AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 11th day of
March, 1998 (this "Plan"), by and among MainStreet BankGroup
Incorporated, a Virginia corporation ("MSBC"), and Ballston
Bancorp, Inc., a Delaware corporation ("Ballston").
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
13,307,083 shares of MSBC Common Stock and no shares of MSBC
Preferred Stock, respectively, are issued and outstanding as of
the date hereof. MSBC has eleven (11) 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; First National Bank of
Xxxxxxx Forge, a national banking association; Commerce Bank
Corporation, a Maryland bank; Tysons National Bank, a national
banking association and Regency Bank, a Virginia bank (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 two wholly owned nonbanking subsidiaries, 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
Tysons Financial Corporation, a Virginia corporation ("TFC"),
holder of one hundred percent of the outstanding shares of Tysons
National Bank. The MSBC Bank Subsidiaries, MSBC Trust
Subsidiary, and TFC are individually referred to as an "MSBC
Subsidiary" and collectively as "MSBC Subsidiaries".
(B) BALLSTON. Ballston is a corporation duly organized
and existing in good standing under the laws of the State of
Delaware, with its principal executive offices located at 0000 X
Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, 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. Ballston's only subsidiary is
The Bank of Northern Virginia ("BNV"). As of the date hereof,
Ballston has 500,000 authorized shares of Preferred Stock, each
of $0.20 par value, none of which were issued and outstanding as
of the date hereof, and 2,500,000 authorized shares of Common
Stock, each of $0.20 par value ("Ballston Common Stock"), of
which 1,619,474 shares were issued and outstanding as of the date
hereof, (no other class of capital stock being authorized). The
holders of Ballston Common Stock have no preemptive rights.
Ballston Common Stock is not 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) BNV. BNV is a corporation duly organized and existing
in good standing under the laws of the Commonwealth of Virginia,
is qualified to do business as a bank in Virginia and is a member
bank of the Federal Reserve System. BNV's headquarters are
located at 0000 Xxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000 BNV
has 4,500 shares of common stock, $1,000 par value per share
("BNV Common Stock") authorized (no other class of capital stock
being authorized), of which 3,350 shares are issued and
outstanding as of the date hereof, all of which are held of
record and beneficially by Ballston. There are no shares of BNV
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 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
BNV Common Stock and no commitment to grant any such options or
share appreciation rights.
With respect to Ballston, any reference herein to
"Subsidiary" or "Subsidiaries" refers to BNV and, with respect to
MSBC, any reference to "Subsidiary" refers to any MSBC Subsidiary
and any reference to "Subsidiaries" refers to the MSBC
Subsidiaries, jointly and severally (unless the context otherwise
requires).
(D) RIGHTS, ETC. Except as Previously Disclosed by MSBC 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 by MSBC, 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 by Ballston and except for shares
reserved pursuant to the Stock Option Agreement (as hereinafter
defined), there are no shares of Ballston Common Stock authorized
and reserved for issuance and Ballston 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 Ballston any such shares, and no securities, warrants or
obligations representing any such rights are outstanding.
(E) THIS TRANSACTION. The Boards of Directors of MSBC and
Ballston, respectively, deem it advisable and in the best
interests of MSBC and Ballston and their stockholders that
Ballston be acquired by MSBC through a merger of Ballston into
MSBC pursuant to this Plan.
(F) STOCK OPTION AGREEMENT. As a condition and inducement
to MSBC's willingness to enter into this Plan, Ballston has
agreed that simultaneously with its entry into this Plan Ballston
shall enter into a Stock Option Agreement with MSBC ("Stock
Option Agreement") in the form attached hereto as Exhibit E
pursuant to which Ballston shall grant to MSBC an option
("Option") to purchase, under certain circumstances, shares of
Ballston Common Stock.
(G) APPROVALS. The Board of Directors of each of MSBC and
Ballston has approved and adopted, at meetings of each of such
Board of Directors, this Plan and the Stock Option Agreement and
has authorized the execution of such instruments in counterparts
by a member of the Office of the Chairman of MSBC and by the
Chairman, President and Chief Executive Officer or the Vice
Chairman or any other officer of Ballston designated by either of
them, respectively, and any further modifications to such
instruments as may be agreed by an officer authorized to execute
this Plan and the Stock Option Agreement and not inconsistent
with the authorizations of their respective Board of Directors.
At the meeting of the Ballston Board of Directors, the Board of
Directors of Ballston recommended the Plan as so executed to its
shareholders.
(H) NASDAQ. Trading of the MSBC Common Stock is presently
reported on the National Association of Securities Dealers
("NASD") Automated Quotations System National Market System
("Nasdaq National Market"). Ballston Common Stock is not traded
on any established exchange or market.
(I) BENEFITS OF PLAN. MSBC and Ballston 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 (as hereinafter defined) 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 enable them to expand the market
for their banking and related financial services; (5) Ballston
shareholders who will become MSBC shareholders in the Merger will
benefit from the larger and more diverse shareholder base of MSBC
and enhanced liquidity of their equity investments; and (6) no
gain or loss generally will be recognized by stockholders of
Ballston who receive shares of MSBC Common Stock in exchange for
their shares of Ballston 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) Ballston shall merge into MSBC
(the"Merger"), the separate existence of Ballston shall cease and
MSBC (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
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 MSBC, and the Bylaws of
the Continuing Corporation shall be those of MSBC. The officers
and directors of MSBC 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"). As soon as reasonably practicable after the
satisfaction or waiver, if permissible, of the conditions to the
Merger as set forth in Article VI, the parties shall cause the
Merger Effective Date to occur by executing and filing (i) the
Articles of Merger containing a Plan of Merger in substantially
the form of Exhibit A1 hereto (the "Plan of Merger") in
accordance with the relevant provisions of the Virginia Stock
Corporation Act ("VSCA"), and (ii) the Certificate of Merger in
substantially the form of Exhibit A2 (the "Certificate of
Merger") in accordance with section 252 of the General
Corporation Law of the State of Delaware (the "DGCL"). 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 the Friday of the week following the
satisfaction of the conditions set forth in Paragraphs (A), (B)
and (C) of Article VI, or on such other date as the parties may
mutually agree, but no later than the Merger Effective Date.
Prior to the Merger Closing, MSBC and Ballston shall deliver to
the Virginia Corporation Authority (as hereinafter defined), the
Articles of Merger including the Plan for pre-approval.
II. MERGER CONSIDERATION
(A) 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.
(B) OUTSTANDING BALLSTON COMMON STOCK. Each share
(excluding shares held by Ballston, BNV or by MSBC or by any of
the MSBC Subsidiaries, in each case other than in a fiduciary or
custodial capacity or as a result of debts previously contracted
(the "Excluded Shares")) of Ballston 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 (the "Exchange Ratio") obtained
(subject to the next following sentence) by dividing $12.04 by
the average of the bid price and the asked price per share for
MSBC Common Stock as reported on the Nasdaq National Market for
each of the twenty (20) trading days preceding the tenth calendar
day prior to the Merger Effective Date ("Average MSBC Share
Price") (which, together with cash required to be paid for
fractional shares under Section II(D) is referred to as the
"Merger Consideration"). If the ratio computed in accordance
with the immediately preceding sentence is less than 0.4025, the
Exchange Ratio shall be 0.4025, and if the ratio computed in
accordance with the immediately preceding sentence is greater
than 0.4920, the Exchange Ratio shall be 0.4920.
