of the Merger by the holders of shares of MSBC Common
Stock is not required.
V. COVENANTS
Tysons hereby covenants to MSBC, and MSBC hereby covenants
to Tysons, that:
(A) Best Efforts to Complete Merger. Subject to the terms
and conditions of this Plan, it shall use its best efforts in
good faith to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or desirable,
or advisable under applicable laws, as promptly as practicable so
as to permit consummation of the Merger within the time
contemplated by this Agreement and to otherwise enable
consummation of the transactions contemplated hereby and by the
Stock Option Agreement and shall cooperate fully with the other
parties hereto to that end (it being understood that any
amendments to the Registration Statement (as hereinafter defined)
or a resolicitation of proxies as a consequence of an acquisition
agreement by MSBC shall not violate this covenant), including (1)
using its best efforts to lift or rescind any order adversely
affecting its ability to consummate the transactions contemplated
41
herein and in the Stock Option Agreement and to cause to be
satisfied the conditions referred to in Article VI and in the
Stock Option Agreement, and each of Tysons and MSBC shall use,
and shall cause their respective Subsidiaries to use, their
respective best efforts to obtain all consents (governmental or
other) necessary or desirable for the consummation of the
transactions contemplated by this Plan and the Stock Option
Agreement; and (2) in the case of Tysons, cooperating with MSBC
in supplying such information as MSBC may reasonably request in
connection with any public offerings of securities by MSBC prior
to the Merger Effective Date;
(B) Tysons Proxy Statement. In the case of Tysons only,
(1) it shall promptly prepare and provide to MSBC prior to its
filing and mailing a proxy statement (the "Proxy Statement") to
be mailed to the holders of Tysons Common Stock in connection
with the Merger and to be filed by MSBC in a registration
statement (the "Registration Statement") with the SEC, which
shall conform to all applicable legal requirements; (2) without
limiting the foregoing, at the time such Proxy Statement or any
amendment or supplement thereto is mailed to holders of Tysons
Common Stock and at all times thereafter up to and including the
meeting of Tysons shareholders referred to in Subparagraph (3) of
this Paragraph (B), the Proxy Statement and such amendments and
supplements will comply in all material respects with the
provisions (to the extent applicable) of the Exchange Act and
42
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements contained therein not
misleading; provided, however, in no event shall any party hereto
be liable for any untrue statement of a material fact or omission
to state a material fact in the Proxy Statement made in reliance
upon, and in conformity with, written information concerning
another party furnished by such other party specifically for use
in the Proxy Statement; (3) it shall hold a special meeting (the
"Meeting") of the holders of Tysons Common Stock as soon as
practicable after the Registration Statement has become effective
for purposes of voting upon this Plan, the Plan of Merger and the
Merger contemplated hereby and thereby, and (4) subject to the
fiduciary duties of the Board of Directors of Tysons (as advised
in writing by its counsel), it shall use its best efforts to
solicit and obtain votes of the holders of Tysons Common Stock in
favor of the above proposals and shall once, at MSBC's request,
recess or adjourn the Meeting for a period not exceeding ten days
(unless Tysons consents to a longer period) if such recess or
adjournment is deemed by MSBC to be necessary or desirable;
(C) Registration Statement Contents. When the Registration
Statement or any post-effective amendment or supplement thereto
shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the Meeting, such
Registration Statement and all amendments or supplements thereto,
43
with respect to all information set forth therein furnished or to
be furnished by Tysons relating to Tysons and its Subsidiary and
by MSBC relating to MSBC and the MSBC Subsidiaries (1) will
comply in all material respects with the provisions of the
Securities Act and any other applicable statutory or regulatory
requirements, and (2) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained
therein not misleading; provided, however, in no event shall any
party hereto be liable for any untrue statement of a material
fact or omission to state a material fact in the Registration
Statement made in reliance upon, and in conformity with, written
information concerning another party furnished by such other
party specifically for use in the Registration Statement. In
connection with the preparation of the Registration Statement and
related Prospectus/Proxy Statement, each will cooperate with the
other and will furnish the information concerning itself required
by law to be included therein;
(D) Effectiveness of Registration Statement. MSBC will
advise Tysons, promptly after MSBC receives notice thereof, of
the time when the Registration Statement has become effective or
any supplement or amendment has been filed or of the issuance of
any stop order or the suspension of the qualification of the MSBC
Common Stock for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose, or
44
of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information;
(E) Public Announcements. It agrees that, unless approved
by the other party hereto in advance, it will not issue any press
release or written statement for general circulation relating to
the transactions contemplated hereby, except as otherwise
required by law or applicable NASD or stock exchange rule;
(F) Review of Information. (1) Upon reasonable notice, it
shall afford the other party hereto, and its officers, employees,
counsel, accountants and other authorized representatives,
access, during normal business hours throughout the period prior
to the Merger Effective Date, to all of its properties, books
contracts, commitments and records to the extent permitted by law
and, during such period, it shall furnish promptly to the other
party hereto (a) a copy of each material report, schedule and
other document filed by it pursuant to the requirements of the
Federal Securities Laws or any state laws, rules and regulations
regulating the issuance, sale or exchange of securities or the
markets in which any of the foregoing occurs ("Blue Sky Law(s)"
which together with the Federal Securities Laws are hereinafter
referred to as the "Securities Laws") or banking laws, and (b)
all other information concerning its business, properties and
personnel as the other parties hereto may reasonably request,
provided that no investigation pursuant to this Paragraph (F) by
any party shall affect or be deemed to modify or waive any
45
representation or warranty made by any other party hereto or the
conditions to the obligation of the first party to consummate the
transactions contemplated by the Plan; and (2) each party hereto
will not use any information obtained pursuant to this Paragraph
(F) for any purpose unrelated to the consummation of the
transactions contemplated by this Plan and the Stock Option
Agreement and, if the Merger is not consummated, will hold all
information and documents obtained pursuant to this paragraph in
confidence (as provided in Paragraph (F) of Article VIII) unless
and until such time as such information or documents become
publicly available other than by reason of any action or failure
to act by such party or as it is advised by counsel that any such
information or document is required by law or applicable NASD or
stock exchange rule to be disclosed, and in the event of the
termination of this Plan, each party will, upon request by the
other party, deliver to the other all documents so obtained by it
or destroy such documents;
(G) No Solicitation. In the case of Tysons only, (1) it
shall not, and shall direct the officers, directors, employees
and other persons affiliated with it or any investment banker,
attorney, accountant or other representative of it, not to,
directly or indirectly, solicit or encourage inquiries or
proposals with respect to, or (except as required by the
fiduciary duties of its Board of Directors as advised in writing
by its counsel) furnish any nonpublic information relating to or
46
participate in any negotiations or discussion concerning, any
acquisition or purchase of all or a substantial portion of the
assets of, or a substantial equity interest in, it or any merger
or other business combination with it other than as contemplated
by this Plan; (2) shall notify MSBC immediately if any such
inquiries or proposals are received by, or any such negotiations
or discussions are sought to be initiated with, it; and (3) shall
instruct its officers, directors, agents, advisors and affiliates
to refrain from doing any of the foregoing;
(H) Filing of Registration Statement. In the case of MSBC
only, it shall, as promptly as practicable following the date of
this Plan, prepare and file the Registration Statement with the
SEC and MSBC shall use its best efforts to cause the Registration
Statement to be declared effective as soon as practicable after
the filing thereof;
(I) Blue Sky. In the case of MSBC only, it shall use its
best efforts to obtain, prior to the effective date of the
Registration Statement, all necessary Blue Sky Law permits and
approvals, provided that MSBC shall not be required by virtue
thereof to submit to general jurisdiction in any state;
(J) Affiliates. In the case of Tysons only, it will cause
each person who may be deemed to be an "affiliate" of it for
purposes of Rule 145 under the Securities Act to execute and
deliver to in the form attached hereto as Exhibit B restricting
the disposition of such affiliate's shares of Tysons Common Stock
47
and the shares of MSBC Common Stock to be received by such person
in exchange for such person's shares of Tysons' Common Stock;
(K) Tysons' Policies and Practices. In the case of Tysons
only: Tysons shall and shall cause its Subsidiary to use its
best efforts to modify and change its credit, investment,
litigation, and real estate valuation policies and practices
(including loan classifications and levels of reserves) prior to
the Merger Closing so as to be consistent on a mutually
satisfactory basis with those of MSBC and generally accepted
accounting principles. Tysons shall not be required to modify or
change any policies or practices, however, until (x) satisfaction
of the conditions set forth in Paragraphs (A), (B) and (C) of
Article VI, (y) such time as Tysons and MSBC shall reasonably
agree that the Merger Closing will occur prior to public
disclosure of such modifications or changes in regular periodic
earnings releases or periodic reports filed with the SEC or other
applicable governmental authority available to the public, and
(z) such time as MSBC acknowledges in writing that all conditions
to MSBC's obligation to consummate the Merger (and MSBC's rights
to terminate this Plan) have been waived or satisfied; provided,
however, that in all circumstances Tysons shall and shall cause
its Subsidiary to make such modifications and changes not later
than immediately prior to the Merger Effective Date. Tysons'
representations, warranties and covenants and contained in the
Plan shall not be deemed to be untrue or breached in any respect
48
for any purpose as a consequence of any modifications or changes
undertaken solely on account of this Paragraph (K);
(L) State Takeover Laws. In the case of Tysons only, it
shall not take any action that would cause the transactions
contemplated by this Plan and/or the Stock Option Agreement to be
subject to any applicable state takeover statute in effect as of
the date of this Plan and shall take all necessary steps to
exempt (or ensure the continued exemption of) the transactions
contemplated by this Plan and the Stock Option Agreement from, or
if necessary challenge the validity or applicability of, any
applicable state takeover law, as now or hereafter in effect,
including, without limitation, Articles 14 and 14.1 of the
Virginia Stock Corporation Act;
(M) Tysons Special Shareholder Rights. In the case of
Tysons only: (1) it shall take all necessary steps to ensure
that the entering into of this Plan and the Stock Option
Agreement and the consummation of the transactions contemplated
hereby and thereby (including without limitation the Merger and
the exercise of the Option) and any other action or combination
of actions, or any other transactions contemplated hereby or
thereby do not and will not result in the grant of any rights to
any person under the Articles of Incorporation of Bylaws of
Tysons or under any agreement to which Tysons is a party (other
than as Previously Disclosed); or (2) it shall not restrict or
49
impair in any way the ability of MSBC to exercise the rights
granted hereunder or under the Stock Option Agreement;
(N) Shareholder Approval. In the case of Tysons, only, it
shall not adopt any plan or other arrangement granting any rights
to any shareholders that would adversely affect in any way MSBC's
rights under this Plan or the Stock Option Agreement and, in the
case of MSBC only, it shall not amend the terms of its
Participating Cumulative Preferred Stock, Series A, of which
100,000 shares are authorized but unissued as of March 31, 1997,
in a manner that affects holders of Tysons Common Stock in a
disproportionate manner;
(O) Best Efforts for Merger. Subject to the terms of this
Agreement, it undertakes and agrees to use its best efforts to
cause the Merger to be effected;
(P) Government Applications. In the case of MSBC only, it
shall promptly prepare and submit an application to the FRB and
the Virginia State Corporation Commission for approval of the
Merger and promptly make all appropriate filings to secure all
other approvals, consents and rulings which are necessary for the
consummation of the Merger by MSBC. Both MSBC and Tysons will use
their best efforts to obtain and will cooperate with each other
in making applications for such approvals or other actions
advisable in the reasonable judgment of MSBC, with the consent of
Tysons, such consent not to be unreasonably withheld, to
consummate the Merger including, but not limited to, promptly
50
furnishing information relating to it and its Subsidiaries
required to be set forth therein; provided, however, that any
approval shall not require a change which materially adversely
impacts the economic or business benefits to either MSBC or
Tysons of the transactions contemplated by this Plan so as to
render inadvisable the consummation of the Merger in the
reasonable opinion of the Board of Directors of either MSBC or
Tysons;
(Q) Environmental Tests. Tysons and its Subsidiary will
allow MSBC to conduct, through designated representatives,
environmental and engineering tests provided that no test or
information discovered pursuant thereto shall be deemed to affect
or modify or waive any representation or warranty made by Tysons;
(R) Listing of MSBC Common Stock. MSBC will use its best
efforts, prior to the Merger Effective Date, to cause the shares
of the MSBC Common Stock to be issued to Tysons shareholders in
connection with the consummation of the Plan, to be listed on the
NASDAQ/NMS, upon official notice of issuance.
