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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 2, 2001
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
F.N.B. CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 6711 25-1255406
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
GARY L. TICE
2150 GOODLETTE ROAD NORTH PRESIDENT AND CHIEF EXECUTIVE OFFICER
NAPLES, FLORIDA 34102 F.N.B. CORPORATION
(800) 262-7600 2150 GOODLETTE ROAD NORTH
(ADDRESS, INCLUDING ZIP CODE, AND NAPLES, FLORIDA 34102
TELEPHONE NUMBER, INCLUDING AREA CODE, OF (800) 262-7600
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE
AND TELEPHONE NUMBER, INCLUDING
AREA CODE OF AGENT FOR SERVICE)
---------------
COPIES TO:
ROBERT C. SCHWARTZ, ESQ. KRISTEN LARKIN STEWART, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP KIRKPATRICK & LOCKHART LLP
PROMENADE II, SUITE 3100 Henry W. Oliver Building
1230 Peachtree Street, N.E. 535 Smithfield Street
Atlanta, Georgia 30309 Pittsburgh, Pennsylvania 15222
(404) 815-3500 (412) 355-6500
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
Upon the effective date of the merger of
Promistar Financial Corporation with and into Registrant.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
CALCULATION OF REGISTRATION FEE
==============================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED TO BE PRICE OFFERING FEE
REGISTERED(1) PER SHARE PRICE(3)
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Common Stock, $0.01 par value 16,500,000 shares (2) $ 423,458,423.33 $105,864.61
==============================================================================================
(1) Reflects the estimated maximum number of shares of the Registrant's
common stock which may be issued in connection with the proposed merger
of Promistar Financial Corporation with and into the Registrant.
(2) Not applicable.
(3) Computed, in accordance with Rule 457(f)(1), as the product of (x) the
average of the high and low prices of the common stock of Promistar on
July 26, 2001 multiplied by (y) the estimated maximum number of shares
of Promistar common stock to be received by the Registrant in exchange
for the securities registered hereby.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
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JOINT PROXY STATEMENT/PROSPECTUS
PROMISTAR FINANCIAL CORPORATION
F.N.B. CORPORATION
Dear Promistar Shareholder:
You are cordially invited to attend a special meeting of the
shareholders of Promistar Financial Corporation to be held on ______,
__________, 2001 at _____ a.m. local time at _____________________. At this
special meeting, you will be asked to consider and vote upon an Agreement and
Plan of Merger pursuant to which Promistar will be merged with and into F.N.B.
Corporation, a diversified financial services holding corporation. If the merger
agreement is approved at the special meeting and the merger is completed, each
share of common stock of Promistar will be converted, at the effective time of
the merger, into the right to receive 0.926 shares of FNB common stock, subject
to possible adjustment in accordance with the terms of the merger agreement.
FNB common stock is traded on the Nasdaq National Market under the
symbol "FBAN." The closing price of FNB common stock on __________, 2001 was
$_____.
The merger cannot be completed unless Promistar's shareholders approve
the merger agreement at the special meeting. If you were a shareholder of record
of Promistar common stock on ______ __, 2001, you are entitled to vote at the
special meeting. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE TAKE THE TIME TO VOTE
BY COMPLETING AND MAILING THE ENCLOSED PROXY CARD.
This joint proxy statement/prospectus provides you with detailed
information about the merger, FNB and the shares of FNB common stock that will
be issued if the merger is completed. We encourage you to read this entire
document carefully.
THE BOARD OF DIRECTORS OF PROMISTAR BELIEVES THAT THE MERGER IS IN THE
BEST INTERESTS OF PROMISTAR'S SHAREHOLDERS. THE BOARD HAS APPROVED THE MERGER
WITH FNB AND RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL TO APPROVE THE
MERGER AGREEMENT.
Sincerely,
John H. Anderson
Chairman and Chief Executive Officer
PLEASE SEE THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 10 FOR
A DISCUSSION OF POTENTIAL RISKS ASSOCIATED WITH THE MERGER, AND IN OWNING FNB
COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE FNB COMMON STOCK TO BE ISSUED IN THE
MERGER OR DETERMINED THAT THIS DOCUMENT IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This joint proxy statement/prospectus is dated _____ ___, 2001 and is
being first mailed to Promistar shareholders on or about ______ ___, 2001.
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PROMISTAR FINANCIAL CORPORATION
551 MAIN STREET
JOHNSTOWN, PENNSYLVANIA 15901-1146
----------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _____________, 2001
----------------------------
To the Shareholders of Promistar Financial Corporation:
A special meeting of the shareholders of Promistar Financial
Corporation will be held on _____, _________, 2001, at _____, local time at
_____________________for the following purposes:
(1) To consider and vote upon a proposal to approve and
adopt an Agreement and Plan of Merger pursuant to which Promistar will
be merged with and into F.N.B. Corporation.
(2) To act on such other matters as may properly come
before the special meeting and any adjournments or postponements of the
special meeting.
The merger agreement is more completely described in the accompanying
proxy statement/prospectus, and a copy of the merger agreement is attached as
Appendix A to the proxy statement/prospectus. PLEASE REVIEW THESE MATERIALS
CAREFULLY AND CONSIDER FULLY THE INFORMATION SET FORTH THEREIN.
Action may be taken on the above proposals at the special meeting on
the date specified above or on any date or dates to which the special meeting
may be adjourned or postponed. Only holders of record of Promistar common stock
at the close of business on _____ ___, 2001, the record date for the special
meeting, will be entitled to notice of, and to vote at, the special meeting and
any adjournments or postponements thereof. The affirmative vote of Promistar
shareholders owning a majority of the shares of Promistar common stock
represented at the meeting in person or by proxy is required for approval of the
merger agreement and the merger.
THE BOARD OF DIRECTORS OF PROMISTAR RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF THE MERGER AGREEMENT.
Your vote is important. Whether or not you plan to attend the special
meeting in person, please complete, sign and date the enclosed proxy card and to
return it without delay in the enclosed postage-paid envelope. This will assure
your representation at the special meeting and may avoid the cost of additional
communications. This will not prevent you from voting in person at the special
meeting. You may revoke your proxy at any time before it is voted by signing and
returning a later dated proxy with respect to the same shares, by filing with
the Secretary of Promistar a written revocation bearing a later date, or by
attending and voting in person at the special meeting.
By Order of the Board of Directors,
John H. Anderson
Chairman and Chief Executive Officer
Johnstown, Pennsylvania
_____ _____, 2001
PLEASE COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
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JOINT PROXY STATEMENT/PROSPECTUS
F.N.B. CORPORATION
PROMISTAR FINANCIAL CORPORATION
Dear FNB Shareholder:
You are cordially invited to attend a special meeting of the
shareholders of F.N.B. Corporation to be held on ______, __________, 2001 at
_____ local time at _____________________. At this special meeting, you will be
asked to consider and vote upon (i) an Agreement and Plan of Merger pursuant to
which FNB will acquire Promistar Financial Corporation through the merger of
Promistar with and into FNB, and (ii) an amendment to the Articles of
Incorporation of FNB to increase the number of authorized shares of common stock
from 100 million to 500 million.
If the merger agreement is approved at the special meeting and the
merger is completed, FNB will issue 0.926 shares of common stock in exchange for
each share of Promistar common stock outstanding at the time of the merger. The
exchange ratio is subject to possible adjustment in accordance with the terms of
the merger agreement.
The merger cannot be completed unless FNB's shareholders approve the
merger agreement at the special meeting. If you were a shareholder of record of
FNB common stock on ______ __, 2001, you are entitled to vote at the special
meeting. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE TAKE THE TIME TO VOTE BY
COMPLETING AND MAILING THE ENCLOSED PROXY CARD.
This proxy statement/prospectus provides you with detailed information
about the merger. We encourage you to read this entire document carefully.
THE BOARD OF DIRECTORS OF FNB RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE MERGER AGREEMENT AND THE AMENDMENT TO FNB'S ARTICLES OF INCORPORATION.
Sincerely,
Gary L. Tice
President and Chief Executive Officer
PLEASE SEE THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 10 FOR
A DISCUSSION OF POTENTIAL RISKS ASSOCIATED WITH THE MERGER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS DETERMINED THAT THIS DOCUMENT IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated _____ ___, 2001 and is being
first mailed to FNB shareholders on or about ______ ___, 2001.
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F.N.B. CORPORATION
F.N.B. CENTER, 2150 GOODLETTE ROAD NORTH
NAPLES, FLORIDA 34102
----------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _____________, 2001
----------------------------
To the Shareholders of F.N.B. Corporation:
A special meeting of the shareholders of F.N.B. Corporation will be
held on _____, _________, 2001, at _____, local time at _____________________,
for the purpose of considering and voting upon the following:
(1) a proposal to approve and adopt an Agreement and Plan
of Merger pursuant to which FNB will acquire Promistar Financial
Corporation through the merger of Promistar with and into FNB;
(2) a proposal to amend the Articles of Incorporation of
FNB to increase the number of authorized shares of common stock from
100 million to 500 million; and
(3) such other matters as may properly come before the
special meeting and any adjournments or postponements of the special
meeting.
The merger agreement is more completely described in the accompanying
proxy statement/prospectus, and a copy of the merger agreement is attached as
Appendix A to the proxy statement/prospectus. PLEASE REVIEW THESE MATERIALS
CAREFULLY AND CONSIDER FULLY THE INFORMATION SET FORTH THEREIN.
Action may be taken on the above proposals at the special meeting on
the date specified above or on any date or dates to which the special meeting
may be adjourned or postponed. Only holders of record of FNB common stock or
Series A Preferred Stock at the close of business on _____ ___, 2001, the record
date for the special meeting, will be entitled to notice of, and to vote at, the
special meeting and any adjournments or postponements thereof. The proposals to
approve and adopt the merger agreement and to amend the Articles of
Incorporation each require that the votes cast at the special meeting in favor
of the proposal exceed the votes cast against the proposal.
THE BOARD OF DIRECTORS OF FNB RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE APPROVAL OF THE MERGER AGREEMENT.
Your vote is important. Whether or not you plan to attend the special
meeting in person, please complete, sign and date the enclosed proxy card and to
return it without delay in the enclosed postage-paid envelope. This will assure
your representation at the special meeting and may avoid the cost of additional
communications. This will not prevent you from voting in person at the special
meeting. You may revoke your proxy at any time before it is voted by signing and
returning a later dated proxy with respect to the same shares, by filing with
the Secretary of FNB a written revocation bearing a later date, or by attending
and voting at the special meeting.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
Naples, Florida
_____ _____, 2001
PLEASE COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
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ADDITIONAL INFORMATION
This document incorporates important business and financial information
about Promistar and FNB from other documents that are not included in or
delivered with this document. This information is available to you without
charge upon your written or oral request. You can obtain these documents by
requesting them in writing or by telephone from the appropriate company as
follows:
Promistar Financial Corporation F.N.B. Corporation
Attn: Corporate Secretary Attn: Corporate Secretary
551 Main Street F.N.B. Center
Johnstown, PA 15901 2150 Goodlette Road North
(814) 532-3801 Naples, FL 34102
(941) 262-7600
Promistar shareholders who would like to request any documents should
do so by _______, 2001 in order to receive them before the Promistar special
meeting. FNB shareholders who would like to request any documents should do so
by ______________, 2001 in order to receive them before the FNB special meeting.
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TABLE OF CONTENTS
PAGE
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SUMMARY...........................................................................................................1
The Special Meetings.........................................................................................1
Promistar Special Meeting................................................................................1
FNB Special Meeting......................................................................................1
The Merger...................................................................................................2
The Companies............................................................................................2
The Combined Company.....................................................................................2
What Promistar Shareholders Will Receive.................................................................2
Promistar's Reasons for the Merger.......................................................................3
Dissenters' Rights.......................................................................................3
Ownership of FNB after the Merger........................................................................3
Opinions of Financial Advisors...........................................................................3
Conditions to the Merger.................................................................................4
Termination of the Merger Agreement......................................................................4
Amendment, Waiver and Extension of the Merger Agreement..................................................4
Regulatory Approvals.....................................................................................4
Federal Income Tax Consequences..........................................................................5
Accounting Treatment.....................................................................................5
Stock Option Agreement...................................................................................5
Certain Differences in the Rights of Shareholders........................................................5
Future FNB Acquisition Activity..........................................................................5
Share Information and Market Prices......................................................................6
Selected Financial Data..................................................................................8
RISK FACTORS.....................................................................................................10
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS.......................................................13
THE PROMISTAR SPECIAL MEETING....................................................................................14
General ...............................................................................................14
Voting and Revocation of Proxies........................................................................14
Solicitation of Proxies.................................................................................14
Record Date and Voting Rights...........................................................................14
Recommendation of the Promistar Board...................................................................15
THE FNB SPECIAL MEETING..........................................................................................16
General ...............................................................................................16
Voting and Revocation of Proxies........................................................................16
Solicitation of Proxies.................................................................................16
Record Date and Voting Rights...........................................................................16
Recommendations of the FNB Board........................................................................17
THE MERGER.......................................................................................................18
Description of the Merger...............................................................................18
Conversion of Promistar Options.........................................................................19
Effective Time of the Merger............................................................................19
Exchange of Certificates................................................................................20
Background of the Merger................................................................................20
Promistar's Reasons for the Merger......................................................................22
Opinion of Promistar's Financial Advisor................................................................23
FNB's Reasons for the Merger............................................................................31
Opinion of FNB's Financial Advisor......................................................................31
Impact of the Merger on FNB's Financial Performance.....................................................36
Conditions to the Merger................................................................................36
Conduct of Business Prior to the Merger.................................................................37
Modification and Waiver of Provisions of the Merger Agreement...........................................39
Termination of the Merger Agreement.....................................................................39
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Termination Fee.........................................................................................42
Expenses................................................................................................42
Certain Federal Income Tax Consequences.................................................................42
Stock Option Agreement..................................................................................43
Accounting Treatment....................................................................................45
Interests of Certain Persons in the Merger..............................................................46
Bank Regulatory Matters.................................................................................47
Restrictions on Resales by Affiliates of Promistar......................................................48
FNB Dividend Reinvestment and Direct Stock Purchase Plan................................................48
INFORMATION ABOUT FNB............................................................................................49
INFORMATION ABOUT PROMISTAR......................................................................................51
COMPARISON OF SHAREHOLDER RIGHTS.................................................................................53
DESCRIPTION OF FNB CAPITAL STOCK.................................................................................64
PROPOSAL TO AMEND FNB'S ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED CAPITAL STOCK...........................66
LEGAL MATTERS....................................................................................................67
EXPERTS..........................................................................................................67
OTHER MATTERS....................................................................................................67
WHERE YOU CAN FIND MORE INFORMATION..............................................................................68
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS................................................................69
APPENDIX A -- Agreement and Plan of Merger......................................................................A-1
APPENDIX B -- Stock Option Agreement............................................................................B-1
APPENDIX C -- Opinion of Keefe, Bruyette & Woods, Inc...........................................................C-1
APPENDIX D -- Opinion of The Robinson-Humphrey Company, LLC.....................................................D-1
ii
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SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. The merger agreement is attached to this proxy
statement/prospectus as Appendix A. To fully understand the merger and for a
more complete description of the terms of the merger, you should carefully read
this entire document, including the exhibits, and the documents we refer you to
under the caption "Where You Can Find More Information."
THE SPECIAL MEETINGS
PROMISTAR SPECIAL MEETING (See page 14)
A special meeting of Promistar's shareholders will be held on _____,
_____, 2001 at _____ .m. at _____________________. At the special meeting,
Promistar shareholders will be asked to approve the merger agreement and the
related merger.
The merger agreement must be approved by the holders of a majority of
the shares of Promistar common stock represented at the special meeting in
person or by proxy. As of the record date for the special meeting, directors and
executive officers of Promistar controlled approximately ___% of the outstanding
shares of Promistar common stock entitled to vote at the special meeting.
THE PROMISTAR BOARD BELIEVES THAT THE MERGER IS IN YOUR BEST INTERESTS
AND RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT
AND THE RELATED MERGER.
FNB SPECIAL MEETING (See page 16)
A special meeting of FNB's shareholders will be held on _____, _____,
2001 at _____ .m at ______________________. At the special meeting, FNB
shareholders will be asked to approve (i) the merger agreement and the related
merger, and (ii) an amendment to the Articles of Incorporation of FNB increasing
the number of authorized shares of FNB common stock from 100 million to 500
million.
The proposals to approve and adopt the merger agreement and to amend
the Articles of Incorporation each require that the votes cast at the special
meeting in favor of the proposal exceed the votes cast against the proposal. As
of the record date for the special meeting, directors and executive officers of
FNB controlled approximately ___% of the outstanding shares of FNB common stock
entitled to vote at the special meeting.
THE FNB BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE THE
MERGER AGREEMENT AND THE RELATED MERGER, AND FOR THE PROPOSAL TO AMEND FNB'S
ARTICLES OF INCORPORATION.
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THE MERGER
THE COMPANIES
F.N.B. CORPORATION
2150 Goodlette Road North
Naples, Florida 34102
(800) 262-7600
FNB is a financial services holding company with executive offices in
Naples, Florida and Hermitage, Pennsylvania. FNB provides a broad range of
financial services to its customers through its banking, insurance agency,
consumer finance, and trust company subsidiaries, which operate over 150 offices
in four states. As of June 30, 2001, FNB had $4.1 billion in consolidated assets
and $3.3 billion in deposits. For additional information regarding FNB, see "The
Merger," "Information About FNB" and "Where You Can Find More Information."
PROMISTAR FINANCIAL CORPORATION
551 Main Street
Johnstown, Pennsylvania 15901-1146
(814) 532-3801
Promistar is a bank holding company headquartered in Johnstown,
Pennsylvania. Promistar's business consists primarily of the operations of
Promistar Bank, its banking subsidiary, which is a member of the Federal Reserve
System. Promistar Bank conducts business through a network of 72 offices located
throughout southwestern Pennsylvania and provides a full range of financial
services to individuals, businesses and governmental bodies, including accepting
demand, savings and time deposits, safe deposit facilities, electronic banking
services, debit cards, money transfer services, and other banking services.
Promistar Bank also offers lending services, including consumer, real estate,
commercial and industrial loans. As of June 30, 2001, Promistar had consolidated
assets of $2.1 billion and $1.7 billion in deposits. For additional information
regarding Promistar, see "The Merger," "Information About Promistar" and "Where
You Can Find More Information."
THE COMBINED COMPANY
At the effective time of the merger, Promistar will be merged with and
into FNB, which is incorporated under the laws of the State of Florida. The FNB
Articles of Incorporation and the FNB Bylaws in effect at the effective time
will continue to govern FNB until amended or repealed in accordance with
applicable law. Following the merger, the size of the FNB Board will be
increased by three, and three of the members of the Promistar Board, to be
chosen by Promistar, will be elected by the FNB Board to fill those vacancies.
WHAT PROMISTAR SHAREHOLDERS WILL RECEIVE (See page 18)
If the merger is completed, Promistar shareholders will receive 0.926
shares of FNB common stock for each share of Promistar common stock owned on the
effective date of the merger. Each Promistar shareholder will receive a small
cash payment equal to the value of any fractional share to which such
shareholder is entitled, unless such shareholder elects to enroll in FNB's
dividend reinvestment plan, in which case FNB will issue to such shareholder, in
book-entry form, the exact number of shares (rounded to the third decimal place)
to which such person is entitled.
The 0.926 exchange ratio is subject to adjustment in the event that
certain termination provisions, based on the market price of FNB's common stock,
have been triggered and the Promistar Board elects to terminate the merger
agreement. Promistar's right to terminate the merger agreement would arise if
the average closing price of FNB common stock during a specified period before
receipt of the last required regulatory or shareholder approval of the merger is
less than $19.962 per share and FNB common stock underperforms an index of
financial institution stocks by a specified amount. However, Promistar would not
have the right to terminate the merger agreement if FNB were to elect to make a
compensating adjustment in the exchange ratio.
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PROMISTAR'S REASONS FOR THE MERGER (See page 22)
The Promistar Board believes that the terms of the merger agreement and
the merger are fair to, and in the best interests of, Promistar and its
shareholders. In reaching its decision, the Promistar Board considered the
following factors, among others:
- the belief of the Promistar Board that FNB has offered a fair
price to Promistar shareholders for their Promistar common
stock and that Promistar shareholders would generally not be
taxed upon their exchange of Promistar stock for FNB stock
(except with respect to cash received in lieu of fractional
shares);
- the potential benefits to be received by Promistar's customers
from the merger and FNB's commitment to community banking;
- an evaluation of the potential long-term prospects of FNB;
- the stock and cash dividend history of FNB common stock; and
- FNB's intention to retain most of Promistar's employees.
The Promistar Board believes that the financial services industry is
becoming increasingly competitive, and that the merger will enable Promistar's
customers to be better served and will provide Promistar's shareholders with
substantial benefits. The merger will also provide opportunities for Promistar's
customers to be offered more diverse products and services.
DISSENTERS' RIGHTS
Neither FNB shareholders nor Promistar shareholders will have any
dissenters' or appraisal rights as a result of the matters to be voted on at the
respective special meetings.
OWNERSHIP OF FNB AFTER THE MERGER
FNB will issue up to 16.5 million shares of its common stock to
Promistar shareholders in connection with the merger (assuming no additional
shares of Promistar common stock are issued upon the exercise of Promistar stock
options prior to the merger, and assuming there is no adjustment to the 0.926
exchange ratio), which would constitute approximately 39% of the outstanding
stock of FNB after the merger, based on the number of outstanding shares of FNB
common stock on June 30, 2001. The shares will be listed for trading on the
Nasdaq National Market. FNB common stock is traded on the Nasdaq National Market
under the symbol "FBAN."
OPINIONS OF FINANCIAL ADVISORS (See pages 23 and 31)
Promistar's Advisor. Promistar asked its financial advisor, Keefe,
Bruyette & Woods, Inc. ("KBW"), for advice on the fairness to Promistar's
shareholders of the consideration that FNB is offering in the merger. KBW
performed a number of analyses in which it compared the companies' historical
stock prices and other measures of performance, compared the financial terms of
the merger to those of other publicly announced transactions, and estimated the
relative values of FNB and Promistar based on past and anticipated future
performance and the benefits that could be expected from the merger. KBW
delivered its written opinion, dated June 13, 2001, that the merger
consideration is fair to Promistar shareholders from a financial point of view.
The fairness opinion is attached as Appendix C to this proxy
statement/prospectus. You should read this opinion completely to understand the
procedures followed, assumptions made, matters considered and limitations of the
review undertaken by KBW. KBW's opinion is addressed to the Promistar Board and
does not constitute a recommendation to any shareholder as to how to vote with
respect to matters relating to the proposed merger.
FNB's Advisor. FNB asked its financial advisor, The Robinson-Humphrey
Company, LLC (now SunTrust Robinson Humphrey Equity Capital Markets), for advice
on the fairness to FNB's shareholders of the consideration that FNB is offering
in the merger. Robinson-Humphrey has delivered a written opinion to the FNB
Board that as of June 13, 2001, the date the FNB Board approved the merger and
related agreements, the exchange ratio was fair to FNB shareholders from a
financial
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point of view. The opinion is attached Appendix D to this proxy
statement/prospectus. You should read this opinion completely to understand the
procedures followed, assumptions made, matters considered and limitations of the
review undertaken by Robinson-Humphrey. Robinson-Humphrey's opinion is addressed
to the FNB Board and does not constitute a recommendation to any shareholder as
to how to vote with respect to matters relating to the proposed merger.
CONDITIONS TO THE MERGER (See page 36)
To complete the merger, a number of conditions must be satisfied in
addition to obtaining the approval of the shareholders of FNB and Promistar,
including the following:
- no law or injunction may effectively prohibit the merger;
- FNB and Promistar must receive all necessary approvals of
governmental and regulatory authorities;
- FNB and Promistar must receive a legal opinion that the merger
will be treated as a tax-free reorganization under the
Internal Revenue Code; and
- FNB and Promistar must receive a letter from FNB's independent
auditors indicating that the merger can be accounted for as
a pooling of interests.
TERMINATION OF THE MERGER AGREEMENT (See page 39)
FNB and Promistar can agree to terminate the merger agreement at any
time prior to completion of the merger, and either FNB or Promistar can
terminate the merger agreement if, among other reasons, any of the following
occurs:
- the merger is not approved by the shareholders of Promistar
and FNB;
- the merger is not completed by March 31, 2002;
- a court or other governmental authority permanently prohibits
the merger; or
- the other party breaches or materially fails to comply with
any of its representations or warranties or obligations under
the merger agreement.
Promistar will also have the right to terminate the merger agreement if
the average closing price of FNB stock during a specified period before receipt
of the last required regulatory or shareholder approval of the merger is less
than $19.962 and FNB common stock underperforms an index of financial
institutions by a specified amount, unless FNB were to elect to make a
compensating adjustment to the exchange ratio.
AMENDMENT, WAIVER AND EXTENSION OF THE MERGER AGREEMENT (See page 39)
Promistar and FNB may amend the merger agreement at any time before the
merger is completed, and may agree to extend the time within which any action
required by the merger agreement is to take place. However, if an amendment
would change the amount or form of the consideration Promistar shareholders
would receive in the merger, the amendment would have to be approved by the
shareholders of Promistar and FNB.
REGULATORY APPROVALS (See page 47)
The merger is subject to the approval of the Federal Reserve Board. If
the Federal Reserve Board approves the merger, the United States Department of
Justice has 15 days in which to challenge the approval on antitrust grounds. We
may not consummate the merger until expiration of the 15-day waiting period.
These governmental authorities may impose conditions for granting approval of
the merger.
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FNB and Promistar have filed all required applications for regulatory
review and approval or notice in connection with the merger. Neither Promistar
nor FNB can offer any assurance that all necessary approvals will be obtained or
as to the date of any such approvals.
FEDERAL INCOME TAX CONSEQUENCES (See page 42)
The merger is structured so that Promistar shareholders generally will
not recognize any gain or loss for federal income tax purposes in the merger,
except for taxes payable because of cash received by Promistar shareholders
instead of fractional shares of FNB common stock.
ACCOUNTING TREATMENT (See page 45)
FNB plans to account for the merger as a pooling-of-interests under
generally accepted accounting principles.
STOCK OPTION AGREEMENT (See page 43)
In connection with the merger agreement, Promistar granted FNB an
option to purchase up to 2,975,830 shares of Promistar common stock at an
exercise price of $17.306 per share. FNB may exercise the stock option only if
certain events occur that would likely be associated with another party
attempting to prevent the merger and acquire a substantial portion or all of
Promistar. As of the date of this joint proxy statement/prospectus, none of
those events has occurred. The purpose of the stock option is to increase the
likelihood that the merger will occur by making it more costly for another party
to acquire Promistar.
CERTAIN DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS (See page 53)
Once the merger occurs, Promistar shareholders will automatically
become shareholders of FNB and their rights will be governed by Florida law and
FNB's corporate governing documents rather than Pennsylvania law and Promistar's
governing documents.
FUTURE FNB ACQUISITION ACTIVITY
As part of its growth strategy, FNB may acquire other banks or other
financial services institutions to expand or strengthen its market position.
Risks associated with this strategy include, but are not limited to, FNB paying
too high a price for future acquisitions or failing to properly integrate and
manage new operations. Future acquisitions may be dilutive to FNB shareholders.
5
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SHARE INFORMATION AND MARKET PRICES
The following table presents the closing market prices for Promistar
and FNB common stock on June 13, 2001 and ______________, 2001. June 13, 2001
was the last full trading day prior to the date on which the signing of the
merger agreement was announced. ________________, 2001 was the last practicable
trading day for which information was available prior to the date of the filing
of this joint proxy statement/prospectus. The table also presents the equivalent
price per share of Promistar common stock, giving effect to the merger, as of
such dates. The equivalent per share price of Promistar common stock is
determined by multiplying the closing market price per share of FNB common stock
on each date by the exchange ratio of 0.926.
FNB common stock trades on the Nasdaq National Market under the trading
symbol "FBAN." Promistar common stock trades on the Nasdaq National Market under
the trading symbol "PRFC." The market prices of shares of FNB common stock and
Promistar common stock fluctuate from day to day. As a result, you should obtain
current market quotations to evaluate the merger. These quotations are available
from stockbrokers, in major newspapers such as The Wall Street Journal, and on
the Internet.
PROMISTAR
EQUIVALENT PER
FNB PROMISTAR SHARE PRICE
------ --------- --------------
June 13, 2001....................... $26.74 $19.76 $24.76
_______, 2001....................... $_____ $_____ $_____
RECENT DEVELOPMENTS
On February 26, 2001, Promistar entered into an agreement to acquire
FNH Corporation, a single bank holding company located in Herminie,
Pennsylvania. At March 31, 2001, FNH Corporation had total consolidated assets
of approximately $306 million, total consolidated deposits of approximately $247
million, and total consolidated stockholders' equity of approximately $31
million. Promistar expects to complete the acquisition in August 2001. See
"Information About Promistar -- Recent Developments."
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COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth selected comparative per share data for
each of FNB and Promistar on an historical basis and selected unaudited pro
forma comparative per share data assuming the merger had been consummated and
FNB and Promistar had been combined as of the beginning of the earliest period
presented for earnings per share and dividends per share and as of the dates
shown for book value per share. The unaudited pro forma financial data have been
prepared giving effect to the merger as a pooling-of-interests. For a
description of the effect of pooling-of-interests method of accounting on the
merger and the historical financial statements of FNB, see "The Merger -
Accounting Treatment."
The pro forma equivalent amounts shown below for Promistar have been
calculated by multiplying the pro forma combined amounts for FNB by the exchange
ratio of 0.926. The pro forma amounts are presented for informational purposes
only and are not necessarily indicative of the operating results and financial
position that might have been achieved had the merger occurred as of an earlier
date, nor are they necessarily indicative of operating results and financial
position that may occur in the future. All per share data have been adjusted to
reflect the FNB 5% stock dividend paid on May 31, 2001.
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------- ------------------
2000 1999 1998 2001 2000
------ ------ ------ ---- ----
(Unaudited, except FNB and (Unaudited)
Promistar historical)
EARNINGS BEFORE EXTRAORDINARY ITEMS PER
COMMON SHARE:
FNB
Historical (basic) ........................... $ 1.84 $ 1.69 $ 1.43 $.25 $.44
Historical (diluted) ......................... 1.79 1.64 1.37 .24 .43
Pro forma combined (basic) ................... 1.58 1.56 1.40 .28 .42
Pro forma combined (diluted) ................. 1.56 1.52 1.37 .27 .42
Promistar
Historical (basic) ........................... 1.11 1.25 1.26 .31 .37
Historical (diluted) ......................... 1.11 1.25 1.26 .31 .37
Pro forma equivalent
Basic ................................... 1.46 1.44 1.30 .26 .39
Diluted ................................. 1.44 1.41 1.27 .25 .39
CASH DIVIDENDS DECLARED PER COMMON SHARE:
FNB ............................................. .68 .64 .61 .17 .16
Promistar historical ............................ .83 .71 .61 .21 .20
Promistar pro forma equivalent .................. .63 .59 .16 .56 .15
AS OF DECEMBER 31, 2000 AS OF MARCH 31, 2001
----------------------- --------------------
BOOK VALUE PER COMMON SHARE:
FNB historical................................. $13.68 $13.67
FNB pro forma combined......................... 13.07 13.15
Promistar historical........................... 11.13 11.32
Promistar pro forma equivalent................. 12.10 12.18
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SELECTED FINANCIAL DATA
The following tables present (i) summary selected financial data for
each of FNB and Promistar on an historical basis and (ii) summary unaudited pro
forma selected financial data for FNB and Promistar giving effect to the merger
as a pooling-of-interests. For a description of the effect of
pooling-of-interests accounting on the merger and the historical financial
statements of FNB, see "The Merger - Accounting Treatment." The FNB summary
selected financial data are derived from FNB's consolidated audited financial
statements and unaudited interim financial statements. All FNB historical per
share data have been adjusted to reflect the 5% FNB stock dividend paid on May
31, 2001. The Promistar summary selected financial data are derived from
Promistar's consolidated audited financial statements and unaudited interim
financial statements. See "Where You Can Find More Information."
The pro forma amounts are not necessarily indicative of results of
operations or combined financial position that would have resulted had the
merger been consummated at the beginning of the period indicated or that will be
attained in the future. The pro forma information should be read in conjunction
with the audited financial statements of FNB and Promistar.