(C) STOCKHOLDER RIGHTS; STOCK TRANSFERS. On the Merger
Effective Date, holders of Ballston Common Stock shall cease to
be, and shall have no rights as, stockholders of Ballston other
than the right to receive the Merger Consideration. After the
Merger Effective Date, there shall be no transfers on the stock
transfer books of Ballston or the Continuing Corporation of the
shares of Ballston Common Stock which were issued and outstanding
immediately prior to the Merger becoming effective.
(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 Ballston 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.
(E) EXCHANGE PROCEDURES. As promptly as practicable after
the Merger Effective Date, MSBC shall send or cause to be sent to
each former stockholder of Ballston of record immediately prior
to the Merger Effective Date transmittal materials for use in
exchanging such stockholder's certificates of Ballston for the
Merger Consideration. Any fractional share checks which a
Ballston stockholder shall be entitled to receive in exchange for
such stockholder's shares of Ballston 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 Ballston Common Stock will be delivered
to such stockholder only upon delivery to MSBC (or to whomever
MSBC shall designate in the transmittal materials) 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 Ballston 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 Ballston Common Stock are converted,
regardless of whether such holders have exchanged their
certificates representing Ballston Common Stock for certificates
representing MSBC Common Stock in accordance with the provisions
of this Plan.
(F) SHARES HELD BY BALLSTON OR MSBC. All Excluded Shares
shall be canceled and retired at the Merger Effective Date and no
consideration shall be issued in exchange therefor.
(G) 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 whose primary purpose is the acquisition for
value of a going concern or in connection with a dividend
reinvestment plan or a grant of stock or stock options to one or
more employees or directors or the exercise of any such options)
and the record date therefor shall be prior to the Merger
Effective Date, the Exchange Ratio shall be proportionately
adjusted by multiplying it by a fraction the numerator of which
is the number of shares of MSBC Common Stock outstanding
immediately after such transaction and the denominator of which
is the number of shares of MSBC Common Stock outstanding
immediately before such transaction.
(H) DIVIDENDS. Ballston 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.
III. ACTIONS PENDING MERGER
A. BALLSTON ACTIONS. From the date hereof until the earlier of
the Merger Effective Date or termination under Article VII,
without the prior written consent or approval of MSBC:
1. FORBEARANCES. Ballston will not and will cause its
Subsidiary not to:
(a) STOCK DISTRIBUTIONS. Make, declare or pay any
dividend other than cash dividends on Ballston Common Stock or
BNV Common Stock, as the case may be, consistent with past
practice and in an amount not greater than the last previous cash
dividend declared prior hereto by Ballston or BNV, respectively,
as Previously Disclosed, or declare or make any distribution on,
or directly or indirectly combine, redeem, reclassify, purchase
or otherwise acquire, any shares of its capital stock (other than
in a fiduciary or custodial 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, any additional
shares of its 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 it 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;
(b) EMPLOYMENT CONTRACTS. Enter into any employment
contracts with, increase the rate of compensation of (except in
accordance with existing policy consistent with past practice and
Previously Disclosed or required by 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;
(c) EMPLOYEE BENEFIT PLANS. Enter into or modify
(except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust agreement 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;
(d) ASSET DISPOSITION. Sell, lease or otherwise
dispose of or grant or allow to arise an encumbrance, lien or
security interest on any property or assets or discontinue using
any assets or properties or discontinue any business or
operations except in the ordinary course of business consistent
with past practice 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 or custodial capacity or securitization transactions,
in each case in the ordinary course of business consistent with
past practice);
(e) CONSTITUENT DOCUMENTS. Amend or restate its
Certificate of Incorporation or Bylaws as delivered to MSBC in
connection with this Plan;
(f) MATERIAL TRANSACTIONS. (a) Settle any litigation
or legal proceeding brought by or against it or claim of or
against it (involving individually or in the aggregate more than
$50,000) or (b) enter into any material transaction or make any
material commitment relating to its assets, business, operations
or properties (including but not limited to any acquisition
thereof), otherwise than as contemplated hereby or in the
ordinary course of business consistent with past practice and in
any case obligating it to expend after the Merger Effective Date
more than $50,000 in all such transactions; (c) incur any
indebtedness for borrowed money or assume, guarantee, endorse or
otherwise become responsible for the obligations of any person or
entity except in the ordinary course of business consistent with
past practice; (d) make any material investment in or purchase
any material securities of any person or entity; or (e) cancel or
allow any of its existing insurance policies to lapse;
(g) ACTIONS NOT IN ORDINARY COURSE. Take any action
not in the ordinary course of business consistent with past
practice;
(h) ACCOUNTING. Alter in any way the manner in which
it has regularly and customarily maintained its books of account
and records, or change any of its accounting principles or
methods by which such principles are applied for tax, regulatory
or reporting purposes, except as required by law or by generally
accepted accounting principles.
(i) AGREEMENTS. Agree to take any of the foregoing
actions.
2. CONDUCT OF BUSINESS. Ballston will and will cause its
Subsidiary to:
(a) ORDINARY COURSE. Conduct its business and
operations only in the ordinary and usual course and in a manner
consistent with past practices and use reasonable efforts to
preserve intact its present business organization and keep
available its present officers and employees material to its
business and operations.
(b) NOTIFICATION. Notify MSBC (i) of any emergency or
change in the normal conduct of the Business, (ii) of any event,
occurrence, fact, condition, change or effect that, individually
or in the aggregate, has or is reasonably expected to have a
Material Adverse Effect or breach of a representation or warranty
set forth in Article (IV) or a covenant or agreement set forth in
this Article V which has or is reasonably expected to have a
Material Adverse Effect and (iii) of the threat or initiation of
any litigation against it.
IV. REPRESENTATIONS AND WARRANTIES
Ballston hereby represents and warrants to MSBC and MSBC
hereby represents and warrants to Ballston 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
conducted and to own all of their respective material properties
and assets and have good and marketable title to or a valid and
existing leasehold interest in all of the material properties and
assets thereof reflected as owned or leased in its balance sheet
as of December 31, 1997, and included in the MSBC Reports and
Ballston Reports (as hereinafter defined) and in all material
properties and assets acquired or leased by it or its respective
Subsidiaries, since December 31, 1997. In the case of Ballston
and its Subsidiary only, none of its properties is subject to any
mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind or any provision terminating or
altering or giving the right to terminate or alter the terms and
conditions of its use and enjoyment thereof on account of any
change of control or ownership 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
Ballston 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
equity principles. In the case of Ballston, 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 Ballston, 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;
or (3) except as Previously Disclosed, create a right of
termination, default in or change in terms and conditions of use
or enjoyment of any real or personal property it uses in its
business.