(S) Execution of Plan by Holding Company. Upon the
incorporation of the Holding Company and its due organization
subsequent to the date of this Agreement and prior to Merger
Closing, MSBC shall cause the Holding Company by a duly
authorized officer to execute this Plan.
(T) Tysons Stock Directors Options. Not less than thirty
days prior to the Merger Closing each holder of a Directors
51
Option shall have entered into a written agreement with Tysons
for the express benefit of and reasonably satisfactory to MSBC
agreeing to accept as of the Merger Closing in full satisfaction
of the optionee's rights under such Directors Option that number
of shares of MSBC Common Stock equal to the quotient obtained by
dividing (y) the difference between $14.50 minus the price per
share at which the optionee could have exercised his option
rights under the terms of his Directors Option ("Strike Price"),
by (z) the Average MSBC Share Price ("Option Ratio"). If the
Option Ratio computed in accordance with the immediately
preceding sentence is less than the ratio ("Bottom Ratio")
obtained by dividing (y) the difference between $14.50 minus the
Strike Price, by (z) $28.60, the Option Ratio shall be the Bottom
Ratio; if the Option Ratio computed in accordance with the
immediately preceding sentence is greater than the ratio ("Top
Ratio") obtained by dividing (y) the difference between $14.50
minus the Strike Price, (z) by $23.40, the Option Ratio shall be
the Top Ratio. As of the Merger Closing, the optionees with
respect to all outstanding Directors Options shall by agreement
be entitled to receive from MSBC only the shares of MSBC Common
Stock as provided in the agreements executed in accordance with
this Paragraph and shall have no further rights under the terms
of their Directors Options.
(U) Tysons Warrants. Tysons shall enter into an agreement
with each holder of Tysons Warrants, reasonably acceptable to
52
MSBC, by which such holder shall agree to exchange each Tysons
Warrant at least 30 days prior to the Merger Closing for a number
of shares of Tysons Common Stock per Warrant equal to the
percentage obtained by dividing (y) the difference between $14.50
minus the strike price per Warrant by, (z) $14.50.
(V) Payment of ESOP Loan. Prior to the Merger Closing,
Tysons shall pay or cause to be paid and satisfy in full that
certain promissory note dated June, 1994, in the initial
principal amount of $500,000, payable to the order of Xxxxxxx
Xxxxxxxx and issued by Tysons Financial Corporation Employee
Stock Ownership Plan and Trust and cause to be discharged in full
all obligations under that certain Term Loan Agreement dated as
of June, 1994, pursuant to which such promissory note was issued;
provided, however, Tysons shall not be obligated to do so until
the (x) satisfaction of the conditions set forth in Paragraphs
(A), (B), and (C) of Article VI, (y) such time as Tysons and MSBC
shall reasonably agree that the Merger Closing will occur prior
to the public disclosure of such action in regular public
earnings releases or periodic reports filed with the SEC; and (z)
such time as MSBC acknowledges in writing that the conditions to
MSBC's obligation to consummate the Merger (and MSBC's rights to
terminate this Plan) have been waived or satisfied.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
Consummation of the Merger is conditioned upon:
53
(A) Shareholder Approval. Approval of the Merger and the
other transactions contemplated hereby (including any actions
contemplated by Paragraph (L) of Article VIII) by the requisite
vote of the stockholders of Tysons;
(B) Specific Regulatory Approval. Procurement of the
approval by the FRB and the Virginia State Corporation Commission
of the Merger and procurement of all other regulatory consents
and approvals applicable to financial institutions and their
holding companies and satisfaction of all other regulatory
requirements applicable to financial institutions and their
holding companies necessary for consummation of the Merger, and
the expiration of the statutory waiting periods relating thereto.
(C) General Governmental Approval. Procurement of all other
governmental consents and approvals and satisfaction of all other
requirements prescribed by law which are necessary to the
consummation of the Merger; provided, however, that no approval or
consent in Paragraph (B) or (C) of this Article VI shall have imposed
any condition or requirement which would materially adversely impact
the economic or business benefits to either MSBC or Tysons of the
transactions contemplated by this Plan so as to render inadvisable
the consummation of the Merger;
(D) No Countervening Orders. There shall not be in effect
any order, decree or injunction of any court or agency of
54
competent jurisdiction that enjoins or prohibits consummation of
the Merger;
(E) Accountants' Reports as to MSBC. Tysons and its
directors shall have received from Coopers & Xxxxxxx letters,
dated the date of or shortly prior to (i) the mailing of the
Proxy Statement, and (ii) the Merger Effective Date, in form and
substance satisfactory to Tysons with respect to MSBC's
consolidated financial position and results of operations, which
letters shall be based upon customary specified procedures
undertaken by such firm;
(F) Accountants' Reports as to Tysons. MSBC shall have
received from KPMG Peat Marwick, LLP, dated the date of or
shortly prior to (1) the mailing of the Proxy Statement, (2) the
public offerings of any securities by MSBC prior to the Merger
Effective Date, and (3) the Merger Effective Date, in form and
substance satisfactory to MSBC with respect to Tyson's financial
position and results of operations, which letters shall be based
upon customary specified procedures undertaken by such firm;
(G) MSBC Legal Opinion. Tysons shall have received an
opinion, dated the Merger Effective Date, of Flippin, Densmore,
Xxxxx, Xxxxxxxxxx & Xxxxxx, P.C., counsel for MSBC and the
Holding Company, in form reasonably satisfactory to Tysons, which
shall cover the matters contained in Exhibit C hereto;
(H) Tysons Legal Opinion. MSBC and its directors and
officers who sign the Registration Statement shall have received
55
an opinion, dated the Merger Effective Date of Xxxxxxx, Baetjer
and Xxxxxx, LLP in form reasonably satisfactory to MSBC, which
shall cover the matters contained in Exhibit D hereto;
(I) MSBC Representations and Warranties. (1) Each of the
representations and warranties contained herein of MSBC shall be
true and correct as of the date of this Plan and upon the Merger
Effective Date with the same effect as though all such
representations and warranties had been made on the Merger
Effective Date, except (a) for any such representations and
warranties made as of a specified date, which shall be true and
correct as of such date, (b) as expressly contemplated by this
Plan, or (c) for representations and warranties (other than the
representations and warranties set forth in Paragraph (A) of
Article IV, which shall be true and correct in all material
respects) the inaccuracies of which relate to matters that,
individually or in the aggregate, do not materially adversely
affect the Merger and the other transactions contemplated by this
Plan, and (2) each and all of the agreements and covenants of
MSBC to be performed and complied with pursuant to this Plan and
the other agreements contemplated hereby prior to the Merger
Effective Date shall have been duly performed and complied with
in all material respects, and Tysons shall have received a
certificate or certificates signed by the Chief Executive Officer
and Chief Financial Officer of MSBC dated the Merger Effective
Date, to such effect;
56
(J) Tysons' Representations and Warranties. (1) Each of the
representations and warranties contained herein of Tysons shall
be true and correct as of the date of this Plan and upon the
Merger Effective Date with the same effect as though all such
representations and warranties had been made on the Merger
Effective Date, except (a) for any such representations and
warranties made as of a specified date, which shall be true and
correct as of such date, (b) as expressly contemplated by this
Plan, or (c) for representations and warranties (other than the
representations and warranties set forth in Paragraph (A) of
Article IV, which shall be true and correct in all material
respects) the inaccuracies of which relate to matters that,
individually or in the aggregate, do not materially adversely
affect the Merger and the other transactions contemplated by this
Plan, and (2) each and all of the agreements and covenants of
Tysons to be performed and complied with pursuant to this Plan
and the other agreements contemplated hereby prior to the Merger
Effective Date shall have been duly performed and complied with
in all material respects, and MSBC shall have received a
certificate signed by the Chief Executive Officer and the Chief
Financial Officer of Tysons dated the Merger Effective Date, to
such effect;
(K) Registration Statement Effectiveness. The Registration
Statement shall have become effective and no stop order
suspending the effectiveness of the Registration Statement shall
57
have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC or any other regulatory
authority;
(L) Blue Sky Approvals. MSBC shall have received all Blue
Sky Law approvals, permits and other authorizations necessary to
consummate the Merger;
(M) Tax Free Reorganization Opinion. MSBC and Tysons shall
have received an opinion from Xxxxxxx, Baetjer and Xxxxxx, LLP to
the effect that (1) the acquisition of Tysons Common Stock by
MSBC and the Merger constitutes a reorganization under Section
368 of the Code, and (2) no gain or loss will be recognized by
stockholders of Tysons who receive shares of MSBC Common Stock in
exchange for their shares of Tysons Common Stock except that gain
or loss may be recognized as to cash received in lieu of
fractional share interests and, in rendering their opinion, may
require and rely upon representations contained in certificates
of officers of MSBC, Tysons and others;
(N) Listing of MSBC Common Stock. The shares of MSBC
Common Stock issuable pursuant to the Merger shall have been
approved for listing on the NASDNAQ/NMS, subject to official
notice of issuance;
(O) Affiliate Letters. MSBC shall have received from each
affiliate of Tysons the affiliates letter referred to in
Paragraph (J) of Article V;
58
(P) Tysons Fairness Opinion. At the time the Proxy
Statement is mailed to the holders of shares of Tysons Common
Stock and on the Merger Effective Date, the Board of Directors of
Tysons shall have received an opinion from Xxxxx & Xxxxxxxxxxxx
that the terms of the Merger are fair to the shareholders of
Tysons from a financial point of view;
(Q) Exercise of Tysons Warrants. As of a date which is no
later than 30 days before the Merger Closing, each and every
Tysons Warrant shall have been exercised and no Tysons Warrants
shall be issued and outstanding;
(R) Tysons Directors Options. Each optionee with respect
to each Tysons Directors Option shall by written agreement with
Tysons for the express benefit of MSBC shall be entitled to
receive from MSBC only the shares of MSBC Common Stock provided
in Paragraph T of Article V.