FNB:
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------------- ----------------------
2000 1999 1998 1997 1996 2001 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except per share data) (Unaudited)
INCOME STATEMENT DATA:
Interest income ...................... $ 290,936 $ 254,916 $ 246,027 $ 225,126 $ 209,761 $ 73,801 $ 69,166
Interest expense ..................... 135,308 106,467 108,152 96,728 88,063 34,886 30,296
Net interest income .................. 155,628 148,449 137,875 128,398 121,698 38,915 38,870
Provision for loan losses ............ 10,877 9,240 7,572 11,503 10,063 2,101 2,973
Income before extraordinary items .... 42,776 39,295 33,021 29,228 23,327 5,872 10,391
Extraordinary income, net of tax ..... -- -- -- 8,809 -- -- --
Net income ........................... 42,776 39,295 33,021 38,037 23,327 5,872 10,391
Earnings per common share
before extraordinary items
Basic .......................... 1.84 1.69 1.43 1.36 1.03 .25 .44
Diluted ........................ 1.79 1.64 1.37 1.30 1.00 .24 .43
Cash dividends declared per
common share ...................... .68 .64 .61 .52 .50 .17 .16
BALANCE SHEET DATA (AT PERIOD END):
Total assets ....................... $3,886,548 $3,706,184 $3,406,677 $3,098,453 $2,796,926 $4,005,876 $3,762,325
Total loans net of unearned income
and allowance for loan losses ... 2,923,336 2,767,463 2,390,576 2,144,734 1,939,818 2,908,890 2,869,633
Total deposits ..................... 3,102,937 2,909,434 2,850,428 2,583,586 2,344,312 3,205,649 3,044,292
Total Long-term debt ............... 116,140 117,634 70,384 73,434 59,448 113,052 92,381
Stockholders' equity ............... 321,244 290,315 282,138 270,440 235,025 327,817 292,739
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PROMISTAR:
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------------- ----------------------
2000 1999 1998 1997(1) 1996(2) 2001 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(unaudited)
(in thousands, except per share data)
INCOME STATEMENT DATA:
Interest income .................... $ 148,882 $ 140,165 $ 138,926 $ 130,513 $ 124,778 $ 37,182 $ 36,355
Interest expense ................... 71,018 59,484 60,421 54,987 51,653 19,024 16,455
Net interest income ................ 77,864 80,681 78,505 75,526 73,125 18,158 19,900
Provision for loan losses .......... 6,060 6,099 5,984 4,250 2,441 2,200 1,203
Net income ......................... 18,162 20,814 21,059 20,478 16,800 4,588 6,119
Earnings per common share
Basic ............................ 1.11 1.25 1.26 1.23 1.03 .31 .37
Diluted .......................... 1.11 1.25 1.26 1.23 1.02 .31 .37
Cash dividends declared per
common share ..................... .83 .71 .61 .53 .43 .21 .20
BALANCE SHEET DATA (AT PERIOD END):
Total assets ....................... $2,070,338 $2,060,672 $1,915,908 $1,792,036 $1,699,748 $2,056,106 $1,998,964
Total loans, net of unearned income
and allowance for loan loss .... 1,501,196 1,499,170 1,312,039 1,173,649 1,127,769 1,493,279 1,472,655
Total deposits ..................... 1,665,804 1,595,119 1,578,150 1,549,520 1,465,101 1,644,345 1,584,860
Total long term debt ............... 151,031 150,010 100,031 14,335 17,270 151,265 150,004
Stockholders' equity .............. 166,378 185,027 189,145 177,233 165,432 169,285 187,676
COMBINED:
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------------- ----------------------
2000 1999 1998 1997 1996 2001 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
INCOME STATEMENT DATA:
Interest income .................... $ 439,789 $ 395,056 $ 384,931 $ 355,628 $ 334,530 $ 110,976 $ 105,514
Interest expense ................... 206,326 165,951 168,573 151,715 139,716 53,910 46,751
Net interest income ................ 233,463 229,105 216,358 203,913 194,814 57,066 58,763
Provision for loan losses .......... 16,937 15,339 13,556 15,753 12,504 4,301 4,176
Income before extraordinary items .. 60,912 60,087 54,060 49,695 40,118 10,454 16,504
Extraordinary income, net of tax ... 0 0 0 8,809 0 0 0
Net income ......................... 60,912 60,087 54,060 58,504 40,118 10,454 16,504
Earnings before extraordinary items
per common share
Basic ............................ 1.58 1.56 1.40 1.35 1.06 .28 .42
Diluted .......................... 1.56 1.52 1.37 1.31 1.04 .27 .42
Cash dividends declared per
common share ..................... .77 .69 .63 .54 .49 .19 .18
BALANCE SHEET DATA (AT PERIOD END):
Total assets ....................... $5,956,272 $5,766,116 $5,321,665 $4,889,632 $4,496,068 $6,061,368 $5,760,675
Total loans, net of unearned income
and allowance for loan loss .... 4,424,532 4,266,633 3,702,615 3,318,383 3,067,587 4,402,169 4,342,288
Total deposits ..................... 4,768,741 4,504,553 4,428,578 4,133,106 3,809,413 4,849,994 4,629,152
Total long term debt................ 267,171 267,644 170,415 87,769 76,718 264,317 242,385
Stockholders' equity .............. 487,223 474,861 470,685 447,115 400,063 496,703 479,801
----------------
(1) Reflects the purchase acquisition of three branch offices of National
City Bank on June 6, 1997.
(2) Reflects the purchase acquisition of the Armstrong County Trust Company
on June 13, 1996.
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RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this joint proxy statement/prospectus, you should give careful
attention to the following statements respecting certain risks associated with
the merger and with the ownership of FNB common stock.
RISKS SPECIFICALLY RELATED TO THE MERGER
FNB MAY ENCOUNTER INTEGRATION DIFFICULTIES OR MAY FAIL TO REALIZE THE
ANTICIPATED BENEFITS OF THE MERGER.
FNB and Promistar may not be able to integrate their operations without
encountering difficulties including, without limitation, the loss of key
employees and customers, the disruption of their respective ongoing businesses
or possible inconsistencies in standards, controls, procedures and policies.
While FNB has successfully integrated past acquisitions, the proposed merger
with Promistar would be by far the largest acquisition undertaken by FNB and
will be significantly more difficult to integrate smoothly and successfully.
Additionally, in determining that the merger is in the best interests
of FNB and Promistar, as the case may be, the Board of Directors of each of FNB
and Promistar considered that enhanced earnings may result from the consummation
of the merger, including from reduction of duplicate costs, improved efficiency
and cross-marketing opportunities. However, there can be no assurance that any
enhanced earnings will result from the merger.
BECAUSE THE MARKET PRICE OF FNB COMMON STOCK MAY FLUCTUATE, YOU CANNOT BE
CERTAIN OF THE MARKET VALUE OF THE COMMON STOCK THAT PROMISTAR SHAREHOLDERS WILL
RECEIVE IN THE MERGER.
Upon completion of the merger, each share of Promistar common stock
will be converted into 0.926 shares of FNB common stock, subject to possible
adjustment as described under the heading "The Merger -Termination of the Merger
Agreement." Any change in the price of FNB common stock prior to the merger will
affect the market value of the stock that Promistar shareholders will receive on
the date of the merger. Stock price changes may result from a variety of
factors, including general market and economic conditions, changes in our
businesses, operations and prospects, and regulatory considerations. Many of
these factors are beyond our control.
The prices of FNB common stock and Promistar common stock at the
closing of the merger may vary from their respective prices on the date the
merger agreement was executed, on the date of this proxy statement/prospectus
and on the date of the special meetings. As a result, the value represented by
the exchange ratio will also vary. For example, based on the range of closing
prices of FNB common stock during the period from June 13, 2001, the last
trading day before public announcement of the merger, through _____________,
2001, the exchange ratio represented a value ranging from a high of $______ to a
low of $_______ for each share of Promistar common stock. Because the date the
merger is completed will be later than the dates of the meetings, at the time of
your shareholders' meeting, you will not know what the market value of the
combined company's common stock will be upon completion of the merger.
FUTURE RESULTS OF THE COMBINED COMPANIES MAY MATERIALLY DIFFER FROM THE PRO
FORMA FINANCIAL INFORMATION PRESENTED IN THIS DOCUMENT.
Future results of the combined company may be materially different from
those shown in the pro forma financial statements that only show a combination
of our historical results. We have estimated that the combined company will
record approximately $41 million of merger-related charges. The charges may be
higher or lower than we have estimated, depending upon how costly or difficult
it is to integrate our two companies. Furthermore, these charges may decrease
capital of the combined company that could be used for profitable,
income-earning investments in the future. See "The Merger -- Impact of the
Merger on FNB's Financial Performance."
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RISKS RELATED TO OWNING FNB COMMON STOCK
FNB'S STATUS AS A HOLDING COMPANY MAKES IT DEPENDENT ON DIVIDENDS FROM ITS
SUBSIDIARIES TO MEET ITS OBLIGATIONS.
FNB is a holding company and conducts almost all of its operations
through its subsidiaries. FNB does not have any significant assets other than
the stock of its subsidiaries. Accordingly, FNB depends on the cash flows of its
subsidiaries to meet its obligations. FNB's right to participate in any
distribution of earnings or assets of its subsidiaries is subject to the prior
claims of creditors of such subsidiaries. Under federal and state law, FNB's
bank subsidiaries are limited in the amount of dividends they can pay to FNB
without prior regulatory approval. Also, bank regulators have the authority to
prohibit FNB's subsidiary banks from paying dividends if they think the payment
would be an unsafe and unsound banking practice.
INTEREST RATE VOLATILITY COULD SIGNIFICANTLY HARM FNB'S BUSINESS.
FNB's results of operations are affected by the monetary and fiscal
policies of the federal government and the regulatory policies of governmental
authorities. A significant component of FNB's earnings is its net interest
income, which is the difference between income from interest-earning assets,
such as loans, and expense of interest-bearing liabilities, such as deposits. A
change in market interest rates will adversely affect FNB's earnings if market
interest rates change such that the interest FNB pays on deposits and borrowings
increases faster than the interest it collects on loans and investments.
Consequently, FNB, along with other financial institutions generally, is
sensitive to interest rate fluctuations.
FNB'S RESULTS OF OPERATIONS ARE SIGNIFICANTLY AFFECTED BY THE ABILITY OF ITS
BORROWERS TO REPAY THEIR LOANS.
Lending money is an essential part of the banking business. However,
borrowers do not always repay their loans. The risk of non-payment is affected
by:
- credit risks of a particular borrower;
- changes in economic and industry conditions;
- the duration of the loan; and
- in the case of a collateralized loan, uncertainties as to the
future value of the collateral.
Generally, commercial/industrial, construction and commercial real estate loans
present a greater risk of non-payment by a borrower than other types of loans.
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FNB'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS WILL BE ADVERSELY AFFECTED
IF ITS ALLOWANCE FOR LOAN LOSSES IS NOT SUFFICIENT TO ABSORB ACTUAL LOSSES.
There is no precise method of predicting loan losses. FNB can give no
assurance that its allowance for loan losses is or will be sufficient to absorb
actual loan losses. Excess loan losses could have a material adverse effect on
FNB's financial condition and results of operations. FNB attempts to maintain an
appropriate allowance for loan losses to provide for estimated losses in its
loan portfolio. FNB periodically determines the amount of the allowance for loan
losses based upon consideration of several factors, including:
- an ongoing review of the quality, mix and size of the overall
loan portfolio;
- historical loan loss experience;
- evaluation of non-performing loans;
- assessment of economic conditions and their effects on the
existing portfolio; and
- the amount and quality of collateral, including guarantees,
securing loans.
FNB'S FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED IF IT IS UNABLE TO ATTRACT
SUFFICIENT DEPOSITS TO FUND ITS ANTICIPATED LOAN GROWTH.
FNB funds its loan growth primarily through deposits. To the extent
that FNB is unable to attract and maintain levels of deposits to fund its loan
growth, FNB would be required to raise additional funds through public or
private financings. FNB can give no assurance that it would be able to obtain
these funds on terms that are favorable to it.
FNB COULD EXPERIENCE SIGNIFICANT DIFFICULTIES AND COMPLICATIONS IN CONNECTION
WITH ITS GROWTH.
FNB has grown significantly over the last few years and may seek to
continue to grow by acquiring financial institutions and branches as well as
non-depository entities engaged in permissible activities for its financial
institution subsidiaries. However, the market for acquisitions is highly
competitive. FNB may not be as successful in the future as it has been in the
past in identifying financial institution and branch acquisition candidates,
integrating acquired institutions or preventing deposit erosion at acquired
institutions or branches.
FNB may encounter unforeseen expenses, as well as difficulties and
complications in integrating expanded operations and new employees without
disruption to overall operations. In addition, rapid growth may adversely affect
FNB's operating results because of many factors, including start-up costs,
diversion of management time and resources, asset quality and required operating
adjustments. FNB may not successfully integrate or achieve the anticipated
benefits of its growth or expanded operations.
FNB COULD BE ADVERSELY AFFECTED BY CHANGES IN THE LAW, ESPECIALLY CHANGES
DEREGULATING THE BANKING INDUSTRY.
FNB and its subsidiaries operate in a highly regulated environment and
are subject to supervision and regulation by several governmental regulatory
agencies, including the Federal Reserve Board, the Office of the Comptroller of
the Currency, the FDIC and the Pennsylvania and Florida Departments of Banking.
Regulations are generally intended to provide protection for depositors and
customers rather than for investors. FNB is subject to changes in federal and
state law, regulations, governmental policies, income tax laws and accounting
principles. Deregulation could adversely affect the banking industry as a whole
and may limit FNB's growth and the return to investors by restricting such
activities as:
- the payment of dividends;
- mergers with or acquisitions by other institutions;
- investments;
- loans and interest rates;
- providing securities, insurance or trust services; and
- the types of non-deposit activities in which FNB's financial
institution subsidiaries may engage.
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In addition, legislation may change present capital requirements, which
would restrict FNB's activities and require it to maintain additional capital.
FNB cannot predict what changes, if any, federal and state agencies will make to
existing federal and state legislation and regulations or the effect that such
changes may have on FNB's business.
FNB'S RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED DUE TO SIGNIFICANT
COMPETITION.
FNB may not be able to compete effectively in its markets, which could
adversely affect its results of operations. The banking and financial service
industry in each of FNB's market areas is highly competitive. The increasingly
competitive environment is a result of:
- changes in regulation;
- changes in technology and product delivery systems; and
- the accelerated pace of consolidation among financial services
providers.
FNB competes for loans, deposits and customers with various bank and
non-bank financial service providers, many of which are larger in terms of total
assets and capitalization, have greater access to capital markets and offer a
broader array of financial services than does FNB. Competition with such
institutions may cause FNB to increase its deposit rates or decrease its
interest rate spread on loans it originates.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains forward-looking statements
that are subject to risks and uncertainties. Forward-looking statements include
statements preceded by, followed by or including words such as "believes,"
"anticipates," "plans," "expects" and similar expressions. You should understand
that the following important factors, in addition to those discussed elsewhere
in this document and the documents incorporated by reference in this document,
could affect the future results of FNB and Promistar and could cause those
results to differ materially from those expressed in these forward-looking
statements:
- the business of FNB or Promistar may not be integrated
successfully or such integration may be more difficult,
time-consuming or costly than expected;
- expected revenue synergies and cost savings from the merger
may not be fully realized within the expected time frame or at
all;
- revenues following the merger may be lower than expected;
- deposit attrition, operating costs, customer loss and business
disruption, including, without limitation, difficulties in
maintaining relationships with employees, customers, clients
or suppliers, may be greater than expected following the
merger;
- the regulatory approvals required for the merger may not be
obtained on the proposed terms or on the anticipated schedule;
- the merger may not be approved by FNB's and Promistar's
shareholders;
- Promistar has not yet consummated its acquisition of FNH
Corporation and such acquisition may not be consummated, or
may experience delays or integration difficulties;
- competitive pressures among depository and other financial
institutions may increase significantly and may have an effect
on pricing, spending, third-party relationships and revenues;
- the strength of the United States economy in general and the
strength of the local economies in which the combined company
will conduct operations may be different than expected,
resulting in, among other things, a deterioration in credit
quality or a reduced demand for credit, including the
resultant effect on the combined company's loan portfolio and
allowance for loan losses; and
- significant changes in the United States and foreign legal and
regulatory framework may occur.
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THE PROMISTAR SPECIAL MEETING
GENERAL
This section contains information about the special shareholder meeting
Promistar has called to consider and vote on the approval of the merger
agreement. Promistar is mailing this proxy statement/prospectus to its
shareholders on or about ____________, 2001. Together with this proxy
statement/prospectus, Promistar is also sending to its shareholders a notice of
the Promistar special meeting and a form of proxy that Promistar's Board is
soliciting for use at the special meeting and at any adjournments or
postponements of the meeting. The special meeting will be held on _____________,
2001 at _____, local time at __________________________.
VOTING AND REVOCATION OF PROXIES
You may use the accompanying proxy if you are unable to attend the
special meeting in person or wish to have your shares voted by proxy even if you
attend the meeting. You may revoke any proxy given pursuant to this solicitation
by delivering to the Corporate Secretary of Promistar, prior to or at the
special meeting, a written notice revoking the proxy or a duly executed proxy
relating to the same shares bearing a later date, or by attending the special
meeting and voting in person at the special meeting. Your attendance at the
special meeting will not, in and of itself, constitute a revocation of your
proxy. All written notices of revocation and other communications with respect
to the revocation of Promistar proxies should be addressed to Promistar
Financial Corporation, 551 Main Street, Post Office Box 1146, Johnstown,
Pennsylvania 15901-1146, Attention: Corporate Secretary. For a notice of
revocation or later proxy to be valid, however, it must actually be received by
Promistar prior to the vote of the shareholders. All shares represented by valid
proxies received pursuant to this solicitation, and not revoked before they are
exercised, will be voted in the manner specified therein. If properly executed
proxies are received by Promistar with no voting instructions, the proxies will
be voted "FOR" approval of the merger agreement. The Promistar Board is unaware
of any other matters that may be presented for action at the special meeting. If
other matters do properly come before the special meeting, however, it is
intended that shares represented by proxies in the accompanying form will be
voted by the persons named in the proxies in their discretion.
SOLICITATION OF PROXIES
Solicitation of proxies may be made in person or by mail, telephone, or
facsimile, or other form of communication by directors, officers and employees
of Promistar, who will not be specially compensated for such solicitation.
Nominees, fiduciaries and other custodians will be requested to forward
solicitation materials to beneficial owners and to secure their voting
instructions, if necessary, and will be reimbursed for the expenses incurred in
sending proxy materials to beneficial owners.
No person is authorized to give any information or to make any
representation not contained in this proxy statement/prospectus and, if given or
made, such information or representation should not be relied upon as having
been authorized by Promistar, FNB or any other person. The delivery of this
proxy statement/prospectus shall not, under any circumstances, create any
implication that there has not been any change in the business or affairs of
Promistar or FNB since the date of this proxy statement/prospectus.
FNB and Promistar have each agreed to pay one-half of the printing
costs of this proxy statement/prospectus and related materials. All other costs
of solicitation of proxies from Promistar shareholders will be borne by
Promistar.
RECORD DATE AND VOTING RIGHTS
The Promistar Board has fixed the close of business on _________ ___,
2001 as the record date for the determination of shareholders of Promistar
entitled to receive notice of and to vote at the special meeting. At the close
of business on the record date, there were outstanding __________ shares of
Promistar common stock held by ____ holders of record. Each share of Promistar
common stock outstanding on the record date is
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entitled to one vote as to (i) the approval of the merger agreement and the
transactions contemplated thereby and (ii) any other proposal that may properly
come before the special meeting.
Under Pennsylvania law and the Articles of Incorporation and Bylaws of
Promistar, the affirmative vote of holders of a majority of the shares of
Promistar common stock represented at the special meeting in person or by proxy
is required to approve and adopt the merger agreement and the transactions
contemplated thereby.
As of the record date, approximately _________ shares of Promistar
common stock (____% of the shares entitled to vote at the special meeting) were
beneficially held by directors and executive officers of Promistar. Promistar
Trust Company, a subsidiary of Promistar, beneficially owned approximately
_________ shares of Promistar common stock in various fiduciary capacities as of
the record date, of which Promistar Trust Company had sole or shared voting
power with respect to approximately _________ shares (representing ___% of the
votes entitled to be cast at the special meeting).
In order to take action on any other matter submitted to shareholders
at the special meeting, the votes cast in favor of the action must exceed the
votes cast opposing the action, unless Promistar's Articles of Incorporation or
Pennsylvania law requires a greater number of votes. All abstentions and broker
non-votes will be counted as present for purposes of determining the existence
of a quorum, but since they are neither votes cast in favor of, nor votes cast
opposing, a proposed action, abstentions and broker non-votes typically will
have no impact on the outcome of the matter and will not be counted as a vote
cast on such matters. (A broker non-vote generally occurs when a broker who
holds shares in street name for a customer does not have the authority to vote
on certain non-routine matters because its customer has not provided any voting
instructions with respect to the matter.)
RECOMMENDATION OF THE PROMISTAR BOARD
THE PROMISTAR BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS
OF PROMISTAR AND ITS SHAREHOLDERS, AND RECOMMENDS THAT THE SHAREHOLDERS OF
PROMISTAR VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
In the course of reaching its decision to approve the merger agreement
and the transactions contemplated thereby, the Promistar Board, among other
things, consulted with its legal advisors regarding the legal terms of the
merger agreement and with its financial advisor as to the fairness, from a
financial point of view, of the consideration to be paid to the holders of
shares of Promistar common stock. For a discussion of the factors considered by
the Promistar Board in reaching its conclusion, see "The Merger - Promistar's
Reasons for the Merger."
Promistar shareholders should note that certain members of management
and directors of Promistar have certain interests in and may derive certain
benefits as a result of the merger in addition to those received by Promistar
shareholders generally. See "The Merger - Interests of Certain Persons in the
Merger."
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THE FNB SPECIAL MEETING
GENERAL
This section contains information about the special shareholder meeting
FNB has called to consider and vote on the approval the merger agreement. FNB is
mailing this proxy statement/prospectus to its shareholders on or about
____________ , 2001. Together with this proxy statement/prospectus, FNB is also
sending to its shareholders a notice of the FNB special meeting and a form of
proxy that FNB's Board is soliciting for use at the special meeting and at any
adjournments or postponements of the meeting. The special meeting will be held
on _____________, 2001 at _____, local time at __________________________.
VOTING AND REVOCATION OF PROXIES
You may use the accompanying proxy if you are unable to attend the
special meeting in person or wish to have your shares voted by proxy even if you
attend the meeting. You may revoke any proxy given pursuant to this solicitation
by delivering to the Corporate Secretary of FNB, prior to or at the special
meeting, a written notice revoking the proxy or a duly executed proxy relating
to the same shares bearing a later date, or by attending the special meeting and
voting in person at the special meeting. Your attendance at the special meeting
will not, in and of itself, constitute a revocation of your proxy. All written
notices of revocation and other communications with respect to the revocation of
FNB proxies should be addressed to F.N.B. Corporation, F.N.B. Center, 2150
Goodlette Road North, Naples, Florida 34102, Attention: Corporate Secretary. For
a notice of revocation or later proxy to be valid, however, it must actually be
received by FNB prior to the vote of the shareholders. All shares represented by
valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. If no
specification is made, the proxies will be voted "FOR" approval of the merger
agreement. The FNB Board is unaware of any other matters that may be presented
for action at the special meeting. If other matters do properly come before the
special meeting, however, it is intended that shares represented by proxies in
the accompanying form will be voted by the persons named in the proxies in their
discretion.
SOLICITATION OF PROXIES
Solicitation of proxies may be made in person or by mail, telephone, or
facsimile, or other form of communication by directors, officers and employees
of FNB, who will not be specially compensated for such solicitation. Nominees,
fiduciaries and other custodians will be requested to forward solicitation
materials to beneficial owners and to secure their voting instructions, if
necessary, and will be reimbursed for the expenses incurred in sending proxy
materials to beneficial owners.
No person is authorized to give any information or to make any
representation not contained in this proxy statement/prospectus and, if given or
made, such information or representation should not be relied upon as having
been authorized by FNB, Promistar or any other person. The delivery of this
proxy statement/prospectus shall not, under any circumstances, create any
implication that there has not been any change in the business or affairs of FNB
or Promistar since the date of this proxy statement/prospectus.
FNB and Promistar have each agreed to pay one-half of the printing
costs of this proxy statement/prospectus and related materials. All other costs
of solicitation of proxies from FNB shareholders will be borne by FNB.
RECORD DATE AND VOTING RIGHTS
The FNB Board has fixed the close of business on _________ ___, 2001 as
the record date for the determination of shareholders of FNB entitled to receive
notice of and to vote at the special meeting. At the close of business on the
record date, there were outstanding __________ shares of FNB common stock held
by ____ holders of record, and _____ shares of Series A Preferred Stock held by
_____ holders of records. The holders of FNB common stock and FNB Series A
Preferred Stock will vote together as a group on (i) the approval of the merger
agreement and the transactions contemplated thereby, (ii) the proposal to amend
the
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Articles of Incorporation of FNB to increase the number of shares of authorized
common stock, and (iii) any other proposal that may properly come before the
special meeting, with each share of FNB common stock outstanding on the record
date entitling the holder thereof to cast one vote, and each share of FNB Series
A Preferred Stock outstanding on the record date entitling the holder thereof to
cast 6.2 votes.
As of the record date, approximately _________ shares of FNB common
stock, representing _____% the votes entitled to be cast at the special meeting,
were beneficially held by directors and executive officers of FNB. Subsidiaries
of FNB beneficially owned approximately ________ shares of FNB common stock in
various fiduciary capacities as of the record date, of which those subsidiaries
have sole or shared voting power with respect to approximately _______ shares
(representing _____% the votes entitled to be cast at the special meeting). None
of the directors or executive officers of FNB nor any of the subsidiaries of FNB
beneficially own any shares of FNB Series A Preferred Stock.
Under Florida law and the Articles of Incorporation of FNB, FNB is not
required to obtain shareholder approval of the merger. However, because of the
number of shares of FNB common stock to be issued in the merger, the Nasdaq
Stock Market requires FNB to obtain shareholder approval of the merger. Under
Nasdaq rules, the affirmative vote of a majority of the votes cast at the FNB
special meeting by the holders of the FNB common stock and the FNB Series A
Preferred Stock entitled to vote thereon is required to approve and adopt the
merger agreement and the transactions contemplated thereby.
Under Florida law and the Articles of Incorporation of FNB, approval of
the proposal to amend the Articles of Incorporation of FNB to increase the
shares of authorized common stock from 100 million to 500 million requires the
affirmative vote of a majority of the votes cast at the FNB special meeting by
the holders of the FNB common stock and the FNB Series A Preferred Stock.
In order to take action on any other matter submitted to shareholders
at the special meeting, the votes cast in favor of the action must exceed the
votes cast opposing the action, unless the Articles of Incorporation or Florida
law requires a greater number of votes. All abstentions and broker non-votes
will be counted as present for purposes of determining the existence of a
quorum, but since they are neither votes cast in favor of, nor votes cast
opposing, a proposed action, abstentions and broker non-votes typically will
have no impact on the outcome of the matter and will not be counted as a vote
cast on such matters. (A broker non-vote generally occurs when a broker who
holds shares in street name for a customer does not have the authority to vote
on certain non-routine matters because its customer has not provided any voting
instructions with respect to the matter.)
RECOMMENDATIONS OF THE FNB BOARD
MERGER AGREEMENT. THE FNB BOARD BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF FNB AND ITS SHAREHOLDERS, AND RECOMMENDS THAT THE SHAREHOLDERS OF
FNB VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
In the course of reaching its decision to approve the merger agreement
and the transactions contemplated thereby, the FNB Board, among other things,
consulted with its legal advisors regarding the legal terms of the merger
agreement and with its financial advisor as to the fairness to FNB's
shareholders, from a financial point of view, of the consideration to be paid to
the holders of shares of Promistar common stock. For a discussion of the factors
considered by the FNB Board in reaching its conclusion, see "The Merger - FNB's
Reasons for the Merger."
AMENDMENT TO ARTICLES OF INCORPORATION. THE FNB BOARD RECOMMENDS THAT
FNB'S SHAREHOLDERS VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT OF THE ARTICLES
OF INCORPORATION OF FNB INCREASING THE NUMBER OF AUTHORIZED SHARES OF FNB COMMON
STOCK. See "Proposal to Amend FNB's Articles of Incorporation to Increase
Authorized Capital."
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THE MERGER
The following summary of certain terms and provisions of the merger
agreement and stock option agreement is qualified in its entirety by reference
to the merger agreement and stock option agreement, which, with the exception of
the exhibits and disclosure memoranda to the merger agreement, are incorporated
herein by reference and included as Appendix A and Appendix B, respectively, to
this proxy statement/prospectus. We encourage you to read the merger agreement,
the stock option agreement and the other Appendices hereto in their entirety.
DESCRIPTION OF THE MERGER
At the effective time of the merger, Promistar will be merged with and
into FNB. The FNB Articles of Incorporation and the FNB Bylaws in effect at the
effective time will continue to govern FNB until amended or repealed in
accordance with applicable law. Following the merger, the size of the FNB Board
will be increased by three, and three of the members of the Promistar Board, to
be chosen by Promistar, will be elected by the FNB Board to fill those
vacancies. The merger is subject to regulatory approval. See "- Bank Regulatory
Matters."
At the effective time of the merger, each share of Promistar common
stock outstanding immediately prior to the effective time (other than shares
held by Promistar, FNB, or any of their subsidiaries, in each case, other than
in a fiduciary capacity or as a result of debts previously contracted) will be
converted automatically into the right to receive 0.926 shares of FNB common
stock. The exchange ratio is subject to possible adjustment as described below
under the subheading "--Termination of the Merger Agreement."
The merger agreement provides that the exchange ratio will be adjusted
to prevent dilution in the event FNB changes the number of shares of FNB common
stock issued and outstanding prior to the effective time of the merger as a
result of a stock split, stock dividend, recapitalization, reclassification, or
similar transaction. At the effective time of the merger, any shares of
Promistar common stock held by Promistar, FNB, or any of their subsidiaries, in
each case, other than in a fiduciary capacity or as a result of debts previously
contracted, will be canceled and retired without consideration being paid.
As of the record date for the Promistar special meeting, there were
__________ shares of Promistar common stock outstanding. Following the effective
time, assuming that ___________ shares of Promistar common stock are outstanding
at the effective time, the former shareholders of Promistar would be issued
__________ shares of FNB common stock, or approximately _____% of the then
outstanding shares of FNB common stock, based on the number of shares of FNB
common stock outstanding on the record date for the Promistar special meeting.
The number of shares of FNB common stock to be issued in the merger will be
increased in the event any outstanding options to purchase shares of Promistar
common stock are exercised prior to the effective time. As of July 31, 2001,
excluding the option granted to FNB pursuant to the stock option agreement
described in this proxy statement/prospectus, there were outstanding options to
purchase 745,800 shares of Promistar common stock, all of which were then
exercisable.
Promistar shareholders will be offered the opportunity to have the
shares of FNB common stock issued in the merger enrolled in FNB's dividend
reinvestment plan. A shareholder who elects to enroll in the plan will have his
or her shares of FNB common stock held in book-entry form, with any fractional
share issued in the merger rounded to the third decimal place. A shareholder who
elects not to participate in the plan will receive a stock certificate
evidencing the whole number of shares issued to the shareholder in the merger
along with cash (without interest) in an amount equal to the value of any
remaining fractional share, based on the closing price of FNB common stock as
reported by the Nasdaq National Market on the last trading day preceding the
closing of the merger. See "- Exchange of Certificates."
The shares of FNB capital stock outstanding immediately prior to the
merger will continue to be outstanding after the effective time of the merger.
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CONVERSION OF PROMISTAR OPTIONS
Options issued by Promistar to certain of its employees and directors
to purchase an aggregate of 745,800 shares of Promistar common stock were
outstanding as of July 31, 2001. To the extent that shares of Promistar common
stock are issued pursuant to the exercise of Promistar options in accordance
with their terms prior to the effective time of the merger, the shares will be
converted into FNB common stock in the same manner as other shares of Promistar
common stock. At the effective time, each option to purchase Promistar common
stock that has not expired and remains outstanding shall be converted into and
become an option to purchase shares of FNB common stock, and FNB shall assume
each such option in accordance with the individual stock option agreement and
any option plan by which it is evidenced, except that, from and after the
effective time:
- FNB and its compensation committee shall be substituted for
Promistar and its compensation committee (or, if applicable,
the entire Promistar Board) administering such Promistar
option and plan;
- each Promistar option assumed by FNB may be exercised solely
for shares of FNB common stock;
- the number of shares of FNB common stock subject to such
Promistar option will be equal to the number of shares of
Promistar common stock subject to such Promistar option
immediately prior to the effective time multiplied by the
exchange ratio, with cash being paid in lieu of any resulting
fraction of a share of FNB common stock equal to the product
of such fraction and the difference between the market value
of one share of FNB common stock and the per share exercise
price of such option or other right to purchase shares of FNB
common stock; and
- the per share exercise price under each such Promistar option
will be adjusted by dividing the per share exercise price
under each such Promistar option by the exchange ratio and
rounding up to the nearest cent. For example, at the present
exchange ratio of 0.926, an option to purchase 1,000 shares of
Promistar common stock at an exercise price of $10.00 per
share would be converted into an option to purchase 926 shares
of FNB common stock at a price of $10.80 per share.