(F) MSBC REPORTS. In the case of MSBC only, and except as
Previously Disclosed, (1) MSBC's 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 reports and documents of MSBC are
hereinafter referred to as its "MSBC 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 MSBC 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 MSBC 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) BALLSTON REPORTS. In the case of Ballston only, it has
Previously Disclosed to MSBC copies of (1) Ballston's
Consolidated Financial Statements, for the years ended December
31, 1994, 1995, 1996 and 1997; (2) BNV's "Consolidated Report of
Condition and Income" for the years ended December 31, 1994,
December 31, 1995, December 31, 1996 and December 31, 1997 and
for any subsequent period(s) as delivered to the appropriate bank
regulatory authority; (3) all other reports and documents filed
with or sent to any federal or state regulatory authority by it
or BNV during 1996, 1997 and 1998 (as of the date of this
Agreement); and (4) to the extent not prohibited by law, all
reports of any state or federal regulatory authority relating to
it or BNV and received during or relating to matters in 1996,
1997 or 1998 (as of the date of this Agreement) (all of the
foregoing reports and documents are hereinafter referred to as
"Ballston Reports"). Ballston represents and warrants to MSBC:
(a) that, as of their respective dates, the Ballston Reports
referred to in (1) and (2) above are accurate and complete and
fairly present the financial position of the entity or entities
to which they relate and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent
statements (including any related notes and schedules thereto)
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; (b) that the Ballston Statements referred to in (1) have
been prepared in accordance with generally accepted accounting
principles, consistently applied; and (c) that, as of their
respective dates the Ballston Reports referred to in (2) and (3)
above complied in all material respects with all legal and
regulatory requirements applicable thereto and no additional
reports or documents or amendments to previously filed reports or
documents were required to be filed by Ballston with any federal
or state regulatory authority during such periods except as
Previously Disclosed.
(H) MATERIAL EVENTS. Except as Previously Disclosed, no
event(s), occurrence(s), condition(s), or circumstance(s),
whether known or unknown, has or have occurred which has or is
reasonably likely to have at any future time (individually or in
the aggregate) a Material Adverse Effect on it.
(I) LITIGATION. Except as Previously Disclosed, no
litigation, proceeding or controversy before any court or
governmental agency and no mediation or arbitration is pending
which has or is reasonably likely to have at any future time a
Material Adverse Effect on it and, to the best of its knowledge,
no such litigation, proceeding, controversy, mediation or
arbitration has been threatened and no claim has been asserted
which could lead to such litigation, proceeding, controversy,
mediation or arbitration.
(J) MATERIAL CONTRACTS. Except as Previously Disclosed 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 in whole
or part 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 Xxxxxxxxx Associates, Inc., who has acted as financial advisor
to Ballston.
(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
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"), except as Previously Disclosed has
received a favorable determination letter from the Internal
Revenue Service, and it has no knowledge of any circumstances
likely to result in the revocation 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
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
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 it nor any Subsidiary is 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 the
conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies or its management, nor
has it been advised by any bank regulator that it is
contemplating issuing or requesting any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission.
(O) SUBSIDIARIES. In the case of Ballston only, it has no
subsidiaries other than BNV, all of the outstanding shares of
which are validly issued, fully paid and nonassessable (except
pursuant to 12 USC 55 or comparable state law, if any) 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 are validly issued, fully paid and
nonassessable (except pursuant to 12 USC 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
the employees of it or any Subsidiary seeking to certify a
collective bargaining unit or engaging in any other organization
activity.
(Q) CLASSIFIED ASSETS AND LOAN AND LEASE LOSS RESERVE.
Ballston has Previously Disclosed a list of the loans, extensions
of credit or other assets of BNV that were classified by the
examiners of the Federal Reserve Board ("FRB") or by the Bureau
of Financial Institutions of the Virginia State Corporation
Commission ("Virginia Bank Regulator") in its last respective
preceding examination ("BNV Asset Classification") and has
Previously Disclosed a list of its loans and extensions of credit
by BNV in the respective initial principal amount of $10,000 or
more, any payment of which is, as of the date so disclosed,
delinquent ("BNV Delinquent Loan List"). The BNV Asset
Classification and the BNV Delinquent Loan List are,
respectively, accurate and complete in all material respects and
no loans, extensions of credit or other assets (or portions
thereof) that have been classified as of the respective date of
the BNV 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 BNV Asset Classification other than amounts of loans,
extensions of credit or other assets that were charged off by BNV
prior to the respective date of the BNV Asset Classification.
BNV's loan and lease loss reserve as Previously Disclosed to MSBC
are reasonably believed by Ballston and BNV to be adequate as of
the date thereof and no event(s), occurrence(s), condition(s) or
circumstance(s) has or have occurred which have had, will have,
or are reasonably likely (individually or in the aggregate) to
have the effect of rendering such loan and lease loss reserve
inadequate or causing a material addition to the reserve to be
made.
(R) AFFILIATES. In the case of Ballston only, except as
Previously Disclosed, to the best of its knowledge, there is no
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 Ballston 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 Ballston
Common Stock 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 Ballston 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
takeover laws in effect as of the date of this Plan, including
section 203 of the DGCL.
(V) APPROVAL OF THIS TRANSACTION. In the case of Ballston
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
Certificate of Incorporation or Bylaws or, except as granted
hereunder or under the Stock Option Agreement or as Previously
Disclosed, under any agreement (including but not limited to any
rights contingent on a merger or change in control in any lease
or employment agreement); or (3) except as set forth in
Paragraphs (B) and (C) of Article VI, and Section 8 of the Stock
Option Agreement, 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 Ballston only, (1) to its
knowledge, it, its Subsidiary, the Participation Facilities and
the Loan Properties (each as 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
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
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 (W): "to its knowledge" means the actual
knowledge of or actual notice (which if pursued with due care
would lead to actual knowledge) to any officer of Ballston, any
information contained in the business records of Ballston and,
with respect to any "Loan Property", any information contained in
a Phase I or Phase II environmental assessment furnished to
Ballston; "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,
directive, ordinance, rule, regulation, code, by law, license,
permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, legally binding policy or guideline relating
to (i) the protection, preservation or restoration of the indoor
or ambient environment or natural resources (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, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Material,
in each case as amended and as now in effect, including, 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
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 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 and state 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 December 31, 1996,
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, (4) the amounts accrued for Taxes
in the Ballston Reports and the MSBC Reports are sufficient for
the payment of all Taxes of that company and its Subsidiary,
whether or not disputed, which are properly accruable, (5) all
Taxes due with respect to completed and settled examinations have
been paid in full or properly reserved, (6) 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 the Ballston Reports
or in the MSBC 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 and there are no agreements by it or its Subsidiary
for the extension of time for the assessment of any Taxes.
(Y) LEGAL COMPLIANCE. Except as Previously Disclosed, it
and its Subsidiaries are in compliance with all applicable laws,
statutes, rules, regulations, ordinances, orders, decrees, or
resolutions of any governmental authority or agency or court
relating or applicable to the conduct of their respective
businesses, operations, employment practices or relating to the
ownership or use of their respective properties which either
alone or in the aggregate have or are reasonably likely to 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;
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 Ballston, by BNV, in
each case in full compliance with the law, including but not
limited to, Regulation O of the 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
rights to tradenames, trademarks, service marks, patents, patent
rights, copyrights, whether domestic or foreign (as well as
applications, registrations or certificates therefor, inventions,
trade secrets, proprietary processes, software and other
intellectual property rights ("Intellectual Property"), and all
other 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 or, in any case, subject it to liability of $50,000
or more, individually or in the aggregate.