(S) ISO's. As of a date which is no later than 30 days
before the Merger Closing, each and every holder of an ISO to
purchase shares of Tysons Common Stock, to the extent legally
necessary to allow such conversion, shall have entered into a
written agreement with Tysons for the express benefit of and
reasonably acceptable to MSBC obligating such holder to accept
the conversion of such ISO stock options with respect to MSBC
Common Stock as contemplated by Paragraph (J) of Article II
hereof.
59
provided, however, that a failure to satisfy any of the
conditions set forth in the proviso following Paragraph (C)
or in Paragraph (F), (H), (J), (L), (M), (O), or (Q), or
(R), or (S) of this Article VI shall only constitute
conditions if asserted by MSBC and a failure to satisfy any
of the conditions set forth in the proviso following
Paragraph (C), Paragraph (E), (G), (I), (M), (N) or (P) of
this Article VI shall only constitute conditions if asserted
by Tysons.
VII. TERMINATION.
This Plan may be terminated prior to the Merger Effective
Date, either before or after receipt of required stockholder
approval:
(A) Mutual Consent. by the mutual consent of MSBC and
Tysons, if the Board of Directors of each so determines by vote
of a majority of the members of its entire Board;
(B) On Breach. By MSBC or Tysons, if its Board of Directors
so determines by vote of a majority of the members of its entire
Board, in the event of (1) a breach by the other party of any
representation or warranty contained herein, which breach cannot
be or has not been cured within thirty (30) days after the giving
of written notice to the breaching party of such breach and which
breaches, individually or in the aggregate, materially adversely
affect the Merger and the other transactions contemplated by this
60
Plan, or (2) a material breach by the other party of any of the
covenants or agreements contained herein, which breach cannot be
or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach; provided,
however, that a breach can only be asserted as a basis for
termination pursuant to this paragraph (B) by a party who is not
itself at such time in breach hereof and provided, further, that
termination under this Paragraph (B) shall not relieve any party
from liability under Paragraph (E) of Article VIII;
(C) Failure to Consummate on Time. By MSBC or Tysons, if
its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not
consummated by March 31, 1998, and provided, further, that
termination under this Paragraph (C) shall not relieve any party
from liability under Paragraph (E) of Article VIII;
(D) Failure to Obtain Certain Approvals. By MSBC or Tysons,
if its Board of Directors so determines by a vote of a majority
of the members of its entire Board, in the event that (1) any
common stockholder approval contemplated by Paragraph (A) of
Article VI is not obtained at a meeting or meetings called for
the purpose of obtaining such approval; (2) if any regulatory
approval contemplated by Paragraph (B) of Article VI to the
extent necessary to consummate the Merger legally, is finally and
unconditionally denied; provided, however, that termination under
61
this Paragraph (D) shall not relieve any party from liability
under Paragraph (E) of Article VIII.
(E) Failure to Execute Stock Option Agreement. By MSBC if,
prior to 5:00 p.m. on June 25, 1997, Tysons does not execute and
deliver to MSBC the Stock Option Agreement.
(F) Possible Adjustment in Exchange Ratio and Option Ratio.
By Tysons by vote of a majority of the members of its entire
Board during the ten (10) day period commencing on the
Determination Date if both of the following conditions are
satisfied:
(1) if the Average MSBC Determination Price
for MSBC Common Stock on the Determination Date is
less than $23.40; and
(2) if the First Percentage exceeds the
Second Percentage by at least ten (10) percentage
points;
subject, however, to the immediately following four sentences.
If Tysons elects to exercise its termination right pursuant to
Paragraph (F) of Article VII, it shall give prompt written notice
to MSBC (provided that such notice of election to terminate may
be withdrawn at any time within the aforementioned ten (10) day
period). During the seven (7) day period commencing with its
receipt of such notice, MSBC shall have the option of increasing
the consideration to be received by the holders of Tysons Common
Stock (including shares to be acquired pursuant to ISO's)and by
62
optionees with respect to Tysons Directors Options by adjusting
the Exchange Ratio and Option Ratio, respectively, to equal a
quotient, the numerator of which is $23.40 multiplied by the
Exchange Ratio (as then in effect) with respect to Tysons Common
Stock and the Option Ratio (as then in effect) with respect to
the Directors Options and in either case the denominator of which
is the Average MSBC Determination Price. If MSBC makes the
election contemplated by the immediately preceding sentence, it
shall give prompt written notice to Tysons of such election and
the revised Exchange Ratio and Option Ratio, whereupon no
termination shall have accrued pursuant to this Paragraph (F) and
the Plan shall remain in effect in accordance with its terms
(except as the Exchange Ratio or Option Ratio shall have been so
modified) and any references in this Plan to "Exchange Ratio" or
"Option Ratio" shall thereafter be deemed to refer to the
Exchange Ratio or Option Ratio as adjusted pursuant to this
Paragraph (F).
For purposes of this Paragraph (F) the following terms shall
have the meanings indicated:
"Average MSBC Determination Price" means the average of the
bid/asked price for MSBC Common Stock as reported on the
NASDAQ/NMS for the 20 consecutive full trading days preceding the
Determination Date.
"Determination Date" means the tenth day prior to the Merger
Closing.
63
"First Percentage" means the percentage resulting from: (a)
taking the remainder ("First Remainder") obtained by subtracting
the Average MSBC Determination Price from $27.875 (the average of
the bid and asked prices of MSBC Common Stock as reported on the
NASDAQ/NMS on July 22, 1997; and (b) dividing the First Remainder
by the Average MSBC Determination Price.
"Second Percentage" means the percentage resulting from: (a)
taking the remainder ("Second Remainder") obtained by subtracting
the SNL Southeast Bank Index reported most recently prior to the
last trading day in the measuring period for calculating the
Average MSBC Determination Price ("Recent SNL Bank Index") from
the SNL Southeast Bank Index at July 22, 1997; and (b) dividing
the Second Remainder by the Recent SNL Bank Index.
VIII. OTHER MATTERS.
(A) Survival. If the Merger Effective Date occurs, the
agreements of the parties in Paragraph (H) of Xxxxxxx XX, xxx
Xxxxxxxxxx (X), (X), (X), (X), (X), (X) and (K) of this Article
VIII shall survive the Merger Effective Date; all other
representations, warranties, agreements and covenants contained
in this Plan shall be deemed to be conditions of the Merger and
shall not survive the Merger Effective Date. If this Plan is
terminated prior to the Merger Effective Date, the agreements and
representations of the parties in Paragraph (K) of Article IV,
Paragraphs (F)(2) of Article V and Paragraphs (A), (E), (F) and
(I) of this Article VIII shall survive such termination. In the
64
event of the termination and abandonment of this Plan pursuant to
the provisions of Article VII, this Plan shall become void and
have no effect, except (1) as provided in the immediately
preceding sentence; and (2) no party shall be relieved or
released from any liability arising out of a breach of any
provisions of this Plan except as provided in Paragraph (E) of
this Article.
(B) Waiver, Amendment. Prior to the Merger Effective Date,
any provision of this Plan may be (1) waived by the party
benefited by the provision, or (2) amended or modified at any
time (including the structure of the transaction), by an
agreement in writing among the parties hereto approved by their
respective Boards of Directors and executed in the same manner as
this Plan, except that, after the vote by the stockholders of
Tysons, the consideration to be received by the stockholders of
Tysons for each share of Tysons Common Stock shall not be
decreased (except in accordance with Section 4 of the Plan of
Merger).
(C) Counterparts. This Plan may be executed in one or more
counterparts, each of which shall be deemed to constitute an
original. This Plan shall become effective when one counterpart
has been signed by each party hereto.
(D) Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of
Virginia.
65
(E) Fees and Expenses. In the event that the Plan is
terminated in accordance with the provisions of Article VII
otherwise than on account of a breach by MSBC or Tysons, each
party shall bear its own costs, expenses and fees in connection
with and arising out of the Merger and the other transactions
contemplated by this Plan (including, without limitation, amounts
paid or payable to investment bankers, to counsel and
accountants, and to governmental and regulatory agencies).
(F) Confidentiality. Except as otherwise provided in
Paragraph (F)(2) of Article V, each of the parties hereto and
their respective agents, attorneys and accountants will maintain
the confidentiality of all information provided in connection
herewith which has not been publicly disclosed.
(G) Notices. All notices, requests and other
communications hereunder to a party shall be in writing and shall
be deemed to have been duly given when delivered by hand,
telegram or facsimile (confirmed in writing) to such party at its
address set forth below or such other address as such party may
specify by notice to the parties hereto.
If to MSBC or Holding Company, to:
MainStreet BankGroup Incorporated
000 X. Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxx,
Chief Executive Officer
Copy to:
00
Xxxxxxx X. Xxxxxxxx, Xxx.