As soon as practicable after the effective time of the merger, FNB will
deliver to the holders of each Promistar option an appropriate notice setting
forth such participant's rights pursuant thereto and the rights pursuant to such
Promistar option shall continue in effect on the same terms and conditions
(subject to the adjustments described in the above paragraph), and FNB will
comply with the terms of each Promistar option to ensure, to the extent required
thereby, that Promistar options which qualified as incentive stock options prior
to the effective time continue to qualify as incentive stock options after the
effective time. At or prior to the effective time, FNB will take all corporate
action necessary to reserve for issuance sufficient shares of FNB common stock
for delivery upon exercise of Promistar options assumed by it. FNB will cause
the issuance of such shares to be registered with the SEC.
Any restrictions or limitations on transfer with respect to shares of
Promistar common stock subject to Promistar options or any other plan, program,
or arrangement of Promistar or of any subsidiary of Promistar, to the extent
that such restrictions or limitations will not have already lapsed, and except
as otherwise expressly provided in such plan, program, or arrangement, will
remain in full force and effect with respect to shares of FNB common stock into
which such stock is converted pursuant to the merger agreement.
EFFECTIVE TIME OF THE MERGER
The merger and the other transactions contemplated by the merger
agreement shall become effective on the date and at the time Articles of Merger
are accepted for filing by the Pennsylvania Secretary of State and the Florida
Secretary of State or such other later date and time as is agreed to by the
parties and specified in the Articles of Merger. Neither FNB nor Promistar can
offer any assurance, however, as to whether or when the merger will occur. See
"- Conditions to the Merger" and "- Bank Regulatory Matters."
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EXCHANGE OF CERTIFICATES
As soon as practicable after the effective time, First National Bank of
Florida, a subsidiary of FNB (the "Exchange Agent"), will mail to each holder of
record of Promistar common stock as of the effective time a Letter of
Transmittal and related forms for use in forwarding stock certificates
previously representing shares of Promistar common stock for surrender and
exchange for certificates representing FNB common stock. Risk of loss and title
to the certificates theretofore representing shares of Promistar common stock
shall pass only upon proper delivery of such certificates to the Exchange Agent.
PROMISTAR SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY HAVE RECEIVED THE LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
Upon the surrender to the Exchange Agent of one or more certificates
for shares of Promistar common stock, together with a properly completed Letter
of Transmittal, each Promistar shareholder will be issued and mailed a
certificate or certificates representing the aggregate number of whole shares of
FNB common stock to which he or she is entitled pursuant to the merger
agreement, together with all declared but unpaid dividends in respect of such
shares, and, where applicable, a check for the amount (without interest)
representing any fractional share. A certificate for shares of FNB common stock,
or any check representing cash in lieu of a fractional share or declared but
unpaid dividends, may be issued in a name other than the name in which the
surrendered certificate is registered only if (i) the certificate surrendered is
properly endorsed, accompanied by a guaranteed signature if required by the
Letter of Transmittal and otherwise in proper form for transfer, and (ii) the
person requesting the issuance of such certificate either pays to the Exchange
Agent any transfer or other taxes required by reason of the issuance of a
certificate for such shares in a name other than the registered holder of the
certificate surrendered or establishes to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable. The Exchange Agent will issue
stock certificates evidencing FNB common stock in exchange for lost, stolen,
mutilated, or destroyed certificates of shares of Promistar common stock only
upon receipt of a lost stock affidavit and a bond indemnifying FNB against any
claim arising out of the allegedly lost, stolen, mutilated, or destroyed
certificate. In no event will the Exchange Agent, FNB, or Promistar be liable to
any persons for any FNB common stock or dividends thereon or cash delivered in
good faith to a public official pursuant to any applicable abandoned property,
escheat, or similar law.
Each Promistar shareholder electing to enroll in FNB's dividend
reinvestment plan will receive, rather than a stock certificate and a check for
the amount of any fractional share of FNB common stock to which such shareholder
is entitled, a statement from the Exchange Agent setting forth the number of
shares of FNB common stock, rounded to the third decimal place, which are being
held in such shareholder's account in book-entry form.
On and after the effective time and until surrender of certificates of
shares of Promistar common stock to the Exchange Agent, each certificate that
represented outstanding shares of Promistar common stock immediately prior to
the effective time will be deemed to evidence ownership of the number of shares
of FNB common stock into which such shares have been converted, and the holders
thereof shall be entitled to vote at any meeting of FNB shareholders. Beginning
30 days after the effective time, no shareholder will, however, receive
dividends or other distributions on such FNB common stock until the certificates
representing shares of Promistar common stock are surrendered. Upon surrender of
Promistar common stock certificates, Promistar shareholders will be paid any
dividends or other distributions on FNB common stock that are payable to holders
as of any dividend record date on or following the effective time. No interest
will be payable with respect to withheld dividends or other distributions.
However, voting rights on shares of Promistar common stock continue for 90 days
after the effective time regardless of whether certificates representing
Promistar common stock have been surrendered.
BACKGROUND OF THE MERGER
Since the mid-1990's, management of Promistar has had growing concern
over the company's potential for revenue growth. The majority of Promistar's
revenues have historically been derived from
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traditional banking activities - gathering deposit funds and using those funds
to make loans or other investments. The company's net interest income, the
difference between the interest income it recognizes on loans and investment
securities and the interest expense it incurs on deposits and other borrowed
funds, has come under increasing competitive pressure as the market for
supplying individuals and small businesses with investing and borrowing options
has expanded to include businesses other than traditional commercial banks. As a
result, Promistar, and community banks in general, have been challenged to seek
new areas of revenue growth, such as annuities, mutual funds and insurance.
Management of Promistar has recognized that FNB has a track record of success in
these product areas and that FNB shares the same community banking perspectives
that Promistar holds to be important. In early 2001, Promistar management began
to consider whether a strategic combination of the two companies might be the
best interests of Promistar and its shareholders.
From time to time, Promistar has employed financial advisors to assist
it in areas of strategic planning, and particularly merger and acquisitions.
William Frack, a former principal of Berwind Financial L.P., Philadelphia,
Pennsylvania, serves as such an advisor to Promistar. Prior to Mr. Frack's
retirement from Berwind Financial, he represented that firm in advising
Promistar with respect to a number of Promistar's acquisitions during the period
from 1975 to 1998.
On March 6, 2001, at the direction of management of Promistar, Mr.
Frack contacted Peter Mortensen, the Chairman of FNB, and suggested that FNB
consider the possibility of a strategic business combination with Promistar.
Later that month, Steven Gurgovits, the Vice Chairman of FNB, telephoned Mr.
Anderson and proposed that representatives of FNB meet with Mr. Anderson to
explore the possibility of such a transaction, and a meeting was scheduled for
April 11, 2001.
The meeting was attended by Messrs. Anderson, Mortensen, Gurgovits and
Gary Tice, the President and Chief Executive Officer of FNB, at FNB's
headquarters in Naples, Florida. The parties discussed the respective histories
of FNB and Promistar, and the strategic and business philosophies of the
management teams. The representatives of FNB expressed initial interest in
pursuing the possibility of acquiring Promistar, conditioned upon the
requirement that the transaction be accretive to FNB's earnings.
A regularly scheduled meeting of the executive committee of the
Promistar board was held on April 25, 2001. Mr. Anderson described to the
committee his preliminary discussions with FNB, and the committee authorized him
to continue negotiations with FNB.
On May 15, 2001, FNB engaged The Robinson-Humphrey Company, LLC (now
known as SunTrust Robinson Humphrey Equity Capital Markets) as its financial
advisor in connection with the potential acquisition of Promistar. Senior
management of FNB met with representatives of Robinson-Humphrey on that date and
discussed the terms and conditions upon which FNB would be interested in
pursuing the transaction, and Robinson-Humphrey was authorized to initiate
negotiations with Promistar or its financial advisor regarding the basic
financial terms of the transaction within certain parameters set by FNB
management.
On May 17, 2001, Promistar engaged Keefe, Bruyette and Woods, Inc.
("KBW") as its financial advisor in connection with the proposed merger.
During the week of May 15, 2001, the parties negotiated the basic
structure of the transaction, and on May 22, 2001, Messrs. Tice and Gurgovits
met with Mr. Anderson in Johnstown, Pennsylvania and agreed on the exchange
ratio of 0.926 shares of FNB common stock for each share of Promistar common
stock, subject to the negotiation of a definitive merger agreement and the
completion by each party of a due diligence review of the other party.
A meeting of FNB's executive committee was held on May 23, 2001, at
which management of FNB reviewed the terms of the proposed transaction with the
committee. Representatives of Smith, Gambrell & Russell, LLP, FNB's outside
legal counsel, were also present at the meeting to review the terms of a draft
of the merger agreement that was in the process of being negotiated. The
executive committee authorized the appropriate officers of FNB to proceed with
the negotiation of a definitive merger agreement, subject to the successful
completion of a due diligence review of Promistar.
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A meeting of the Promistar board was held on May 24, 2001. In addition
to members of the board, management of Promistar and representatives of KBW,
Kirkpatrick & Lockhart LLP, Promistar's outside legal counsel, and
PricewaterhouseCoopers LLP, Promistar's independent auditors, were present.
After reviewing the strategic aspects of the proposed merger, including industry
trends and the economics of comparative transactions, the board authorized KBW
to finalize negotiations and directed that a due diligence review of FNB be
conducted.
During the period from June 1, 2001 through June 7, 2001, FNB conducted
its on-site due diligence review of Promistar. Promistar conducted its on-site
due diligence review of FNB from June 4, 2001 through June 6, 2001. Neither
party discovered anything in its review to affect the then on-going merger
negotiations, or to cause it to change the proposed terms of the merger.
FNB and Promistar, with the assistance of their respective legal
counsel and financial advisors, reached agreement on the final terms of a
definitive merger agreement and of the stock option agreement on June 12, 2001.
Meetings of the board of directors of Promistar and of the executive committee
of FNB's board were scheduled for June 13, 2001.
At the meeting of Promistar's board on June 13, 2001, management of
Promistar updated the board on the successful completion of the due diligence
review of FNB and the negotiation of a definitive merger agreement and stock
option agreement. Representative's of Kirkpatrick & Lockhart reviewed the terms
of the merger agreement and the stock option agreement. Representatives of KBW
delivered their written opinion that, as of the date of the meeting, the
exchange ratio set forth in the merger agreement was fair, from a financial
point of view, to the shareholders of Promistar. After discussion, the board
approved the merger agreement and the stock option agreement, and authorized the
Chief Executive Officer of Promistar to execute the agreements and to take such
further action as necessary to consummate the merger, subject to the required
regulatory and shareholder approvals.
At the meeting of FNB's executive committee on June 13, 2001,
management of FNB updated the committee on the successful completion of the due
diligence review of Promistar and the negotiation of a definitive merger
agreement and stock option agreement. Representatives of Smith, Gambrell &
Russell reviewed the terms of the merger agreement and the stock option
agreement, and representatives of Ernst and Young LLP, FNB's independent
auditors, reviewed the accounting treatment of the merger. Representatives of
Robinson-Humphrey delivered their written opinion that, as of the date of the
meeting, the exchange ratio set forth in the merger agreement was fair, from a
financial point of view, to the shareholders of FNB. After discussion, the
executive committee approved the merger agreement and the stock option
agreement, and authorized the Chief Executive Officer of FNB to execute the
agreements and to take such further action as necessary to consummate the
merger, subject to the required regulatory and shareholder approvals.
Shortly following the conclusion of the respective meetings, the
parties entered into the merger agreement and the stock option agreement.
PROMISTAR'S REASONS FOR THE MERGER
The Promistar Board believes that the merger will enable the Promistar
shareholders to realize significant value when compared to the value of
Promistar common stock if the merger does not occur.
In reaching its determination that the merger agreement is fair to, and
in the best interests of, Promistar and its shareholders, the Promistar Board
considered a number of factors, both from a short- term and long-term
perspective, including, without limitation, the following:
- The Promistar Board's familiarity with and review of FNB's
business, financial condition, results of operations, and
prospects, including, but not limited to, its potential
growth, development, productivity and profitability;
- A detailed study of the financial impact of the merger on
Promistar's shareholders, including the fact that, based on
the closing price of $26.74 for FNB common stock as of June
13, 2001, the last trading day before the merger was announced
publicly, Promistar shareholders would receive a 25% premium
to Promistar's market value of $19.76 per share of its common
stock
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- Other benefits of the FNB offer including (i) the FNB offer
containing no collar in the event FNB's stock price was to
increase during the executory period; and (ii) the FNB offer
including three board seats for Promistar's directors and five
seats on the board of directors of FNB's Pennsylvania banking
subsidiary for Promistar's directors;
- The anticipated tax-free exchange of Promistar common stock
for FNB common stock in the merger (see the subheading "--
Certain Federal Income Tax Consequences");
- The current and prospective environment in which Promistar
operates, including national, state and local economic
conditions, Promistar's competitive environment, the increased
regulatory burdens on financial institutions generally, the
trend towards consolidation in the financial services industry
in general and among financial institutions in Pennsylvania
and the likely effect of the foregoing factors on Promistar's
potential growth, development, productivity and profitability;
- The business, financial condition, results of operation,
market valuations and acquisition history of FNB and the
opportunity for Promistar shareholders to participate in any
future growth of FNB by obtaining FNB common stock in the
merger;
- An in-depth due diligence review of FNB's operations,
financial records, capital position and legal matters
conducted by Promistar's employees, financial advisors,
accountants and attorneys;
- A comparison of the products and services provided by
Promistar and FNB, as well as the costs associated with and
relative level of resources available to Promistar and FNB,
respectively, to maintain and provide future enhancements to,
and develop new products and services within their markets;
- FNB's intention to retain most of Promistar's employees;
- The presentation by KBW to the Promistar Board on June 13,
2001, including the written opinion of KBW that, as of
June 13, 2001, the exchange ratio was fair to the shareholders
of Promistar from a financial point of view; and
- The condition in the merger agreement that permits Promistar
to terminate the merger agreement if the average closing price
of FNB common stock during a specified period before receipt
of the last required regulatory or shareholder approval of the
merger is less than $19.962 and FNB common stock underperforms
an index of financial institutions by a specified amount,
unless FNB were to elect to make a compensating adjustment to
the exchange ratio.
In addition, the Promistar Board is of the opinion that the merger will
result in a combined entity which has increased financial, managerial,
technological and other resources and will be better able to meet increased
competition and to profit from the opportunities resulting from the changing
legal and regulatory environment facing banks and bank holding companies.
OPINION OF PROMISTAR'S FINANCIAL ADVISOR
On May 17, 2001, Promistar engaged KBW to provide a fairness opinion in
connection with the merger. Pursuant to the terms of its engagement, KBW agreed
to assist Promistar in analyzing, structuring, negotiating and effecting a
transaction with FNB. Promistar selected KBW because KBW is a nationally
recognized investment banking firm with substantial experience in transactions
similar to the merger and is familiar with Promistar and its business. As part
of its investment banking business, KBW is continually engaged in the valuation
of businesses and their securities in connection with mergers and acquisitions.
As part of its engagement, representatives of KBW attended the meeting
of the Promistar Board held on June 13, 2001 at which the Promistar Board
considered and approved the merger agreement. At the June 13, 2001 meeting, KBW
rendered an oral opinion (subsequently confirmed in writing) that, as of such
date, the exchange ratio was fair to the holders of shares of Promistar common
stock from a financial point of view.
The full text of KBW's written opinion dated as of June 13, 2001 is
attached as Appendix C to this proxy statement/prospectus and is incorporated
herein by reference. The description of the opinion set forth herein is
qualified in its entirety by reference to Appendix C. Promistar shareholders are
urged to read the opinion in its entirety for a description of the procedures
followed, assumptions made, matters considered, and qualifications and
limitations on the review undertaken by KBW in connection therewith.
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KBW'S OPINION IS DIRECTED TO THE PROMISTAR BOARD AND ADDRESSES ONLY THE
EXCHANGE RATIO. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION TO PROCEED
WITH THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY PROMISTAR
SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING WITH
RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED THERETO.
KBW has informed Promistar that in arriving at its written opinion,
KBW, among other things:
- reviewed Promistar's Annual Reports on Form 10-K and related
audited financial information for the three fiscal years ended
December 31, 2000 and certain interim Promistar quarterly
reports on Form 10-Q and related unaudited financial
information for the subsequent quarterly periods;
- reviewed FNB's Annual Reports on Form 10-K and related audited
financial information for the three fiscal years ended
December 31, 2000 and certain interim FNB quarterly reports on
Form 10-Q and related unaudited financial information for the
subsequent quarterly periods;
- reviewed certain limited financial information, including
financial forecasts, relating to the respective businesses,
earnings, assets and prospects of Promistar and FNB furnished
to KBW by management of Promistar and FNB as well as projected
cost savings estimates and revenue enhancements expected to
result from the merger (the "Pro Forma Adjustments") furnished
to it by management of FNB;
- conducted certain limited discussions with members of
management of Promistar and FNB concerning the respective
businesses, financial condition, earnings, assets,
liabilities, operations, regulatory condition, financial
forecasts, contingencies and prospects of Promistar and FNB
and their respective views as to the future financial
performance of Promistar, FNB, and the combined entity, as the
case may be, following the merger;
- reviewed the historical market prices and trading activity for
Promistar common stock and FNB common stock and compared them
with that of certain publicly traded companies which KBW
deemed to be relevant;
- compared the respective results of operations of Promistar and
FNB with those of certain companies which KBW deemed to be
relevant;
- compared the proposed financial terms of the merger with the
financial terms of certain other mergers and acquisitions
which KBW deemed to be relevant;
- reviewed the amount and timing of the Pro Forma Adjustments
following the merger as prepared, and discussed with it, by
management of FNB;
- considered, based upon information provided by Promistar's
management, the pro forma impact of the merger on the earnings
and book value per share, consolidated capitalization and
certain balance sheet and profitability ratios of FNB;
- reviewed the merger agreement; and
- reviewed such other financial studies and analyses and
performed such other investigations and took into account such
other matters as KBW deemed necessary.
In preparing its opinion, KBW, with Promistar's consent, assumed and
relied on the accuracy and completeness of all financial and other information
supplied or otherwise made available to it by Promistar and FNB, including that
contemplated in the items listed above, and KBW has not assumed responsibility
for independently verifying such information or undertaken an independent
evaluation or appraisal of the assets or liabilities, contingent or otherwise,
of Promistar or FNB or any of their subsidiaries, nor has it been furnished any
such evaluation or appraisal. KBW is not an expert in the evaluation of
allowances for loan losses, and, with Promistar's consent, it has not made an
independent evaluation of the adequacy of the allowance for loan losses of
Promistar or FNB, nor has it reviewed any individual credit files relating to
Promistar or FNB, and, with Promistar's consent, it assumed that the respective
aggregate allowances for loan losses for both Promistar and FNB are adequate to
cover such losses and will be adequate on a pro forma basis for the combined
entity. In addition, it has not conducted any physical inspection of the
properties or facilities of Promistar or FNB. With Promistar's consent, KBW also
assumed and relied upon the management of Promistar and FNB as to the
reasonableness and achievability of the financial forecasts (and the assumptions
and bases therefore) provided to, and discussed with, KBW. In that regard, KBW
has assumed with Promistar's consent that such forecasts, including without
limitation, financial forecasts, evaluations of
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contingencies, pro forma adjustments and operating synergies resulting from the
merger and projections regarding underperforming and non-performing assets, net
charge-offs, adequacy of reserves, future economic conditions and results of
operations reflect the best currently available estimates and judgments of the
management of Promistar and FNB and/or the combined entity, as the case may be.
KBW's opinion is predicated on the merger receiving the tax and accounting
treatment contemplated in the merger agreement. KBW's opinion was necessarily
based on economic, market and other conditions as in effect on, and the
information made available to it as of, the date of its opinion.
KBW's opinion was rendered without regard to the necessity for, or
level of, any restrictions, obligations, undertakings or divestitures which may
be imposed or required in the course of obtaining regulatory approval for the
merger.
In connection with rendering its opinion dated June 13, 2001, KBW
performed a variety of financial analyses, consisting of those summarized below.
The summary set forth below does not purport to be a complete description of the
analyses performed by KBW in this regard, although it describes all material
analyses performed by KBW. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to a
partial analysis or summary description. Accordingly, notwithstanding the
separate factors summarized below, KBW believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors
considered by it, without considering all analyses and factors, or attempting to
ascribe relative weights to some or all such analyses and factors, could create
an incomplete view of the evaluation process underlying KBW's opinion.
In performing its analyses, KBW made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Promistar, FNB and KBW. The
analyses performed by KBW are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Such analyses were prepared solely as part of KBW's analysis
of the fairness to the shareholders of Promistar of the exchange ratio and were
provided to the Promistar Board in connection with the delivery of KBW's
opinion. KBW gave the various analyses described below approximately similar
weight and did not draw any specific conclusions from or with regard to any one
method of analysis. With respect to the comparison of selected companies
analysis and the analysis of selected merger transactions summarized below, no
company utilized as a comparison is identical to Promistar or FNB. Accordingly,
an analysis of comparable companies and comparable business combinations is not
mathematical; rather it involves complex considerations and judgments concerning
the differences in financial and operating characteristics of the companies and
other factors that could affect the public trading values or announced merger
transaction values, as the case may be, of the companies concerned. The analyses
do not purport to be appraisals or to reflect the process at which Promistar and
FNB might actually be sold or the prices at which any securities may trade at
the present time or at any time in the future. In addition, as described above,
KBW's opinion is just one of many factors taken into consideration by the
Promistar Board.
The projections furnished to KBW and used by it in certain of its
analyses were prepared by the management of Promistar and FNB. The projections
were based on numerous variables and assumptions which are inherently uncertain,
including, without limitation, factors related to general economic and
competitive conditions, and accordingly, actual results could vary significantly
from those set forth in such projections.
The following is a summary of the material analyses presented by KBW to
the Promistar Board on June 13, 2001 (the "KBW Report") in connection with its
June 13, 2001 opinion. All analyses considered reflected data for Promistar on a
pro forma basis giving effect to its acquisition of FNH Corporation as if it had
already occurred.
Summary of Proposal. KBW calculated multiples which were based on the
assumed per share purchase price of $24.82 (derived by multiplying the exchange
ratio of 0.926 by $26.80, the last reported sale
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price of FNB common stock on June 12, 2001). Promistar's March 31, 2001 book
value per share was $12.16, tangible book value per share was $10.58, and 2001
earnings per share estimate was $1.54. Based on this data, the price to book
value multiple was 2.04 times, the price to tangible book value multiple was
2.35 times, and the price to the 2001 earnings estimate per share was 16.1
times.
Analysis of Selected Merger Transactions. KBW reviewed certain
financial data related to comparable nationwide acquisitions of bank holding
companies announced between January 1, 2001 and June 12, 2001 with announced
deal values greater than $100 million. The transactions included in the
nationwide comparable transactions group were:
- Hanmi Financial Corporation/California Center Bank
- BNP Paribas Group/BancWest Corporation
- Allegiant Bancorp, Inc./Southside Bancshares Corp.
- Marshall & Ilsley Corporation/National City Bancorporation
- First Union Corporation/Wachovia Corporation
- First Virginia Banks, Inc./James River Bankshares, Inc.
- North Fork Bancorporation, Inc./Commercial Bank of New York
- Citigroup, Inc./European American Bank
- Royal Bank of Canada/Centura Banks, Inc.
- BB&T Corporation/F&M National Corporation
- BB&T Corporation/First Virginia Bancshares, Inc.
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Comparisons were based on both announced transaction values and
adjusted values, calculated by adjusting the announced value proportionately
with the interim change in the buyer's stock price for transactions in which
stock was issued. The results of KBW's review are set forth in the following
table.
Announced Announced Adjusted Adjusted
Comparable Comparable Comparable Comparable
Transaction Group Group Group Group
Multiple Average Median Average Median
----------- ---------- ---------- ---------- ----------
Deal Price/Book Value 204% 201% 207% 197% 199%
Deal Price/Tangible Book Value 235% 228% 241% 224% 215%
Deal Price/Trailing 12 Months
Earnings per Share 17.6x 17.4x 17.2x 17.1x 17.2x
Deal Price/Forward Earnings per Share 16.1x 15.8x 15.7x 15.6x 15.6x
Deal Price/Total Assets 18.2% 20.7% 20.8% 20.2% 20.1%
Core Deposit Premium 15.2% 18.0% 18.3% 17.6% 17.7%
Premium to Seller's Prior Closing Price 24.1% 33.5% 40.1% 32.6% 40.1%
Premium to Seller's One Month Prior
Closing Price 45.7% 48.3% 47.6% 47.4% 47.1%
KBW also reviewed certain financial data related to comparable
Northeastern acquisitions of bank holding companies announced between January 1,
2000 and June 12, 2001 with announced deal values greater than $40 million and
less than $500 million. The transactions included in the Northeastern comparable
transactions group were:
- Promistar Financial Corporation/FNH Corporation
- North Fork Bancorporation, Inc./Commercial Bank of New York
- United Parcel Service Inc./First International Bancorp, Inc.
- Fulton Financial Corporation/Drovers Bancshares Corp.
- Community Bank System, Inc./First Liberty Bank Corp.
- Financial Institutions, Inc./Bath National Corp.
- Valley National Bancorp/Merchants New York Bancorp, Inc.
- BB&T Corporation/FCNB Corp.
- M&T Bank Corporation/Premier National Bancorp, Inc.
- Niagara Bancorp, Inc./Iroquois Bancorp, Inc.
- Sterling Financial Corp./Hanover Bancorp, Inc.
- Mercantile Bankshares Corp./Union National Bancorp, Inc.
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The results of KBW's review are set forth in the following table.
Announced Announced Adjusted Adjusted
Comparable Comparable Comparable Comparable
Transaction Group Group Group Group
Multiple Average Median Average Median
----------- ---------- ---------- ---------- ----------
Deal Price/Book Value 204% 223% 234% 233% 234%
Deal Price/Tangible Book Value 235% 233% 239% 243% 243%
Deal Price/Trailing 12 Months
Earnings per Share 17.6x 18.1x 17.5x 19.0.x 18.3x
Deal Price/Forward
Earnings per Share 16.1x 15.9x 15.8x 16.7x 16.5x
Deal Price/Total Assets 18.2% 18.5% 19.2% 19.4% 20.8%
Core Deposit Premium 15.2% 16.5% 16.7% 17.1% 18.2%
Premium to Seller's Prior Closing Price 24.1% 36.4% 30.6% 40.5% 38.8%
Premium to Seller's One Month Prior
Closing Price 45.7% 59.0% 34.7% 63.0% 42.8%
No company or transaction used as a comparison in the above analysis is
identical to Promistar, FNB or the merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared.
Selected Peer Groups Analyses. KBW compared the financial performance
and market performance of Promistar, FNB and the pro forma company based on
various financial measures of earnings performance, operating efficiency,
capital adequacy and asset quality and various measures of market performance,
including market/book values, price to earnings and dividend yields to those of
a group of comparable regional bank holding companies. For purposes of such
analysis, the financial information used by KBW was as of and for the quarter
ended March 31, 2001. Stock price information was as of June 12, 2001. The
companies in the peer group were:
- M&T Bank Corporation
- FirstMerit Corp.
- Sky Financial Group, Inc.
- First Commonwealth Financial Corporation
- WesBanco, Inc.
- S&T Bancorp, Inc.
- Omega Financial Corp.
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The results of these comparisons are set forth in the following table.
Peer Peer
Group Group
Promistar FNB Pro Forma Average Median
--------- ---- --------- ------- ------
Core Return on Average Assets 1.02% 1.11% 1.20% 1.37% 1.33%
Core Return on Average Equity 11.5% 13.3% 14.1% 13.8% 13.2%
Net Interest Margin 3.96% 4.52% 4.31% 4.09% 4.10%
Efficiency Ratio 61.5% 67.6% 62.8% 51.6% 52.5%
Non Interest Income/Total Revenue 16.3% 31.1% 27.0% 24.3% 21.7%
Equity/Assets 8.87% 8.19% 8.43% 9.98% 9.68%
Tangible Equity/Tangible Assets 7.80% 7.56% 7.65% 8.96% 7.68%
Leverage Ratio 7.82% 7.85% 7.78% 9.42% 8.48%
Loan/Deposits 89.5% 92.0% 91.1% 94.4% 98.3%
Loan Loss Reserves/Non-performing Loans 166% 298% 236% 419% 344%
Loan Loss Reserves/Gross Loans 1.17% 1.30% 1.26% 1.52% 1.50%
Net Charge Offs/Average Loans 0.36% 0.31% 0.33% 0.25% 0.27%
Stock Price/Book Value 1.64x 1.99x 2.02x 2.12x 2.12x
Stock Price/Tangible Book Value 1.89x 2.18x 2.24x 2.54x 2.17x
Stock Price/2001 Earnings per Share 13.0x 13.5x 13.0x 14.9x 14.2x
Stock Price/2002 Earnings per Share 11.8x 12.6x 12.1x 13.6x 13.1x
2002 vs. 2001 Earnings per Share Growth 10.39% 7.04% 7.77% 9.41% 8.94%
Dividend Yield 4.20% 2.69% 2.69% 3.57% 3.74%
Contribution Analysis. KBW analyzed the relative contribution of each
of Promistar and FNB to the pro forma balance sheet and income statement items
of the combined entity, including assets, common equity, tangible equity,
deposits, loans, market capitalization, estimated 2001 and 2002 net income, and
estimated 2001 and 2002 cash net income. KBW compared the relative contribution
of such balance sheet and income statement items with the estimated pro forma
ownership for Promistar based on an exchange ratio of 0.926. The results of
KBW's analysis are set forth in the following table.
FNB Promistar
---- ---------
2001 Net Income 66.2% 33.8%
2001 Cash Net Income 65.9% 34.1%
2002 Net Income 65.5% 34.5%
2002 Cash Net Income 65.2% 34.8%
Common Equity 62.0% 38.0%
Tangible Equity 63.3% 36.7%
Assets 63.9% 36.1%
Deposits 63.9% 36.1%
Gross Loans 64.6% 35.4%
Market Capitalization 66.5% 33.5%
Ownership 62.0% 38.0%
Financial Impact Analysis. KBW performed a pro forma merger analysis
that combined projected income statement and balance sheet information.
Assumptions regarding the accounting treatment, acquisition adjustments, cost
savings and revenue enhancements were used to calculate the financial impact
that the merger would have on certain projected financial results of FNB. This
analysis indicated that the merger is
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expected to be accretive to estimated earnings per share and cash earnings per
share in year one and thereafter, and slightly decrease book value and tangible
book value per share based on quarter ended March 31, 2001 financial data. This
analysis was based on internal estimates of Promistar's and FNB's 2001 and 2002
earnings per share, and on FNB management's estimates of the Pro Forma
Adjustments. These projections were discussed with the management of each of
Promistar and FNB. The actual results achieved by FNB following the merger will
vary from the projected results, and the variations may be material.
Implied Dividend Analysis. KBW performed an analysis comparing the
implied dividend to be received by a holder of Promistar common stock given the
exchange ratio and FNB's annualized dividend of $0.72 per share versus
Promistar's $0.84 per share dividend. The value of the implied dividend was
20.6% less than the value of the current Promistar dividend.
KBW presented the following table to illustrate the dividend payout
ratios and dividend yields of Promistar, FNB and the 149 nationwide banks
included in the KBW Daily BankScan based on annualized dividends and closing
stock prices as of June 12, 2001:
Dividend Rank Rank
Payout (out of Dividend (out of
Ratio 152 banks) Yield 152 banks)
-------- --------- -------- ----------
Promistar 54.5% 9 4.20% 15
FNB 36.2% 75 2.69% 70
KBW BankScan Average 34.5% NA 2.61% NA
KBW BankScan Median 36.2% NA 2.61% NA
Discounted Cash Flow Analysis. KBW estimated the present value of the
future cash flows that would accrue to a holder of a share of Promistar common
stock assuming the shareholder held the stock from the year 2001 through the
year 2005 and then sold it at the end of year 2005. This stand-alone analysis
was based on several assumptions, including earnings per share of $1.54 in 2001
and $1.70 in 2002, and a 12.0% discount rate. Earnings per share for 2003
through 2006 were based on projected growth rates. The current 54.5% annual
dividend payout ratio was assumed for Promistar. A terminal valuation for
Promistar was calculated by multiplying projected 2006 earnings per share by a
price to forward earnings multiple. KBW presented a table showing the analysis
with a range of terminal multiples from 11.0 times to 16.5 times and a range of
projected EPS growth rates from 6.0% to 9.0%, resulting in a range of present
values for a share of Promistar common stock of $16.87 to $26.06. These values
were determined by adding (i) the present value of the estimated future dividend
stream that Promistar could generate over the period beginning January 2001 and
ending in December 2005, and (ii) the present value of the "terminal value" of
the Promistar common stock.