(BB) LIABILITIES. Except to the extent reflected or
reserved against in the MSBC Reports, as to MSBC and its
Subsidiaries, and in the Ballston Reports, as to Ballston and
BNV, and except as Previously Disclosed, 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. Except as Previously
Disclosed, it has no shareholder who owns of record or
beneficially 10% or more of the outstanding shares of Ballston
Common Stock, or MSBC Common Stock, as the case 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 Ballston
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 ownership of such shares within 60 days.
(DD) OPTION SHARES. In the case of Ballston 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 Ballston only,
true, correct and current copies of its and its Subsidiary's
Articles of Incorporation (or Association) and bylaws have been
delivered to MSBC.
(FF) 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.
(GG) POOLING OF INTERESTS. It has taken no action that
would cause the Merger to fail to qualify for pooling of
interests accounting treatment.
(HH) YEAR 2000. It has Previously Disclosed: (1) the
amount it and its Subsidiaries have spent or budgeted to be spent
for Year 2000 related remediation; (2) it and its Subsidiaries'
Year 2000 plan relating to their business, their operations
(including operating systems) and their relationships with
customers, suppliers, vendors and borrowers and the present
status of the plan's completion; and (3) any anticipated Year
2000 problems of which they have knowledge which individually or
in the aggregate have or are likely to have a Material Adverse
Effect.
V. COVENANTS
Ballston hereby covenants to MSBC, and MSBC hereby covenants
to Ballston, that:
(A) REASONABLE BEST EFFORTS TO COMPLETE MERGER. Subject to
the terms and conditions of this Plan, it shall use its
reasonable best efforts in good faith to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable
laws, 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
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 Ballston 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 Ballston, 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. Notwithstanding the foregoing, in
the event that one party hereto notifies the other party pursuant
to Paragraph (B) of Article VII that a breach has occurred in
this Plan, either party shall have the option of suspending its
obligations under this Paragraph or Paragraph (O) of this Article
until such time as the breach has been cured.
(B) BALLSTON PROXY STATEMENT. In the case of Ballston
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 Ballston 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 Ballston Common Stock and at all times thereafter up
to and including the meeting of Ballston 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 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 Ballston
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) it shall use its best efforts to solicit and
obtain votes of the holders of Ballston 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
Ballston 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,
with respect to all information set forth therein furnished or to
be furnished by Ballston relating to Ballston 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 Ballston, promptly after MSBC receives notice thereof, of
the time when the Registration Statement has become effective or
any supplement or amendment has been filed and becomes effective
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 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, properties and records to the extent permitted by
law and to its officers, employees, counsel and accountants,
authorizing each of them to discuss fully with the other party's
representatives all matters related to this Plan, the
transactions contemplated hereby and the condition, operations,
business, assets or properties of such party. During such
period, it shall also 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.
The foregoing process is herein referred to as "due diligence".
No due diligence by any party or the results thereof shall affect
or be deemed to modify or waive any 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.
(2) Each party hereto agrees not to use any information
obtained in due diligence for any purpose unrelated to its
evaluation of the transactions contemplated by this Plan and the
Stock Option Agreement. If the Merger is not consummated, each
party will hold all information and documents obtained in due
diligence in confidence (as provided in Paragraph (F) of Article
VIII) except to the extent that disclosure to a third party is
for the purpose of assisting in the assessment of such
information or documents for purposes of evaluating this Plan and
its consummation (in which case reasonable steps shall be taken
to preserve the confidentiality thereof) and in any event 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. 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 Ballston only, from
and including the date of this Plan until the Merger Effective
Date or the termination of this Plan pursuant to its terms, (1)
it shall not, and shall direct the officers, directors, employees
and other persons affiliated with it and 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 in connection with an unsolicited bona fide
written proposal) furnish any nonpublic information relating to
or 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; (3) shall
instruct its officers, directors, agents, advisors and affiliates
to refrain from doing any of the foregoing; and (4) shall furnish
to MSBC copies of all documents reviewed or received by it in
connection with any inquiries, proposals, negotiations and
discussions referred to in Subsection (G)(2).
(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
reasonable 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 Ballston only, it will use
its best efforts to cause each person who may be deemed to be an
"affiliate" of it for purposes of Rule 145 under the Securities
Act, no later than thirty (30) days after the date hereof (and
within ten (10) days after any person becomes an "affiliate"
thereafter), to execute and deliver to MSBG a letter agreement in
the form attached hereto as Exhibit B restricting the disposition
of such affiliate's shares of Ballston Common Stock and the
shares of MSBC Common Stock to be received by such person in
exchange for such person's shares of Ballston Common Stock.
(K) BALLSTON'S POLICIES AND PRACTICES. In the case of
Ballston only: Ballston shall and shall cause its Subsidiary to
use its best efforts to modify and change its credit, investment,
asset-liability management, risk management, 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.
Additionally, Ballston hereby agrees to accrue all investment
banking, legal and accounting costs associated with this Plan and
the transactions contemplated hereby between the date of this
Plan and the anticipated Effective Date. Except as provided in
the immediately preceding sentence, Ballston 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 Ballston 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 Ballston
shall and shall cause its Subsidiary to make such modifications
and changes not later than immediately prior to the Merger
Effective Date. Ballston's representations, warranties and
covenants contained in the Plan shall not be deemed to be untrue
or breached in any respect for any purpose as a consequence of
any modifications or changes undertaken solely on account of this
Paragraph (K).
(L) STATE TAKEOVER LAWS. In the case of Ballston 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 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, Section 203
of the DGCL.
(M) BALLSTON SPECIAL SHAREHOLDER RIGHTS. In the case of
Ballston 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 or Bylaws of
Ballston or under any agreement (including any lease, credit, or
employment, severance or officer, director or employee
compensation agreement or plan) to which Ballston is a party
(other than as Previously Disclosed by Ballston); or (2) it shall
not restrict or 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 Ballston, 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 December 31,
1997, in a manner that affects holders of Ballston Common Stock
in a disproportionate manner.
(O) NOTICE OF ADVERSE EVENTS. It shall promptly (but in
any event within ten days after discovering the same) notify the
other party hereto in writing of any event(s), occurrence(s),
condition(s) or circumstance(s) which alone or in the aggregate
results or is reasonably likely to result in the inaccuracy of
any warranty or representation or warranty or the material breach
of any covenant or agreement in this Plan of the party
discovering the same.
(P) GOVERNMENT APPLICATIONS. In the case of MSBC only, it
shall promptly prepare and submit an application to the FRB and
the Virginia Bank Regulator 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 Ballston 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
Ballston, such consent not to be unreasonably withheld, to
consummate the Merger including, but not limited to, promptly
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
Ballston 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
Ballston.