Flippin, Densmore, Xxxxx, Xxxxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Drawer 1200
Xxxxxxx, Xxxxxxxx 00000
If to Tysons, to:
Tysons Financial Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
President
Copy to:
Xxxxxxxxx X. Xxxxxx
Xxxxxxx, Baetjer & Xxxxxx, LLP
1800 Mercantile Bank & Trust Building
0 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(H) Definitions. Any term defined anywhere in this Plan
shall have the meaning ascribed to it for all purposes of this
Plan (unless expressly noted to the contrary). In addition:
(1) the term "knowledge" when used with respect to a
party shall mean the knowledge, after due inquiry, of any
"Executive Officer" of such party as such term is defined in FRB
Regulation O;
(2) the term "Material Adverse Effect," when applied to
a party, shall mean an event, occurrence or circumstance
(including without limitation (a) the making of any provisions
for possible loan and lease losses, write-downs of other real
67
estate and taxes and (b) any breach of a representation or
warranty by such party) which, in either case, (i) has or is
reasonably likely to have a material adverse effect on the
financial position, results of operations or business of the
party and its subsidiaries, taken as a whole, or (ii) would
materially impair the party's ability to perform its obligations
under this Plan or the consummation of the Merger and the other
transactions contemplated by this Plan; provided, however, that,
solely for purposes of measuring whether an event, occurrence or
circumstance has a material adverse effect on such party's
results of operations, the term "results of operations" shall
mean net interest income plus non-interest income (less
securities gains) less gross expenses (excluding provisions for
possible loan and lease losses, write-downs of other real estate
and taxes); and provided, further, that material adverse effect
and material impairment shall not be deemed to include the impact
of (x) changes in banking and similar laws of general
applicability or interpretations thereof by courts or
governmental authorities, (y) changes in generally accepted
accounting principles or regulatory accounting requirements
applicable to banks and bank holding companies generally and (z)
the effects of Merger on the operating performance of the parties
to this Plan;
(3) the term "Previously Disclosed" by a party shall
mean information set forth in a written disclosure letter that is
68
delivered by that party to the other party contemporaneously with
the execution of this Plan and specifically designated as
information "Previously Disclosed" pursuant to this Plan;
provided, further, the mere inclusion of an item in a disclosure
letter shall not be deemed an admission by a party that such item
represents a material exception of fact, event or circumstances
or that such item is reasonably likely to result in a Material
Adverse Effect.
(I) Entire Understanding. This Plan represents the entire
understanding of the parties hereto with reference to the
transactions contemplated hereby and supersede any and all other
oral or written agreements heretofore made. Nothing in this Plan
expressed or implied, is intended to confer upon any person,
other than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason
of this Plan, other than as provided in Paragraph (K) below.
(J) Benefit Plans. Upon consummation of the Merger, as
soon as administratively practicable employees of Tysons shall be
entitled to participate in MSBC's pension, severance, benefit and
similar plans on the same terms and conditions as employees of
MSBC and its Subsidiaries. With respect to the MSBC 401(k) plan,
employees of Tysons shall be given full credit for prior service
with Tysons with respect to eligibility for and vesting in such
plan. MSBC shall cause the Continuing Corporation to honor in
accordance with their terms as in effect on the date hereof, or
69
as amended after the date hereof with the prior written consent
of MSBC, all employment, severance, consulting and other
compensation contracts and agreements Previously Disclosed to
MSBC and executed in writing by both Tysons or TNB on the one
hand and any individual current or former director, officer or
employee thereof on the other hand, copies of which have
previously been delivered by Tysons to MSBC. In no event shall
the immediately preceding sentence apply to Tyson's Employee
Stock Ownership Plan which MSBC presently intends to terminate as
soon as practicable after the Merger Effective Date.
(K) Indemnification. (1) In the case of MSBC only, it
agrees that for the period of the relevant statute of limitations
but in no event less than six-years following the Merger
Effective Date, it shall cause the Continuing Corporation and any
successor thereto to indemnify and hold harmless any person who
has rights to indemnification from Tysons to the same extent and
on the same conditions as such person is entitled to
indemnification pursuant to Tysons' Bylaws as in effect on the
date of this Plan, to the extent legally permitted to do so, with
respect to matters occurring on or prior to the Merger Effective
Date (regardless of whether a claim is asserted in connection
therewith on or prior to the Merger Effective Date or
thereafter). Without limiting the foregoing, in any case in which
approval by the Continuing Corporation may be required to
effectuate any such indemnification, MSBC shall cause the
70
Continuing Corporation to direct, at the election of the party to
be indemnified, that the determination of any such approval shall
be made by independent counsel mutually agreed upon between MSBC
and the indemnified party. MSBC shall use its reasonable best
efforts to provide coverage to the officers and directors of the
Continuing Corporation under MSBC policy or policies of director
and officers liability insurance on the same or substantially
similar terms then in effect for the directors and officers of
MSBC and the Continuing Corporation shall reimburse MSBC for the
additional premium incurred by it in connection with providing
such coverage; (2) If MSBC or any of its successors or assigns
shall consolidate with or merge into any other entity and shall
not be the continuing or surviving entity of such consolidation
or merger or shall transfer all or substantially all of its
assets to any entity, then and in each case, proper provisions
shall be made so that the successors and assigns of MSBC shall
assume the obligations set forth in this Paragraph (K)(1). MSBC
shall pay all reasonable costs, including attorneys' fees, that
may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Paragraph
(K)(1).
(L) Acquisition of MSBC. In the event that MSBC is
acquired through a merger, share exchange or other business
combination in which it is not the surviving entity, MSBC agrees
that it shall make provision by which the acquirer shall assume
71
this Agreement and the holders of Tysons Common Shares shall be
entitled to receive the same consideration for such shares as the
holders of MainStreet Common Stock received, giving effect to the
Exchange Ratio and appropriate provision shall be made for the
holders of Tysons Warrants and Tysons Options.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly
authorized officers, all as of the day and year first above
written.
MainStreet BankGroup Incorporated
/S/ Xxxxxxx X. Xxxxxxx,
Executive Vice President and Secretary
Tysons Financial Corporation
/S/ Xxxxxx X. Xxxxx,
President/Chief Executive Officer
MB Corp.
By:_______________________________
_______________
President
72
Annex 1
to Exhibit A
PLAN OF MERGER
A. MB Corp. ("MB") is a corporation organized and existing under the
laws of the Commonwealth of Virginia.
B. Tysons Financial Corporation ("Tysons") is a corporation organized and
existing under the laws of the Commonwealth of Virginia.
C. MB and Tysons, their respective Boards of Directors and shareholders
have approved a statutory merger ("Merger") of MB (the "Disappearing
Corporation") with and into Tysons ("the Continuing Corporation").
1. Effective Time. The Merger shall become effective at the time when
a certificate of merger shall have been issued by the State Corporation
Commission of the Commonwealth of Virginia (the "Effective Time") but in
no event before December 31, 1997 and the conditions in Article VI of the
Agreement and Plan of Merger between the Continuing Corporation, the
Disappearing Corporation and MainStreet BankGroup Incorporated ("MSBC")
dated as of July 25, 1997 (the "Agreement") shall have been fulfilled or
waived.
2. Merger. At the Effective Time, the Disappearing Corporation shall be
merged with and into the Continuing Corporation in accordance with the
provisions of Article 12 of the Virginia Stock Corporation Act. The
Continuing Corporation shall be and continue in existence as the surviving
corporation and the separate corporate existence of the Disappearing
Corporation shall cease.
3. Effect of Merger on Outstanding Shares. The manner of converting or
cancelling the shares of the Disappearing Corporation and of the Continuing
Corporation shall, by virtue of the Merger, and without any action on the
part of the holders thereof be as follows:
(A) The shares of the Disappearing Corporation issued and outstanding as
of the Effective Time shall be converted into the shares of common stock of
the Continuing Corporation issued and outstanding as of the Effective Time
and shall constitute the only issued and outstanding shares of common stock
of the Continuing Corporation.
(B) Each share of the common stock, $5.00 par value per share, of
Tysons ("Tysons Common Stock") shall be converted into the right to
receive that number of shares of the common stock, $5.00 par value per
share, of MainStreet BankGroup Incorporated ("MSBC Common Stock") obtained
by dividing the Negotiated Price per share of Tysons Common Stock by the
average of the bid/asked price per share for the MSBC Common Stock as
reported on the National Association of Securities Dealers Quotations
73
System National Market System ("NASDAQ/NMS") for each of the twenty (20)
trading days preceding the later to occur of (i) the approval of
the Merger and the other transactions contemplated by the Agreement by
the shareholders of Tysons; and (ii) the financial institution regulatory
approvals (but not the statutory waiting periods) necessary for the
consummation of the Merger and the other transactions contemplated by the
Agreement. If the Exchange Ratio computed in accordance with the
immediately preceding sentence is less than .507, the Exchange Ratio shall
be .507, and if the Exchange Ratio computed in accordance with the
immediately preceding sentence is greater than .620, the Exchange Ratio
shall be .620. ("Exchange Ratio"). The Negotiated Price per share
of Tysons Common Stock is $14.50.
(C) Stockholder Rights; Stock Transfers. As of the Effective Time,
holders of the shares of Tysons Common Stock shall cease to be, and shall
have no rights as, stockholders of Tysons, other than to receive the
Merger consideration provided under Paragraph (A) above, and the
consideration provided in Paragraph (D) below. After the Effective Time,
there shall be no transfers on the stock transfer books of Tysons or
the Surviving Corporation of the shares of Tysons Common Stock which were
issued and outstanding immediately prior to the Effective Time.
(D) Fractional Shares. Notwithstanding any other provision hereof,
no fractional shares of MSBC Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in
the Merger; instead, MSBC shall pay to each holder of Tysons Common
Stock who would otherwise be entitled to a fractional share an amount
in cash determined by multiplying such fractional share by the average
of the last bid/asked price of MSBC Common Stock on the last trading
day prior to the Effective Time, as reported on the NASDAQ/NMS (as
reported by The Wall Street Journal).
(E) Exchange Procedures. As promptly as practicable after the
Effective Time, MSBC shall send or cause to be sent to each former
holder of Tysons Common Stock of record immediately prior to the
Effective Time transmittal materials for use in exchanging such
stockholder's certificates of Tysons Common Stock for the consideration
set forth in Paragraphs (A) and (D) above. Any fractional share checks
which a Tysons stockholder shall be entitled to receive in exchange for
such stockholder's shares of Tysons Common Stock, and any dividends
paid on any shares of MSBC Common Stock that such stockholder shall be
entitled to receive prior to the delivery to _________________ (the
"Exchange Agent") of such stockholder's certificates representing all of
such stockholder's share of Tysons Common Stock will be delivered to
such stockholder only upon delivery to the Exchange Agent of the
certificates representing all of such shares (or indemnity satisfactory
to MSBC and the Exchange Agent, in their judgment, if any of such
certificates are lost, stolen or destroyed). No interest will be
74
paid on any such fractional share checks or dividends to which the
holder of such shares shall be entitled to receive upon such delivery.
After the Effective Time, to the extent permitted by law, former
stockholders of record of Tysons shall be entitled to vote at any
meeting of holders of MSBC Common Stock the number of whole shares
of MSBC Common Stock into which their respective shares of Tysons
Common Stock entitle them, regardless of whether such holders have
exchanged their Tysons Common Stock for certificates representing
MSBC Common Stock in accordance with the provisions of this Plan of Merger.