KBW stated that the discounted cash flow analysis is a widely used
valuation methodology but noted that it relies on numerous assumptions,
including asset and earnings growth rates, dividend payout rates, terminal
values and discount rates. The analysis did not purport to be indicative of the
actual values or expected values of Promistar common stock.
KBW has been retained by the Promistar Board as an independent
contractor to act as financial advisor to Promistar with respect to the merger.
KBW, as part of its investment banking business, is continually engaged in the
valuation of banking businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. As specialists in the
securities of banking companies, KBW has experience in, and knowledge of, the
valuation of banking enterprises. In the ordinary course of its business as a
broker-dealer, KBW may, from time to time, purchase securities from, and sell
securities to, Promistar and FNB and as a market maker in securities KBW may
from time to time have a long or short position in, and buy or sell, debt or
equity securities of Promistar and FNB for KBW's own account and for the
accounts of its customers.
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Promistar and KBW have entered into a letter agreement dated May 17,
2001 relating to the services to be provided by KBW in connection with the
merger. Promistar has agreed to pay KBW fees as follows: a cash fee of $250,000
following the signing of the letter agreement, and, at the time of closing, a
cash fee ("Contingent Fee") equal to 0.75% of the market value of the aggregate
consideration on the date of the signing of the definitive agreement, provided
however, that the fee paid prior to the Contingent Fee payment will be credited
against the Contingent Fee. Pursuant to the KBW engagement agreement, Promistar
also agreed to reimburse KBW for reasonable out-of-pocket expenses and
disbursements incurred in connection with its retention and to indemnify against
certain liabilities, including liabilities under the federal securities laws.
FNB'S REASONS FOR THE MERGER
The FNB Board believes the proposed merger with Promistar will provide
significant opportunities to market FNB's investment, insurance and other
fee-based products to the existing customers of Promistar. Also, the FNB Board
believes that the increased cash flow to FNB resulting from the acquisition of
Promistar will improve FNB's ability to continue its expansion in the Florida
market. Following the merger, Promistar's banking subsidiary will be merged into
First National Bank of Pennsylvania and will be able to draw upon its resources
and competencies to provide a broader range of services and product delivery
channels.
OPINION OF FNB'S FINANCIAL ADVISOR
FNB has engaged Robinson-Humphrey to act as its financial advisor in
connection with the proposed merger. At the June 13, 2001 meeting of the FNB
Board, Robinson-Humphrey reviewed with the Board its financial analysis of the
proposed merger and delivered its written opinion to the effect that, as of that
date and based upon and subject to the matters described in the opinion, the
exchange ratio in the proposed merger was fair, from a financial point of view,
to the shareholders of FNB. No limitations were imposed by the FNB Board upon
Robinson-Humphrey with respect to the investigation made or the procedures
followed by Robinson-Humphrey in rendering its opinion.
The full text of Robinson-Humphrey's written opinion dated June 13,
2001, which describes the assumptions made, procedures followed, matters
considered and limitations on the review undertaken in connection with the
opinion, is attached as Appendix D and is incorporated herein by reference. You
are urged to read this opinion in its entirety.
ROBINSON-HUMPHREY'S OPINION IS ADDRESSED TO THE BOARD OF DIRECTORS OF
FNB AND RELATES ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE
EXCHANGE RATIO TO THE SHAREHOLDERS OF FNB, AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW TO VOTE WITH RESPECT TO MATTERS
RELATING TO THE PROPOSED MERGER. The summary of Robinson-Humphrey's opinion
described below is qualified in its entirety by reference to the full text of
its opinion which is attached as Appendix D.
MATERIAL AND INFORMATION CONSIDERED WITH RESPECT TO THE PROPOSED MERGER
In arriving at its opinion, Robinson-Humphrey:
- reviewed the merger agreement and exhibits thereto;
- reviewed and analyzed certain publicly available information
concerning FNB and Promistar which Robinson-Humphrey believed
to be relevant to its inquiry;
- reviewed and analyzed financial and operating information with
respect to the business, operations and prospects of FNB and
Promistar furnished to Robinson-Humphrey by FNB and Promistar,
respectively;
- reviewed and analyzed a trading history of Promistar's common
stock from June 7, 1996 to June 13, 2001 and a comparison of
that trading history with those of other publicly traded
companies which Robinson-Humphrey deemed relevant;
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- reviewed and analyzed a comparison of the historical financial
results and present financial condition of each of FNB and
Promistar with those of publicly traded companies which
Robinson-Humphrey deemed relevant;
- reviewed and analyzed historical data relating to premiums
paid in acquisitions of bank holding companies from January 1,
1999 to June 13, 2001;
- reviewed and analyzed a comparison of the financial terms of
the proposed merger with the publicly available financial
terms of other recent transactions which Robinson-Humphrey
deemed relevant;
- conducted discussions with the respective managements of FNB
and Promistar concerning their respective businesses,
operations, assets, liabilities, present condition and future
prospects and the potential cost savings, operating synergies,
incremental revenues and other strategic benefits expected by
the management of FNB to result from a combination of the
businesses of Promistar and FNB; and
- reviewed such other studies, analyses and investigations and
took into account such other matters as Robinson-Humphrey
deemed appropriate.
In rendering its opinion, Robinson-Humphrey assumed and relied upon,
without independent verification, the accuracy and completeness of the financial
and other information discussed with or reviewed by Robinson-Humphrey in
arriving at its opinion. With respect to the financial forecasts, including the
synergies and other benefits expected to result from the proposed merger,
provided to or discussed with Robinson-Humphrey, Robinson-Humphrey assumed,
without independent verification or investigation, that such forecasts had been
reasonably prepared on bases reflecting the best currently available
information, estimates and judgments of the respective managements of FNB and
Promistar as to the future financial performance of each company. In arriving at
its opinion, Robinson-Humphrey did not conduct a physical inspection of the
properties and facilities of either FNB or Promistar and did not make nor obtain
any evaluations or appraisals of the assets or liabilities (including, without
limitation, any potential environmental liabilities), contingent or otherwise,
of either FNB or Promistar. Robinson-Humphrey also assumed the following:
- that the proposed merger would be consummated in accordance
with the terms of the merger agreement;
- that the proposed merger will be accounted for as a pooling of
interests under generally accepted accounting principles and
will be treated as a tax-free reorganization for federal
income tax purposes; and
- that all material governmental, regulatory or other consents
and approvals necessary for the consummation of the proposed
merger will be obtained without any adverse effect on FNB or
Promistar, or on the expected benefits of the proposed merger.
Robinson-Humphrey's opinion is necessarily based upon market, economic
and other conditions as they may have existed and could be evaluated as of June
13, 2001. Robinson-Humphrey expressed no opinion as to the underlying valuation,
future performance or long-term viability of FNB or Promistar. Robinson-Humphrey
does not have any obligation to update or revise its opinion.
In connection with the preparation of its fairness opinion,
Robinson-Humphrey performed financial and comparative analyses, the material
portions of which are summarized below. The summary set forth below includes the
financial analyses used by Robinson-Humphrey and deemed to be material, but does
not purport to be a complete description of the analyses performed by
Robinson-Humphrey in arriving at its opinion. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances, and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. In addition,
Robinson-Humphrey believes that its analyses must be considered as an integrated
whole, and that selecting
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portions of such analyses and the factors considered by it, without considering
all of such analyses and factors, could create a misleading or incomplete view
of the process underlying its analyses set forth in the opinion.
In performing its analyses, Robinson-Humphrey made numerous assumptions
with respect to industry and economic conditions, many of which are beyond the
control of FNB or Promistar. Any estimates contained in such analyses are not
necessarily indicative of actual past or future results or values, which may be
significantly more or less favorable than as set forth therein. Estimates of
values of companies do not purport to be appraisals or necessarily to reflect
the price at which such companies may actually be sold, and such estimates are
inherently subject to substantial uncertainty. No company, business or
transaction used in such analyses as a comparison is identical to FNB,
Promistar, their respective businesses or the proposed merger, and an evaluation
of the results of those analyses is not entirely mathematical. Rather, the
analyses involve complex considerations and judgments concerning financial and
operating characteristics and other factors that could affect the acquisition,
public trading or other values of the companies, businesses or transactions
analyzed.
Robinson-Humphrey's opinion and financial analyses were only one of
many factors considered by FNB's Board of Directors in its evaluation of the
proposed merger and should not be viewed as determinative of the views of FNB's
Board of Directors or management with respect to the proposed merger or the
exchange ratio in the proposed merger. The type of consideration and the
exchange ratio in the proposed merger were determined through direct negotiation
between FNB and Promistar. Although Robinson-Humphrey provided financial advice
to FNB during the course of negotiations, the decision to enter into the
proposed merger agreement was solely that of the Board of Directors.
The following is a summary of the material financial analyses presented
by Robinson-Humphrey to the FNB Board in connection with its opinion.
ANALYSIS OF SELECTED PUBLICLY TRADED REFERENCE COMPANIES
Reference company analysis analyzes a company's operating performance
relative to a reference group of publicly traded companies. Based on relative
performance and outlook for a company, this analysis enables an implied
unaffected market trading value to be determined. Robinson-Humphrey analyzed the
financial and stock market information for the following selected publicly
traded bank holding companies operating primarily in the mid-Atlantic region of
the United States:
- BSB Bancorp, Inc.
- Harleysville National Corporation
- National Penn Bancshares, Inc.
- NBT Bancorp, Inc.
- Omega Financial Corporation
- Sandy Spring Bancorp, Inc.
- Second Bancorp, Inc.
- TrustCo Bank Corp. of New York
- UNB Corporation
- WesBanco, Inc.
For the each of the reference companies, Robinson-Humphrey reviewed and
analyzed, among other things, market price as a multiple of:
- latest twelve months earnings per share ("EPS")
- estimated calendar 2001 EPS
- book value per share
- tangible book value per share
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All multiples were based on closing stock prices as of June 8, 2001. EPS
estimates for calendar 2001 were based on the First Call consensus estimates as
of June 8, 2001. The following table sets forth the multiples indicated by this
analysis for the reference companies as of June 8, 2001:
AVERAGE MEDIAN
------- ------
SELECTED COMPANIES' MARKET PRICE TO:
Latest Twelve Months EPS 14.63x 14.77x
Estimated Calendar Year 2001 EPS 13.35x 12.77x
Book Value 2.03x 1.85x
Tangible Book Value 2.11x 1.92x
Robinson-Humphrey then applied the average multiples resulting from the
analysis above to the values for Promistar (adjusted on a pro forma basis for
Promistar's proposed acquisition of FNH Corporation) for the latest twelve
months EPS, estimated calendar year 2001 EPS, book value per share and tangible
book value per share as of March 31, 2001. This analysis yielded implied equity
values per share for Promistar of approximately $19.16, $20.84, $24.66 and
$22.41, respectively. These implied equity values per share were compared to the
implied equity value per share for Promistar of approximately $23.93, based on
the exchange ratio in the proposed merger and FNB's market price as of June 8,
2001. Estimated financial data for Promistar was based on internal estimates of
the managements of Promistar and FNB.
ANALYSIS OF SELECTED MERGER AND ACQUISITION TRANSACTIONS
Reference merger and acquisition transaction analysis provides a
valuation range based upon consideration paid for selected bank holding
companies in recent transactions. Robinson-Humphrey reviewed the financial
terms, to the extent publicly available, of 32 proposed, pending or completed
merger and acquisition transactions from January 1, 1999 to June 13, 2001,
involving selected bank holding companies with between $1 billion and $5 billion
in assets (the "National Reference Transactions Group"). Robinson-Humphrey also
reviewed the financial terms, to the extent publicly available, of 42 proposed,
pending or completed merger and acquisition transactions from January 1, 1999 to
June 13, 2001, involving selected bank holding companies operating in the
mid-Atlantic region of the United States (the "Mid-Atlantic Reference
Transactions Group"). For each of the National Reference Transactions Group and
the Mid-Atlantic Reference Transactions Group, Robinson-Humphrey calculated
various financial multiples based on publicly available information for each of
the selected acquisition transactions and compared them to corresponding
financial multiples for the proposed merger, based on the exchange ratio.
Robinson-Humphrey reviewed and analyzed, among other things, market
price as a multiple of:
- latest twelve months EPS
- book value per share
- tangible book value per share
All multiples for the selected transactions were based on publicly available
information at the time of announcement of the relevant transaction.
For the National Reference Transactions Group, the average and median
multiples indicated by these analyses are as follows:
AVERAGE MEDIAN
------- ------
MARKET PRICE TO:
Latest Twelve Months EPS 21.16x 20.77x
Book Value Per Share 2.60x 2.44x
Tangible Book Value Per Share 2.87x 2.79x
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Robinson-Humphrey then applied the average multiple resulting from the
analysis above to the latest twelve months EPS, book value per share and
tangible book value per share for Promistar (adjusted on a pro forma basis for
Promistar's proposed acquisition of FNH Corporation). This analysis yielded
implied equity values per share for Promistar of approximately $27.72, $31.64
and $30.38, respectively. These implied equity values per share were compared to
the implied equity value per share for Promistar of approximately $23.93, based
on the exchange ratio in the proposed merger and FNB's market price as of June
8, 2001. Estimated financial data for Promistar was based on internal estimates
of the managements of Promistar and FNB.
For the Mid-Atlantic Reference Transactions Group, the average and
median multiples indicated by these analyses are as follows:
AVERAGE MEDIAN
------- ------
MARKET PRICE TO:
Latest Twelve Months EPS 23.64x 21.16x
Book Value Per Share 2.22x 2.13x
Tangible Book Value Per Share 2.32x 2.40x
Robinson-Humphrey then applied the average multiple resulting from the
analysis above to the latest twelve months EPS, book value per share and
tangible book value per share for Promistar (adjusted on a pro forma basis for
Promistar's proposed acquisition of FNH Corporation). This analysis yielded
implied equity values per share for Promistar of approximately $30.97, $26.99
and $24.61, respectively. These implied equity values per share were compared to
the implied equity value per share for Promistar of approximately $23.93, based
on the exchange ratio in the proposed merger and FNB's market price as of June
8, 2001. Estimated financial data for Promistar was based on internal estimates
of the managements of Promistar and FNB.
CONTRIBUTION ANALYSIS
Robinson-Humphrey reviewed the relative contribution that FNB and
Promistar (adjusted on a pro forma basis for Promistar's proposed acquisition of
FNH Corporation) would be making to the combined business in terms of net
interest income, net income, total assets, net loans and shareholders' equity.
Robinson-Humphrey analyzed relative contribution based on the latest twelve
months results for each company through March 31, 2001. The relative
contribution of Promistar to the combined entity's pro forma combined financial
results ranged from a high of 37.8% (based on each company's shareholders'
equity as of March 31, 2001) to a low of 32.6% (based on each company's latest
twelve months net income). The 37.8% ownership of the combined entity that
Promistar shareholders are expected to receive, based upon the exchange ratio in
the proposed merger, was within the overall range of relative contribution that
Promistar will provide to the combined business in terms of net interest income,
net income, total assets, net loans and shareholders' equity.
DIVIDEND DISCOUNT ANALYSIS
Robinson-Humphrey performed a dividend discount analysis to estimate a
range of present values per share of Promistar common stock, assuming Promistar
continued to operate as a stand-alone entity. Robinson-Humphrey discounted five
years of estimated cash flows for Promistar (adjusted on a pro forma basis for
Promistar's proposed acquisition of FNH Corporation), assuming a dividend rate
sufficient to maintain an equity capital ratio (defined as common equity divided
by total assets) of 6.00% and using a range of discount rates from 9% to 11%.
Robinson-Humphrey derived an estimate of a range of terminal values by applying
multiples ranging from 11 times to 15 times estimated year-end 2005 net income.
This analysis yielded a range of stand-alone, fully diluted values for Promistar
of approximately $22.49 to $28.89 per share, with an average and median value of
$25.60 and $25.59 per share, respectively. These implied equity values per share
were compared to the implied equity value per share for Promistar of
approximately $23.93, based on the exchange ratio in the proposed merger and
FNB's market price as of June 8, 2001. Estimated financial data for Promistar
was based on internal estimates of the managements of Promistar and FNB.
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PRO FORMA IMPACT ON PROJECTED FINANCIAL STATEMENTS
Based on the exchange ratio in the proposed merger, Robinson-Humphrey
reviewed the impact of the proposed merger on FNB's pro forma earnings per
share. The following table sets forth Robinson-Humphrey's analysis.
2002 2003 2004
---- ---- ----
Accretion to FNB's Earnings per Share 4.1% 5.1% 6.1%
This analysis was based upon internal earnings estimates of the
managements of Promistar and FNB, and estimated pre-tax cost savings and
operational synergies of approximately $12.1 million, $13.8 million and $16.3
million for 2002, 2003 and 2004, respectively. Robinson-Humphrey also analyzed
the impact of the proposed merger on FNB's pro forma balance sheet, which
resulted in an increase in total assets from $4.2 billion to $6.5 billion, an
increase in net loans from $3.0 billion to $4.7 billion and an increase in total
deposits from $3.3 billion to $5.2 billion. The pro forma impact at closing of
the proposed merger on FNB's book value per share and tangible book value per
share was 1.3% dilutive and 6.1% dilutive, respectively.
INFORMATION CONCERNING FNB'S FINANCIAL ADVISOR
Robinson-Humphrey is a nationally recognized investment banking firm
and, as a customary part of its investment banking activities, is regularly
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwritings, private placements, and for
corporate and other purposes. FNB retained Robinson-Humphrey because of its
experience, expertise, reputation in the financial services industry and
familiarity with FNB and transactions similar to the proposed merger. In the
ordinary course of business, Robinson-Humphrey and its affiliates may actively
trade or hold the securities and other instruments and obligations of FNB for
its own account and for the accounts of customers and, accordingly, may at any
time hold long or short positions in such securities, instruments or
obligations. In addition, Robinson-Humphrey has performed various investment
banking services for FNB, including acting as financial advisor in connection
with merger and acquisition transactions. In the past two years,
Robinson-Humphrey has been paid fees aggregating approximately $437,000 for
services rendered to FNB.
Robinson-Humphrey is acting as financial advisor to FNB in connection
with the proposed merger. Pursuant to an engagement letter dated May 2, 2001,
FNB agreed to pay Robinson-Humphrey (i) a fee of $200,000 upon delivery of its
opinion and (ii) a fee of 0.5% of the consideration payable to the Promistar
shareholders under the Merger Agreement (less any amounts payable to
Robinson-Humphrey under (i)), payable upon consummation of the merger for its
services in connection with the merger. The estimated fee payable to
Robinson-Humphrey under the preceding formula equals approximately $2.1 million.
FNB has also agreed to reimburse Robinson-Humphrey for its out-of-pocket
expenses incurred in connection with its engagement, and to indemnify
Robinson-Humphrey against specified liabilities, including liabilities under
federal securities laws incurred in connection with its engagement.
IMPACT OF THE MERGER ON FNB'S FINANCIAL PERFORMANCE
MERGER CHARGES. It is expected that FNB will incur charges arising from
the merger and from the assimilation of Promistar into the FNB organization.
Anticipated charges would normally arise from matters such as, but not limited
to, legal and accounting fees, financial advisory fees, consulting fees,
payments of contractual benefits triggered by a change of control, early
retirement and involuntary separation and related benefits, costs associated
with elimination of duplicate facilities and branch consolidations, data
processing charges, cancellation of vendor contracts and similar costs which
normally arise from the consolidation of operational activities.
The merger is expected to be accounted for as a pooling of interests.
FNB currently estimates incurring aggregate restructuring and merger-related
charges of approximately $41 million (or $29 million after taxes) in connection
with the consummation of the merger. Substantially all of these charges are
expected to be recognized in the period in which the merger closes. The
estimated restructuring and merger-related charges include approximately $7
million in noncash charges. The components of the anticipated merger-related
charges are summarized as follows:
(In thousands)
--------------
Employee-related ..................................................... $ 11,500
Occupancy and equipment .............................................. 3,500
Loss on restructuring of investment portfolio ........................ 6,600
Conversion ........................................................... 10,500
Investment banker, legal, accounting and other merger-related fees ... 7,100
Other ................................................................ 1,800
--------
41,000
Taxes ................................................................ (12,000)
--------
$ 29,000
========
The estimate of anticipated charges to be incurred in connection with
consummating the merger is a preliminary estimate of the significant charges
which may, in the aggregate, be required and should be viewed accordingly.
Moreover, this estimate has been based on the due diligence reviews that have
been performed to date in connection with the merger and may be subject to
change. The actual charges incurred may be higher or lower than what is
currently contemplated, once Promistar is assimilated from an operational
perspective and various contingencies are either satisfied or eliminated.
COST SAVINGS AND REVENUE ENHANCEMENTS. FNB believes it has the ability
to obtain substantial cost savings and to achieve substantial revenue
enhancements in the operations of the combined companies following the merger.
While no assurance can be given, based on present information, FNB estimates
that following the merger it can realize reductions in the noninterest expenses
attributable to Promistar's operations of approximately $9 million, or 13% of
Promistar's estimated 2002 noninterest expense. FNB anticipates these pre-tax
benefits from cost savings to increase to 15% in years subsequent to 2002. These
estimates are based on the assumption that by the end of 2002, FNB can reduce
operating costs in the areas of information technology, general and
administrative expenses and operations.
The foregoing estimated possible reductions in noninterest expense are
in the financial statement categories of (i) salaries and employee benefits
(approximately $5.0 million), (ii) occupancy expenses (approximately $1.1
million), (iii) furniture and equipment (approximately $0.3 million), and other
noninterest expenses (approximately $2.6 million for expense items such as data
processing, advertising, professional fees and printing and supplies). In
developing such assumptions, FNB evaluated Promistar's noninterest expense
structure, identified elements of Promistar's noninterest expenses that could be
reduced or eliminated as duplicative or unnecessary, and quantified the
anticipated cost savings in various categories. FNB also took into account its
experience in assimilating previous acquisitions in assessing the feasibility of
the projected cost savings in each category and concluded the projections are
feasible and realistic. In deriving the estimates of the amounts of anticipated
cost savings, FNB considered any applicable increases in its expenditures
necessary to operate the combined companies, and the above estimates are
presented net of any such increases.
Similarly with no assurance, FNB expects the combined company following
the merger to benefit from enhanced revenues in specific areas. FNB anticipates
that product enhancements and uniform application of FNB's policies to increase
revenues from Promistar's operations approximating $2.7 million pre-tax in 2002
and $3.5 million pre-tax in 2003, primarily resulting from broader mortgage loan
product line offerings, expanded annuity and investment sales capabilities, and
increased trust product offerings and standardization of service fee structures.
Possible cost savings and revenue enhancements are not reflected in the
pro forma financial information presented elsewhere in this proxy
statement/prospectus. Moreover, while FNB anticipates that the benefits
derivable from the cost savings and revenue enhancements discussed above will
continue in future years, FNB has not attempted to quantify identified benefits
beyond 2003.
PROJECTED IMPACT ON PER SHARE EARNINGS. Based on its evaluation of the
possible cost savings, revenue enhancements and other considerations, FNB
anticipates that consummation of the merger will be accretive to FNB's earnings
by more than 4% in 2002 and 5% in 2003. The estimated effects of the merger on
FNB's future per share earnings necessarily depend on assumptions and
uncertainties which may cause actual results to differ materially from the
anticipated results. See "Cautionary Statement Concerning Forward-Looking
Statements."
CONDITIONS TO THE MERGER
The merger will occur only if the merger agreement is approved by the
shareholders of FNB and Promistar at the respective special meetings.
Consummation of the merger is subject to the satisfaction of certain other
conditions, unless waived, to the extent legally permitted. Such conditions
include:
- the receipt of all required regulatory and governmental
consents, approvals, authorizations, clearances, exemptions,
waivers, or similar affirmations (and the expiration of all
applicable waiting periods following the receipt of such items
or the delivery of appropriate notices);
- the receipt, with certain exceptions, of all consents required
for consummation of the merger and the preventing of any
default under any contract of such party which, if not
obtained or made, is reasonably likely to have, individually
or in the aggregate, a material adverse effect on such party;
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- the absence of any action by a court or governmental or
regulatory authority that restricts, prohibits or makes
illegal the transactions contemplated by the merger agreement;
- the effectiveness of the Registration Statement filed with the
SEC of which this proxy statement/prospectus forms a part, and
the receipt of all necessary approvals under state and federal
securities laws relating to the issuance or trading of the
shares of FNB common stock issuable pursuant to the merger;
- the receipt of a letter dated as of the date of the closing of
the merger from FNB's independent auditors to the effect that
the merger qualifies to be accounted for as a pooling of
interests under GAAP; and
- the receipt of the tax opinion described below under the
caption "-- Certain Federal Income Tax Consequences."
In addition, unless waived, each party's obligation to effect the
merger is subject to the accuracy of the other party's representations and
warranties at the effective time of the merger and the performance by the other
party of its obligations under the merger agreement and the receipt of certain
closing certificates from the other party. The obligation of FNB to effect the
merger also is subject to the satisfaction of the following conditions:
- FNB shall have received an agreement from each affiliate of
Promistar restricting his or her ability to sell or otherwise
transfer his or her shares of Promistar common stock prior to
consummation of the merger or the shares of FNB common stock
received upon consummation of the merger, to the extent
necessary to assure, in the reasonable judgment of FNB, that
the transactions contemplated by the merger agreement will
qualify for pooling-of-interests accounting treatment;
- FNB shall have received an executed copy of a non-compete
agreement from not less than 90% of the directors of Promistar
who are not executive officers of Promistar; and
- FNB shall have received a written legal opinion of counsel to
Promistar addressing such matters as agreed to by FNB,
Promistar and such counsel.
The obligation of Promistar to effect the merger is also subject to the
satisfaction of the following conditions:
- FNB shall have delivered to the Exchange Agent the
consideration to be paid to holders of Promistar common stock;
and
- Promistar shall have received a written legal opinion of
counsel to FNB addressing such matters as agreed upon by
Promistar, FNB and such counsel.
No assurances can be provided as to when or if all of the conditions
precedent to the merger can or will be satisfied or waived by the party
permitted to do so.
Either Promistar or FNB may waive any of the conditions imposed with
respect to its respective obligations to consummate the merger, except for
requirements that the merger be approved by Promistar's and FNB's shareholders
and that all required regulatory approvals be received.
CONDUCT OF BUSINESS PRIOR TO THE MERGER
Under the terms of the merger agreement, Promistar and FNB have each
agreed that, without the prior written consent of the other, it will not, and it
will cause its subsidiaries not to:
- take any action which would adversely affect the ability of
any party to obtain any consent or approval required for the
transactions contemplated by the merger agreement;
- except as disclosed in the merger agreement, (i) enter into or
amend any employment or severance agreements with any of its
directors or executive officers, or any material employment or
severance agreements with any of its other officers or
employees, or (ii) grant any salary or wage
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increase or increase any employee benefit (including incentive
or bonus payments), except for normal individual increases in
compensation to employees in the ordinary course of business
consistent with past practice and grants of awards to newly
hired employees consistent with past practice;
- except as disclosed in the merger agreement, enter into or
amend any employee benefit plan (except as may be required by
applicable law, to satisfy contractual obligations existing as
of the date hereof or amendments which, either individually or
in the aggregate, would not reasonably be expected to result
in a material liability to FNB, Promistar or their respective
subsidiaries);
- take any action that would adversely affect such party's
ability to perform any of its material obligations under the
merger agreement;
- amend its Articles of Incorporation or Bylaws; or
- make any change in its accounting principles, practices or
methods, other than as may be required by generally accepted
accounting principles.
In addition, Promistar has agreed that it will not, without the prior
consent of FNB:
- operate its business other than in the usual, regular and
ordinary course;
- fail to use its reasonable efforts to preserve intact its
business organization and assets and maintain its rights and
franchises;
- fail to use its reasonable efforts to maintain its current
employee relationships;
- make any unsecured loan or other extension of credit to any
person if, immediately after making such loan or extension of
credit, such person would be indebted to Promistar and its
subsidiaries in an aggregate amount in excess of $3 million;
- make any fully secured loan to any person (except for loans
secured by a first mortgage on single family owner-occupied
real estate and except for any loan to any person who has
received from Promistar a commitment for a loan or extension
of credit prior to the date of the merger agreement) if,
immediately after making such loan, such person would be
indebted to Promistar and its subsidiaries in an aggregate
amount in excess of $5 million;
- incur any additional debt obligation or other obligation for
borrowed money in excess of an aggregate of $1 million except
in the ordinary course of business consistent with past
practices, or impose, or suffer the imposition, with certain
exceptions, of a lien on any asset of Promistar or its
subsidiaries (other than in connection with deposits,
repurchase agreements, bankers acceptances, treasury tax and
loan accounts established in the ordinary course of business,
the satisfaction of legal requirements in the exercise of
trust powers, and already existing liens);
- except in connection with an acquisition pending at the time
the merger agreement was entered into, repurchase, redeem, or
otherwise acquire or exchange (other than exchanges in the
ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any
shares, of the capital stock of Promistar or any of its
subsidiaries;
- except for (i) pursuant to the stock option agreement between
Promistar and FNB, (ii) in connection with an acquisition
pending at the time the merger agreement was entered into, or
(iii) pursuant to the exercise of outstanding options to
purchase Promistar common stock options, issue, sell, pledge,
encumber, authorize the issuance of, enter into any contract
to issue, sell, pledge, encumber, or authorize the issuance
of, or otherwise permit to become outstanding, any additional
shares of Promistar common stock or any other capital stock of
any Promistar subsidiary, or any stock appreciation rights, or
any option, warrant, conversion, or other right to acquire any
such stock, or any security convertible into any such stock;
- adjust, split, combine, or reclassify the capital stock of
Promistar or any subsidiary or issue or authorize the issuance
of any other securities in respect of or in substitution for
Promistar common stock or sell, lease, mortgage, or otherwise
dispose of or otherwise encumber (i) any shares of capital
stock of any Promistar subsidiary (unless any such shares of
stock are sold or otherwise transferred to Promistar or
another of its subsidiaries) or (ii) any asset other than in
the ordinary course of business for reasonable and adequate
consideration;
- except for purchases of United States Treasury securities or
United States government agency securities, which in either
case have maturities of five years or less, purchase any
securities or make any material investment, either by purchase
of stock or securities, contributions to capital,
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asset transfers, or purchase of any assets, in any person
other than a wholly owned subsidiary or otherwise acquire
direct or indirect control over any person, other than in
connection with (i) foreclosures in the ordinary course of
business, (ii) acquisitions of control by a depository
institution subsidiary in its fiduciary capacity, or (iii) the
creation of new wholly owned subsidiaries organized to conduct
or continue activities otherwise than permitted by the merger
agreement;
- except as otherwise disclosed in the merger agreement,
commence any litigation other than in accordance with past
practice or settle any litigation for material money damages
or restrictions upon the operations of Promistar or any of its
subsidiaries;
- except in the ordinary course of business, modify, amend, or
terminate any material contract, other than renewals without a
material adverse change of terms, or waive, release,
compromise, or assign any material rights or claims;
- except as otherwise disclosed in the merger agreement and for
transactions in the ordinary course of business consistent
with past practice, make any investment in excess of $250,000
either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or
assets of any other individual, corporation or other entity
other than a wholly owned subsidiary of Promistar;
- sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or
other entity other than a direct or indirect wholly owned
subsidiary, or cancel, release or assign any indebtedness to
any such person or any claims held by any such person, except
in the ordinary course of business consistent with past
practice or pursuant to contracts or agreements in force at
the date of the merger agreement; or
- agree to, or make any commitment to, take any of the actions
described above.
FNB has also agreed to conduct its business and the business of its
subsidiaries in a manner designed, in its reasonable judgment, to enhance the
long-term value of the FNB common stock and its business prospects. FNB or any
of its subsidiaries may, however, discontinue or dispose of any of its assets or
business if FNB determines that such action is desirable in the conduct of its
business.
MODIFICATION AND WAIVER OF PROVISIONS OF THE MERGER AGREEMENT
The merger agreement may be amended by a subsequent writing signed by
each party upon the approval of each party's respective Board of Directors.
However, the provisions relating to the consideration to be received by the
holders of Promistar common stock may not be amended in any material respect
after the special meeting of either FNB or Promistar without the further
approval of the shareholders of such party.