(Q) ENVIRONMENTAL TESTS. Ballston 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
Ballston.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
Consummation of the Merger is conditioned upon:
(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 Ballston.
(B) SPECIFIC REGULATORY APPROVAL. Procurement of the
approval by the FRB and the Virginia Bank Regulator 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 (including but not
limited to approval of Articles of Merger by the Virginia
Corporation Authority) 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 Ballston of
the transactions contemplated by this Plan so as to render
inadvisable the consummation of the Merger.
(D) NP COUNTERVENING ORDERS. There shall not be in effect
any order, decree or injunction of any court or agency of
competent jurisdiction that enjoins or prohibits consummation of
the Merger.
(E) ACCOUNTANTS' REPORTS AS TO MSBC. Ballston 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 Ballston 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 BALLSTON. MSBC shall have
received from Xxxx, Xxxxxx & Company, P.C., 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 Ballston's
financial position and results of operations, which letters shall
be based upon customary specified procedures undertaken by such
firm.
(G) MSBC LEGAL OPINION. Ballston shall have received an
opinion, dated the Merger Effective Date, of Flippin, Densmore,
Xxxxx, Xxxxxxxxxx & Xxxxxx, P.C., counsel for MSBC, in form and
substance reasonably satisfactory to Ballston, which shall cover
the matters contained in Exhibit C hereto.
(H) BALLSTON LEGAL OPINION. MSBC and its directors and
officers who sign the Registration Statement shall have received
an opinion, dated the Merger Effective Date of Duane, Morris &
Heckscher, LLP, in form and substance reasonably satisfactory to
MSBC, which shall cover the matters contained in Exhibit D
hereto.
(I) MSBC REPRESENTATIONS AND WARRANTIES. (1) No matter,
event, circumstance, occurrence, condition, or other action or
failure of action which was discovered by Ballston in its due
diligence or of which Ballston was or should have been notified
pursuant to Subsection V(O) and which in either case creates
reasonable uncertainty as to the accuracy of any representation
or warranty of MSBC or the breach of any covenant or agreement of
MSBC in this Plan and with respect to which MSBC has been
notified in writing shall be unresolved to the reasonable
satisfaction of Ballston; (2) 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 for any such
representations and warranties made as of a specified date, which
shall be true and correct as of such date; and (3) 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 Ballston 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.
(J) BALLSTON REPRESENTATIONS AND WARRANTIES. (1) No
matter, event, circumstance, occurrence, condition, or other
action or failure of action which was discovered by MSBC in its
due diligence or of which MSBC was or should have been notified
pursuant to Subsection V(O) and which in either case creates
reasonable uncertainty as to the accuracy of any representation
or warranty of Ballston or the breach of any covenant or
agreement of Ballston in this Plan and with respect to which
Ballston has been notified in writing shall be unresolved to the
reasonable satisfaction of MSBC; (2) each of the representations
and warranties contained herein of Ballston 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 for
any such representations and warranties made as of a specified
date, which shall be true and correct as of such date; and (3)
each and all of the agreements and covenants of Ballston 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
Ballston 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
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 Ballston
shall have received an opinion from Flippin, Densmore, Xxxxx,
Xxxxxxxxxx & Xxxxxx, PC to the effect that (1) the Merger will
constitute and qualify as a reorganization within the meaning of
Section 368(a) of the Code and that Ballston and MSBC will each
be a party in that reorganization within the meaning of Section
368(b) of the Code, and (2) no gain or loss will be recognized by
stockholders of Ballston on the exchange of Ballston Common Stock
solely for shares of MSBC Common Stock except that gain or loss
may be recognized on the receipt of cash in lieu of fractional
share interests of MSBC Common Stock. In rendering their
opinion, counsel may require and rely upon representations
contained in certificates of officers of MSBC, Ballston and
others.
(N) AFFILIATE LETTERS. MSBC shall have received from each
person who may be deemed an "affiliate" of Ballston for purposes
of Rule 145 under the Securities Act an executed letter agreement
in the form attached hereto as Exhibit B.
(O) BALLSTON FAIRNESS OPINION. At the time the Proxy
Statement is mailed to the holders of shares of Ballston Common
Stock, the Board of Directors of Ballston shall have received an
opinion from Xxxxxxxxx Associates, Inc., that the Exchange Ratio
is fair to the shareholders of Ballston from a financial point of
view.
(P) POOLING. MSBC and Ballston shall have received a
letter, dated as of the Merger Effective Date, in form and
substance reasonably acceptable to MSBC, from Coopers & Xxxxxxx
to the effect that the Merger will qualify for pooling of
interests accounting treatment.
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 (P) 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) or (O) of
this Article VI shall only constitute conditions if asserted by
Ballston.
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
Ballston.
(B) ON BREACH. By MSBC or Ballston, in the event (1) any
representation or warranty contained herein made by the other
party is breached and the 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, 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.
(C) FAILURE TO CONSUMMATE ON TIME. By MSBC or Ballston, in
the event that the Merger is not consummated by September 30,
1998.
(D) FAILURE TO OBTAIN CERTAIN APPROVALS. By MSBC or
Ballston, 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; or (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.
(E) FAILURE TO EXECUTE STOCK OPTION AGREEMENT. By MSBC,
upon the failure of Ballston to execute and deliver to MSBC the
Stock Option Agreement, contemporaneously with the execution of
this Plan.
(F) POSSIBLE ADJUSTMENT IN EXCHANGE RATIO. By Ballston
during the ten (10) day period commencing on the Determination
Date (as hereinafter defined) if both of the following conditions
are satisfied:
(1) if the Average MSBC Share Price is less than
$24.47; 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 Ballston 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 Ballston
Common Stock by adjusting the Exchange Ratio, to equal a
quotient, the numerator of which is $24.47 multiplied by the
Exchange Ratio (as then in effect) with respect to Ballston
Common Stock, and the denominator of which is the Average MSBC
Share Price. If MSBC makes the election contemplated by the
immediately preceding sentence, it shall give prompt written
notice to Ballston of such election, 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 shall have been so modified) and any
references in this Plan to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to
this Paragraph (F).
For purposes of this Paragraph (F) the following terms shall
have the meanings indicated:
"Determination Date" means the tenth calendar day prior to
the Merger Effective Date.
"First Percentage" means the percentage resulting from: (a)
taking the remainder ("First Remainder") obtained by subtracting
the Average MSBC Share Price from $27.19; and (b) dividing the
First Remainder by the Average MSBC Share 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 Share Price ("Recent SNL Bank Index") from the SNL
Southeast Bank Index reported most recently prior to or on
February 13, 1998; and (b) dividing the Second Remainder by the
Recent SNL Bank Index.
(G) FIDUCIARY DUTY. By Ballston, if its board of directors
(on written advice of counsel that such recommendation is
necessary to comply with their fiduciary duty) shall have
determined to recommend an acquisition proposal to its
stockholders after determining that such acquisition proposal is
superior in value to the stockholders to the transaction
contemplated by the Plan, and Ballston gives MSBC at least three
business days' prior notice of its intention to effect such
termination pursuant to this Paragraph.