(F) Anti-Dilution Provisions. In the event MSBC changes the
number of shares of MSBC Common Stock issued and outstanding prior
to the Effective Time as a result of a stock split, stock dividend,
recapitalization or similar transaction with respect to the
outstanding MSBC Common Stock (but not as a result of a merger, share
exchange or similar transaction) and the record date therefor shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
(G) Excluded Shares. Each of the shares of Tysons Common Stock held
by Tysons, MSBC or any of their respective subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted shall be canceled and retired at the Effective Time.
(H) ISO's. From and after the Effective Time, all stock options
granted to officers, employees of Tysons in such capacity to purchase
shares of Tysons Common Stock which are then outstanding and unexercised,
shall be converted into and become options with respect to MSBC Common
Stock, and MSBC shall assume each option and right, in accordance with
the terms of the plan and agreement by which it is evidenced. From
and after the Effective Time, (i) each such ISO assumed by MSBC may
be exercised solely for shares of MSBC Common Stock, (ii) the number
of shares of MSBC Common Stock subject to each ISO shall be equal to
the number of shares of Tysons Common Stock subject to such ISO
immediately prior to the Effective Time multiplied by the Exchange
Ratio, and (iii) the per share exercise price under each such ISO
shall be adjusted by dividing the per share exercise price of each
such ISO by the Exchange Ratio, and rounding to the nearest cent.
(I) Tysons Directors Options. As of the Effective Time, all holders
of options to purchase Tysons Common Stock granted to directors of
Tysons in such capacity ("Directors Options") shall receive in full
satisfaction of the optionee's rights under such Options that number
of shares of MSBC Common Stock equal to the quotient obtained by
dividing (x) the difference of $14.50 minus the price per share at
which the optionee could have exercised his option rights under the
terms of the Directors Option ("Strike Price"), by (2) the Average
MSBC Share Price ("Option Ratio"). If the Option Ratio computed in
accordance with the immediately preceding sentence is less than the
ratio ("Bottom Ratio") obtained by dividing (y) the difference of
$14.50 minus the Strike Price by, (z) $28.60, the Option Ratio shall
be the Bottom Ratio; if the Option Ratio computed in accordance with
the immediately preceding sentence is greater than the ratio ("Top
Ratio") obtained by dividing (y) the difference of $14.50 minus
75
the Strike Price by, (y) $23.40, the Option Ratio shall be the Top Ratio.
(J) Possible Adjustment in Exchange Ratio and Option Ratio. The
Agreement may be terminated prior to the Effective Time (i) as set
forth in 3 below or (ii) either before or after approval by the
stockholders of Tysons, by Tysons by vote of a majority of the members
of its entire Board during the ten (10) day period commencing on the
Determination Date if both of the following conditions are satisfied:
(1) if the Average MSBC Determination Price for MSBC Common Stock
on the Determination Date is less than $23.40; and
(2) if the First Percentage exceeds the Second Percentage by at
least ten (10) percentage points;
subject, however, to the immediately following four sentences. If
Tysons elects to exercise its termination right pursuant to clause
(ii), it shall give prompt written notice to MSBC (provided that such
notice of election to terminate may be withdrawn at any time within the
aforementioned ten (10) day period). During the seven (7) day period
commencing with its receipt of such notice, MSBC shall have the option
of increasing the consideration to be received by the holders of Tysons
Common Stock (including shares to be acquired pursuant to ISO's)
and by optionees with respect to Tysons Directors Options by adjusting
the Exchange Ratio and Option Ratio, respectively, to equal a quotient,
the numerator of which is $23.40 multiplied by the Exchange Ratio
(as then in effect) with respect to Tysons Common Stock and the
Option Ratio (as then in effect) with respect to the Directors
Options and the denominator of which in either case is the Average
MSBC Determination Price. If MSBC makes an election contemplated by
the immediately preceding sentence, it shall give prompt written notice
to Tysons of such election and the revised Exchange Ratio and Option
Ratio, whereupon no termination shall have accrued pursuant to clause
(ii) and the Agreement shall remain ineffect in accordance with its
terms (except as the Exchange Ratio and Option Ratio shall have been
so modified) and any references in this Plan to "Exchange Ratio" and
"Option Ratio" shall thereafter be deemed to refer to the Exchange
Ratio and Option Ratio as adjusted pursuant to this Subparagraph (J).
For purposes of this Paragraph (J) the following terms shall have
the meanings indicated:
"Average MSBC Determination Price" means the average of the bid/asked
price for MSBC Common Stock as reported on the NASDAQ/NMS for the 20
consecutive full trading days preceding the Determination Date.
76
"Determination Date" means the tenth day prior to the Merger Closing.
"First Percentage" means the percentage resulting from: (a) taking the
remainder ("First Remainder") obtained by subtracting the Average MSBC
Determination Price from $22.875 (the average of the bid and asked prices
of MSBC Common Stock as reported on the NASDAQ/NMS on July 22, 1997;
and (b) dividing the First Remainder by the Average MSBC Determination
Price.
"Second Percentage" means the percentage resulting from: (a) taking
the remainder ("Second Remainder") obtained by subtracting the SNL
Southeast Bank Index reported most recently prior to the last trading
day in the measuring period for calculating the Average MSBC Price
("Recent SNL Bank Index") from the SNL Southeast Bank Index at July 22,
1997; and (b) dividing the Second Remainder by the Recent SNL Bank Index.
"Merger Closing" means an end of the month date designated by MSBC and
reasonably acceptable to Tysons after the satisfaction of the conditions
to the Merger set forth in Paragraphs (A), (B) and (C) of Article VI of
the Agreement but no later than the Effective Time or before December 31,
1997.
(K) Tysons Warrants. As of the Merger Closing no warrants to purchase
Tysons Common Stock shall be outstanding and unexercised.
3. Termination of Abandonment. In addition to the termination provisions
set forth above, this Plan of Merger shall terminate and the Merger be
abandoned at any time prior to the Effective Time if the Agreement is
terminated in accordance with its terms.
4. Amendment. Pursuant to Section 13.1-718(I) of the Virginia Stock
Corporation Act, the Board of Directors of MSBC and Tysons reserve the
right to amend this Plan of Merger at any time prior to the issuance by
the Virginia State Corporation Commission of the certificate of merger;
provided, however, that any such amendment made subsequent to the
submission of this Plan of Merger to the shareholders of Tysons, may not:
(i) alter or change the amount or kind of shares, securities, cash,
property or rights to be received in exchange for or in conversion of all
or any of the shares of any class or series of such corporation;
(ii) alter or change any of the terms and conditions of this Plan of
Merger if such alteration or change would adversely affect the shares of
any class or series of such corporation; or (iii) alter or change any
term of the articles of incorporation of any corporation (except as
provided herein) whose shareholders must approve this Plan of Merger.
5. Articles of Incorporation and Bylaws. The Articles of Incorporation
and Bylaws of the Disappearing Corporation in effect at the Effective
Time shall continue (until amended or repealed as provided by applicable
77
law) to be the Articles of Incorporation and Bylaws of the Continuing
Corporation after the Effective Time.
6. Officers and Directors. The officers and directors of the Continuing
Corporation immediately prior to the Effective Time together with such
additional officers and directors as may thereafter be elected, shall be
the officers and directors of the Continuing Corporation after the
Effective Time to serve, in accordance with the Bylaws of the Continuing
Corporation until their successors are duly elected and qualified or
their earlier death, resignation or removal.
78
EXHIBIT B
Form of Tysons Affiliate's Letter
_______________, 19__
MainStreet BankGroup Incorporated
address
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger,
dated as of ___________, 1997, by and between MainStreet BankGroup
Incorporated, a Virginia corporation ("MSBC"), MB Corporation, a
Virginia corporation (the "Holding Company") and Tysons Financial
Corporation ("Tysons"), (the "Agreement"), the Holding Company, a wholly
owned subsidiary of MSBC, shall merge with and into Tysons (the "Merger").
As a result of the Merger the undersigned may receive shares of Common
Stock, $5.00 par value per share, of MSBC ("MSBC Common Stock"). The
undersigned would receive such shares in exchange for shares owned by the
undersigned of Common Stock, $5.00 par value per share, of Tysons.
The undersigned hereby represents, warrants to, and covenants
with, MSBC that in the event the undersigned receives any MSBC Common
Stock as a result of the Merger:
(A) The undersigned shall not make any sale, transfer or other
disposition of the MSBC Common Stock in violation of the Securities Act
of 1933, as amended, or the rules and regulations thereunder (the "Act").
(B) The undersigned has carefully read this letter and discussed its
requirements and other applicable limitations upon the undersigned's
ability to sell, transfer or otherwise dispose of MSBC Common Stock to
the extent the undersigned felt necessary, with the undersigned's counsel
or counsel for Tysons.
(C) The undersigned will not sell, transfer or otherwise dispose of
MSBC Common Stock issued to the undersigned in the Merger unless (i)
such sale, transfer or other disposition has been registered under the
Act, (ii) such sale, transfer or other disposition is made in conformity
with the provisions of Rule 145 under the Act (as such rule may be
hereafter from time to time be amended), or (iii) in the opinion of
counsel in form and substance reasonably acceptable to MSBC, in which
counsel for MSBC concurs, or in a "no-action" letter obtained by the
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79
undersigned from the staff of the Securities and Exchange Commission
(the "Commission"), a determination is made that such sale, transfer
or other disposition will not violate or is otherwise exempt from
registration under the Act.
(D) The undersigned understands that MSBC is under no obligation
to register the sale, transfer or other disposition of shares of
MSBC Common Stock by the undersigned or on the undersigned's behalf
under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
(E) The undersigned also understands that stop transfer instructions
will be given to MSBC's transfer agent with respect to MSBC Common
Stock owned by the undersigned and that there will be placed on the
certificates for the MSBC Common Stock issued to the undersigned, or
any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued
in a transaction to which Rule 145(d) under the Securities
Act of 1933 applies. The shares represented by this certificate
may only be transferred in accordance with the terms of a letter
agreement dated __________________, 199___ between the registered
holder hereof and MainStreet BankGroup Incorporated, a copy of
which agreement is on file at the principal offices of MainStreet
BankGroup Incorporated."
(F) The undersigned also understands that unless the transfer
by the undersigned of the undersigned's MSBC Common Stock has
been registered under the Act or is a sale made in conformity
with the provisions of Rule 145(d) under the Act, MSBC reserves
the right, in its sole discretion, to place the following legend
on the certificates issued to any transferee of shares from the
undersigned:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a transaction
to which Rule 145 under the Securities Act of 1933 applies.
The shares have been acquired by the holder not with a view to,
or for resale in connection with, any distribution thereof
B-2
80
within the meaning of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise transferred except in
accordance with an exemption from the registration requirements
of the Securities Act of 1933."