The merger agreement provides that each party may (i) waive any default
in the performance of any term of the merger agreement by the other party, (ii)
waive or extend the time for compliance of fulfillment by the other party of any
of its obligations under the merger agreement and (iii) waive any of the
conditions precedent to its obligations to consummate the merger to the extent
legally permitted. Neither FNB nor Promistar intends to waive any conditions of
the merger if such waiver would, in the judgment of the waiving party, have a
material adverse effect on it.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated by mutual agreement of the FNB
Board and the Promistar Board. The merger agreement may also be terminated by
either Board of Directors in the event that:
- any representation or warranty of the other party contained in
the merger agreement is inaccurate and cannot be or has not
been cured within 40 days of written notice of such inaccuracy
and which inaccuracy would provide the terminating party the
ability to refuse to consummate the merger under the
applicable standard set forth in the merger agreement,
provided that such party is not then in breach of the merger
agreement;
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- the other party materially breaches any covenant or agreement
in the merger agreement that cannot be or has not been cured
within 40 days of written notice of such breach;
- the required approval of the Promistar and FNB shareholders or
any applicable regulatory or governmental authority is not
obtained; or
- the merger is not consummated by March 31, 2002, provided that
the failure to consummate the merger by such date is not
caused by any breach of the merger agreement by the
terminating party.
Promistar may also terminate the merger agreement on any day (the
"Election Date") during the four business day period ("Election Period")
commencing on the first day following the date on which all governmental and
shareholder approvals have been obtained (the "Approval Date"), if each of the
following conditions is satisfied:
(i) the average daily per share closing prices of FNB's common
stock during the five trading days preceding the Election Date
(the "FNB Ending Price") is less than $19.962; and
(ii) the quotient obtained by dividing the FNB Ending Price by
$24.952 (the "FNB Starting Price") is less than the difference
obtained by subtracting 0.15 from the quotient obtained by
dividing the Index Price on the Election Date by the Index
Price on May 19, 2001 (the term "Index Price" is defined in
the following paragraph);
(iii) Promistar notifies FNB of Promistar's intention to terminate
the merger agreement; and
(iv) FNB elects not to increase the exchange ratio in accordance
with the formula described below.
The "Index Price" on a particular date is calculated as the weighted
average daily per share closing prices during the five trading days preceding
that date of the common stocks of 44 publicly traded U.S. financial institutions
having assets of between $3 billion and $10 billion (the "Index Group"). The
companies constituting the Index Group were selected by FNB, with the assistance
of its financial advisor, because they were deemed to constitute a peer group of
institutions, although none of such companies is identical to FNB in size,
location, financial condition and operations.
The Promistar Board has made no decision as to whether it would elect
to terminate the merger agreement in the event the first two conditions
described above are satisfied. Any such decision would be made by the Promistar
Board in light of the circumstances existing at the time. Prior to making any
determination to elect to terminate the merger agreement, the Promistar Board
would consult with its financial and other advisors and would consider all
financial and other information it deemed relevant to its decision. In this
regard, the Promistar Board would consider many of the same factors that it
considered in determining whether to approve and adopt the merger agreement,
including the principal factors discussed under "The Merger - Promistar's
Reasons for the Merger." In particular, the Promistar Board would analyze, among
other factors, whether the then current consideration to be received in the
merger would deliver more value to Promistar shareholders than the value that
could be expected in the event Promistar were to continue as an independent
company (which would occur if the Promistar Board were to elect to abandon the
merger and FNB determined not to increase the exchange ratio). In addition, the
Promistar Board would consider whether, in light of market and other industry
conditions at the time of such decision, the exchange ratio continued to be fair
from a financial point of view to Promistar's shareholders. There can be no
assurance that the Promistar Board would exercise its right to terminate the
merger agreement if the first two conditions set forth above were satisfied. If
Promistar elected not to terminate the merger agreement, which it could do
without any action on the part of Promistar shareholders, the exchange ratio
would remain 0.926 and the dollar value of the consideration which Promistar
shareholders would receive for each share of Promistar common stock would be the
value of 0.926 shares of FNB common stock at the effective time of the merger.
If each of the first two conditions set forth above were satisfied and
the Promistar Board were to elect to terminate the merger agreement, FNB would
then have the option of increasing the consideration payable to
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Promistar shareholders by adjusting the exchange ratio in the manner described
below. FNB would be under no obligation to adjust the exchange ratio and there
can be no assurance that FNB would elect to adjust the exchange ratio if
Promistar were to exercise its option to terminate the merger agreement. Any
such decision would be made by FNB in light of the circumstances existing at the
time. If FNB were to elect to adjust the exchange ratio, Promistar would then
not have any right to terminate the merger agreement as a result of the
above-described circumstances, and the merger agreement would remain in effect,
with the adjusted exchange ratio.
The operation of the conditions permitting Promistar to terminate the
merger agreement based on a decrease in the market price of the FNB common stock
reflects the parties' agreement that Promistar shareholders would assume the
risk of a decline in value of the FNB common stock to $19.962 per share under
any circumstances and that such shareholders would assume the risk of a more
significant decline in value of the FNB common stock unless the percentage
decline in the value of the FNB common stock from $24.952 to the average value
of FNB common stock during the five day period immediately preceding the
Election Date is more than 15 percentage points greater than the percentage
decrease, if any, in the Index Price from May 19, 2001 to the Election Date. The
premise of this agreement is that a decline in the value of FNB's common stock
which is comparable to the decline in the value of an index of comparable
publicly traded stocks is indicative of a broad-based change in market and
economic conditions affecting the financial services industry generally rather
than factors which affect the value of the FNB common stock in particular.
Since the date of execution of the merger agreement, there has been
substantial volatility in the U.S. stock market. Although the price of FNB
common stock has traded above $19.962 since the execution of the merger
agreement, there can be no assurance that this will be the case during the
period when the prices of FNB common stock and the stocks of the Index Group are
evaluated for purposes of determining Promistar's ability to terminate the
merger agreement.
The operation and effect of the provisions of the merger agreement
dealing with a decline in the market price of FNB's common stock may be
illustrated by the following three scenarios:
(1) One scenario is that the FNB Ending Price is above $19.962. In
this event, there would be no adjustment to the 0.926 exchange ratio and
Promistar would be obligated to consummate the merger regardless of the change
in the weighted average price of the common stocks of the Index Group (assuming
all other conditions to Promistar's obligations were satisfied or waived).
(2) A second scenario is that the FNB Ending Price is less than
$19.962 but that the percentage decline in the price of the FNB common stock
from the initial measurement price of $24.952 is not more than 15 percentage
points greater than the percentage decline, if any, in the weighted average
prices of the common stocks of the Index Group. Under such circumstances, there
would be no adjustment to the 0.926 exchange ratio and Promistar would be
obligated to consummate the merger (assuming all other conditions to Promistar's
obligations were satisfied or waived).
(3) A third scenario is that the FNB Ending Price is less than
$19.962 and the percentage decline in the price of FNB common stock from the
initial measurement price is more than 15 percentage points greater than the
decline in the weighted average prices of the common stocks of the Index Group.
Under such circumstances, Promistar would have the right, but not the
obligation, to terminate the merger agreement unless FNB elected to increase the
exchange ratio to the lesser of:
- the number obtained by dividing (A) $18.484 (the product of
the Starting Price, 0.80 and the exchange ratio of 0.926) by
(B) the average closing price per share of FNB common stock
for the five trading days immediately preceding the Approval
Date (the "FNB Adjustment Price"); or
- the number equal to the product of the exchange ratio
multiplied by a fraction, the numerator of which is the Index
Price on the Approval Date divided by the Index Price on May
19, 2001, and the denominator of which is the FNB Ending Price
divided by the FNB Starting Price.
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For example, if the FNB Ending Price was $18.00 and the Index Price was $50.00
on May 19, 2001 and $45.00 on the Election Date, Promistar would have the right
to elect to terminate the merger agreement because (i) the FNB Ending Price
would be less than $19.962 and (ii) the FNB Ending Price divided by the FNB
Starting Price ($18.00 / $24.952 = .72) would be less than the difference
obtained by subtracting 0.15 from the quotient obtained by dividing the Index
Price on the Election Date by the Index Price on May 19, 2001 ($45.00 / $50.00 -
0.15 = 0.75). If Promistar were to exercise its right to terminate the merger
agreement under such circumstances, FNB would have the option to increase the
exchange ratio to the lesser of (i) 1.027 (the number determined by dividing
$18.484 by the $18.00 Ending FNB Price, and (ii) 1.156 (the number determined by
multiplying 0.926 (the exchange ratio) by a fraction, the numerator of which is
0.90 (the Index Price on the Ending Date ($45.00) divided by the Index Price on
May 19, 2001 ($50.00)) and the denominator of which is .721 (the FNB Ending
Price ($18.00) divided by the FNB Starting Price ($24.952))). If FNB exercised
its option to adjust the exchange ratio, the exchange ratio would be 1.027 and
Promistar would be obligated to consummate the merger (assuming all other
conditions to Promistar's obligations were satisfied or waived).
If, between the date of the merger agreement and the effective time of
the merger, any company belonging to the Index Group or FNB declares or effects
a stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction, the prices for the common stock of
such company shall be appropriately adjusted for purposes of the above-discussed
termination provision. In addition, in the event that the common stock of any
company in the Index Group ceases to be publicly traded or a proposal to acquire
such company is announced before the Approval Date, such company shall be
removed from the Index Group, and the weights attributed to the remaining
companies shall be adjusted proportionately for purposes of determining the
Index Price.
Approval of the merger agreement by the shareholders of Promistar and
FNB at the special meetings will confer on each of the Promistar Board and the
FNB Board the power, consistent with its respective fiduciary duties, to elect
to consummate the merger, regardless of whether any event may have occurred
which would entitle such Board of Directors to terminate the merger agreement.
TERMINATION FEE
If the merger is terminated following the occurrence of an Initial
Triggering Event, and a Subsequent Triggering Event occurs within 12 months
following termination of the merger agreement, FNB will be entitled to a cash
payment from Promistar in an amount equal to $1 million. The terms "Initial
Triggering Event" and "Subsequent Triggering Event" generally relate to the
acquisition of Promistar by an entity other than FNB and are defined in the
stock option agreement entered into between FNB and Promistar, which is
described below under the subheading "-- Stock Option Agreement."
EXPENSES
Each of the parties has agreed to pay its own expenses and one-half of
the printing costs of this proxy statement/prospectus and related materials;
provided, however, that in the event the merger agreement is terminated as a
result of FNB's failure to satisfy any of its representations, warranties or
covenants set forth therein, FNB shall reimburse Promistar for its reasonable
out-of-pocket expenses relating to the merger in an amount not to exceed
$250,000.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Smith, Gambrell & Russell, LLP has delivered to FNB and Promistar its
opinion that, based upon certain customary assumptions and representations,
under federal law as currently in effect:
- the proposed merger will constitute a reorganization within
the meaning of Section 368(a) of the Code;
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- no gain or loss will be recognized by the shareholders of
Promistar on the exchange of their Promistar common stock for
FNB common stock pursuant to the terms of the merger to the
extent of such exchange;
- the federal income tax basis of the FNB common stock for which
shares of Promistar common stock are exchanged pursuant to the
merger will be the same as the basis of such shares of
Promistar common stock exchanged therefor (including basis
allocable to any fractional interest in any share of FNB
common stock);
- the holding period of FNB common stock for which shares of
Promistar common stock are exchanged will include the period
that such shares of Promistar common stock were held by the
holder, provided that such shares were capital assets of the
holder; and
- the receipt of cash in lieu of fractional shares will be
treated as if the fractional shares were distributed as part
of the exchange and then redeemed by FNB, and gain or loss
will be recognized in an amount equal to the difference
between the cash received and the basis of the fractional
share of FNB common stock surrendered, which gain or loss will
be capital gain or loss if the Promistar common stock was a
capital asset in the hands of the shareholder.
THE FOREGOING IS A SUMMARY OF THE ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE PROPOSED MERGER UNDER THE CODE AND IS FOR GENERAL
INFORMATION ONLY. IT DOES NOT INCLUDE CONSEQUENCES OF STATE, LOCAL OR OTHER TAX
LAWS OR SPECIAL CONSEQUENCES TO PARTICULAR SHAREHOLDERS HAVING SPECIAL
SITUATIONS. SHAREHOLDERS OF PROMISTAR SHOULD CONSULT THEIR OWN TAX ADVISORS
REGARDING SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE AND LOCAL TAX LAWS AND TAX CONSEQUENCES
OF SUBSEQUENT SALES OF FNB COMMON STOCK.
STOCK OPTION AGREEMENT
As an inducement to FNB and to satisfy a condition of FNB's willingness
to enter into the merger agreement, FNB and Promistar entered into a stock
option agreement whereby Promistar granted FNB an irrevocable stock option
entitling FNB to purchase, subject to certain adjustments, up to 2,975,830
shares of Promistar common stock, at an exercise price, subject to certain
adjustments, of $17.306 per share, payable in cash, under the circumstances
described below.
FNB may exercise the stock option, in whole or in part, by sending
written notice after the occurrence of an "Initial Triggering Event" and a
"Subsequent Triggering Event" prior to the occurrence of an "Exercise
Termination Event" (as such terms are defined in the stock option agreement). An
"Initial Triggering Event" is defined as the occurrence of any of the following
events:
- Promistar or any of its subsidiaries, without having received
FNB's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as defined
below) with any person other than FNB or any of its
subsidiaries or the Promistar Board shall have recommended
that the stockholders of Promistar approve or accept any such
Acquisition Transaction other than as contemplated by the
merger agreement or the stock option agreement. For purposes
of the stock option agreement, "Acquisition Transaction" means
(i) a merger or consolidation, or any similar transaction
involving Promistar, (ii) a purchase, lease, or other
acquisition of all or substantially all of the assets or
deposits of Promistar, or (iii) a purchase or other
acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 15% or more
of the voting power of Promistar;
- any person (other than the officers and directors of
Promistar) other than FNB or one of FNB's subsidiaries acting
in a fiduciary capacity shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 15%
or more of the outstanding shares of Promistar common stock
(the term "beneficial ownership" for purposes of the stock
option agreement having the meaning given in Section 13(d) of
the Securities Exchange Act, and the rules and regulations
thereunder, pursuant to which a person is the beneficial owner
of all shares that such person has direct or indirect voting
power or investment power over whether through any contract,
arrangement, understanding, relationship or otherwise);
- the shareholders of Promistar shall not have approved the
transactions contemplated by the merger agreement at the
special meeting of Promistar's shareholders, or the special
meeting shall
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not have been held or shall have been canceled prior to
termination of the merger agreement, in either case, after the
Promistar Board shall have withdrawn or modified, or publicly
announced its intention to withdraw or modify, its
recommendation that the stockholders of Promistar approve the
transactions contemplated by the merger agreement, or after
Promistar, without having received FNB's prior written
consent, shall have authorized, recommended, proposed, or
publicly announced its intention to authorize, recommend, or
propose, to engage in an Acquisition Transaction with any
person other than FNB;
- any person other than FNB shall have made a bona fide proposal
to Promistar to engage in an Acquisition Transaction, which
proposal has an economic value equal to or exceeding that of
the merger agreement;
- Promistar shall have willfully and materially breached any
material covenant or obligation contained in the merger
agreement in anticipation of engaging in an Acquisition
Transaction and such breach would entitle FNB to terminate the
merger agreement; or
- any person other than FNB, other than in connection with a
transaction to which FNB has given its prior written consent,
shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition
Transaction.
A "Subsequent Triggering Event" is defined as either (i) the
acquisition by any person of beneficial ownership of 25% or more of the then
outstanding shares of Promistar common stock, or (ii) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 25% or more of the voting power of
Promistar.
The term "Exercise Termination Event" is defined as the occurrence of
any of the following events:
- the effective time of the merger;
- termination of the merger agreement in accordance with the
terms thereof prior to the occurrence of an Initial Triggering
Event (other than termination due to the failure of FNB to
satisfy a condition to closing);
- twelve months (subject to extension to obtain regulatory
approvals (for so long as the Holder is using commercially
reasonable efforts to obtain such regulatory approvals), to
allow statutory waiting periods to expire, and to avoid
liability under Section 16(b) of the Exchange Act which
provides for the disgorgement to the issuer of any profit
realized by an insider as a result of a purchase and sale or
sale and purchase of certain equity securities occurring
within a six-month period) after termination of the merger
agreement following the occurrence of an Initial Triggering
Event; or
- such other date as to which FNB and Promistar agree.
After a Subsequent Triggering Event and prior to an Exercise
Termination Event, FNB may demand that any shares of FNB common stock issued or
issuable under the option be registered under the Securities Act. Upon such
demand, Promistar must use its best efforts to effect such registration
promptly, subject to certain exceptions. FNB is entitled to two such
registrations.
Under applicable law, FNB may not acquire 5% or more of the issued and
outstanding shares of Promistar common stock without the prior approval of the
Federal Reserve Board. In considering whether to approve the acquisition by FNB
of shares pursuant to the exercise of the stock option, the Federal Reserve
Board will generally apply the same standards as in considering whether to
approve the merger. See " - Bank Regulatory Matters - Federal Reserve Board."
Certain other regulatory approvals may also be required before such an
acquisition could be completed. FNB has submitted an application seeking Federal
Reserve Board approval of its acquisition of up to 19.9% of the outstanding
shares of Promistar common stock pursuant to a potential exercise of the stock
option.
In the event that prior to an Exercise Termination Event, Promistar
enters into an agreement (i) to consolidate with or merge into any person other
than FNB and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person other than FNB to merge into
Promistar
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with Promistar as the continuing or surviving corporation, but in connection
therewith the then outstanding shares of Promistar common stock are changed into
or exchanged for securities of any other person or cash or any other property,
or the then outstanding shares of Promistar common stock after such merger
represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or transfer all or substantially all of its or
a significant subsidiary's assets or deposits to any person other than FNB, then
such agreement shall provide that the stock option be converted into or
exchanged for an option (a "Substitute Option") to purchase shares of common
stock of, at FNB's option, either (x) the continuing or surviving corporation of
a merger or consolidation or the transferee of all or substantially all of
Promistar's assets or deposits, or (y) the person controlling such continuing or
surviving corporation or transferee. The number of shares subject to the
Substitute Option and the exercise price per share will be determined in
accordance with a formula in the stock option agreement. To the extent possible,
the Substitute Option will contain terms and conditions that are the same as
those in the stock option agreement.
The number of shares of Promistar common stock subject to the stock
option will be increased to the extent that Promistar issues additional shares
of Promistar common stock (otherwise than pursuant to an exercise of the stock
option) such that the number of shares of Promistar common stock subject to the
stock option (when combined with the shares of Promistar common stock already
owned by FNB) equals 19.9% of the shares of Promistar common stock then issued
and outstanding, before giving effect to the issuance of shares of Promistar
common stock pursuant to an exercise of the stock option. In the event of any
change in the shares of Promistar common stock by reasons of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, or the like, the type and number shares of Promistar stock
subject to the stock option, and the applicable exercise price per share, will
be appropriately adjusted and proper provision will be made so that, in the
event that any additional shares of Promistar common stock are to be issued or
otherwise become outstanding as a result of any such change (other than pursuant
to an exercise of the stock option), the number of shares of Promistar common
stock that remain subject to the stock option will be increased so that, after
such issuance and together with shares of Promistar common stock previously
issued pursuant to the exercise of the stock option and the number of shares
otherwise beneficially owned by FNB (as adjusted on account of any of the
foregoing changes in Promistar common stock), it equals 19.9% of the number of
shares of Promistar common stock then issued and outstanding.
No shares shall be issued pursuant to the exercise of the stock option
if (i) at the time of the Initial Triggering Event and at the time of exercise,
FNB is in material breach under the merger agreement, or (ii) a preliminary or
permanent injunction has been issued by a court of proper jurisdiction enjoining
such exercise.
The rights and obligations of Promistar and FNB under the stock option
agreement are subject to receipt of any required regulatory approvals, and both
parties have agreed to use their best efforts in connection therewith. These
include, but are not limited to, applying to the Federal Reserve Board for
approval to acquire the shares subject to the stock option.
The purpose of the stock option agreement and the stock option is to
increase the likelihood that the merger will occur by making it more difficult
for another party to acquire Promistar. The ability of FNB to exercise the Stock
Option and to cause, subject to certain adjustments, up to an additional 842,583
shares of Promistar common stock to be issued may be considered a deterrent to
other potential acquisitions of control of Promistar, as it is likely to
increase the cost of an acquisition of all the Promistar common stock which
would then be outstanding.
ACCOUNTING TREATMENT
It is intended that the merger will be accounted for as a pooling of
interests under generally accepted accounting principles. Promistar and FNB have
agreed to use their reasonable efforts to cause the merger, and to take no
action that would cause the merger not, to qualify for pooling-of-interests
treatment.
Under the pooling-of-interests method of accounting, the historical
basis of the assets and liabilities of FNB and Promistar will be combined at the
effective time of the merger and carried forward at their previously
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recorded amounts, and the shareholders' equity accounts of Promistar and FNB
will be combined on FNB's consolidated balance sheet and no goodwill or other
intangible assets will be created.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Promistar board with respect
to the merger agreement, Promistar shareholders should be aware that certain of
the directors and members of management of Promistar have interests in the
merger that are in addition to their interests as shareholders of Promistar
generally. The Promistar board was aware of these interests and considered them
in approving the merger.
CHANGE IN CONTROL PROVISIONS. Certain of Promistar's executive officers
will be entitled to certain benefits as a result of the merger under the terms
of Promistar's 2001 Supplemental Executive Retirement Plan and under the terms
of employment agreements presently in effect between Promistar and the
respective executives.
Six of Promistar's executive officers are participants in Promistar's
2001 Supplemental Executive Retirement Plan. The Plan provides for cash payments
to be made to each of the Plan's participants under certain circumstances,
including the retirement or death of the participant. Generally, a participant
in the Plan (or his beneficiary) is entitled to receive, upon the participant's
retirement at age 55 or older, or the participant's death, payments for a period
of ten years at an annual rate calculated as the product of (x) 1.85% of the
highest average monthly compensation paid to such participant over a 36-month
period during the 10-year period preceding the participant's retirement or
death, multiplied by (y) the number of years of the participant's service to
Promistar (to a maximum of 28 years). The Plan provides that in the event of a
"change in control" of Promistar, as defined in the Plan, the interests of each
Plan participant in the Plan become nonforfeitable except in the event of a
participant's termination for Cause (as defined in the Plan). Approval of the
merger agreement by Promistar's shareholders at the Promistar special meeting
would constitute a change in control of Promistar under the terms of the Plan.
In addition, under the terms of existing employment agreements between
Promistar and each of its executive officers, if the merger agreement is
approved by Promistar's shareholders and either (i) the executive's employment
is terminated for any reason other than for Cause (as defined in the respective
agreements) within six months prior to or 12 months following the shareholder
approval date, or (ii) the executive terminates his employment within 90 days
before or after the shareholder approval date, then in lieu of all other
payments under the employment agreement, the executive will be entitled to:
- a lump sum payment equal to three times the executive's then
applicable base salary and average annual incentive payments
for the Corporation's last three fiscal years;
- any other benefits payable under Promistar's other benefit
plans, which shall be considered to vest immediately; and
- continuing coverage, to the extent not prohibited by law, for
36 months for the executive and his eligible dependents under
Promistar's other benefit plans.
EXECUTION OF NEW EMPLOYMENT AGREEMENTS. In connection with the proposed
merger, Steven C. Ackmann, the President and Chief Operating Officer of
Promistar and Promistar Bank, and Kim Craig, Executive Vice President of
Promistar and the President and Chief Operating Officer of Promistar Trust
Company and Promistar Investment Advisors, Inc., have each entered into an
employment agreement with a subsidiary of FNB, contingent upon the consummation
of the merger. Each of the employment agreements provides for a term of three
years, which term automatically renews for successive one-year terms unless
sooner terminated upon notice sent at least 30 days in advance of the end of the
then current term. Mr. Ackmann and Mr. Craig will receive an annual base salary
of $253,000 and $208,000, respectively, which in each case may be adjusted from
time to time in FNB's discretion to reflect merit increases. If FNB terminates
the employment of either Mr. Ackmann or Mr. Craig without Proper Cause (as
defined in the employment agreements), FNB will be obligated to pay such person,
in biweekly installments, an amount equal to twice the amount of his annual
salary at the time of termination.
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INDEMNIFICATION. FNB has agreed that it will, following the effective
time of the merger, indemnify, defend, and hold harmless the current and former
directors, officers, employees, and agents of Promistar against all losses,
expenses, claims, damages, or liabilities arising out of actions or omissions
occurring at or prior to the effective time to the fullest extent then permitted
under Pennsylvania law and by Promistar's Articles of Incorporation and Bylaws,
as in effect on the date of the merger agreement, including provisions relating
to advances of expenses incurred in defense of any litigation. The merger
agreement further provides that Promistar shall purchase six years of extended
coverage under its current directors and officers liability insurance policy to
provide for continued coverage of its directors and officers with respect to
matters occurring prior to the effective time of the merger.
BANK REGULATORY MATTERS
FEDERAL RESERVE BOARD APPROVAL. The merger is subject to prior approval
by the Federal Reserve Board. In determining whether to approve a transaction
such as the merger, the Federal Reserve Board takes into consideration the
financial and managerial resources (including the competence, experience and
integrity of the officers, directors and principal shareholders) and future
prospects of the existing and proposed institutions and the convenience and
needs of the communities to be served. In considering financial resources and
future prospects, the Federal Reserve Board will, among other things, evaluate
the adequacy of the capital levels of the parties to a proposed transaction.
The Federal Reserve Board is prohibited from approving a merger if it
would result in a monopoly or would be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or if its effect in any section of the country
would be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner result in a restraint of trade, unless the
Federal Reserve Board finds that the anti-competitive effects of a merger are
clearly outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. In addition, under the Community Reinvestment Act of 1977, as amended
(the "CRA"), the Federal Reserve Board must take into account the record of
performance of the existing institutions in meeting the credit needs of the
entire community, including low- and moderate-income neighborhoods, served by
such institutions. As of June 30, 2001, each of FNB's and Promistar's banking
subsidiaries had a "satisfactory" rating with the appropriate federal regulator.
Applicable federal law provides for the publication of notice and
public comment on applications filed with the Federal Reserve Board and
authorizes the Federal Reserve Board to permit interested parties to intervene
in the proceeding. If an interested party is permitted to intervene, such
intervention could delay the regulatory approval process.
The merger generally may not be consummated until after 30 days
following the date of applicable federal regulatory approval, unless shortened
to 15 days by the Attorney General, during which time the Department of Justice
may challenge the merger on antitrust grounds. The commencement of an antitrust
action would stay the effectiveness of the Federal Reserve Board's approval
unless a court specifically ordered otherwise. FNB and Promistar believe that
the merger does not raise substantial antitrust or other significant regulatory
concerns and that any divestitures that may be required in order to consummate
the merger will not be material to the financial condition or results of
operations of FNB or Promistar prior to the merger, or of FNB following the
merger.
In addition, FNB's right to exercise the stock option under the stock
option agreement is also subject to the prior approval of the Federal Reserve
Board, because the exercise of the stock option would result in FNB owning more
than 5% of the outstanding shares of Promistar's common stock. In considering
whether to approve FNB's right to exercise the stock option, the Federal Reserve
Board would generally apply the same statutory criteria it would apply to its
consideration of approval of the merger.
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STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. FNB and Promistar
have filed all applications and notices and have taken (or will take) other
appropriate action with respect to any requisite approvals or other action of
any governmental authority. FNB has submitted an application seeking Federal
Reserve Board approval of the merger and of FNB's acquisition of up to 19.9% of
the outstanding shares of Promistar common stock pursuant to a potential
exercise of the stock option.
FNB and Promistar are not aware of any governmental approvals or
actions that may be required for consummation of the merger other than as
described above. Should any other approval or action be required, FNB and
Promistar currently contemplate that such approval or action would be sought.
THE MERGER CANNOT BE COMPLETED WITHOUT APPROVAL OF THE FEDERAL RESERVE
BOARD. THERE CAN BE NO ASSURANCES THAT SUCH REGULATORY APPROVAL WILL BE OBTAINED
OR AS TO THE DATE OF SUCH APPROVAL. THERE CAN ALSO BE NO ASSURANCE THAT SUCH
APPROVAL WILL NOT CONTAIN A CONDITION OR REQUIREMENT WHICH CAUSES SUCH APPROVAL
TO FAIL TO SATISFY THE CONDITIONS SET FORTH IN THE MERGER AGREEMENT. SEE " -
CONDITIONS TO THE MERGER." THERE CAN LIKEWISE BE NO ASSURANCE THAT THE
DEPARTMENT OF JUSTICE WILL NOT CHALLENGE THE MERGER, OR, IF SUCH A CHALLENGE IS
MADE, AS TO THE RESULT THEREOF.
See " - Effective Time of the Merger," " - Conditions to the Merger"
and " - Termination of the Merger Agreement."
RESTRICTIONS ON RESALES BY AFFILIATES OF PROMISTAR
The shares of FNB common stock to be issued to shareholders of
Promistar in the merger have been registered under the Securities Act. Such
shares may be traded freely and without restriction by those shareholders not
deemed to be "affiliates" of Promistar or FNB as that term is defined under the
Securities Act. Any subsequent transfer of such shares by any person who is an
affiliate of Promistar at the time of Promistar's special meeting will, however,
under existing law, require either (a) the further registration under the
Securities Act of the shares of FNB common stock to be transferred, (b)
compliance with Rule 145 promulgated under the Securities Act (permitting
limited sales under certain circumstances), or (c) the availability of another
exemption from registration. An "affiliate" of Promistar, as defined by the
rules promulgated pursuant to the Securities Act, is a person who directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with Promistar. In addition, under requirements for
pooling-of-interests method of accounting, the shares of FNB common stock issued
to affiliates are not transferable until such time as financial results covering
at least 30 days of combined operations of FNB and Promistar have been
published. The foregoing restrictions are expected to apply to the directors,
executive officers, and the beneficial holders of 10% or more of the shares of
Promistar common stock (and to certain relatives or the spouse of any such
person and any trusts, estates, corporations, or other entities in which any
such person has a 10% or greater beneficial or equity interest). Stop transfer
instructions will be given by FNB to its transfer agent with respect to the FNB
common stock to be received by persons subject to the restrictions described
above. Promistar has agreed to use its best efforts to obtain from each of those
persons identified by Promistar as its affiliates appropriate agreements that
each such individual will not make any further sales of Promistar common stock,
or make any sales of shares of FNB common stock received upon consummation of
the merger, except in compliance with the restrictions described in this
paragraph.
FNB DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN
FNB has adopted a dividend reinvestment and direct stock purchase plan.
The plan is available to existing FNB shareholders and shareholders of Promistar
who receive shares of FNB common stock in the merger, as well as persons who are
not already shareholders, and permits participants to purchase shares of FNB
common stock through reinvestment of dividends on their shares of FNB common
stock and/or optional cash payments and permits participants to have their FNB
stock held in book-entry form by the plan administrator. You will be offered the
opportunity to enroll the shares of FNB common stock issued to you in the merger
in the plan.
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INFORMATION ABOUT FNB
FNB is a financial services holding company with executive offices in
Naples, Florida and Hermitage, Pennsylvania. FNB provides a broad range of
financial services to its customers through its banking, insurance agency,
consumer finance, and trust company subsidiaries, which operate over 150 offices
in five states. As of June 30, 2001, FNB had approximately $4.1 billion in
consolidated assets and approximately $3.3 billion in deposits. FNB's main
office is located at 2150 Goodlette Road North, Naples, Florida 34102 and its
telephone number is (800) 262-7600.
FNB's subsidiaries provide a full range of financial services,
principally to consumers and small- to medium-sized businesses, in their
respective market areas. FNB's business strategy has been to focus primarily on
providing quality, community-based financial services adapted to the needs of
each of the markets it serves. FNB has emphasized its community orientation by
generally preserving the names and local management of its subsidiaries and
allowing its subsidiaries significant autonomy in decision-making, thus enabling
them to respond to customer requests more quickly.
The lending philosophy of each of FNB's bank subsidiaries is to
minimize credit losses by following uniform credit approval standards (which
include independent analysis of realizable collateral value), diversifying its
loan portfolio, maintaining a relatively modest average loan size and conducting
ongoing review and management of the loan portfolio. The banks are active
residential mortgage lenders, and make commercial loans generally to established
local businesses. FNB's bank subsidiaries do not have a significant amount of
construction loans, any highly leveraged transaction loans or any loans to
foreign countries.
No material portion of the deposits of FNB's bank subsidiaries has been
obtained from a single or small group of customers, and the loss of any
customer's deposits or a small group of customers' deposits would not have a
material adverse effect on the business of FNB.
While FNB has generally sought to preserve the identities and autonomy
of its subsidiaries, it has established centralized credit analysis, loan
review, investment, audit and data processing functions. The centralization of
these processes has enabled FNB to maintain consistent quality of these
functions and to achieve certain economies of scale. FNB has recently further
centralized its banking operations through the consolidation of its banking
subsidiaries under one charter in each state -- First National Bank of
Pennsylvania in Pennsylvania, First National Bank of Florida in Florida, and
Metropolitan National Bank in Ohio. FNB believes the consolidation program will
enable it to realize significant savings by eliminating operational redundancies
and integrating common deposit and lending programs. The individual bank offices
will generally retain their existing names and local management structure.