VIII. OTHER MATTERS.
(A) SURVIVAL. If the Merger Effective Date occurs, the
agreements of the parties in Paragraph (F) of Article II, and
Paragraphs (A), (D), (F), (I), (J) 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), (D), (E), (F)
and (I) of this Article VIII shall survive such termination. In
the 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 or
approved in the manner authorized by their respective Boards of
Directors and executed in the same manner as this Plan, except
that, after the vote by the stockholders of Ballston, the
consideration to be received by the stockholders of Ballston for
each share of Ballston Common Stock shall not be decreased except
as expressly provided herein.
(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.
(E) FEES AND EXPENSES. In the event that the Plan is
terminated in accordance with the provisions of Article VII
otherwise than pursuant to Section VII(B) on account of a breach
by one party (so long as the other party is not also in breach),
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). In the event that the Plan is terminated pursuant to
Article VII(B), the total documented out-of-pocket costs,
expenses, and fees (excluding only investment banking fees)
incurred by the other party (regardless of whether incurred
before or after the execution of this Plan), so long as such
other party shall not also be in breach, in connection with and
arising out of the Merger and other transactions contemplated by
this Plan shall be paid by the breaching party and the breaching
party shall promptly make such reimbursement to the non-breaching
party as is necessary to effectuate the same.
(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, to:
MainStreet BankGroup Incorporated
000 X. Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxx,
Chief Executive Officer
Copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Flippin, Densmore, Xxxxx, Xxxxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Drawer 1200
Xxxxxxx, Xxxxxxxx 00000
If to Ballston, to:
Ballston Bancorp, Inc.
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxxxx
Chairman, President and Chief
Executive Officer
Copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 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) except as otherwise expressly defined herein the
term "knowledge" when used with respect to a party shall mean (a)
the actual knowledge or constructive knowledge assuming due
inquiry after notice, of any Vice President or equivalent or
superior officer or (b) the actual knowledge or constructive
knowledge of any other officer or employee to the extent of his
actual participation in or review of such matters for purposes of
this Agreement and the consummation of the transactions
contemplated hereby; or (c) information set forth in the books
and records of such party;
(2) the term "Material Adverse Effect," when applied
to a party, shall mean an event, occurrence, condition or
circumstance (including without limitation the making of any
provisions for possible loan and lease losses or other reserves,
classification of assets, loan or credit problems, costs and
expenses associated with Year 2000, investment losses or write-
downs, legal proceedings, violations of law, assertions of claims
(including claims related to Intellectual Property), write-downs
of other real estate and taxes) which, in any case, (i) has or is
reasonably likely at any future time to have individually or in
the aggregate a material adverse effect on the financial
condition, results of operations, assets, liquidity, operations
or business of the party and its Subsidiaries, taken as a whole,
or (ii) has impaired or is reasonably likely to impair materially
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; and provided 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 that is
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;
(4) the term "including" shall mean in all cases
except as otherwise expressly indicated "including but not
limited to".
(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 Ballston and
BNV 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 only, employees of Ballston and
BNV shall be given full credit for prior service with Ballston
and BNV 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
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 Ballston or BNV on the one
hand and any individual current or former director, officer or
employee thereof on the other hand, copies of which have been
Previously Disclosed by Ballston to MSBC.
(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 and it shall cause any successor thereto
to indemnify and hold harmless any person who has rights to
indemnification from Ballston and it shall cause BNV as its
Subsidiary and any successor there to indemnify and hold harmless
any person who has rights to indemnification from BNV to the same
extent and on the same conditions as such person is entitled to
indemnification pursuant to Ballston's or BNV's respective
Certificate or Articles of Incorporation and bylaws or applicable
board resolutions as in effect on the date of this Plan as
Previously Disclosed, 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 MSBG or its Subsidiary may be required to effectuate
any such indemnification, MSBC shall cause the Continuing
Corporation or, if applicable, such Subsidiary 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 MSBC and BNV, respectively, 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). MSBC shall
have no obligation to maintain directors and officers liability
insurance under this Section if MSBC determines in good faith
that (a) such insurance is not reasonably available; or (b) the
premium costs for such insurance is disproportionate to the
amount of coverage provided, (c) the incremental premium costs
for such coverage exceed 175% of the amount per annum Ballston
and BNV paid in its last full fiscal year, or (d) the coverage
provided by such insurance is limited by exclusives so as to
provide an insufficient benefit (it being understood that if such
exclusives are not materially greater than those in effect for
MSBC as of December 31, 1997, this clause (d) cannot be invoked).
(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
this Agreement and the holders of Ballston 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.
(M) ALTERNATIVE STRUCTURE. Notwithstanding anything to the
contrary contained in this Plan, subject to the final sentence of
this Section (M), MSBC may, at its sole option, elect to either
(a) form a separate subsidiary corporation and merge it into
Ballston or Ballston into it such that MSBC shall be the sole
shareholder of the surviving corporation, or (b) convert this
Plan to an exchange of Ballston Common Stock for MSBC Common
Stock, instead of a merger, on the same terms and conditions
contained herein (except for such conversion); provided, however,
that MSBC may not make such an election if it would result in
failure to satisfy the condition set forth in either Section (M)
or (P) of Article VI. In the event MSBC makes an election
pursuant to the prior sentence, Ballston shall take all actions
reasonably requested by MSBC (including without limitation using
its best efforts to obtain any requisite corporate and
stockholder approvals in connection therewith). In the event
that MSBC makes an election pursuant to the first sentence of
this Section (M), the parties hereto agree promptly to amend this
Plan as MSBC may reasonably deem necessary or appropriate. If
MSBC reasonably determines that the Merger cannot be effected
pursuant to this Plan (other than pursuant to this Section (M))
and MSBC also reasonably determines that the transactions
contemplated by this Plan can be effected if one or more of the
actions contemplated by this Section (M) are taken, then MSBC
shall elect to take one or more of the actions contemplated by
this Section (M); provided, however, that MSBC shall not be
required to take any such action if the taking of such action is,
in MSBC's reasonable judgment, reasonably likely to result in the
failure of any of the conditions set forth in Article VI.
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
By:
------------------------------
Xxxxxxx Xxxxxx
Chief Executive Officer
Ballston Bancorp, Inc.
By:
------------------------------
Xxxxxx X. Xxxxxxxx
Chairman, President and Chief
Executive Officer
EXHIBIT A1
ARTICLES OF MERGER
MERGING
BALLSTON BANCORP, INC.
A DELAWARE CORPORATION
INTO
MAINSTREET BANKGROUP INCORPORATED
A VIRGINIA CORPORATION
Pursuant to the provisions of Section 13.1-720 of the
Virginia Stock Corporation Act, MainStreet BankGroup
Incorporated, a Virginia corporation (the "Surviving
Corporation"), as the surviving corporation, and Ballston
Bancorp, Inc., a Delaware corporation (the "Disappearing
Corporation"), as the disappearing corporation, hereby execute
and deliver the following articles of merger and set forth:
1. The Plan of Merger (the "Plan") pursuant to which the
Disappearing Corporation will merge into the Surviving
Corporation is attached hereto as Annex 1.