It is understood and agreed that the legends set forth in
paragraphs (E) and (F) above shall be removed by delivery of
substitute certificates without such legend if the undersigned shall
have delivered to MSBC (i) a copy of a "no action" letter from the
staff of the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to MSBC, in which counsel for MSBC concurs,
to the effect that such legend is not required for purposes of the
Act, or (ii) reasonably satisfactory evidence or representations that
the shares represented by such certificates are being or have been
transferred in a transaction made in conformity with the provisions
of Rule 145(d).
Very truly yours,
____________________________
Name:
[add below the signatures of
all registered owners (other
than nominee) of shares deemed
beneficially owned by the
affiliate]
____________________________
Name:
____________________________
Name:
____________________________
Name:
Acknowledged this ___ day of
___________________, 199___.
MAINSTREET BANKGROUP INCORPORATED
By: ________________________
Name:
Title:
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81
EXHIBIT C
The opinion of counsel for MainStreet BankGroup Incorporated
("MSBC") contemplated in Paragraph (G) of Article VI of the Agreement
and Plan of Merger to which this EXHIBIT C is attached (the "Plan")
shall be to the following effect (all terms used herein which are
defined in the Plan have the meanings set forth therein):
(A) MSBC and MB Corporation (the "Holding Company") are
each corporations duly organized and existing in good standing under
the laws of the Commonwealth of Virginia;
(B) MSBC and the Holding Company have the corporate power and
authority to carry on their respective business as it is now being
conducted and to own all their respective material property and assets;
(C) the outstanding shares of capital stock of MSBC and of Holding
Company are validly issued and outstanding, fully paid and nonassessable
and subject to no preemptive rights. Except as Previously Disclosed,
there are no outstanding options, warrants, rights to subscribe to or
securities convertible into shares of MSBC Common Stock. Except for
_____________________________, there are no shares of MSBC Preferred
Stock outstanding and except as Previously Disclosed there are no
outstanding options, warrants, rights to subscribe to or securities
or rights convertible into shares of MSBC Preferred Stock.
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82
(D) MSBC and the Holding Company have each taken all required
corporate action to approve and adopt the Plan and the Plan is a
valid and binding agreement of it enforceable against it in accordance
with the terms of the Plan, subject to bankruptcy, insolvency,
fraudulent transfer, moratorium and other laws of general applicability
relating to or affecting creditors' rights in general and to general
equity principles (provided, however, that such counsel need not render
any such opinion with respect to any indemnification provisions);
(E) the execution, delivery and performance of the Plan by MSBC
and by the Holding Company, respectively, did not, and the consummation of
the transactions contemplated thereby by them does not, constitute
(i) to the knowledge of such counsel, a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of MSBC or any of its subsidiaries or to which it or any of
its subsidiaries is subject, which breach, violation or default to the
knowledge of such counsel would have a Material Adverse Effect
on MSBC or (ii) a breach or violation of or a default under the
Articles of Incorporation or Bylaws of MSBC or of Holding Company;
and, (iii) to such counsel's knowledge, the consummation of the
transactions contemplated by the Plan, does not require any
material consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or,
C-2
83
except as Previously Disclosed, the material consent or approval of
any other party to any such agreement, indenture or instrument,
other than required approvals of the appropriate federal and state
regulatory authorities, and required filings under the federal
securities laws and under the state "blue sky" or securities laws
which have been made or received and are in full force and effect;
(F) except as Previously Disclosed or as reflected in
the Financial Reports, (i) to such counsel's knowledge, there
is no litigation, proceeding or controversy before any court or
governmental agency pending against MSBC or any of its subsidiaries
with respect to the transactions contemplated by the Plan by a
governmental authority which is reasonably likely to have a Material
Adverse Effect on MSBC and, to the knowledge of such counsel, no such
litigation, proceeding or controversy has been threatened or is
contemplated, (ii) neither MSBC nor any of its subsidiaries is subject
to any (as to MSBC and its subsidiaries taken as a whole) order, decree,
agreement, memorandum of understanding or similar arrangement with, or
commitment letter or similar submission to, any federal or state
governmental agency or authority charged with the supervision or
regulation of depository institutions or engaged in the insurance
of deposits which restricts or purports to restrict in any material
respect the conduct of the business of it or any of its subsidiaries
or properties, or in any manner relates to the capital, liquidity,
credit policies or management of it or any of its subsidiaries; and
(iii) to the knowledge of such counsel neither MSBC nor any
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84
of its subsidiaries has been advised by any such regulatory authority
that such authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment
letter or similar submission;
(G) the regulatory consents set forth in Paragraphs B and C of
Article VI of the Plan, necessary to permit the consummation of the
Plan, have been secured and are in full force and effect;
(H) the Registration Statement and Prospectus included
therein, as of the effective date of the Registration Statement,
complied in all material respects as to form with the provisions
of the Federal Securities Laws. Further such counsel does
not believe that, insofar as they relate to MSBC and its
subsidiaries, the Registration Statement and Prospectus, on such
effective date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(Such opinion may state that such counsel does not assume
any responsibility for the accuracy or fairness of the statements
contained in the Registration Statement and Prospectus and that
he does not express any opinion or belief as to material in the
Registration Statement insofar as it includes or reflects any
information relating to or supplied by entities other
than MSBC or its subsidiaries or as to any financial statements
or other financial data contained in the Registration Statement
and prospectus); and
(I) the shares of MSBC Common Stock to be issued
in exchange for shares of Tysons Common Stock upon
consummation of the Merger have been duly authorized and,
when issued in accordance with the terms of the Plan, will be
validly issued, fully paid and nonassessable and subject to
no preemptive rights.
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85
EXHIBIT D
The opinion of counsel for Tysons Financial Corporation
contemplated in Paragraph (H) of Article VI of the Agreement
and Plan of Merger to which this Exhibit D is attached (the "Plan")
shall be to the following effect (all terms used herein which
are defined in the Plan have the meanings set forth therein):
(A) Tysons is a corporation duly organized and
existing in good standing under the laws of the Commonwealth
of Virginia; and is authorized to do business in Virginia as a bank
holding company within the meaning of the federal Bank Holding
Company Act of 1956, as amended, and Chapter 13 of the
Virginia Banking Act;
(B) Tysons National Bank ("TNB") is a duly organized
national banking association, existing in good standing under
the laws of the United States.
(C) Tysons and TNB each have the corporate power
and authority to carry on their respective business as it is
now being conducted and to own all their respective material
property and assets;
(D) the authorized capital stock of Tysons consists
of 10,000,000 shares of common stock, $5.00 par value per
share, of which 1,071,119 shares are issued and outstanding
as of the date hereof and ________ shares are reserved for
issuance as set forth on Schedule I attached hereto; the authorized
capital stock of TNB consists of _______ shares of common stock,
$______ par value per share ("TNB Common Stock"), of which
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86
______ shares are issued and outstanding as of the date hereof and
no shares are reserved for issuance as set forth on Schedule I attached
hereto. The outstanding shares of Tysons Common Stock and TNB
Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable and are subject to no preemptive rights.
All of the issued and outstanding shares of TNB Common Stock are
held of record by Tysons. Except for the warrants described in the
next following sentence, there are no outstanding options, warrants,
rights to subscribe to or securities or rights convertible into shares
of Tysons Common Stock (other than the Options) or TNB Common
Stock. Tysons has issued and outstanding as of the date hereof
warrants to purchase up to 347,850 shares of Tysons Common
Stock at $10.00 per share. The holders of these warrants are, as
of the date hereof, obligated to redeem them in accordance with
the provisions of Paragraph (S) of Article VI of the Agreement.
(E) Tysons has taken all required corporate action to
approve and adopt the Plan and the Stock Option Agreement,
and the Plan and the Stock Option Agreement are valid and binding
agreements of it enforceable against it in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium
and other laws of general applicability relating to or affecting creditors'
rights in general, and to general equity principles (provided, however, that
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87
such counsel need not render any such opinion with respect to any
indemnification provisions);
(F) the execution, delivery and performance of the Plan and
Stock Option Agreement by Tysons did not, and the consummation of
the transactions contemplated thereby by such agreements does not,
constitute or result in (i) to the knowledge of such counsel, a breach or
violation of, or a default under any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of Tysons or TNB or to which Tysons or TNB
is subject, which breach, violation or default to the knowledge of such
counsel would have a Material Adverse Effect on Tysons or TNB; (ii)
a breach or violation of, or a default under, the Articles of Incorporation
or Bylaws of Tysons or TNB; (iii) to the knowledge of such counsel,
the consummation of the transactions contemplated by the Plan and the
Stock Option Agreement, does not require any material consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or, except as Previously Disclosed, the
material consent or approval of any other party to any such agreement,
indenture or instrument, other than the required approvals or the
appropriate federal and state regulatory authorities, and required
filings under the federal securities laws and under the state "blue sky"
or securities laws, and (iv) result in the grant of any rights to any person
under the Articles of Incorporation or Bylaws of Tysons or TNB or, to
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the knowledge of such counsel, under any agreement to which Tysons
or TNB is a party;
(G) Tysons has taken all necessary action to exempt
the transactions contemplated by the Plan and the Stock
Option Agreement from any applicable take over, business
combination, control share acquisition or similar law in effect
under the laws of the Commonwealth of Virginia as of the date
hereof, including without limitation Articles 14 and 14.1 of the
Virginia Stock Corporation Act;
(H) except as Previously Disclosed or as reflected in the
Financial Reports, (i) to such counsel's knowledge, there is no litigation,
proceeding or controversy before any court or governmental agency
pending against Tysons or TNB by a governmental authority which is
reasonably likely to have a Material Adverse Effect on Tysons and, to the
knowledge of such counsel, no such litigation, proceeding or controversy
has been threatened or is contemplated, (ii) except as Previously Disclosed
Tysons and TNB are not subject to any order, decree, agreement, memorandum
of understanding or similar arrangement with, or a commitment letter or
similar submission to, any federal or state governmental agency or authority
charged with the supervision or regulation of depository institutions or
engaged in the insurance of deposits which restricts or purports to restrict
in any material respect the conduct of their respective business or
properties, or in any manner relates to their respective capital,
liquidity, credit policies or management; and (iii) to the knowledge
of such counsel and except as Previously Disclosed, Tysons and TNB
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have not been advised by any such regulatory authority that such
authority is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter or similar
submission;
(I) the Proxy Statement (including any documents relating
to Tysons and TNB incorporated by reference therein), as of the
mailing date thereof, complied in all material respects as to form with
the requirements of all applicable laws, rules, and regulations. Further,
such counsel does not believe that, insofar as it relates to Tysons and
TNB, the Proxy Statement, on such mailing date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. (Such opinion may state that such counsel
does not assume any responsibility for the accuracy or fairness of
the statements contained in the Proxy Statement and that he does not
express any opinion or belief as to material in the Proxy Statement
insofar as it includes or reflects any information relating to or supplied
by entities other than Tysons and TNB or as to any financial statements
or other financial data contained in the Proxy Statement);
(J) except as Previously Disclosed, to the knowledge of such counsel
there are no persons who may be deemed to be "affiliate" of Tysons within
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the meaning of Rule 145 under the Securities Act.