FNB has two insurance agency subsidiaries, Gelvin, Jackson and Starr,
Inc., with four offices in Pennsylvania, and Roger Bouchard Insurance, Inc. with
nine offices in Florida. FNB's consumer finance subsidiary, Regency Finance
Company, has 48 offices in four states and had $145.6 million in total assets as
of June 30, 2001. FNB's trust company subsidiary, First National Trust Company,
has three offices in Florida and three offices in Pennsylvania and held $992.7
million of assets in trust as of June 30, 2001.
FNB has five other subsidiaries, Penn-Ohio Life Insurance Company,
First National Corporation, Customer Service Center of F.N.B., Mortgage Service
Corporation, and F.N.B. Building Corporation. Penn-Ohio underwrites, as a
reinsurer, credit life and accident and health insurance sold by FNB's
subsidiaries. First National holds equity securities and other assets for the
holding company. Customer Service provides data processing and other services to
FNB's affiliates. Mortgage Service services mortgage loans for unaffiliated
financial institutions, and FNB Building owns real estate that is leased to
certain of FNB's affiliates.
As part of its operations, FNB regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for financial holding company investment. In
addition, FNB regularly analyzes the values of, and submits bids for, the
acquisition of customer-based funds and other liabilities and assets of such
financial institutions and other businesses. As a
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general rule, FNB publicly announces such material acquisitions when a
definitive agreement has been reached.
For further information about FNB, see "Where You Can Find More
Information."
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INFORMATION ABOUT PROMISTAR
Promistar is a bank holding company located in Johnstown, Pennsylvania.
Promistar was incorporated under the laws of the Commonwealth of Pennsylvania on
December 16, 1982.
Promistar has one banking subsidiary, Promistar Bank. Promistar Bank's
principal place of business is in Johnstown, Pennsylvania. At June 30, 2001,
Promistar had total assets of $2.1 billion and total deposits of $1.7 billion.
Promistar has seven wholly owned non-bank subsidiaries; Promistar Trust Company,
a trust company which provides trust and investment services; Promistar
Investment Advisors, Inc., which provides investment advisory services;
Promistar Capital Advisors, Inc., which plans to register as a broker-dealer;
Flex Financial Consumer Discount Company, which provides consumer finance loans;
Promistar Community Development Corporation, a corporation which conducts
community development activities; Bedford Associates Inc., which holds and
leases property; and Bedford Associates of Delaware, Inc., an investment holding
company.
Promistar's business is primarily incident to Promistar Bank. Promistar
Bank conducts business through a network of 72 full-service offices located
throughout Allegheny, Armstrong, Bedford, Blair, Butler, Cambria, Fayette,
Greene, Indiana, Somerset, Washington, and Westmoreland Counties. Promistar Bank
operates under the management of its own officers and directors, although
certain financial and administrative functions, including auditing, marketing,
human resources, investment, accounting, data processing and credit review are
coordinated through Promistar. In addition, Promistar Bank operates 58 automated
teller machines ("ATM's"), which are part of the "Cirrus" and "MAC" systems,
located on both bank premises and off-premise sites. "Cirrus" and "MAC" provide
links to national and regional ATM networks.
Promistar Bank is engaged in the business of commercial and retail
banking. Promistar Bank provides a full range of financial services to
individuals, businesses and governmental bodies, including accepting demand,
savings and time deposits, safe deposit facilities, electronic banking services,
debit cards, money transfer services and other banking services. Promistar Bank
also offers lending services, including consumer, real estate, commercial and
industrial loans. Promistar Bank's commercial customers are primarily small- to
mid-sized businesses in southwestern Pennsylvania.
Promistar Bank's deposits are insured by the FDIC, the majority by the
Bank Insurance Fund ("BIF"), with certain deposits insured by the Savings
Association Insurance Fund ("SAIF"). While Promistar Bank has trust powers,
substantially all trust business of Promistar's affiliates is conducted by
Promistar Trust Company.
Promistar maintains an Internet site at www.promistar.com. The website
offers customers a convenient way to conduct many popular banking services
including online bill payment and access to online check images.
Bedford Associates, Inc. is a Pennsylvania corporation formed in 1983
for the purpose of holding and leasing property used by Promistar's
subsidiaries. Most of its properties are leased to Promistar Bank for use as
community banking offices. It is located in Johnstown, Pennsylvania and is a
wholly owned non-banking subsidiary of Promistar.
Promistar Trust Company is located in Johnstown, Pennsylvania and
offers a wide range of corporate and personal trust services, as well as pension
and fiduciary services. It is a Pennsylvania chartered trust company formed on
April 30, 1990. As of June 30, 2001, Promistar Trust Company managed assets with
a market value of $849.7 million.
Promistar Community Development Corporation was organized in 1992 to
conduct community development activities. It is a for-profit Pennsylvania
corporation conducting activities consisting of equity investments as a limited
partner in various housing developments for low income individuals.
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Bedford Associates of Delaware, Inc., a Delaware corporation, was
formed in 1998 for the purpose of holding and managing certain investments of
Promistar. It is located in Wilmington, Delaware, and is a wholly owned
non-banking subsidiary of Promistar.
Promistar Investment Advisors, Inc., a Pennsylvania corporation, was
formed in 1999. It operates as a registered investment advisor providing
investment advisory services.
Flex Financial Consumer Discount Company, a Pennsylvania corporation,
was organized in 1997. It conducts business as a consumer discount company
providing consumer finance loans to individuals.
Promistar Capital Advisors, Inc., a Pennsylvania corporation, was
organized in 2001 and has not commenced operations.
Promistar and Promistar Bank are subject to competition in all aspects
of their businesses from banks as well as other financial institutions,
including savings and loan associations, savings banks, finance companies,
credit unions, money market mutual funds, brokerage firms, investment companies,
credit companies and insurance companies. They also compete with nonfinancial
institutions, including retail stores that maintain their own credit programs,
and with governmental agencies that make loans available to certain borrowers.
RECENT DEVELOPMENTS
On February 24, 2001, Promistar entered into an agreement and plan of
reorganization with FNH Corporation, a Pennsylvania corporation, pursuant to
which FNH is to be merged with and into Promistar with Promistar surviving. The
shareholders of FNH were scheduled to vote on the Promistar/FNH merger at their
annual meeting originally scheduled for June 29, 2001. However, on June 14,
2001, FNB and Promistar announced their agreement to merge. In order to provide
FNH shareholders with information regarding the proposed FNB/Promistar merger,
the FNH annual meeting and the vote on the Promistar/FNH merger was postponed
until August 14, 2001. Promistar and FNH have received all required regulatory
approvals for the Promistar/FNH merger the merger is expected to be effected
following the FNH annual meeting if the merger is approved at that meeting.
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COMPARISON OF SHAREHOLDER RIGHTS
After the merger, shareholders of Promistar will become shareholders of
FNB and their rights will be governed by FNB's Articles of Incorporation, FNB's
Bylaws and the Florida Business Corporations Act. The following summary, which
is not a complete statement of all differences between the rights of the holders
of FNB stock and Promistar stock, discusses differences between FNB's Articles
of Incorporation and Bylaws and Promistar's Articles of Incorporation and Bylaws
and the differences between the Pennsylvania Business Corporation Law and the
Florida Business Corporations Act. For information as to how to get the full
text of each document, see "Where You Can Find More Information."
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Promistar's Articles of Incorporation provide that a director or the
entire Board of Directors of Promistar may be removed without cause by the
affirmative vote of the holders of at least 80% of the outstanding shares of
Promistar entitled to vote in the election of directors. Pennsylvania law and
the Promistar Bylaws provide that vacancies on the Board of Directors of
Promistar, including vacancies resulting from an increase in the number of
directors, may be filled by a majority vote of the remaining directors, though
less than a quorum, and each person so elected shall serve until the next annual
meeting of shareholders, or any special meeting called for the purpose, and
until his or her successor has been elected and qualified.
Under Florida law, unless the Articles of Incorporation of a
corporation provide otherwise, directors may be removed by the corporation's
shareholders with or without cause; provided that, if a director is elected by a
voting group, only the shareholders of that voting group may participate in the
vote to remove him. Article 6 of FNB's Articles of Incorporation, however,
provides that, subject to the rights of holders of any preferred stock, any
director or the entire Board of Directors may be removed without cause by the
affirmative vote of the holders of at least 75% of the then outstanding shares
of FNB common stock. Florida law and FNB's Bylaws provide that vacancies on the
FNB Board of Directors, including vacancies resulting from an increase in the
number of directors or resulting from removal from office, may be filled by a
majority vote of the remaining directors, though less than a quorum. A director
elected to fill a vacancy shall hold office for a term that expires at the next
annual meeting of shareholders and until his or her successor is elected and has
qualified.
QUORUM OF SHAREHOLDERS
FNB's and Promistar's Bylaws both provide that the holders of a
majority of votes entitled to be cast on a matter to be considered, represented
in person or by proxy, constitute a quorum of that voting group for action on
the matter. FNB's Bylaws further provide that whenever the holders of any class
or series of shares are entitled to vote separately on a specified item of
business, the holders of a majority of the votes of that class or series
entitled to be cast, represented in person or by proxy, shall constitute a
quorum of such class or series. Promistar's Bylaws provide that, if a meeting
called for the election of directors is adjourned, the shareholders who attend
the resumption of the adjourned meeting, although less than quorum, shall
nevertheless constitute a quorum for the purpose of electing directors.
ADJOURNMENT AND NOTICE OF SHAREHOLDER MEETINGS
Promistar's Bylaws provide that, generally, shareholders may adjourn a
meeting at which quorum is not present without notice other than announcement at
the meeting. However, any meeting at which directors are to be elected may only
be adjourned for periods not to exceed 15 days each, as may be directed by
shareholders present in person or by proxy at the meeting who are entitled to
cast at least a majority of the votes of that would be entitled to be cast by
all shareholders at a meeting for the election of directors.
The FNB Bylaws and Florida law provide that, if a quorum is not present
or represented at a shareholder meeting, the shareholders present and entitled
to vote at the meeting may adjourn the meeting without notice other than an
announcement at the meeting. Both the FNB and Promistar Bylaws also provide
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that the determination of shareholders of record entitled to notice of or to
vote at any meeting of shareholders will apply to any adjournment thereof,
unless, a new record date is set by the Board of Directors.
CALL OF SPECIAL MEETINGS OF SHAREHOLDERS
Promistar's Bylaws provide that special meetings of the shareholders
may be called by resolution adopted by a majority of the members of the
Promistar Board, the Chairman of the Board, the President or by the holders of
at least 20% of the votes entitled to be cast on any issue to be considered at
the special meeting of shareholders. FNB's Bylaws provide that special meetings
of shareholders may be called only by the Chairman of the Board, the President
or the Secretary of FNB pursuant to a resolution or written direction of at
least 75% of the members of the FNB Board or by the holders of not less than 10%
of the outstanding shares of FNB.
SHAREHOLDER CONSENT IN LIEU OF MEETING
Promistar's Bylaws provide that any action which may be taken at a
meeting of the shareholders may be taken without a meeting, if a consent or
consents in writing setting forth the action so taken shall be signed by all of
the shareholders who would be entitled to vote at a meeting for such purpose and
shall be filed with the Secretary of Promistar.
Florida law permits any action which may be taken at a meeting of the
shareholders of FNB to be taken without a meeting, if, prior or subsequent to
the action, one or more written consents signed by a majority the shareholders
who would be entitled to vote at a meeting for such purpose are delivered to
FNB.
DISSENTERS' RIGHTS
Under Pennsylvania law, shareholders may perfect dissenters' rights
with regard to corporate actions involving certain mergers; consolidations;
sale, lease or exchange of substantially all the assets of the corporation
(under limited circumstances); or the elimination of cumulative voting.
Under Florida law, dissenters' appraisal rights are available in
connection with corporate actions involving certain mergers, share exchanges,
consolidations, sales or other dispositions of all or substantially all of the
property of the corporation (other than in the ordinary course of business), the
approval of certain control-share acquisitions, and amendments of the Articles
of Incorporation where such amendment would adversely affect the shareholder by:
- altering or abolishing any preemptive rights attached to such
shareholder's shares;
- altering or abolishing the voting rights pertaining to such
shareholder's shares, except as such rights may be affected by
the voting rights of new shares then being authorized of any
existing or new class or series of shares;
- effecting an exchange, cancellation, or reclassification of
any of such shareholder's shares, when such amendment would
alter or abolish the shareholder's voting rights or alter his
or her percentage of equity in the corporation, or effecting a
reduction or cancellation of accrued dividends or other
arrearages;
- reducing the stated redemption price of any of the
shareholder's redeemable shares, altering or abolishing any
provision relating to any sinking fund for the redemption or
purchase of any of his or her shares, or making any of the
shareholder's shares subject to redemption when they are not
otherwise redeemable;
- making non-cumulative, in whole or in part, dividends on any
of his or her preferred shares which had theretofore been
cumulative;
- reducing the dividend preference of any of his or her
preferred shares; or
- reducing any stated preferential amount payable on the
shareholder's preferred shares upon voluntary or involuntary
liquidation.
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Under both Florida and Pennsylvania law, dissenters' rights generally
are denied in the case of a merger or share exchange or a proposed sale or
exchange of property when the corporation's shares to be received are listed on
a national securities exchange or the Nasdaq National Market or held of record
by at least 2,000 persons. As a result, neither the shareholders of FNB nor the
shareholders of Promistar will have dissenters' rights in connection with the
merger.
DERIVATIVE ACTIONS
Derivative actions to enforce a secondary right against any present or
former officer or director of the corporation may be brought under Pennsylvania
law by a shareholder of Promistar, even if the shareholder was not a shareholder
at the time of the alleged wrongdoing, if there is a strong prima facie case in
favor of the claim asserted and if the court in its discretion determines that a
serious injustice will result without such action.
Under Florida law, a derivative action may be brought only by a person
who was a shareholder of FNB at the time of the alleged wrongdoing unless the
person became a shareholder through transfer by operation of law from one who
was a shareholder at the time of the alleged wrongdoing.
DIVIDENDS AND DISTRIBUTIONS
Subject to any restrictions in a corporation's Articles of
Incorporation, both Pennsylvania and Florida law generally provide that a
corporation may make distributions to its shareholders unless after giving
effect thereto (i) the corporation would not be able to pay its debts as they
become due in the usual course of business, or (ii) the corporation's total
assets would be less than the sum of its total liabilities plus the amount that
would be needed upon the dissolution of the corporation to satisfy the
preferential rights of shareholders having superior preferential rights to those
shareholders receiving the distribution. FNB's Articles of Incorporation do not
contain any restrictions on the payment of dividends or the making of
distributions to shareholders.
DIRECTOR QUALIFICATIONS, NUMBER AND TERM
Promistar's Articles of Incorporation and Bylaws provide that the
Promistar Board of Directors shall consist of not less than five nor more than
twenty-five members divided into four classes, as equal in number as possible,
with each director serving a staggered four-year term. Under Pennsylvania law
and the Promistar Bylaws, directors must be at least 18 years of age, but need
not be a resident of Pennsylvania.
The FNB Bylaws provide that the Board of Directors of FNB shall consist
of such number of directors as may be determined by the Board of Directors of
FNB, which number shall be not less than five nor more than twenty-five. The FNB
Bylaws further provide that the FNB Board of Directors shall be divided into
three classes, with each director having a staggered, three-year term. Under
Florida law and the FNB Bylaws, directors need not be residents of Florida or a
shareholder of FNB to qualify to serve as a director.
NOMINATION OF DIRECTORS
The Promistar Bylaws provide that any shareholder who intends to
nominate or cause to be nominated any candidate to the Promistar Board, other
than a candidate proposed by the Promistar Board, must notify the Secretary of
Promistar of his or her intention not less than 40 days prior to the date of the
meeting called for the election of directors, or ten days after giving notice of
the meeting is given in accordance with the Bylaws, whichever is later. The
notice required by the Promistar Bylaws must include, among other things:
- The name, address and age of each proposed nominee;
- The principal occupation of each nominee;
- The number of shares of Promistar owned by each nominee;
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- The total number of shares that to the knowledge of the
notifying shareholder will be voted for each proposed nominee;
- The name and residence address of the notifying shareholder;
and
- The number of shares of Promistar owned by the notifying
shareholder.
FNB's Bylaws provide that directors may be nominated for election to
the FNB Board by either a resolution of the Board or by a shareholder of FNB.
The FNB Bylaws provide that a shareholder may make nominations for director by
providing FNB with written notice of the shareholder's intention to nominate a
director. The written notice must be received not less than 14 days prior to the
meeting of shareholders called for the election of directors; except that if
less than 21 days' notice of the meeting is given to shareholders, notice of a
shareholder's nomination must be delivered to the Secretary of FNB not later
than the earlier of either (1) the seventh day following the date notice of the
meeting was first sent to shareholders or (2) the fourth day prior to the
meeting. The notice of a shareholder's intention to nominate a director must
include, among other things:
- the name and address of the nominating shareholder;
- a representation that the shareholder is a holder of record of
FNB voting stock and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in
the notice;
- information regarding each nominee as would have been required
under the SEC's proxy rules;
- a description of all arrangements or understandings among the
shareholder and each nominee pursuant to which the nomination
or nominations are to be made by the shareholder; and
- the written consent of each nominee to serve as a director of
FNB is so elected.
CUMULATIVE VOTING
In an election of directors under cumulative voting, each share of
stock normally having one vote is entitled to a number of votes equal to the
number of directors to be elected. Under both Pennsylvania and Florida law,
cumulative voting in the election of directors is not available unless provided
for in the Articles of Incorporation of the corporation. Neither FNB nor
Promistar has provided for cumulative voting in their respective Articles of
Incorporation.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Pennsylvania law permits a corporation to indemnify its directors and
officers against expenses, judgments, fines and amounts paid in settlement
incurred by them in connection with any pending, threatened or completed action
or proceeding, and permits such indemnification against expenses incurred in
connection with any pending, threatened or completed derivative action, if the
director or officer has acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe his
or her conduct was unlawful. Pennsylvania law further provides that expenses
incurred in defending any action or proceeding may be paid by the corporation in
advance of the final disposition upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount if it is ultimately determined
that the director or officer is not entitled to be indemnified by the
corporation.
Under Pennsylvania law, the statutory provisions for indemnification
and advancement of expenses are non-exclusive with respect to any other rights,
such as contractual rights or rights granted pursuant to a Bylaw or by vote of
shareholders or disinterested directors, to which a person seeking
indemnification or advancement of expenses may be entitled. Such rights may, for
example, provide for indemnification against judgments, fines and amounts paid
in settlement incurred by the indemnified person in connection with derivative
actions. Pennsylvania law permits such derivative action indemnification in any
case except where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
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Pennsylvania law and Promistar's Bylaws permit the corporation to
purchase and maintain insurance on behalf of any director or officer of the
corporation against any liability asserted against the director or officer and
incurred in such capacity, whether or not the corporation would have the power
to indemnify the director or officer against such liability. The Articles of
Incorporation of Promistar further provide that its directors, officers and any
other persons designated by the Promistar Board are entitled to be indemnified
to the fullest extent permitted by law.
Florida law permits a corporation to indemnify a director or officer
who was or is a party to any threatened, pending or completed action, suit or
other type of proceeding, whether civil, criminal, administrative or
investigative, whether formal or informal (other than an action by or any right
of the corporation) by reason of the fact that he or she is or was a director or
officer or is now serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
penalties and amounts paid in settlement actually and reasonably incurred by him
or her in connection with such action, suit or proceeding. These indemnification
rights apply if the director or officer acted in good faith and in a manner in
which he or she reasonably believed to be in or not opposed to the best interest
of the corporation and, with respect to criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In addition, under
Florida law, FNB may indemnify and hold harmless an officer or director who is a
party in an action by or in the right of the corporation against expenses
(including attorneys' fees) and amounts paid in settlement not exceeding
estimated expenses of litigating the action to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if the director or officer has acted in good faith and in a manner in
which he or she reasonably believed to be in or not opposed to the best interest
of the corporation, except indemnification is not authorized where there is an
adjudication of liability, unless the court in which such proceeding was
brought, or any other court of competent jurisdiction, determines, in view of
all the circumstances, that such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Florida law further provides that indemnification of the costs and
expenses of defending any action is required to be made to any officer or
director who is successful (on the merits or otherwise) in defending an action
of the type referred to in the immediately preceding paragraph. Except with
regard to the costs and expenses of successfully defending an action as may be
ordered by a court, indemnification as described in the previous paragraph is
only required to be made to a director or officer if a determination is made
that indemnification is proper under the circumstances. Such determination shall
be made:
- by the Board of Directors of FNB by a majority vote of a
quorum consisting of directors who were not parties to such
action, suit or proceeding;
- by a majority vote of a committee, duly designated by the FNB
Board consisting of two or more directors not at the time
parties to the action, suit or proceeding;
- by independent legal counsel selected by the FNB Board by a
majority vote of a quorum consisting of directors who were not
parties to such action; or
- by the shareholders of FNB by a majority vote of a quorum
consisting of shareholders who were not parties to such
action, suit or proceeding, or, if no such quorum is
obtainable, by a majority vote of the shareholders who were
not parties to such action, suit or proceeding.
The reasonableness of the expenses to be indemnified is determined in
the same manner as the determination of whether the indemnification is
permissible. Florida law further provides that expenses incurred in defending
any action or proceeding may be paid by the corporation in advance of the final
disposition upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined that the director or
officer is not entitled to be indemnified by the corporation.
Under Florida law, the provisions for indemnification and advancement
of expenses are not exclusive. Accordingly, a corporation may make any other or
further indemnification or advancement of expenses of any of its officers or
directors under any Bylaw, agreement, vote of shareholders or disinterested
directors, or
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otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office. Under Florida law, indemnification
or advancement of expenses, however, shall not be made to or on behalf of any
officer or director if a judgment or other final adjudication establishes that
his or her actions or omissions were material to the cause of action so
adjudicated and constitute:
- a violation of the criminal law, unless the officer or
director had reasonable cause to believe that his or her
conduct was lawful or had no reasonable cause to believe that
his or her conduct was unlawful;
- a transaction from which the officer or director derived an
improper personal benefit;
- in the case of a director, a circumstance under which the
liability provisions of Section 607.0834 of the Florida
Business Corporation Act (relating to unlawful distributions)
are applicable; or
- willful misconduct or a conscious disregard for the best
interest of the corporation in a proceeding by or in the right
of the corporation to procure a judgment in its favor or in a
proceeding by or in the right of a shareholder.
Florida law and the Articles of Incorporation of FNB permit FNB to
purchase and maintain insurance on behalf of any director or officer of FNB
against any liability asserted against the director or officer and incurred in
such capacity, whether or not FNB would have the power to indemnify the director
or officer against such liability. The Articles of Incorporation of FNB further
provide that its directors, officers and any other person designated by the
Board of Directors of FNB is entitled to be indemnified to the fullest extent
permitted by law.
DIRECTOR LIABILITY
Pennsylvania law provides that the Bylaws of a corporation may include
a provision limiting the personal liability of directors for monetary damages
for actions taken as a director, except to the extent that the director has
breached or failed to perform his or her duties to the corporation and the
breach or failure to perform constitutes self-dealing, willful misconduct, or
recklessness. The Bylaws of Promistar contain such a provision limiting the
liability of its directors to the fullest extent permitted by law.
Under Florida law, a director is not liable for monetary damages for
any statement, vote, decision, or failure to act, regarding corporate management
or policy, unless the director breached or failed to perform his or her duties
as a director and the director's breach of, or failure to perform, those duties
constitutes a violation of criminal law, self-dealing, willful misconduct, or
recklessness. The Bylaws of FNB contain a provision limiting the liability of
its directors to the fullest extent permitted by law.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
Pennsylvania law requires the affirmative vote of a majority of the
votes cast by all shareholders entitled to vote thereon to amend a corporation's
Articles of Incorporation, provided that shareholder approval is not required
for certain non-material amendments. The Articles of Incorporation of Promistar
provide that, generally, the Promistar Articles may be amended by the
shareholders of Promistar as provided by Pennsylvania law and all rights
conferred upon the shareholders therein are granted subject to such reservation.
However, the affirmative vote the holders of at least 80% of the outstanding
shares of Promistar is required to amend provisions in the Promistar Articles of
Incorporation relating to certain corporate transactions, considerations of the
Promistar Board in evaluating certain corporate transactions, the number of
directors on the Promistar Board, the ability of the Promistar Board to make,
amend and repeal Bylaws, and indemnification.
Under Pennsylvania law, the power to adopt, amend or repeal Bylaws may
generally be vested, pursuant to the Bylaws, in the directors, with certain
statutory exceptions and subject to the power of the shareholders to change such
action. Pennsylvania law further provides that, unless the Articles of
Incorporation provide otherwise, the Board of Directors does not have the
authority to adopt or change a Bylaw on any subject that is committed expressly
to the shareholders by statute. The Articles of Incorporation
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of Promistar and the Bylaws of Promistar provide that Promistar's Bylaws may be
amended by the affirmative vote of a majority of the members of the Promistar
Board of Directors or by the affirmative vote of the holders of at least 80% of
the outstanding capital stock of Promistar entitled to vote thereon.
In order to amend the Articles of Incorporation of a Florida
corporation, Florida law generally requires that, unless the Articles of
Incorporation provide for a greater vote, the votes cast in favor of such an
amendment must exceed the votes cast against such an amendment at a meeting at
which quorum is present; provided, however, that a majority of the outstanding
votes entitled to be cast on the amendment is required with respect to
amendments that would create dissenters' rights under Florida law. Further,
under Florida law shareholder approval is not required for certain non-material
amendments.
Under Florida law, a corporation's Bylaws may be amended or repealed by
the Board of Directors or shareholders; provided, however, that the board may
not amend or repeal the corporation's Bylaws if the Articles of Incorporation
reserve such power to the shareholders, or the shareholders, in amending or
appealing the Bylaws, expressly provide that the Board of Directors may not
amend or repeal the Bylaws or a particular Bylaw provision. The Bylaws of FNB
provide that FNB's Bylaws may be altered or amended and new Bylaws adopted by
the affirmative vote of at least 75% of the members of FNB's Board of Directors
or by the affirmative vote of the holders of at least 75% of the outstanding
shares entitled to vote thereon.
VOTE REQUIRED FOR EXTRAORDINARY CORPORATE TRANSACTIONS
Under Pennsylvania law, generally, a merger, consolidation, share
exchange, dissolution or sale of substantially all of a corporation's assets
other than in the ordinary course of business must be approved by the
affirmative vote of a majority of the votes cast by all shareholders entitled to
vote thereon. Except as otherwise provided by the Bylaws of a corporation, the
shareholders of a corporation do not have to approve a Board of Directors
-approved plan of merger if, among other situations,
- the surviving or new corporation is a domestic business
corporation with Articles of Incorporation that are identical
to the Articles of Incorporation of the constituent
corporation (except for changes permitted by a Board of
Directors without shareholder approval under Pennsylvania
law),
- each share of the constituent corporation outstanding
immediately prior to the effective date of the merger is to
continue to be outstanding or will be converted into an
identical share of the surviving or new corporation after the
effective date of the merger,
- the shareholders of the constituent corporation are to hold,
in the aggregate, shares of the surviving or new corporation
to be outstanding immediately after effectiveness of the plan
of merger entitled to cast at least a majority of the votes
entitled to be cast generally for the election of directors,
and
- immediately prior to the transaction, another corporation that
is a party to the transaction directly or indirectly owns 80%
or more of the outstanding shares of each class of the
constituent corporation.
Under Florida law, generally, a merger, consolidation, share exchange,
dissolution or sale of substantially all of a corporation's assets other than in
the ordinary course of business must be approved by the affirmative vote of the
holders of a majority of the shares entitled to vote thereon unless the
corporation's Articles of Incorporation require a higher vote.
The Articles of Incorporation of FNB require an affirmative vote of the
holders of at least 75% of the outstanding shares of FNB common stock entitled
to vote to approve a merger, consolidation, or sale, lease, exchange or other
disposition, in a single transaction or series of related transactions, of all
or substantially all or a substantial part of the properties or assets of FNB,
unless the Board of Directors of FNB has approved and recommended the
transaction prior to the consummation thereof.
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INTERESTED SHAREHOLDER TRANSACTIONS
Pennsylvania law provides that, if a shareholder of a corporation is a
party to a sale of assets transaction, share exchange, merger or consolidation
involving the corporation or a subsidiary, or if a shareholder is to be treated
differently in a corporate dissolution from other shareholders of the same
class, then approval must be obtained from the shareholders entitled to cast at
least a majority of the votes which all shareholders other than the interested
shareholder are entitled to cast with respect to the transaction, without
counting the votes of the interested shareholder. Such additional shareholder
approval is not required if the consideration to be received by the other
shareholders in such transaction for shares of any class is not less than the
highest amount paid by the interested shareholder in acquiring shares of the
same class, or if the proposed transaction is approved by a majority of the
Board of Directors other than certain directors ("disqualified directors")
affiliated or associated with, or nominated by, the interested shareholder.
Pennsylvania law further provides that a director who has held office for at
least 24 months prior to the date of vote on the proposed transaction is not a
disqualified director.
Promistar's Articles of Incorporation impose special shareholder voting
requirements on certain business transactions between the corporation and an
interested shareholder, unless the transaction is (1) approved by the
affirmative vote of a majority of the entire Board of Promistar prior to the
shareholder becoming an "interested shareholder or (2) approved by the
affirmative vote of the entire Board of Promistar excluding the vote of any
director who is an "interested shareholder" or an affiliate or associate of an
"interested shareholder." An "interested shareholder" is defined in the
Promistar Articles as one who, directly or indirectly, is the beneficial owner
of shares entitling that person to cast at least 20% of the outstanding voting
stock of Promistar. Transactions to which this section of the Promistar Articles
applies include a merger or consolidation with the interested shareholder or any
sale or other disposition to the interested shareholder or any affiliate or
associate of the interested shareholder of all or substantially all of the
assets of Promistar or any of its subsidiaries.
Florida law contains a number of provisions which require supermajority
approval for certain affiliate transactions. Under Florida law, any merger,
consolidation, disposition of all or a substantial part of the assets of the
corporation or a subsidiary of the corporation, or exchange of securities
requiring shareholder approval (a "Business Combination"), if any person who
together with his affiliates and associates beneficially owns 5% or more of any
voting stock of the corporation (an "Interested Person") is a party to such
transaction, shall be approved by the affirmative vote of the holders of
two-thirds of the voting shares other than the shares beneficially owned by the
Interested Person; provided, that such approval is not required if (1) the
Interested Shareholder Transaction has been approved by a majority of the
disinterested directors; (2) the corporation has not had more than 300
shareholders of record at any time during the three years preceding the
announcement date; (3) the Interested Person has been the beneficial owner of at
least 80% of the corporation's outstanding voting shares for at least five years
preceding the announcement date; (4) the Interested Person is the beneficial
owner of at least 90% of the outstanding voting shares of the corporation,
exclusive of shares acquired directly from the corporation in a transaction not
approved by a majority of the disinterested directors; (5) the corporation is an
investment company registered under the Investment Company Act of 1940; or (6)
the consideration to be received by holders of the stock of the corporation
meets certain minimum levels determined by a formula under Section
607.0901(4)(f) of the Florida Business Corporation Act (generally, the highest
price paid by the Interested Person for any shares which she or he has
acquired). This statutory requirement does not apply if the corporation has
opted out of the statutory provision in its Articles of Incorporation. FNB has
not opted out of this provision in its Articles of Incorporation.
FIDUCIARY DUTY
Under Pennsylvania law a director may, in considering the best
interests of a corporation, consider (1) the effects of any action on
shareholders, employees, suppliers, customers and creditors of the corporation,
and upon communities in which offices or other facilities of the corporation are
located, (2) the short-term and long-term interests of the corporation,
including the possibility that the best interests of the corporation may be
served by the continued independence of the corporation, (3) the resources,
intent and conduct of any person seeking to acquire control of the corporation,
and (4) all other pertinent factors.
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The Articles of Incorporation of Promistar provide that when
determining the best interests of shareholders of Promistar in evaluating a
tender offer or other extraordinary business transaction, the Board of Directors
of Promistar may consider:
- the amount of consideration, if any, to be received by
Promistar shareholders in relation to the then current market
price of Promistar capital sock, in relation to the then
current value of the corporation in a freely negotiated
transaction and in relation to the Board's estimate of
Promistar's value as an independent entity; and
- the social and economic effects of the transaction on the
employees, depositors, customers, creditors and other
constituents of Promistar and its subsidiaries and on the
communities served by Promistar and its subsidiaries.
The Articles of Incorporation of FNB provide that the Board of
Directors of FNB, in evaluating a proposal for an extraordinary corporate
transaction, shall consider all relevant factors, including, without limitation,
the long-term prospects and interests of the corporation and its shareholders,
the social, economic, legal or other effects of any action on the employees,
suppliers and customers of the corporation and its subsidiaries, the communities
and societies in which FNB and its subsidiaries operate, and the economy of the
state and the nation.