2. The Plan is not required to be approved by the
shareholders of the Surviving Corporation pursuant to
Section 13.1-718 of the Virginia Stock Corporation Act.
3. The Plan was submitted to the shareholders of the
Disappearing Corporation by its board of directors at a
special meeting of the shareholders held on
_________________, in accordance with the provisions of
the Delaware General Corporation Law; and
(a) The designation, number of outstanding
shares, and the number of votes entitled
to be cast by each voting group entitled
to vote separately on the Plan were:
No. of
Designation Outstanding Shares No. of Votes
----------- ------------------ ------------
Common
b) The total number of votes cast for and
against the Plan by eachvoting group
entitled to vote separately on the Plan
were:
Total No. of Votes Total No. of Votes
Voting Group Cast for the Plan Cast Against the Plan
------------ ----------------- ---------------------
Common
The number of votes cast for the Plan by each voting
group was sufficient for approval by that voting
group.
4. Pursuant to Section 13.1-606 of the Virginia Stock
Corporation Act, the effective time and date of the
merger shall be _______a.m. on __________.
The undersigned, _____________________, of Ballston Bancorp,
Inc. and ______________________, of MainStreet BankGroup
Incorporated, each declare that the facts herein stated are
true as of ____________, _________.
BALLSTON BANCORP, INC.
By:
------------------------------
Its: President
MAINSTREET BANKGROUP INCORPORATED
By:________________________________
Its: President
Annex 1
to Exhibit A
PLAN OF MERGER
A. MainStreet BankGroup Incorporated ("MSBC") is a
corporation organized and existing under the laws of the
Commonwealth of Virginia.
B. Ballston Bancorp, Inc. ("Ballston") is a corporation
organized and existing under the laws of the State of Delaware.
C. MSBC and Ballston, their respective Boards of Directors
and the shareholders of Ballston have approved a statutory merger
("Merger") of Ballston (the "Disappearing Corporation") with and
into MSBC ("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 later than September 30,
1998, and the conditions in Article VI of the Agreement and Plan
of Merger between the Disappearing Corporation and MSBC dated as
of March 11, 1998, (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) Each share of the common stock, $0.20 par value per
share, of Ballston ("Ballston Common Stock") shall be converted
into the right to receive that number of shares (the "Exchange
Ratio") of the common stock, $5.00 par value per share, of MSBC
("MSBC Common Stock") obtained (subject to the next following
sentence) by dividing $12.04 by the average of the bid price and
the asked price per share for the MSBC Common Stock as reported
on the National Association of Securities Dealers Quotations
System National Market System ("NASDAQ National Market") for each
of the twenty (20) trading days preceding the tenth calendar day
prior to the date on which the Effective Time occurs ("Merger
Effective Date"). If the Ratio computed in accordance with the
immediately preceding sentence is less than 0.4025, the Exchange
Ratio shall be 0.4025, and if the ratio computed in accordance
with the immediately preceding sentence is greater than 0.4920,
the Exchange Ratio shall be 0.4920.
(B) Stockholder Rights; Stock Transfers. As of the
Effective Time, holders of the shares of Ballston Common Stock
shall cease to be, and shall have no rights as, stockholders of
Ballston, other than the right to receive the Merger
consideration provided under Paragraph (A) above and the
consideration provided in Paragraph (C) below ("Merger
Consideration"). After the Effective Time, there shall be no
transfers on the stock transfer books of Ballston or the
Surviving Corporation of the shares of Ballston Common Stock
which were issued and outstanding immediately prior to the
Effective Time.
(C) 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 Ballston 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 bid price
and the asked price of MSBC Common Stock for each of the twenty
(20) trading days preceding the tenth calendar day prior to the
Merger Effective Date (the "Average MSBC Share Price") as
reported on the NASDAQ National Market (as reported by The Wall
Street Journal).
(D) Exchange Procedures. As promptly as practicable after
the Effective Time, the Continuing Corporation shall send or
cause to be sent to each former holder of Ballston Common Stock
of record immediately prior to the Effective Time transmittal
materials for use in exchanging such stockholder's certificates
of Ballston Common Stock for the consideration set forth in
Paragraphs (A) and (C) above. Any fractional share checks which
a Ballston stockholder shall be entitled to receive in exchange
for such stockholder's shares of Ballston 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
Registrar and Transfer Company (the "Exchange Agent") of such
stockholder's certificates representing all of such stockholder's
share of Ballston 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 the Continuing Corporation and the Exchange
Agent, in their judgment, if any of such certificates are lost,
stolen or destroyed). No interest will be 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 Ballston 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
Ballston Common Stock entitle them, regardless of whether such
holders have exchanged their Ballston Common Stock for
certificates representing MSBC Common Stock in accordance with
the provisions of this Plan of Merger.
(E) 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 whose primary
purpose is the acquisition for value of a going concern or in
connection with a dividend reinvestment plan or a grant of stock
or stock options to one or more employees or directors or the
exercise of any such options) and the record date therefor shall
be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted by multiplying it by a fraction, the
numerator of which is the number of shares of MSBC Common Stock
outstanding immediately after such transaction and the
denominator of which is the number of shares of MSBC Common Stock
outstanding immediately before such transaction.
(F) Excluded Shares. Each of the shares of Ballston Common
Stock held by Ballston, MSBC or any of their respective
subsidiaries, in each case other than in a fiduciary or custodial
capacity or as a result of debts previously contracted shall be
canceled and retired at the Effective Time.
(G) Possible Adjustment in Exchange 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 Ballston, by Ballston during the ten (10) day
period commencing on the Determination Date (as hereinafter
defined) if both of the following conditions are satisfied:
(1) if the Average MSBC Share Price is less
than $24.47; 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 Ballston 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 Ballston
Common Stock by adjusting the Exchange Ratio, to equal a
quotient, the numerator of which is $24.47 and the denominator of
which in either case is the Average MSBC Share Price. If MSBC
makes an election contemplated by the immediately preceding
sentence, it shall give prompt written notice to Ballston of such
election, whereupon no termination shall have accrued pursuant to
clause (ii) and the Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall
have been so modified) and any references in this Plan to
"Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Paragraph (G). For
purposes of this Paragraph (G) the following terms shall have the
meanings indicated:
"Determination Date" means the tenth calendar day prior to
the Merger Effective Date.
"First Percentage" means the percentage resulting from: (a)
taking the remainder ("First Remainder") obtained by subtracting
the Average MSBC Share Price from $27.19; and (b) dividing the
First Remainder by the Average MSBC Share 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 Share Price ("Recent SNL Bank Index") from the SNL
Southeast Bank Index reported most recently prior to or on
February 13, 1998; and (b) dividing the Second Remainder by the
Recent SNL Bank Index.
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 Ballston 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 Ballston, 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 MSBC in effect at the Effective Time
shall continue (until amended or repealed as provided by
applicable 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
MSBC 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.