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EXHIBIT E
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of _____________, 1997
(the "Agreement"), by and between Tysons Financial Corporation
("Issuer"), and MainStreet BankGroup, Incorporated, a Virginia
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger dated as of ____________, 1997 (the "Plan"), providing
for, among other things, the merger of Issuer with and into a
wholly-owned subsidiary of Grantee, with Issuer as the surviving
corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Plan, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and agreements
set forth herein and in the Plan, and intending to be legally bound
hereby, Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but
not defined herein shall have the meanings ascribed to such terms in
the Plan.
2. Grant of Option. Subject to the terms and conditions
set forth herein, Issuer hereby grants to Grantee an irrevocable
option (the "Option") to purchase up to ________ shares (as adjusted
as set forth herein) (the "Option Shares", which shall include the
Option Shares before and after any transfer of such Option Shares)
of Common Stock, $5.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (the
"Purchase Price") equal to the first closing price per share of Issuer
Common Stock following public announcement of the execution of
the Plan as reported on the National Association of Securities
Dealers Small Cap Market ("NASD/SCM").
3. Exercise of Option.
(a) Provided that (i) Grantee shall not be in material
breach of the agreements or covenants contained in this Agreement
or the Plan, and (ii) no preliminary or permanent injunction or other
order against the delivery of shares covered by the Option issued by
any court of competent jurisdiction in the United States shall be in
effect, Grantee may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase
Event; provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of (a) the Merger Effective
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Date, (b) termination of the Plan in accordance with the terms
thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (other than a termination of the Plan by Grantee
pursuant to Paragraph (B)(i) or Paragraph (B)(ii) of Article VII
thereof or by Grantee and Issuer pursuant to Paragraph (A) of Article
VII thereof if Grantee shall at that time have been entitled to
terminate the Plan pursuant to Paragraph (B)(i) or Paragraph (B)(ii)
of Article VII thereof (a "Default Termination")); (c) 12 months after
the termination of the Plan by Grantee pursuant to a Default
Termination (provided, however, that if within 12 months after such
termination of the Plan a Purchase Event or a Preliminary Purchase
Event shall occur, then notwithstanding anything to the contrary
contained herein (including clause (d) of this sentence), this Option
shall terminate 12 months after the first occurrence of such an event),
(d) 12 months after termination of the Plan (other than pursuant to a
Default Termination) following the occurrence of a Purchase Event
or a Preliminary Purchase Event and (e) December 31, 1998 (subject
to the proviso in clause (c) of this sentence); and provided, further,
that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law, including, without
limitation, the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). The rights set forth in Section 8 shall terminate when
the right to exercise the Option terminates (other than as a result of a
complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Without Grantee's prior written consent, Issuer
shall have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or
entered into an agreement with any person (other than Grantee or
any subsidiary of Grantee) to effect an Acquisition Transaction (as
defined below). As used herein, the term Acquisition Transaction
shall mean (a) a merger, consolidation or similar transaction
involving Issuer or any of its subsidiaries (other than transactions
solely between Issuer's subsidiaries), (b) the disposition, by sale,
lease, exchange or otherwise, of assets of Issuer or any of its
subsidiaries or (c) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any
similar transaction) securities representing 20% or more of the
voting power of Issuer or any of its subsidiaries (any of the foregoing
an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act of or the
right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 25% or more of the then outstanding shares of Issuer
Common Stock.
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(c) As used herein, a "Preliminary Purchase Event" means
any of the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act, with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 25% or
more of the then outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(ii) the holders of Issuer Common stock shall not
have approved the Plan at the meeting of such stockholders held for
the purchase of voting on the Plan, such meeting shall not have been
held or shall have been canceled prior to termination of the Plan or
Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan, in each case after it shall have
been publicly announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (a) made, or disclosed an intention
to make, a proposal to engage in an Acquisition Transaction, (b)
commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer or (c) filed an
application (or given a notice), whether in draft or final form, under
the BHC Act, the Bank Merger Act or the Change in Bank Control
Act of 1978, for approval to engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Grantee wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of
Option Shares it intends to purchase pursuant to such exercise and
(ii) a place and date not earlier than three business days nor later than
15 business days from the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"). If prior
notification to or approval oft he Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") or any other
regulatory authority is required in connection with such purchase,
Issuer shall cooperate with Grantee in the filing of the required
notice of application for approval and the obtaining of such approval
and the Closing shall occur immediately following such regulatory
approvals (and any mandatory waiting periods).
4. Payment and Delivery of Certificates.
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(a) On each Closing Date, Grantee shall (i) pay to
Issuer, in immediately available funds by wire transfer to a bank
account designated by Issuer, an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased on such
Closing Date, and (ii) present and surrender this Agreement to the
Issuer at the address of the Issuer specified in Section 12(f) hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section
4(a), (i) Issuer shall deliver to Grantee (a) a certificate or
certificates representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever and subject
to no preemptive rights, and (b) if the Option is exercised in part
only, an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Grantee shall deliver
to Issuer a letter agreeing that Grantee shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable
federal and state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required
by applicable law, certificates for the Option Shares delivered at
each Closing shall be endorsed with a restrictive legend which shall
read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS
OF ______________________. A COPY OF SUCH AGREEMENT WILL BE PROVIDED
TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed
by delivery of substitute certificate(s) without such legend if Grantee
shall have delivered to Issuer a copy of a letter from the staff of the
SEC, or an opinion of counsel in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect that such legend is
not required for purposes of the Securities Act.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals
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referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Issuer. This Agreement
has been duly executed and delivered by Issuer.
(b) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and to permit it to issue,
and, at all times from the date hereof until the obligation to deliver
Issuer Common Stock upon the exercise of the Option terminates, will
have reserved for issuance, upon exercise of the Option, the number of
shares of Issuer Common Stock necessary for Grantee to exercise the
Option, and Issuer will take all necessary corporate action to authorize
and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock to be
issued upon due exercise of the Option, including all additional
shares of Issuer Common Stock or other securities which may be issuable
pursuant to Section 7, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be delivered free
and clear of all liens, claims, charges and encumbrances of any kind or
nature whatsoever, including any preemptive rights of any stockholder
of Issuer.
6. Representations and Warrants of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate
power and authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the transactions
contemplate hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) Purchase Not for Distribution. This Option is not being,
and any Option Shares or other securities acquired by Grantee upon
exercise of the Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or otherwise disposed
of except in a transaction registered or exempt from registration under
the Securities Act.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares
or securities subject to the Option, and the Purchase Price therefor,
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shall be adjusted appropriately, and proper provision shall be made
in the agreements governing such transaction so that Grantee shall
received, upon exercise of the Option, the number and class of shares
or other securities or property that Grantee would have received in
respect of Issuer Common Stock of the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable. If any
additional shares of Issuer Common Stock are issued after the date of
this Agreement (other than pursuant to an event described in the first
sentence of this Section 7(a)), the number of shares of Issuer
Common Stock subject to the Option shall be adjusted so that, after
such issuance, it, together with any shares of Issuer Common Stock
previously issued pursuant hereto, equals 19.9% of the number of
shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the
Option.
(b) In the event that Issuer shall enter in an agreement:
(i) to consolidate with or merge into any person, other than Grantee
or one of its subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer
and Issuer shall be the continuing or surviving corporation, but,
in connection with such merger, the then outstanding shares of Issuer
Common Stock shall be changed into or exchanged for stock or other
securities of Issuer or any other person or cash or any other property
or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or
(iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its subsidiaries,
then, and in each such case, the agreement governing such transaction
shall make proper provisions so that upon the consummation of any such
transaction and upon the terms and conditions set forth herein, the
Grantee shall receive for each Option Share with respect to which the
Option has not been exercised an amount of consideration in the form
of and equal to the per share amount of consideration that would be
received by the holder of one share of Issuer Common Stock less the
Purchase Price (and, in the event of an election or similar arrangement
with respect to the type of consideration to be received by the holders
of Issuer Common Stock, subject to the foregoing, proper provision shall be
made so that the holder of the Option would have the same election
or similar rights as would the holder of the number of shares of
Issuer Common Stock for which the Option is then exercisable).
(c) Issuer shall not enter into any agreement of the
type described in Section 7(b) unless the other party thereto commits
to provide the funding required for Issuer to pay the Section 8
Repurchase Consideration.
8. Repurchase at the Option of Grantee.
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(a) Subject to the last sentence of Section 3(a), at
the request of Grantee at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d)) and
ending 12 months immediately thereafter, Issuer shall repurchase
from Grantee (i) the Option and (ii) all shares of Issuer Common
Stock purchased by Grantee pursuant hereto with respect to which
Grantee then has beneficial ownership. The date on which Grantee
exercises its rights under this Section 8 is referred to as the "Request
Date". Such repurchase shall be at an aggregate price (the "Section 8
Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Grantee for any
shares of Issuer Common Stock acquired pursuant to the Option with
respect to which Grantee then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with
respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over
the Purchase Price (subject to adjustment pursuant to Section 7) paid
(or, in the case of Option Shares with respect to which the Option
has been exercised but the Closing Date has not occurred, payable)
by Grantee for each share of Issuer Common Stock with respect to
which the Option has been exercised and with respect to which
Grantee then has beneficial ownership, multiplied by the number of
such shares.
(b) If Grantee exercises its rights under this Section
8, Issuer shall, within 10 business days after the Request Date, pay
the Section 8 Repurchase Consideration to Grantee in immediately
available funds, and contemporaneously with such payment Grantee
shall surrender to Issuer the Option and the certificates evidencing
the shares of Issuer Common Stock purchased thereunder with
respect to which Grantee then has beneficial ownership, and Grantee
shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever. Notwithstanding
the foregoing, to the extent that prior notification to or approval of
the Federal Reserve Board or other regulatory authority is required in
connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Grantee shall have the ongoing option to
revoke its request for repurchase pursuant to Section 8, in whole or
part, or to require that Issuer deliver from time to time that portion of
the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or
application for approval and expeditiously process the same (and
each party shall cooperate with the other in the filing of any such
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notice or application and the obtaining of any such approval). If the
Federal Reserve Board of any other regulatory authority disapproves
of any part of Issuer's proposed repurchase pursuant to this Section
8, Issuer shall promptly give notice of such fact to Grantee. If the
Federal Reserve Board or other agency prohibits the repurchase in
part but not in whole, then Grantee shall have the right (i) to revoke
the repurchase request or (ii) to the extent permitted by the Federal
Reserve Board or other agency, determine whether the repurchase
should apply to the Option and/or Option Shares and to what extent
to each, and Grantee shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the sum of the number of shares
covered by the Option in respect of which payment has been made
pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Grantee
shall notify Issuer of its determination under the preceding sentence
within five (5) business days of receipt of notice of disapproval of
the repurchase.