The Articles of Incorporation of FNB further provide that, if the Board
of Directors of FNB determines that such a proposal should be rejected, it may
take any lawful action to accomplish its purposes including, but not limited to,
the following:
- advising shareholders not to accept the proposal;
- instituting litigation against the party making the proposal;
- filing complaints with governmental and regulatory
authorities;
- acquiring its securities;
- selling or otherwise issuing authorized but unissued
securities or granting options with respect thereto;
- acquiring a company to create an antitrust or other problem
for the party making the proposal; and
- obtaining a more favorable offer from another individual or
entity.
Under Florida law, a director is required to discharge his or her
duties in good faith, with the care an ordinarily prudent person in the like
position would exercise under similar circumstances and in a manner reasonably
believed to be in the best interests of the corporation. In discharging his or
her duties, a director is entitled to rely on: (1) information, opinions,
reports, or statements, including financial statements and other financial data,
if presented or prepared by officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented; (2) legal counsel, public accountants or other persons as to matters
the director reasonably believes are within the person's professional or expert
competence; or (3) a committee of the Board of which the director is not a
member if the director reasonably believes the committee merits confidence.
PROVISIONS WITH POSSIBLE ANTI-TAKEOVER EFFECTS
Pennsylvania law contains various statutory "anti-takeover" provisions
which Promistar has chosen to be governed by, including Subchapters 25E and 25F
of Pennsylvania Business Corporation Law. Subchapter 25E of Pennsylvania
Business Corporation Law (relating to control transactions) provides that, if
any person or group acquires 20% or more of the voting power of a corporation,
the remaining shareholders may demand from such person or group the fair value
of their shares, including a proportionate amount of any control premium.
Subchapter 25F of Pennsylvania Business Corporation Law (relating to business
combinations) delays for five years and imposes conditions upon business
combinations between an interested shareholder
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and the corporation. As described above, the term "business combination" is
defined broadly to include various transactions utilizing a corporation's assets
for purchase price amortization or refinancing purposes, and an "interested
shareholder" is defined generally as the beneficial owner of at least 20% of a
corporation's voting shares. Subchapters 25E and 25F of Pennsylvania Business
Corporation Law contain a wide variety of transactional and status exemptions,
exclusions and safe harbors.
In addition, Pennsylvania law permits an amendment to the corporation's
Articles of Incorporation or other corporate action, if approved by
shareholders, to provide mandatory special treatment for specified groups of
nonconsenting shareholders of the same class by providing, for example, that
shares of common stock held only by designated shareholders of record, and no
other shares of common stock, shall be cashed out at a price determined by the
corporation, subject to applicable dissenters' rights. Pennsylvania law also
provides that directors may, in discharging their duties, consider the interests
of a number of different constituencies, including shareholders, employees,
suppliers, customers, creditors and the communities in which the corporation is
located. Directors are not required to consider the interests of shareholders to
a greater degree than other constituencies' interests. Pennsylvania law
expressly provides that directors do not violate their fiduciary duties solely
by relying on poison pills or the anti-takeover provisions of Pennsylvania law.
FNB is subject to statutory "anti-takeover" provisions under Florida
law. Section 607.0902 of Florida Business Corporation Act restricts the voting
rights of certain shares of a corporation's stock when those shares are acquired
by a party who, by such acquisition, would control at least 20% of all voting
rights of the corporation's issued and outstanding stock. The statute provides
that the acquired shares (the "control shares") will, upon such acquisition,
cease to have any voting rights. The acquiring party may, however, petition the
corporation to have voting rights re-assigned to the control shares by way of an
"acquiring person's statement" submitted to the corporation in compliance with
the requirements of the statute. Upon receipt of such request, the corporation
must submit, for shareholder approval, the acquiring person's request to have
voting rights re-assigned to the control shares. Voting rights may be reassigned
to the control shares by a resolution of a majority of the corporation's
shareholders for each class and series of stock. If such a resolution is
approved, and the voting rights re-assigned to the control shares represent a
majority of all voting rights of the corporation's outstanding voting stock,
then, unless the corporation's Articles of Incorporation or Bylaws provide
otherwise, all shareholders of the corporation shall be able to exercise
dissenter's rights in accordance with Florida law.
Florida law further provides that a corporation may, by amendment to
its Articles of Incorporation or Bylaws, provide that, if the party acquiring
the control shares does not submit an acquiring person's statement in accordance
with the statute, the corporation may redeem the control shares at any time
during the period ending 60 days after the acquisition of control shares. If the
acquiring party files an acquiring person's statement, the control shares are
not subject to redemption by the corporation unless the shareholders, acting on
the acquiring party's request for re-assignment, deny full voting rights to the
control shares.
The statute does not alter the voting rights of any stock of the
corporation acquired in any of the following manners:
- pursuant to the laws of intestate succession or pursuant to a
gift or testamentary transfer;
- pursuant to the satisfaction of a pledge or other security
interest created in good faith and not for the purpose of
circumventing the statute;
- pursuant to either a merger or share exchange if the
corporation is a party to the agreement or plan of merger or
share exchange;
- pursuant to any savings, employee stock ownership or other
benefit plan of the corporation; or
- pursuant to an acquisition of shares specifically approved by
the Board of Directors of the corporation.
In addition, there are various provisions in the Articles of
Incorporation and Bylaws of FNB that may serve as anti-takeover protections
including:
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- the ability of the Board of Directors of FNB to fill vacancies
(but only until the next annual meeting of shareholders)
resulting from an increase in the number of directors;
- the supermajority voting requirements for certain corporate
transactions;
- the broad range of factors that the Board of Directors of FNB
may consider in evaluating an unsolicited offer including a
tender offer proposal; and
- provisions in the FNB Articles of Incorporation which
authorize the Board of Directors of FNB, without further
shareholder action, to issue from time to time, up to
20,000,000 shares of FNB preferred stock. The Board of
Directors of FNB is empowered to divide any and all of the
shares of the FNB preferred stock into series and to fix and
determine the relative rights and preferences of the shares of
any series so established.
The "anti-takeover" provisions of Florida law and FNB's Articles and
Bylaws may have the effect of deterring merger proposals, tender offers or other
attempts to effect changes in control of FNB that are not negotiated with and
approved by the Board of Directors of FNB. FNB is not aware of any effort or
intent to gain control of FNB or any effort to organize a proxy contest or to
accumulate shares of FNB.
TREASURY SHARES
Pennsylvania law provides that shares of a corporation's stock that
have been reacquired by the corporation are deemed issued but not outstanding,
and, unless otherwise provided in the corporation's Bylaws, may be returned to
the status of authorized but unissued by a resolution of the Board of Directors.
Pennsylvania law further allows a corporation to adopt a provision in its
articles requiring the corporation to reduce its number of authorized shares by
the number of any shares repurchased by the corporation. Neither Promistar's
Articles of Incorporation nor its Bylaws contain any provisions regarding
treasury shares.
Under Florida law, subject to statutory restrictions regarding
corporate distributions, a corporation may acquire its own issued and
outstanding capital stock. All capital stock reacquired by a corporation is
automatically returned to the status of authorized but unissued shares and is
not deemed treasury stock unless the corporation's Articles of Incorporation
provide otherwise. FNB's Articles of Incorporation do not contain any provisions
regarding treasury stock.
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DESCRIPTION OF FNB CAPITAL STOCK
FNB COMMON STOCK
GENERAL. FNB is authorized to issue 100,000,000 shares of common stock,
$0.01 par value per share, of which 25,616,294 shares were outstanding as of
June 30, 2001. FNB common stock is traded on the Nasdaq National Market under
the trading symbol "FBAN." FNB provides transfer agent and registrar services
for its common stock.
As of June 30, 2001, approximately 3.0 million shares of FNB common
stock were reserved for issuance upon the exercise of outstanding options and
warrants, and upon conversion of the outstanding shares of convertible preferred
stock. In addition, FNB has reserved 16.5 million shares of common stock for
issuance in connection with the merger. After taking into account these reserved
shares, the number of authorized shares of FNB common stock available for other
corporate purposes as of June 30, 2001 was approximately 54.8 million.
VOTING AND OTHER RIGHTS. The holders of FNB common stock are entitled
to one vote per share, and, in general, a majority of votes cast with respect to
a matter is sufficient to authorize action upon routine matters. Directors are
elected by a plurality of the votes cast, and each shareholder entitled to vote
in such election is entitled to vote each share of stock for as many persons as
there are directors to be elected. In elections for directors, shareholders do
not have the right to cumulate their votes. The FNB Series A Preferred Stock
(described below) votes as a class with the FNB common stock. See "-- FNB
Preferred Stock;" "Comparison of Shareholder Rights - Amendment of Articles of
Incorporation and Bylaws" and " -- Vote Required for Extraordinary Corporate
Transaction."
In the event of liquidation, holders of FNB common stock would be
entitled to receive pro rata any assets legally available for distribution to
shareholders with respect to shares held by them, subject to any prior rights of
the holders of any FNB preferred stock then outstanding.
FNB common stock does not carry any preemptive rights, redemption
privileges, sinking fund privileges or conversion rights. All the outstanding
shares of FNB common stock are, and upon issuance the shares of FNB common stock
to be issued to shareholders of Promistar will be, validly issued, fully paid
and nonassessable.
DISTRIBUTIONS. The holders of FNB common stock are entitled to receive
such dividends or distributions as the FNB Board may declare out of funds
legally available for such payments. The payment of distributions by FNB is
subject to the restrictions of Florida law applicable to the declaration of
distributions by a business corporation. A corporation generally may not
authorize and make distributions if, after giving effect thereto, it would be
unable to meet its debts as they become due in the usual course of business or
if the corporation's total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if it were to be dissolved at
the time of distribution, to satisfy claims upon dissolution of shareholders who
have preferential rights superior to the rights of the holders of its common
stock. In addition, the payment of distributions to shareholders is subject to
any prior rights of outstanding FNB preferred stock. Stock dividends, if any are
declared, may be paid from authorized but unissued shares.
The ability of FNB to pay distributions is affected by the ability of
its subsidiaries to pay dividends. The ability of FNB's subsidiaries, as well as
of FNB, to pay dividends in the future is influenced by bank regulatory
requirements and capital guidelines.
FNB PREFERRED STOCK
GENERAL. FNB is authorized to issue 20,000,000 shares of preferred
stock, $0.01 par value per share. The FNB Board has the authority to issue FNB
preferred stock in one or more series and to fix the dividend rights, dividend
rate, liquidation preference, conversion rights, voting rights, rights and terms
of redemption
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(including sinking fund provisions), and the number of shares constituting any
such series, without any further action by the shareholders unless such action
is required by applicable rules or regulations or by the terms of other
outstanding series of FNB preferred stock. Any shares of FNB preferred stock
which may be issued may rank prior to shares of FNB common stock as to payment
of dividends and upon liquidation. As of June 30, 2001, there were 19,194 shares
of FNB Series A Preferred Stock issued and outstanding and 140,663 shares of FNB
Series B 7 1/2% Cumulative Convertible Preferred Stock issued and outstanding.
THE FOLLOWING SUMMARY OF THE FNB SERIES A PREFERRED STOCK AND FNB
SERIES B PREFERRED STOCK IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DESCRIPTION THEREOF CONTAINED IN FNB'S ARTICLES OF INCORPORATION, AS SET FORTH
IN EXHIBIT 4.1 TO FNB'S REPORT ON FORM 8-K FILED WITH THE SEC ON JUNE 1, 2001,
WHICH IS INCORPORATED HEREIN BY REFERENCE.
FNB SERIES A PREFERRED STOCK. The FNB Series A Preferred Stock was
created for the purpose of acquiring Reeves Bank in 1985. Holders of the FNB
Series A Preferred Stock are entitled to 6.2 votes for each share held. The
holders of the FNB Series A Preferred Stock do not have cumulative voting rights
in the election of directors. Dividends on the FNB Series A Preferred Stock are
cumulative from the date of issue and are payable at a rate of $.42 per share
each quarter. The FNB Series A Preferred Stock is convertible at the option of
the holder into shares of the FNB common stock having a market value of $25.00
at time of conversion. FNB has the right to require the conversion of the
balance of all outstanding shares at the conversion rate. At June 30, 2001,
18,650 shares of FNB common stock were reserved by FNB for the conversion of the
remaining 19,194 outstanding shares of Series A Preferred Stock.
FNB SERIES B PREFERRED STOCK. The FNB Series B Preferred Stock was
issued during 1992 for the purpose of raising capital for the acquisition of 13
banking branches in the Erie, Pennsylvania area. Holders of the FNB Series B
Preferred Stock have no voting rights. Dividends on the FNB Series B Preferred
Stock are cumulative from the date of issue and are payable at a rate of $.46875
per share each quarter. The FNB Series B Preferred Stock has a stated value of
$25.00 per share and is convertible at the option of the holder at any time into
shares of FNB common stock at a price of $10.05 per share. As of June 30, 2001,
367,182 shares of FNB common stock were reserved by FNB for the conversion of
the remaining 140,663 outstanding shares of FNB Series B Preferred Stock. FNB
has the right to require the conversion of the balance of all outstanding shares
at the conversion rate.
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PROPOSAL TO AMEND FNB'S ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED CAPITAL STOCK
BACKGROUND
The FNB Board has adopted and recommended that FNB's shareholders
approve an amendment to FNB's Articles of Incorporation increasing the number of
authorized shares of common stock from 100 million to 500 million and has
directed that the amendment be submitted for shareholder approval at the FNB
special meeting.
PROPOSED AMENDMENT
The Articles of Incorporation presently authorize the issuance of 100
million shares of common stock and 20 million shares of preferred stock. The
amendment would increase the authorized number of shares of common stock to 500
million. No change is proposed in the number of authorized shares of preferred
stock. If the amendment is approved, the first paragraph of Article 5 of the
Articles of Incorporation of FNB would read as follows:
"The aggregate number of shares which the Corporation shall
have authority to issue is Five Hundred Twenty Million (520,000,000) of
which Twenty Million (20,000,000) shall be preferred stock, par value
$0.01 per share, issuable in one or more series, and Five Hundred
Million (500,000,000) shall be common stock, par value $0.01 per
share."
GENERAL EFFECT OF PROPOSED AMENDMENT AND REASONS FOR APPROVAL
Of the 100 million authorized shares of FNB common stock, 25,616,294
were outstanding as of June 30, 2001. After taking into account shares reserved
for issuance (i) upon the exercise of outstanding stock options and warrants;
(ii) upon the conversion of outstanding shares of Series A and Series B
Preferred Stock; and (iii) in connection with the Promistar merger,
approximately 54.8 million of the 100 million shares authorized in the Articles
of Incorporation remain available for issuance.
The FNB Board believes the amendment is advisable in order to maintain
FNB's financing and capital-raising flexibility, to facilitate future stock
splits and stock dividends, and to have sufficient shares available for
acquisitions and other corporate purposes. There are no present agreements,
understandings or plans to issue any of the additional shares that would be
authorized by the amendment.
Adoption of the amendment would enable the FNB Board to issue
additional shares of common stock from time to time for such purposes and such
consideration as the Board may approve without further approval of FNB's
shareholders, except as may be required by law or the rules of any national
securities exchange on which the shares of common stock are at the time listed.
Nasdaq rules require shareholder approval to issue common stock under certain
circumstances where the number of shares to be issued equals or exceeds 20% of
the voting power outstanding. As is true for shares presently authorized and
unissued, the future issuance of common stock authorized by the amendment may,
among other things, have a dilutive effect on earnings per share and on the
equity and voting power of existing holders of common and preferred stock.
There are no preemptive rights with respect to shares of FNB common
stock. The additional authorized shares of common stock would have identical
powers, preferences and rights as the shares now authorized, including the right
to cast one vote per share and to receive dividends, if any. Under Florida law,
shareholders will not have any dissenters' or appraisal rights in connection
with the amendment. If the amendment is approved by FNB's shareholders, it will
become effective upon the filing of Articles of Amendment with the Florida
Secretary of State.
While the issuance of shares of common stock in certain instances may
have the effect of forestalling a hostile takeover, the Board does not intend or
view the increase in authorized common stock as an anti-takeover measure, nor is
FNB aware of any proposed or contemplated transaction of this type.
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THE FNB BOARD RECOMMENDS A VOTE FOR THE AMENDMENT TO FNB'S ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK.
LEGAL MATTERS
Certain legal matters relating to the validity of the FNB common stock
issuable in connection with the merger and the federal income tax implications
of the merger will be passed upon for FNB by Smith, Gambrell & Russell, LLP,
Atlanta, Georgia.
EXPERTS
The consolidated financial statements of FNB at December 31, 2000 and
1999, and for each of the three years in the period ended December 31, 2000,
appearing in FNB's Annual Report on Form 10-K and incorporated by reference in
this proxy statement/prospectus have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon and incorporated
herein by reference which, as to the year 1998, are based in part on the report
of Bobbitt, Pittenger & Company, P.A., independent auditors. Such consolidated
financial statements referred to above are incorporated by reference in reliance
upon such reports given on the authority of such firms as experts in accounting
and auditing.
The consolidated financial statements of Promistar incorporated by
reference in this proxy statement/prospectus by reference to the Annual Report
on Form 10-K for the year ended December 31, 2000 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
OTHER MATTERS
As of the date of this proxy statement/prospectus, neither the
Promistar Board nor the FNB Board knows of any matters that will be presented
for consideration at the respective special meetings other than approval of the
merger agreement. However, if any other matters shall properly come before
either special meeting or any adjournments or postponements thereof and be voted
upon, the enclosed proxies shall be deemed to confer discretionary authority on
the individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the respective managements
of Promistar and FNB.
No person is authorized to give any information or make any
representation other than those contained or incorporated in this proxy
statement/prospectus, and, if given or made, such information or representation
should not be relied upon as having been authorized by FNB or Promistar.
This proxy statement/prospectus does not constitute an offer to
exchange or sell, or a solicitation of an offer to exchange or purchase, the
securities offered by this proxy statement/prospectus, nor does it constitute
the solicitation of a proxy, in any jurisdiction in which such offer or
solicitation is not authorized or to or from any person to whom it is unlawful
to make such offer or solicitation.
The information contained in this proxy statement/prospectus speaks as
of the date hereof unless otherwise specifically indicated. The delivery of this
proxy statement/prospectus shall not, under any circumstances, create any
implication that there has been no change in the affairs of Promistar or FNB
since the date of this proxy statement/prospectus or that the information in
this proxy statement/prospectus or in the documents incorporated by reference is
correct at any time subsequent to that date.
This proxy statement/prospectus does not cover any resales of the FNB
common stock offered hereby to be received by shareholders of Promistar deemed
to be "affiliates" of Promistar or FNB upon the consummation of the merger. No
person is authorized to make use of this proxy statement/prospectus in
connection with any such resales.
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WHERE YOU CAN FIND MORE INFORMATION
FNB and Promistar each file reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information filed by FNB or Promistar at the SEC's public reference rooms in
Washington D.C., New York, New York, or Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. FNB's
and Promistar's SEC filings are also available to the public from commercial
document retrieval services and at the web site maintained by the SEC at
www.sec.gov.
FNB filed a Registration Statement on Form S-4 to register with the SEC
the issuance of FNB common stock to Promistar shareholders in the merger. This
proxy statement/prospectus is a part of that Registration Statement and
constitutes a prospectus of FNB and a proxy statement of each of FNB and
Promistar for its respective special meeting. As allowed by the SEC rules, this
proxy statement/prospectus does not contain all the information contained in the
Registration Statement.
The SEC allows the "incorporation by reference" of information into
this proxy statement/prospectus, which means that FNB and Promistar can disclose
important information to you by referring you to another document filed
separately with the SEC by FNB or Promistar. The information incorporated by
reference is deemed to be part of this proxy statement/prospectus, except for
any information which is superseded by information in this proxy
statement/prospectus. This proxy statement/prospectus incorporates by reference
the documents set forth below that FNB or Promistar have previously filed with
the SEC. These documents contain important information about FNB and Promistar.
The following documents previously filed with the SEC by FNB (SEC File
No. 0-8144) are incorporated by reference into this proxy statement/prospectus:
- FNB's Annual Report on Form 10-K for the year ended December
31, 2000;
- FNB's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001;
- FNB's Current Reports on Form 8-K filed January 9, 2001,
February 6, 2001, March 6, 2001, June 1, 2001, and June 14,
2001; and
- the description of FNB common stock contained in the FNB
registration statement filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the
purpose of updating such description.
The following documents previously filed with the SEC by Promistar (SEC
File No. 0-12377) are incorporated by reference into this proxy
statement/prospectus:
- Promistar's Annual Report on Form 10-K for the year ended
December 31, 2000;
- Promistar's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001;
- Promistar's Current Reports on Form 8-K filed February 27,
2001 and June 14, 2001; and
- the description of Promistar's common stock contained in the
Promistar registration statement filed pursuant to Section 12
of the Exchange Act, and any amendment or report filed for the
purpose of updating such description.
Each of FNB and Promistar further incorporates by reference any
additional documents that it files with the SEC between the date of this proxy
statement/prospectus and the date of its respective special meeting.
If you would like to receive a copy of any of the documents
incorporated by reference, please contact Promistar or FNB at the address or
telephone number listed on page 1.
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77
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma balance sheet as of March 31, 2001
combines the historical consolidated balance sheets of FNB and Promistar as if
the merger had been effective on March 31, 2001, after giving effect to certain
adjustments described in the accompanying notes.
The unaudited pro forma statements of income for the three months ended
March 31, 2001, and each of the three years ended December 31, 2000 present the
combined results of operations of FNB and Promistar on a pooling-of-interests
basis, after giving effect to certain adjustments described in the accompanying
notes.
The unaudited pro forma financial statements and accompanying notes
reflect the application of the pooling-of-interests method of accounting for the
merger. Under this method of accounting, the recorded assets, liabilities,
shareholders' equity, income and expenses of FNB and Promistar are combined and
reflected at their historical amounts.
The pro forma financial information does not include the effects of
FNB's acquisition of OneSource Group, Inc., which was completed January 25,
2001, its acquisition of Don Ostrowsky & Assoc., Inc., which was completed on
January 31, 2001, or its acquisition of Citizens Community Bancorp, Inc., which
was completed on April 30, 2001. These acquisitions are not significant to the
historical financial position or results of operations of FNB either
individually or in the aggregate.
The pro forma financial information does not include the anticipated
effect of Promistar's planned acquisition of FNH Corporation, which Promistar
expects to complete in August 2001. This acquisition will not be significant to
the historical financial position or results of operations of Promistar.
69
78
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 2001
(In thousands, except share and per share amounts)
(Unaudited)
FNB
PRO FORMA PRO FORMA
FNB PROMISTAR ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
Assets
Cash and due from banks ....................... $ 141,332 $ 55,946 $ 197,278
Interest bearing deposits with banks .......... 3,449 803 4,252
Federal funds sold ............................ 175,409 24,000 199,409
Mortgage loans held for sale .................. 7,106 7,106
Investment securities ......................... 481,342 402,361 $ (614)(1) 883,089
Loans, net of unearned income ................. 2,947,434 1,510,881 4,458,315
Allowance for loan losses ..................... (38,544) (17,602) (56,146)
------------ ------------ ------- ------------
Net Loans ..................................... 2,908,890 1,493,279 4,402,169
Premises and equipment, net ................... 107,709 25,775 133,484
Other assets .................................. 180,639 53,942 234,581
------------ ------------ ------- ------------
Total assets ............................ $ 4,005,876 $ 2,056,106 $ (614) $ 6,061,368
============ ============ ======= ============
Liabilities
Deposits:
Non-interest bearing ..................... $ 463,481 $ 248,929 $ 712,410
Interest bearing ......................... 2,742,168 1,395,416 4,137,584
------------ ------------ ------- ------------
Total deposits ........................... 3,205,649 1,644,345 4,849,994
Other liabilities ........................ 72,979 17,656 (215)(1) 90,420
Short-term borrowings .................... 286,379 73,555 359,934
Long-term debt ........................... 113,052 151,265 264,317
------------ ------------ ------- ------------
Total Liabilities ....................... 3,678,059 1,886,821 (215) 5,564,665
Stockholders' Equity
Preferred stock ............................... 1,653 1,653
Common stock .................................. 45,457 83,416 (55,787)(2) 73,086
Additional paid in capital .................... 201,785 58,950 21,775(2) 282,510
Retained earnings ............................. 77,373 59,792 137,165
Accumulated other comprehensive income ........ 5,446 1,139 (399)(1) 6,186
Treasury stock ................................ (3,897) (34,012) 34,012 (3,897)
------------ ------------ ------- ------------
Total Stockholders' Equity .................... 327,817 169,285 (399) 496,703
------------ ------------ ------- ------------
Total Liabilities and Stockholders' Equity .... $ 4,005,876 $ 2,056,106 $ (614) $ 6,061,368
============ ============ ======= ============
Book value per share .......................... $ 13.67 $ 11.32 $ 13.15
Shares outstanding ............................ 23,678,078 14,953,921 37,492,725
---------------
(1) Cancelation of 35,296 Promistar shares owned by FNB.
(2) Issuance of 13,814,647 shares of FNB common stock, assuming an exchange
rate of 0.926 shares of FNB common stock for each share of Promistar
common stock and the cancellation of 35,296 Promistar shares owned by
FNB.
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PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2000
(In thousands, except share and per share amounts)
(Unaudited)
FNB
PRO FORMA PRO FORMA
FNB PROMISTAR ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
Interest Income
Loans including fees ........................................ $ 260,160 $ 122,727 $ 382,887
Investment securities ....................................... 29,369 24,129 $(29)(1) 53,469
Other ....................................................... 1,407 2,026 3,433
------------ ------------ ---- ------------
Total interest income ................................. 290,936 148,882 (29) 439,789
Interest Expense
Deposits .................................................... 110,325 58,935 169,260
Short-term borrowings ....................................... 16,895 3,942 20,837
Long-term borrowings ........................................ 8,088 8,141 16,229
------------ ------------ ---- ------------
Total interest expense ................................ 135,308 71,018 206,326
------------ ------------ ---- ------------
Net interest income ......................................... 155,628 77,864 (29) 233,463
Provision for loan losses ................................... 10,877 6,060 16,937
------------ ------------ ---- ------------
Net interest income after provision for loan losses ... 144,751 71,804 (29) 216,526
Other Income:
Net security gains .......................................... 176 36 212
Other ....................................................... 55,469 16,551 72,020
------------ ------------ ---- ------------
Total other income .................................... 55,645 16,587 72,232
Other Expenses
Salaries and benefits ....................................... 76,610 32,103 108,713
Occupancy and equipment expenses ............................ 9,283 11,077 20,360
Amortization of intangible assets ........................... 2,059 1,962 4,021
Other operating expenses .................................... 49,549 18,235 67,784
------------ ------------ ---- ------------
Total other expenses .................................. 137,501 63,377 200,878
Income Before Income Taxes .................................. 62,895 25,014 (29) 87,880
Provision for income taxes .................................. 20,119 6,852 (3)(1) 26,968
------------ ------------ ---- ------------
Net Income ............................................ $ 42,776 $ 18,162 $(26) $ 60,912
============ ============ ==== ============
Earnings per share - Basic .................................. $ 1.84 $ 1.11 $ 1.56
Weighted average shares outstanding - Basic ........... 23,114,809 16,428,141 38,294,583(2)
Earnings per share - Diluted ................................ $ 1.79 $ 1.11 $ 1.56
Weighted average shares outstanding - Diluted ......... 23,936,953 16,428,141 39,116,727(2)
Dividends paid per common share ............................. $ 0.68 $ 0.83 $ 0.77
---------------
(1) Elimination of Promistar dividends received on shares owned by FNB and
related tax impact.
(2) Weighted average shares computed using FNB average shares outstanding
adjusted for the weighted average shares of Promistar, net of Promistar
shares owned by FNB, adjusted for the exchange rate of 0.926 shares of
FNB for each share of Promistar.
71
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PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(In thousands, except share and per share amounts)
(Unaudited)
FNB
PRO FORMA PRO FORMA
FNB PROMISTAR ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
Interest Income
Loans including fees .......................... $ 64,724 $ 30,902 $ 95,626
Investment securities ......................... 7,558 6,021 (7)(1) 13,572
Other ......................................... 1,519 259 1,778
------------ ------------ ---- ------------
Total interest income ................... 73,801 37,182 (7) 110,976
Interest Expense
Deposits ...................................... 29,144 16,016 45,160
Short-term borrowings ......................... 3,766 993 4,759
Long-term borrowings .......................... 1,976 2,015 3,991
------------ ------------ ---- ------------
Total interest expense .................. 34,886 19,024 53,910
------------ ------------ ---- ------------
Net interest income ........................... 38,915 18,158 (7) 57,066
Provision for loan losses ..................... 2,101 2,200 4,301
------------ ------------ ---- ------------
Net interest income after provision for
loan losses ........................... 36,814 15,958 (7) 52,765
Other Income
Net security gains ............................ 32 1,077 1,109
Other ......................................... 18,187 3,795 21,982
------------ ------------ ---- ------------
Total other income ...................... 18,219 4,872 23,091
Other Expenses
Salaries and benefits ......................... 23,032 7,313 30,345
Occupancy and equipment expenses .............. 6,041 2,860 8,901
Amortization of intangible assets ............. 622 488 1,110
Other operating expenses ...................... 17,015 3,883 20,898
------------ ------------ ---- ------------
Total other expenses .................... 46,710 14,544 61,254
Income Before Income Taxes .................... 8,323 6,286 (7) 14,602
Provision for income taxes .................... 2,451 1,698 (1)(1) 4,148
------------ ------------ ---- ------------
Net Income .............................. $ 5,872 $ 4,588 $ (6) $ 10,454
============ ============ ==== ============
Earnings per share - Basic .................... $ 0.25 $ 0.31 $ 0.28
Weighted average shares outstanding - Basic 23,645,169 14,953,921 37,459,816(2)
Earnings per share - Diluted .................. $ 0.24 $ 0.31 $ 0.27
Weighted average shares outstanding - Diluted 24,410,281 14,959,000 38,229,631(2)
Dividends paid per common share ............... $ 0.17 $ 0.21 $ 0.19
---------------
(1) Elimination of Promistar dividends received on shares owned by FNB and
related tax impact.
(2) Weighted average shares computed using FNB average shares outstanding
adjusted for the weighted average shares of Promistar, net of Promistar
shares owned by FNB, adjusted for the exchange rate of 0.926 shares of
FNB for each share of Promistar.
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PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands, except share and per share amounts)
(Unaudited)
FNB
PRO FORMA PRO FORMA
FNB PROMISTAR ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
Interest Income
Loans including fees ................................. $ 222,043 $ 116,038 $ 338,081
Investment securities ................................ 31,347 23,080 (25)(1) 54,402
Other ................................................ 1,526 1,047 2,573
------------ ------------ ------ ------------
Total interest income .......................... 254,916 140,165 (25) 395,056
Interest Expense
Deposits ............................................. 90,326 48,731 139,057
Short-term borrowings ................................ 11,282 3,623 14,905
Long-term borrowings ................................. 4,859 7,130 11,989
------------ ------------ ------ ------------
Total interest expense ......................... 106,467 59,484 165,951
------------ ------------ ------ ------------
Net interest income .................................. 148,449 80,681 (25) 229,105
Provision for loan losses ............................ 9,240 6,099 15,339
------------ ------------ ------ ------------
Net interest income after provision for
loan losses .................................. 139,209 74,582 (25) 213,766
Other income
Net security gains ................................... 1,674 86 1,760
Other ................................................ 45,254 16,146 61,400
------------ ------------ ------ ------------
Total other income ............................. 46,928 16,232 63,160
Other Expenses
Salaries and employee benefits ....................... 70,246 28,940 99,186
Occupancy and equipment expense ...................... 9,000 10,797 19,797
Amortization of intangible assets .................... 1,934 2,095 4,029
Other operating expenses ............................. 48,499 19,482 67,981
------------ ------------ ------ ------------
Total other expenses ........................... 129,679 61,314 190,993
Income Before Income Taxes ........................... 56,458 29,500 (25) 85,933
Provision for Income taxes ........................... 17,163 8,686 (3)(1) 25,846
------------ ------------ ------ ------------
Net Income ...................................... $ 39,295 $ 20,814 $ (22) $ 60,087
============ ============ ====== ============
Earnings per share - Basic ........................... $ 1.69 $ 1.25 $ 1.56
Weighted average shares outstanding - Basic ..... 22,946,757 16,683,294 38,362,803(2)
Earnings per share - Diluted ......................... $ 1.64 $ 1.25 $ 1.52
Weighted average shares outstanding - Diluted ... 24,007,327 16,683,682 39,423,732(2)
Dividends paid per common share ...................... $ 0.17 $ 0.21 $ 0.19
---------------
(1) Elimination of Promistar dividends received on shares owned by FNB and
related to tax impact.
(2) Combined weighted average shares computed using the FNB weighted
average shares and adding the Promistar weighted average shares, net of
Promistar shares owned by FNB, adjusted for the 0.926 exchange ratio.