EXHIBIT B
Form of Ballston Affiliate's Letter
_______________, 19__
MainStreet BankGroup Incorporated
address
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger,
dated as of March 11, 1998, by and between MainStreet BankGroup
Incorporated, a Virginia corporation ("MSBC"), and Ballston
Bancorp, Inc., a Delaware corporation ("Ballston"), (the
"Agreement"), Ballston shall merge with and into MSBC (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,
$0.20 par value per share, of Ballston.
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 Ballston.
(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
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 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 stop transfer
instructions and 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).
(G) The undersigned further represents and warrants to
and covenants with MSBC that the undersigned will not,
within the thirty (30) days prior to the Merger Effective
Date (as defined in the Agreement) sell, transfer, or
otherwise dispose of any shares of the capital stock of
either MSBC or Ballston held by the undersigned and that the
undersigned will not sell, transfer, or otherwise dispose of
any shares of MSBC Common Stock received by the undersigned
in the Merger or other shares of the capital stock of MSBC
until after such time as results covering at least thirty
(30) days of combined operations of MSBC after the Merger
have been published by MSBC within the meaning of section
201.01 of the Commission's Codification of Financial
Reporting Policies.
(H) The undersigned also understands and agrees that
this letter agreement shall apply to all shares of capital
stock of MSBC and Ballston that are owned by (i) the
undersigned's spouse (ii) any relative of the undersigned or
of the undersigned's spouse who has the same home as the
undersigned (iii) any trust or estate in which the
undersigned, the undersigned's spouse and any such relative
collectively own at least at 10% beneficial interest or of
which any of the foregoing serves as trustee, executor or in
any similar fiduciary capacity, and (iv) any corporation or
other organization in which the undersigned, the
undersigned's spouse or any such relative collectively own
at least 10% of any class of equity securities that
otherwise are deemed to be owned by the undersigned pursuant
to Rule 13(d) under the Securities Exchange Act of 1934.
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:
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 is a corporation duly organized and existing in
good standing under the laws of the Commonwealth of Virginia;
(B) MSBC has the corporate power and authority to carry on
its respective business as it is now being conducted and to own
its material property and assets;
(C) the outstanding shares of capital stock of MSBC 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.
(D) MSBC has 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 did not, and the consummation of the transactions
contemplated thereby by it 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 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; 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, 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 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 MSBC
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 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 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 or statistical data contained in the Registration
Statement and prospectus); and
(I) the shares of MSBC Common Stock to be issued in
exchange for shares of Ballston Bancorp, Inc. ("Ballston") 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.
EXHIBIT D
The opinion of counsel for Ballston Bancorp, Inc.
("Ballston") 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) Ballston is a corporation duly organized and existing
in good standing under the laws of the State of Delaware; 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) The Bank of Northern Virginia ("BNV") is a corporation
duly organized and existing in good standing under the laws of
the Commonwealth of Virginia and is qualified to do business as a
bank in Virginia.
(C) Ballston and BNV 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 Ballston consists of
500,000 shares of preferred stock, each of $0.20 per share, none
of which are issued and outstanding as of the date hereof, and
2,500,000 shares of common stock, $0.20 par value per share, of
which 1,619,474 shares are issued and outstanding as of the date
hereof [ and 322,275 shares are reserved for issuance as set
forth on Schedule I attached hereto]; the authorized capital
stock of BNV consists of 4,500 shares of common stock, $1,000.00
par value per share ("BNV Common Stock"), of which 3,350 shares
are issued and outstanding as of the date hereof and no shares
are reserved for issuance. The outstanding shares of Ballston
Common Stock and BNV 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 BNV Common Stock are held of record by
Ballston. There are no outstanding options, warrants, rights to
subscribe to or securities or rights convertible into shares of
Ballston Common Stock or BNV Common Stock except pursuant to the
Stock Option Agreement.
(E) Ballston 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 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 Ballston 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
Ballston or BNV or to which Ballston or BNV is subject, which
breach, violation or default to the knowledge of such counsel
would have a Material Adverse Effect on Ballston or BNV; (ii) a
breach or violation of, or a default under, the Certificate or
the Articles of Incorporation or Bylaws of Ballston or BNV; (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 Certificate or Articles of Incorporation or Bylaws of
Ballston or BNV or, to the knowledge of such counsel, under any
agreement to which Ballston or BNV is a party;
(G) Ballston 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 State of Delaware as of the date hereof, including Section
203 of the Delaware General Corporation Law;
(H) except as Previously Disclosed or as reflected in the
Ballston Reports, (i) to such counsel's knowledge, there is no
litigation, proceeding or controversy before any court or
governmental agency pending against Ballston or BNV by a
governmental authority which is reasonably likely to have a
Material Adverse Effect on Ballston and, to the knowledge of such
counsel, no such litigation, proceeding or controversy has been
threatened or is contemplated, (ii) except as Previously
Disclosed Ballston or BNV 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, Ballston and BNV 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 Ballston and BNV incorporated by reference therein), as of the
mailing date thereof, complied in all material respects as to
form with the requirements of the Federal Securities Laws.
Further, such counsel does not believe that, insofar as it
relates to Ballston and BNV, 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 Ballston and BNV or as to any
financial statements or other financial or statistical 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 Ballston within the meaning of Rule 145 under the
Securities Act.
EXHIBIT E
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 11, 1998 (the
"Agreement"), by and between Ballston Bancorp, Inc., a Delaware
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 this date (the "Plan"), providing
for, among other things, the merger of Issuer with and into
Grantee, with Grantee 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 322,275 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, $0.20 par value per share
("Issuer Common Stock"), of Issuer at a purchase price per Option
Share (the "Purchase Price") of $8.64.
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 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)(1)
or Paragraph (B)(2) 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)(1) or Paragraph (B)(2) 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) or (e) 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, 1999, (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 all or
substantially all of the 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.
(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 purpose 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 of the
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.
(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 MARCH, 1998. 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 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, shall be adjusted
appropriately, and proper provision shall be made in the
agreements governing such transaction so that Grantee shall
receive, 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 if 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, equals the same percentage of the number of shares
of Issuer Common Stock then issued and outstanding as it did
immediately prior to such issuance.
(b) In the event that Issuer shall enter into 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.
(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, to the extent permitted by law, pay the Section
8 Repurchase Consideration within 10 business days after the
Request Date 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 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 NASDAQ (or if transactions in Issuer
Common Stock are not reported on the NASDAQ, 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.
(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.
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 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 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
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.
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 by or on
NASDAQ, National Association of Securities Dealers Small Cap
Market (" NASD/SCM"), the National Association of Securities
Dealers Automated Quotation System National Market System
("NASD/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 NASDAQ, NASD/SCM, NASD/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 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.
(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:
Balston Bancorp, Inc.
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxxxx
Chairman, President and Chief Executive
Officer
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Duane, Morris & Heckscher, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
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
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000
(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: Ballston Bancorp, Inc.
By:
-------------------------
By:
-------------------------
Xxxxxx X. Xxxxxxxx
[CORPORATE SEAL] Chairman, President and
Chief Executive Officer
ATTEST: MainSteet BankGroup Incorporated
By:
-------------------------
By:
-------------------------
Xxxxxxx Xxxxxx, Chairman
[CORPORATE SEAL]