Notwithstanding anything herein to the contrary, all of
Grantee's rights under this Section 8 shall terminate on the date of
termination of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share of Issuer
Common Stock paid for any such share by the person or groups
described in Section 8(d)(i), (ii) the price per share of Issuer
Common Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii), or 7(b)(iii), or (iii)
the highest closing sales price per share of Issuer Common Stock
reported on the NASD/SCM (or if transactions in Issuer Common
Stock are not reported on the NASD/SCM, the highest bid price per
share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a
recognized source chosen by Grantee) during the 60 business days
preceding the Request Date; provided, however, that in the event of a
sale of less than all of Issuer's assets, the Applicable Price shall be
the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Grantee,
divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be
offered, paid or received pursuant to either of the foregoing clauses
(i) or (ii) shall be other than in cash, the value of such consideration
shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Grantee and
reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
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(d) As used herein, "Repurchase Event" shall occur
if (i) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership of (as such term is defined
in Rule 13d-3 promulgated under the Exchange Act), or the right to
acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of,
50% or more of the then outstanding shares of Issuer Common
Stock, or (ii) any of the transactions described in Section 7(b)(i),
7(b)(ii) or 7(b)(iii) shall be consummated.
(e) In connection with the application of the
provisions of this Section 8, Grantee acknowledges the regulatory
and capital matters Previously Disclosed by Issuer to Grantee.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall,
subject to the conditions of subparagraph (c) below, if requested by
Grantee (or if applicable, a Grantee Majority), as expeditiously as
possible prepare and file a registration statement under the Securities
Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock or
other securities that have been acquired by or are issuable to Grantee
upon exercise of the Option in accordance with the intended method
of sale or other disposition stated by Grantee in such request,
including without limitation a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and
Issuer shall use its best efforts to qualify such shares or other
securities for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any
time after the exercise of the Option proposes to register any shares
of Issuer Common Stock under the Securities Act in connection with
an underwritten public offering of such Issuer Common Stock, Issuer
will promptly give written notice to Grantee (and any permitted
transferee) of its intention to do so and, upon the written request of
Grantee (or any such permitted transferee of Grantee) given within
30 days after receipt of any such notice (which request shall specify
the number of shares of Issuer Common Stock intended to be
included in such underwritten public offering by Grantee (or such
permitted transferee)), Issuer will cause all such shares, the holders
of which shall have requested participation in such registration, to be
so registered and included in such underwritten public offering,
provided, however, that Issuer may elect to not cause any such
shares to be so registered (i) if the underwriters in good faith object
for valid business reasons, or (ii) in the case of a registration solely
to implement an employee benefit plan or a registration filed on
Form S-4; provided, further, however, that such election pursuant to
(i) may only be made one time. If some but not all the shares of
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Issuer Common Stock, with respect to which Issuer shall have
received requests for registration pursuant to this subparagraph (b),
shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Grantee and
any such permitted transferee desiring to register their shares pro rata
in the proportion that the number of shares requested to be registered
by each such holder bears to the total number of shares requested to
be registered by all such holders then desiring to have Issuer
Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer
shall use all reasonable efforts to cause each registration statement
referred to in subparagraph (a) above to become effective and to
obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided,
however, that Issuer may delay any registration of Option Shares
required pursuant to subparagraph (a) above for a period not
exceeding 90 days provided Issuer shall in good faith determine that
any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall
not be required to register Option Shares under the Securities Act
pursuant to subparagraph (a) above:
(i) prior to the earliest of (a) termination of
the Plan pursuant to Article VII thereof, (b) failure to obtain the
requisite stockholder approval pursuant to Paragraph (A) of Article
VI of the Plan, and (c) a Purchase Event or a Preliminary Purchase
Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of
a registration referred to in subparagraph (b) above pursuant to
which the holder or holders of the Option Shares concerned were
afforded the opportunity to register such shares under the Securities
Act and such shares were registered as requested; and
(v) unless a request therefor is made to
Issuer by the holder or holders of at least 25% or more of the
aggregate number of Option Shares then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities laws to the
extent necessary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of
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distribution for such shares, provided, however, that Issuer shall not
be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent
to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law
prohibits such payments, Issuer will pay all expenses (including
without limitation registration fees, qualification fees, blue sky fees
and expenses (including the fees and expenses of counsel), legal
expenses including the reasonable fees and expenses of one counsel
to the holders whose Option Shares are being registered, printing
expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but
including liability insurance if Issuer so desires or the underwriters
so require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to
subparagraph (a) or (b) above (including the related offerings and
sales by holders of Option Shares) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b)
above.
(e) Indemnification. In connection with any
registration under subparagraph (a) or (b) above Issuer hereby
indemnifies the holder of the Option Shares, and each underwriter
thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, losses, claims, damages and liabilities caused
by any untrue, or alleged untrue, statement of a material fact
contained in any registration statement or prospectus or notification
or offering circular (including any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission, or
alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities
of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in
reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein,
and Issuer and each officer, director and controlling person of Issuer
shall be indemnified by such holder of the Option Shares, or by such
underwriter, as the case may be, for all such expenses, losses, claims,
damages and liabilities caused by any untrue, or alleged untrue,
statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including
any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such
use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action
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against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this subparagraph (e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party
under this subparagraph (e). In case notice of commencement of any
such action shall be given to the indemnifying party as above
provided, the indemnifying party shall be entitled to participate in
and, to the extent it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense of such action at its
own expenses with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees to
pay the same; (ii) the indemnifying party fails to assume the defense
of such action with counsel satisfactory to the indemnified party, or
(iii) the indemnified party has been advised by counsel that one or
more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which
case the indemnifying party shall be entitled to assume the defense
of such action notwithstanding its obligation to bear fees and
expenses of such counsel. No indemnifying party shall be liable for
any settlement entered into without its consent, which consent may
not be unreasonably withheld.
If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in respect
of any expenses, losses, claims, damages or liabilities referred to
herein, then the indemnifying party, in lieu of indemnifying such
party otherwise entitled to be indemnified, shall contribute to the
amount paid or payable by such party to be indemnified as a result of
such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received
by Issuer, the selling shareholders and the underwriters from the
offering of the securities and also the relative fault of Issuer, the
selling shareholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of
the expenses, losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim; provided, however, that in no case
shall the holders of the Option Shares be responsible, in the
aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Any obligation by any holder to indemnify shall be several and not
joint with other holders.
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In connection with any registration pursuant to subparagraph
(a) or (b) above, Issuer and each holder of any Option Shares (other
than Grantee) shall enter into an agreement containing the
indemnification provisions of this subparagraph (e).
(f) Miscellaneous Reporting. Issuer shall comply
with all reporting requirements and will do all such other things as
may be necessary to permit the expeditious sale at any time of any
Option Shares by the holder thereof in accordance with and to the
extent permitted by any rule or regulation promulgated by the SEC
from time to time, including, without limitation, Rule 144A. Issuer
shall at its expense provide the holder of any Option Shares with any
information necessary in connection with the completion and filing
of any reports or forms required to be filed by them under the
Securities Act or the Exchange Act, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in
connection with the exercise of the Option, and will save Grantee
harmless, without limitation as to time, against any and all liabilities,
with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any
other securities to be acquired upon exercise of the Option are then
authorized for quotation or trading or listing on the NASD/SCM, the
National Association of Securities Dealers Automated Quotation
System National Market System ("NASDAQ/NMS") or any
securities exchange, Issuer, upon the request of Grantee, will
promptly file an application, if required, to authorize for quotation or
trading or listing the shares or Issuer Common Stock or other
securities to be acquired upon exercise of the Option on the
NASD/SCM, NASDQ/NMS or such other securities exchange and
will use its best efforts to obtain approval, if required, of such
quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of
Grantee, upon presentation and surrender of this Agreement at the
principal office of Issuer for other Agreements providing for Options
of different denominations entitling the holder thereof to purchase in
the aggregate the same number of shares of Issuer Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Agreements and related Options for
which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new
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Agreement executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in
Section 9, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of
its own financial consultants, investment bankers, accountants and
counsel.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is entitled to
the benefits of such provision. This Agreement may not be
modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: No Third-Party Beneficiary;
Severability. This Agreement, together with the Plan and the other
documents and instruments referred to herein and therein, between
Grantee and Issuer (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and
(b) is not intended to confer upon any person other than the parties
hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h))
any rights or remedies hereunder. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or a federal or state regulatory agency to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for
any reason such court or regulatory agency determines that the
Option does not permit Grantee to acquire, or does not require Issuer
to repurchase, the full number of shares of Issuer Common Stock as
provided in Sections 3 and 8 (as adjusted pursuant to Section 7), it is
the express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Virginia without
regard to any applicable conflicts of law rules.
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(e) Descriptive Heading. The descriptive headings contained
herein are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to Issuer to:
Tysons Financial Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, President
with a copy to:
If to Grantee to:
MainStreet BankGroup Incorporated
000 X. Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx Xxxxxx, Chairman
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Flippin, Densmore, Xxxxx, Xxxxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
P.O. Box 1200
Roanoke, Virginia 24006
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(g) Counterparts. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one
and the same agreement and shall become effective when both counterparts
have been signed, it being understood that both parties need not
sign the same counterpart.
(h) Neither this Agreement nor any of the rights, interest or
obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party, except that
Grantee may assign this Agreement to a wholly owned subsidiary of
Grantee and Grantee may assign its rights hereunder in whole or in part
after the occurrence of a Purchase Event. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors
and assigns.
(i) Further Assurances. In the event of any exercise of the Option
by Grantee, Issuer and Grantee shall execute and deliver all other
documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided
for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further
agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such equitable relief and
that this provision is without prejudice to any other rights that
the parties hereto may have for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
ATTEST: Tysons Financial Corporation
By:______________ By:_______________________
Xxxxxx X. Xxxxx, President
[CORPORATE SEAL]
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ATTEST: MainSteet BankGroup Incorporated
By:_______________ By:_______________________
Xxxxxxx Xxxxxx, Chairman
[CORPORATE SEAL]
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