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82
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands, except share and per share amounts)
(Unaudited)
FNB
PRO FORMA PRO FORMA
FNB PROMISTAR ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
Interest Income
Loans including fees ................................. $ 205,071 $ 106,593 $ 311,664
Investment securities ................................ 36,622 31,245 (22)(1) 67,845
Other ................................................ 4,334 1,088 5,422
------------ ------------ ---- ------------
Total interest income .......................... 246,027 138,926 (22) 384,931
Interest Expense
Deposits ............................................. 96,657 52,924 149,581
Short-term borrowings ................................ 6,813 2,987 9,800
Long-term borrowings ................................. 4,682 4,510 9,192
------------ ------------ ---- ------------
Total interest expense ......................... 108,152 60,421 168,573
------------ ------------ ---- ------------
Net interest income .................................. 137,875 78,505 (22) 216,358
Provision for loan losses ............................ 7,572 5,984 13,556
------------ ------------ ---- ------------
Net interest income after provision for
loan losses .................................... 130,303 72,521 (22) 202,802
Other Income
Net security gains ................................... 1,385 460 1,845
Other ................................................ 37,920 14,301 52,221
------------ ------------ ---- ------------
Total other income ............................. 39,305 14,761 54,066
Other Expenses
Salaries and employee benefits ....................... 62,740 28,454 91,194
Occupancy and equipment expense ...................... 8,487 10,446 18,933
Amortization of intangible assets .................... 1,321 2,095 3,416
Other operating expenses ............................. 47,621 16,253 63,874
------------ ------------ ---- ------------
Total other expenses ........................... 120,169 57,248 177,417
Income Before Income Taxes ........................... 49,439 30,034 (22) 79,451
Provision for Income taxes ........................... 16,418 8,975 (2)(1) 25,391
------------ ------------ ---- ------------
Net Income ...................................... $ 33,021 $ 21,059 $(20) $ 54,060
============ ============ ==== ============
Earnings per share - Basic ........................... $ 1.43 $ 1.26 $ 1.40
Weighted average shares outstanding - Basic ..... 22,812,001 16,683,924 38,228,631(2)
Earnings per share - Diluted ......................... $ 1.37 $ 1.26 $ 1.37
Weighted average shares outstanding - Diluted ... 24,173,708 16,683,924 39,590,338(2)
Dividends paid per common share ...................... $ 0.61 $ 0.61 $ 0.61
---------------
(1) Elimination of Promistar dividends received on shares owned by FNB and
related to tax impact.
(2) Combined weighted average shares computed using the FNB weighted
average shares and adding the Promistar weighted average shares, net of
Promistar shares owned by FNB, adjusted for the 0.926 exchange ratio.
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83
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
F.N.B. CORPORATION
AND
PROMISTAR FINANCIAL CORPORATION
DATED AS OF JUNE 13, 2001
A-i
84
TABLE OF CONTENTS
PAGE
----
PREAMBLE 1
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER............................................... A-1
1.1 Merger................................................................. A-1
1.2 Time and Place of Closing.............................................. A-2
1.3 Effective Time......................................................... A-2
1.4 Execution of Stock Option Agreement.................................... A-2
ARTICLE 2 TERMS OF MERGER................................................................ A-2
2.1 Articles of Incorporation.............................................. A-2
2.2 Bylaws................................................................. A-2
2.3 FNB Board of Directors................................................. A-2
2.4 First National Bank of Pennsylvania Board of Directors................. A-3
ARTICLE 3 MANNER OF CONVERTING SHARES.................................................... A-3
3.1 Conversion of Shares................................................... A-3
3.2 Anti-Dilution Provisions............................................... A-3
3.3 Shares Held by Promistar or FNB........................................ A-3
3.4 Fractional Shares...................................................... A-3
3.5 Treatment of Options and Warrants...................................... A-4
ARTICLE 4 EXCHANGE OF SHARES............................................................. A-5
4.1 Exchange Procedures.................................................... A-5
4.2 Rights of Former Promistar Shareholders................................ A-5
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PROMISTAR.................................... A-6
5.1 Organization, Standing, and Power...................................... A-6
5.2 Authority; No Breach by Agreement...................................... A-6
5.3 Capital Stock.......................................................... A-7
5.4 Promistar Subsidiaries................................................. A-7
5.5 SEC Filings; Financial Statements...................................... A-8
5.6 Absence of Certain Changes or Events................................... A-9
5.7 Tax Matters............................................................ A-9
5.8 Compliance With Laws................................................... A-9
5.9 Assets................................................................ A-10
5.10 Legal Proceedings..................................................... A-10
5.11 Reports............................................................... A-10
5.12 Statements True and Correct........................................... A-11
5.13 Accounting, Tax and Regulatory Matters................................ A-11
5.14 Environmental Matters................................................. A-11
5.15 Outstanding FNB Common Stock.......................................... A-12
5.16 Material Contracts.................................................... A-12
5.17 Employee Benefit Plans................................................ A-12
5.18 State Takeover Laws................................................... A-15
5.19 Opinion of Financial Advisor.......................................... A-15
A-ii
85
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF FNB......................................... A-15
6.1 Organization, Standing, and Power..................................... A-15
6.2 Authority; No Breach By Agreement..................................... A-15
6.3 Capital Stock......................................................... A-16
6.4 FNB Subsidiaries...................................................... A-16
6.5 SEC Filings; Financial Statements..................................... A-17
6.6 Absence of Certain Changes or Events.................................. A-17
6.7 Tax Matters........................................................... A-17
6.8 Compliance With Laws.................................................. A-18
6.9 Assets................................................................ A-19
6.10 Legal Proceedings..................................................... A-19
6.11 Reports............................................................... A-19
6.12 Statements True and Correct........................................... A-19
6.13 Accounting, Tax and Regulatory Matters................................ A-20
6.14 Environmental Matters................................................. A-20
6.15 Outstanding Promistar Common Stock.................................... A-21
6.16 Material Contracts.................................................... A-21
6.17 Employee Benefit Plans................................................ A-21
6.18 Opinion of Financial Advisor. FNB.................................... A-23
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION...................................... A-24
7.1 Mutual Covenants...................................................... A-24
7.2 Covenants of Promistar................................................ A-25
7.3 Covenants of FNB...................................................... A-26
7.4 Dividends............................................................. A-27
7.5 Adverse Changes In Condition.......................................... A-27
7.6 Reports............................................................... A-27
ARTICLE 8 ADDITIONAL AGREEMENTS......................................................... A-28
8.1 Registration Statement; Shareholder Approval.......................... A-28
8.2 Applications.......................................................... A-28
8.3 Filings With State Offices............................................ A-28
8.4 Agreement as to Efforts to Consummate................................. A-29
8.5 Access to Information; Confidentiality................................ A-29
8.6 Press Releases........................................................ A-30
8.7 Current Information................................................... A-30
8.8 Other Actions......................................................... A-31
8.9 No Solicitation....................................................... A-31
8.10 Accounting and Tax Treatment.......................................... A-33
8.11 Articles of Incorporation Provisions.................................. A-33
8.12 Agreement of Affiliates............................................... A-33
8.13 Employment Contracts.................................................. A-33
8.14 Indemnification....................................................... A-34
8.15 Additional Reports.................................................... A-34
8.16 Exemption from Liability under Section 16(b).......................... A-34
8.17 Right to Update Disclosure Memoranda.................................. A-35
A-iii
86
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE..................................................................... A-35
9.1 Conditions to Obligations of Each Party............................... A-35
9.2 Conditions to Obligations of FNB...................................... A-36
9.3 Conditions to Obligations of Promistar................................ A-37
ARTICLE 10 TERMINATION.................................................................. A-38
10.1 Termination........................................................... A-38
10.2 Effect of Termination................................................. A-40
10.3 Non-Survival of Representations and Covenants......................... A-40
ARTICLE 11 MISCELLANEOUS................................................................ A-40
11.1 Definitions........................................................... A-40
11.2 Expenses.............................................................. A-46
11.3 Brokers and Finders................................................... A-47
11.4 Entire Agreement...................................................... A-47
11.5 Amendments............................................................ A-47
11.6 Obligations of FNB.................................................... A-47
11.7 Waivers............................................................... A-47
11.8 Assignment............................................................ A-48
11.9 Notices............................................................... A-48
11.10 Governing Law......................................................... A-49
11.11 Counterparts.......................................................... A-49
11.12 Captions.............................................................. A-49
11.13 Enforcement of Agreement.............................................. A-49
11.14 Severability.......................................................... A-49
A-iv
87
LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
1 Form of Stock Option Agreement (Section 1.4)
2 Form of agreement of affiliates of Promistar (Section 8.12)
3 Form of outside directors' Non-Compete Agreement (Section 9.2(e))
4 Form of opinion of Kirkpatrick & Lockhart LLP (Section 9.2(f))
5 Form of opinion of Smith, Gambrell & Russell, LLP (Section 9.3(d))
6 Entities Composing the Index Group (Section 10.1(g))
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of the 13th day of June, 2001, by and between F.N.B.
CORPORATION, a Florida corporation having its principal office located in
Naples, Florida ("FNB"), and PROMISTAR FINANCIAL CORPORATION, a Pennsylvania
corporation having its principal office located in Johnstown, Pennsylvania
("Promistar").
PREAMBLE
The Boards of Directors of Promistar and FNB believe that the
acquisition described herein is in the best interests of the parties and their
respective shareholders. This Agreement provides for the acquisition of
Promistar by FNB pursuant to the merger of Promistar with and into FNB (the
"Merger"). At the effective time of such Merger, the outstanding shares of the
capital stock of Promistar shall be converted into the right to receive shares
of the common stock of FNB (except as provided herein). As a result,
shareholders of Promistar shall become shareholders of FNB. Immediately upon
consummation of the Merger, Alpha Bank, a wholly owned subsidiary of Promistar,
shall be merged into First National Bank of Pennsylvania, a wholly owned
subsidiary of FNB. The transactions described in this Agreement are subject to
the approvals of the shareholders of Promistar and FNB, the Board of Governors
of the Federal Reserve System, the Office of the Comptroller of the Currency and
the Pennsylvania Department of Banking, and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the Merger for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and for accounting purposes shall qualify for treatment as a pooling of
interests.
Contemporaneously with the execution and delivery of this Agreement, as
a condition and inducement to FNB's willingness to enter into this Agreement,
Promistar and FNB are entering into a stock option agreement (the "Stock Option
Agreement"), in substantially the form attached hereto as Exhibit 1, pursuant to
which Promistar is granting to FNB an option to purchase shares of Promistar
Common Stock.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time, Promistar shall be merged with and into FNB in accordance
with the provisions of the FBCA and the PBCL. At the Effective Time, the
separate existence of Promistar shall cease, and FNB shall be the Surviving
Corporation resulting from the Merger and shall continue to be governed by the
Laws of the State of Florida. From and after the Effective Time, the Merger
shall have the effects specified in the FBCA and the PBCL. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved and
adopted by the respective Boards of Directors of Promistar and FNB.
1.2 Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing"), including the Merger, shall take
place at 10:00 A.M., local time, on a date specified by the Parties as they,
acting through their chief executive officers or chief financial officers, may
mutually agree. Subject to the terms and conditions hereof, unless mutually
agreed upon in writing
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by each Party, the Parties shall use their reasonable best efforts to cause the
Closing to occur on, but not prior to, the fifth business day following the
Approval Date.
1.3 Effective Time. The Merger and other transactions contemplated
by this Agreement shall become effective upon (i) the later to occur of (A) the
date and time at which the Florida Articles of Merger containing the provisions
required by, and executed in accordance with, the FBCA shall have been accepted
for filing by the Florida Department of State, and (B) the date and time at
which the Pennsylvania Articles of Merger containing the provisions required by,
and executed in accordance with, the PBCL shall have been accepted for filing by
the Pennsylvania Department of State, or (ii) such later date and time as is
agreed in writing by FNB and Promistar and specified in the Florida Articles of
Merger and the Pennsylvania Articles of Merger (the time at which the Merger
becomes effective referred to herein as the "Effective Time"). Unless FNB and
Promistar otherwise mutually agree in writing, the Parties to this Agreement
shall use their best efforts to cause the Effective Time to occur on the date of
Closing.
1.4 Execution of Stock Option Agreement. Concurrently with the
execution and delivery of this Agreement, and as a condition of FNB's
willingness to enter into this Agreement, Promistar is executing and delivering
to FNB the Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. The Articles of Incorporation of
FNB in effect at the Effective Time shall be the Articles of Incorporation of
the Surviving Corporation until otherwise amended or repealed in accordance with
applicable Law.
2.2 Bylaws. The Bylaws of FNB in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation until otherwise amended or
repealed in accordance with applicable Law.
2.3 FNB Board of Directors. Following the Effective Time, the
number of members of the FNB Board of Directors shall be increased by three
(which shall be accomplished by creating one vacancy in each of the three
classes of FNB directors) and three of the present members of the Board of
Directors of Promistar shall be elected by the FNB Board of Directors to fill
the vacancies so created. At the first annual meeting of the shareholders of FNB
following the Effective Time, the Board of Directors of FNB shall nominate for
reelection each of the directors elected pursuant to this Section 2.3. At the
third annual meeting following the Effective Time, the FNB Board of Directors
shall nominate for reelection the director elected pursuant to this Section 2.3
whose term expires at such meeting. At the fourth annual meeting following the
Effective Time, the FNB Board of Directors shall nominate for reelection the
director elected pursuant to this Section 2.3 whose term expires at such
meeting.
2.4 First National Bank of Pennsylvania Board of Directors.
Following the Effective Time, FNB shall cause five of the directors of Promistar
or its Subsidiaries to be elected as members of the Board of Directors of First
National Bank of Pennsylvania.
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ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of FNB, or Promistar, or the shareholders of either, the shares of
the constituent corporations shall be converted as follows:
(a) Each share of FNB Capital Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Subject to Section 3.4 relating to fractional shares, each
share of Promistar Common Stock (excluding shares to be cancelled pursuant to
Section 3.3 of this Agreement) issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for
0.926 shares of FNB Common Stock (subject to possible adjustment pursuant to
Section 10.1 hereof (the "Exchange Ratio").
3.2 Anti-Dilution Provisions. In the event FNB changes the number
of shares of FNB Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, recapitalization, reclassification
or similar transaction with respect to such stock and the record date therefor
(in the case of a stock dividend) or the effective date thereof (in the case of
a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted so as to prevent the dilutive effect of such
transaction on a percentage of ownership basis.
3.3 Shares Held by Promistar or FNB. Each share of Promistar
Common Stock, if any, held by any Promistar Company or by any FNB Company, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 Fractional Shares. Each shareholder of Promistar will have the
option of enrolling the shares of FNB Common Stock issued to such shareholder
pursuant to the Merger in FNB's Dividend Reinvestment and Stock Purchase Plan
(the "DRSP Plan"). Notwithstanding any other provision of this Agreement, each
holder of Promistar Common Stock exchanged pursuant to the Merger who elects not
to enroll in the DRSP Plan and who would otherwise have been entitled to receive
a fraction of a share of FNB Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of FNB
Common Stock multiplied by the "market price" of one share of FNB Common Stock
at the Closing. The market price of one share of FNB Common Stock at the Closing
shall be the closing price of such common stock, as reported by Nasdaq (or, if
not reported thereby, any other authoritative source selected by FNB) on the
last trading day preceding the Closing. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of any
fractional shares. Each shareholder of Promistar electing to enroll in the DRSP
Plan will receive his or her share of FNB Common Stock issued pursuant to the
Merger in book-entry form, with any fractional share rounded to the third
decimal place, and such shareholder will be entitled to dividends and voting
rights with respect to such fractional share.
3.5 Treatment of Options and Warrants.
(a) At the Effective Time, each option, warrant or other right to
purchase or acquire Promistar Common Stock (collectively, the "Promistar
Options") pursuant to stock awards, stock options, stock appreciation rights, or
other benefits granted by Promistar pursuant to any employee stock option plan
or other arrangement of Promistar ("Promistar Stock Plan"), which Promistar
Options are outstanding at the
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Effective Time of the Merger, whether or not such Promistar Options are then
vested or exercisable, shall be converted into and become rights with respect to
FNB Common Stock, and FNB shall assume each Promistar Option, in accordance with
the terms of the Promistar Stock Plan, Stock Option agreement, or warrant
agreement by which it is evidenced, except that from and after the Effective
Time (i) FNB and its Compensation Committee shall be substituted for Promistar
and the compensation committee of Promistar's Board of Directors, including, if
applicable, the entire Board of Directors of Promistar, administering such
Promistar Stock Plan, (ii) each Promistar Option assumed by FNB may be exercised
solely for shares of FNB Common Stock, (iii) the number of shares of FNB Common
Stock subject to each such Promistar Option shall be equal to the number of
shares of Promistar Common Stock subject to each such Promistar Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
(iv) the per share exercise price under each such Promistar Option will be
adjusted by dividing the per share exercise price under each such Promistar
Option by the Exchange Ratio and rounding up to the nearest cent.
Notwithstanding the provisions of clause (iii) of the preceding sentence, FNB
shall not be obligated to issue any fraction of a share of FNB Common Stock upon
exercise of Promistar Options and any fraction of a share of FNB Common Stock
that otherwise would be subject to a converted Promistar Option shall represent
the right to receive a cash payment equal to the product of such fraction and
the difference between the market value of one share of FNB Common Stock on the
date of exercise and the per share exercise price of such Option. Promistar and
FNB agree to take all necessary steps to effectuate the foregoing provisions of
this Section 3.5.
(b) As soon as practicable after the Effective Time, FNB shall
deliver to the participants in each Promistar Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants pursuant
to such Promistar Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments required by Section 3.5(a) of this
Agreement after giving effect to the Merger), and FNB shall comply with the
terms of each Promistar Stock Plan to ensure, to the extent required by, and
subject to the provisions of, such Promistar Stock Plan, that Promistar Options
which qualified as incentive stock options prior to the Effective Time continue
to qualify as incentive stock options after the Effective Time. At or prior to
the Effective Time, FNB shall take all corporate action necessary to reserve for
issuance sufficient shares of FNB Common Stock for delivery upon exercise of
Promistar Options assumed by it in accordance with this Section 3.5. As soon as
practicable after the Effective Time, FNB shall file a registration statement on
Form S-3 or Form S-8, as the case may be (or any successor or other appropriate
forms), with respect to the shares of FNB Common Stock subject to such Promistar
Options and shall use its reasonable efforts to maintain the effectiveness of
such registration statement (and maintain the current status of the prospectus
or the prospectuses contained therein), for so long as such options remain
outstanding. With respect to individuals who subsequent to the Merger will be
subject to the reporting requirements under Section 16(a) of the 1934 Act, where
applicable, FNB shall administer the Promistar Stock Plan assumed pursuant to
this Section 3.5 in a manner which complies with Rule 16b-3 promulgated under
the 1934 Act to the extent the Promistar Stock Plan complied with such Rule
prior to the Merger.
(c) All restrictions or limitations on transfer with respect to
the Promistar Common Stock awarded under the Promistar Stock Plan or any other
plan, program, or arrangement of Promistar, to the extent that such restrictions
or limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. At the Effective Time, FNB shall deposit,
or shall cause to be deposited, with First National Bank of Florida, a wholly
owned subsidiary of FNB (the "Exchange Agent") certificates evidencing shares of
FNB Common Stock and cash in such amounts necessary to
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provide all consideration required to be exchanged by FNB for shares of
Promistar Common Stock pursuant to the terms of this Agreement. Promptly after
the Effective Time, FNB shall cause the Exchange Agent to mail to the former
shareholders of Promistar appropriate transmittal materials (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of Promistar Common Stock shall pass, only upon
proper delivery of such certificates to the Exchange Agent). After the Effective
Time, each holder of shares of Promistar Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) issued and outstanding at
the Effective Time shall surrender the certificate or certificates representing
such shares to the Exchange Agent and shall upon surrender thereof promptly
receive in exchange therefor the consideration provided in Section 3.1 of this
Agreement, together with all declared but undelivered dividends or distributions
in respect of such shares (without interest thereon) pursuant to Section 4.2 of
this Agreement. To the extent required by Section 3.4 of this Agreement, each
holder of Promistar Common Stock issued and outstanding at the Effective Time
also shall receive, upon surrender of the certificate or certificates
representing such shares, cash in lieu of any fractional share of FNB Common
Stock to which such holder may be otherwise entitled (without interest). FNB
shall not be obligated to deliver the consideration to which any former holder
of Promistar Common Stock is entitled as a result of the Merger until such
holder surrenders such holder's certificate or certificates representing the
shares of Promistar Common Stock for exchange as provided in this Section 4.1.
The certificate or certificates of shares of Promistar Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither FNB nor the Exchange Agent
shall be liable to a holder of Promistar Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law. In the event any certificate representing shares of
Promistar Common Stock shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed, and, if required by FNB, the posting by such
person of a bond in such reasonable amount as FNB may direct as indemnity
against any claim that may be made against it with respect to such certificate,
FNB shall issue in exchange for such lost, stolen or destroyed certificate the
shares of FNB Common Stock deliverable in respect thereof determined in
accordance with this Agreement.
4.2 Rights of Former Promistar Shareholders. The stock transfer
books of Promistar shall be closed as to holders of Promistar Common Stock
immediately prior to the Effective Time and no transfers of Promistar Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing Promistar Common Stock
(other than shares to be canceled pursuant to Section 3.3 of this Agreement)
shall from and after the Effective Time represent for all purposes only the
right to receive the consideration provided in Sections 3.1 and 3.4 of this
Agreement in exchange therefor, subject, however, to FNB's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by Promistar in respect of such
Promistar Common Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time. Until 90 days after the Effective Time,
former shareholders of record of Promistar shall be entitled to vote at any
meeting of FNB stockholders the number of shares of FNB Common Stock into which
their respective shares of Promistar Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing Promistar
Common Stock for certificates representing FNB Common Stock in accordance with
the provisions of this Agreement. Whenever a dividend or other distribution is
declared by FNB on the FNB Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, but beginning
30 days after the Effective Time no dividend or other distribution payable to
the holders of record of FNB Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate representing
shares of Promistar Common Stock issued and outstanding at the Effective Time
until such holder surrenders such certificate for exchange as provided in
Section 4.1 of this Agreement. However, upon surrender of such Promistar
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Common Stock certificate, both the FNB Common Stock certificate (together with
all such undelivered dividends or other distributions without interest) and any
undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate. Any portion of the consideration
(including the proceeds of any investments thereof) which had been made
available to the Exchange Agent pursuant to Section 4.1 of this Agreement that
remains unclaimed by the shareholders of Promistar for 12 months after the
Effective Time shall be paid to FNB. Any shareholders of Promistar who have not
theretofore complied with this Article 4 shall thereafter look only to FNB
(subject to abandoned property, escheat or similar laws) and only as general
creditors thereof for payment of their shares of FNB Common Stock, cash in lieu
of fractional shares, and unpaid dividends and distributions on the FNB Common
Stock deliverable in respect of each Promistar Common Share such shareholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PROMISTAR
Promistar hereby represents and warrants to FNB as follows:
5.1 Organization, Standing, and Power. Promistar is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Pennsylvania, and has the corporate power and authority to carry
on its business as now conducted and to own, lease and operate its material
Assets. Promistar is duly qualified or licensed to transact business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Promistar.
5.2 Authority; No Breach by Agreement.
(a) Promistar has the corporate power and authority necessary to
execute and deliver this Agreement and, subject to the approval and adoption of
this Agreement by the shareholders of Promistar, to perform its obligations
under this Agreement and consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Promistar and the
consummation by Promistar of the transactions contemplated herein, including the
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Promistar, subject to the approval of this
Agreement by its shareholders as contemplated by Section 8.1 of this Agreement.
Subject to such requisite shareholder approval (and assuming due authorization,
execution and delivery by FNB) and to such Consents of Regulatory Authorities as
required by applicable law, this Agreement represents a legal, valid and binding
obligation of Promistar, enforceable against Promistar in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Except as set forth in Section 5.2(b) of the Promistar
Disclosure Memorandum, neither the execution and delivery of this Agreement by
Promistar, nor the consummation by Promistar of the transactions contemplated
hereby, nor compliance by Promistar with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Promistar's Articles of
Incorporation or Bylaws, or, (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Promistar Company under, any Contract or Permit of any Promistar
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Promistar, or (iii)
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subject to receipt of the requisite Consents referred to in Section 9.1(a), (b)
and (c) of this Agreement, violate any Order, or, to its Knowledge, any Law
applicable to any Promistar Company or any of their respective material Assets
which will have a Material Adverse Effect on Promistar.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of Nasdaq, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Promistar, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Promistar of the Merger and the other transactions contemplated
in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Promistar consists of (i)
25,000,000 shares of Promistar Common Stock, of which 14,953,921 shares are
issued and outstanding as of the date of this Agreement, and (ii) 2,000,000
shares of preferred stock, no par value per share, none of which are outstanding
as of the date of this Agreement. All of the issued and outstanding shares of
capital stock of Promistar are duly and validly issued and outstanding and are
fully paid and nonassessable under the PBCL. None of the outstanding shares of
capital stock of Promistar has been issued in violation of any preemptive
rights. Promistar has reserved 1,260,000 shares of Promistar Common Stock for
issuance under the Promistar Stock Plans, pursuant to which, as of the date of
this Agreement, options and warrants to purchase not more than 748,500 shares of
Promistar Common Stock are outstanding.
(b) Except as set forth in Section 5.3(a) of this Agreement, as
provided pursuant to the Stock Option Agreement, or as set forth in Section
5.3(b) to the Promistar Disclosure Memorandum, there are no shares of capital
stock or other equity securities of Promistar outstanding and no outstanding
Rights relating to the capital stock of Promistar.
5.4 Promistar Subsidiaries. Except as disclosed in Section 5.4 of
the Promistar Disclosure Memorandum, the list of Subsidiaries of Promistar filed
by Promistar as Exhibit 21.1 to its Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, is a true and complete list of all of the
Promistar Subsidiaries as of the date of this Agreement. Except as disclosed in
Section 5.4 of the Promistar Disclosure Memorandum, Promistar or one of its
Subsidiaries owns all of the issued and outstanding shares of capital stock of
each Promistar Subsidiary. No equity securities of any Promistar Subsidiary are
or may become required to be issued (other than to another Promistar Company) by
reason of any Rights, and there are no Contracts by which any Promistar
Subsidiary is bound to issue (other than to another Promistar Company)
additional shares of its capital stock or Rights or by which any Promistar
Company is or may be bound to transfer any shares of the capital stock of any
Promistar Subsidiary (other than to another Promistar Company). There are no
Contracts relating to the rights of any Promistar Company to vote or to dispose
of any shares of the capital stock of any Promistar Subsidiary. All of the
shares of capital stock of each Promistar Subsidiary held by a Promistar Company
are fully paid and nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized (except, in
the case of Subsidiaries that are national banks, for the assessment
contemplated by 12 U.S.C. ss. 55), and are owned by such Promistar Company free
and clear of any Lien. Each Promistar Subsidiary is either a bank or a
corporation, and is duly organized, validly existing and (as to corporations) in
good standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease and operate its Assets and to carry on its business as now conducted. Each
Promistar Subsidiary is duly qualified or licensed to transact business as a
foreign corporation and is in good standing in each jurisdiction where the
character
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of its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Promistar. Each Promistar Subsidiary
that is a depository institution is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder.
5.5 SEC Filings; Financial Statements.
(a) Promistar has filed and made available to FNB accurate and
complete copies of all forms, reports and documents required to be filed by
Promistar with the SEC since January 1, 1996 (collectively, the "Promistar SEC
Reports"). The Promistar SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the 1933 Act and the 1934
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Promistar SEC Reports or
necessary in order to make the statements in such Promistar SEC Reports, in
light of the circumstances under which they were made, not misleading. Except
for Promistar Subsidiaries that are registered as brokers, dealers, investment
advisers or associated persons thereof, none of the Promistar Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the Promistar Financial Statements (including, in each
case, any related notes) contained in the Promistar SEC Reports, including any
Promistar SEC Reports filed after the date of this Agreement until the Effective
Time, complied, and each Promistar SEC Report filed after the date of this
Agreement until the Effective Time will comply, as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was or will be prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC), and fairly presented the consolidated
financial position of Promistar and its Subsidiaries at the respective dates and
the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring adjustments which were not or are not expected
to be material in amount.
5.6 Absence of Certain Changes or Events. Since March 31, 2001,
(i) there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Promistar, and (ii) the Promistar Companies have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and agreements of
Promistar provided in Articles 7 or 8 of this Agreement.
5.7 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of
the Promistar Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 2000, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Promistar, and all Tax Returns filed are complete and accurate
in all material respects. All Taxes shown on filed Tax Returns have been paid.
There is no audit examination, deficiency, or refund Litigation with respect to
any Taxes that is reasonably likely to result in a determination that would
have, individually or in the aggregate, a Material Adverse Effect on Promistar,
except as reserved against in the Promistar Financial Statements delivered
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prior to the date of this Agreement. All Taxes and other liabilities due with
respect to completed and settled examinations or concluded Litigation have been
paid.
(b) Adequate provision for any Taxes due or, to the Knowledge of
Promistar, to become due for any of the Promistar Companies for the period or
periods through and including the date of the respective Promistar Financial
Statements has been made and is reflected on such Promistar Financial
Statements.
(c) Deferred Taxes of the Promistar Companies have been adequately
provided for in the Promistar Financial Statements.
(d) To the Knowledge of Promistar, each of the Promistar Companies
is in compliance with, and its records contain all information and documents
(including properly completed Internal Revenue Service Forms W-9) necessary to
comply with, all applicable information reporting and Tax withholding
requirements under federal, state and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Promistar.
5.8 Compliance With Laws. Promistar is duly registered as a bank
holding company under the BHC Act. Each Promistar Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Promistar. None of the Promistar Companies is
presently in Default under or in violation of any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Promistar. Except as set forth in
Section 5.8 of the Promistar Disclosure Memorandum, no Promistar Company:
(i) is in violation of any Laws, Orders, or Permits applicable to
its business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Promistar; or
(ii) has received any notification or communication from any agency
or department of federal, state, or local government or any Regulatory Authority
or the staff thereof (i) asserting that any Promistar Company is not in
compliance with any of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Promistar,
(ii) threatening to revoke any Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Promistar, or (iii) requiring any Promistar Company to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any board resolution or
similar undertaking, which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies,
its management or the payment of dividends.
5.9 Assets. Except as disclosed in Section 5.9 of the Promistar
Disclosure Memorandum, the Promistar Companies have good and marketable title,
free and clear of all Liens (except for those Liens which are not likely to have
a Material Adverse Effect on Promistar or its Subsidiaries taken as a whole), to
all of their respective Assets. All material tangible properties used in the
businesses of the Promistar Companies are in good condition, reasonable wear and
tear excepted, and are usable in the ordinary course of business consistent with
Promistar's past practices. All Assets which are material to Promistar's
business on a consolidated basis, held under leases or subleases by any of the
Promistar
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Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The Promistar Companies
currently maintain insurance in amounts, scope, and coverage as disclosed in
Section 5.9 of the Promistar Disclosure Memorandum. None of the Promistar
Companies has received written notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. Except as disclosed in Section 5.9 of the
Promistar Disclosure Memorandum, to the Knowledge of Promistar there are
presently no occurrences giving rise to a claim under such policies of insurance
and no notices have been given by any Promistar Company under such policies.
5.10 Legal Proceedings. There is no Litigation instituted or
pending, or, to the Knowledge of Promistar, threatened against any Promistar
Company, or against any Asset, employee benefit plan, interest, or right of any
of them, that is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Promistar, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Promistar Company, that are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Promistar.
5.11 Reports. Since January 1, 1996, or the date of organization if
later, each Promistar Company has filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with Regulatory Authorities (except, in the case of state
securities authorities, failures to file which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Promistar).
As of its respective date, each such report and document, including the
financial statements, exhibits, and schedules thereto, (i) complied in all
material respects with all applicable Laws, and (ii) did not, in all material
respects, 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, which untrue statement of material fact or omission to state a
material fact is likely to have, individually, or in the aggregate, a Material
Adverse Effect on Promistar.
5.12 Statements True and Correct. None of the information supplied
or to be supplied by any Promistar Company or any Affiliate thereof for
inclusion in the Registration Statement will, when the Registration Statement
becomes effective, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by any Promistar
Company or any Affiliate thereof for inclusion in the Joint Proxy Statement or
any other documents to be filed by Promistar or FNB with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby
will, at the respective time such documents are filed, and with respect to the
Joint Proxy Statement, when first mailed to the shareholders of FNB or
Promistar, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or, in the case of
the Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the FNB Shareholders' Meeting or the Promistar Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the FNB Shareholders' Meeting
or the Promistar Shareholders' Meeting. All documents that any Promistar Company
or any Affiliate thereof is responsible for filing with any Regulatory Authority
in connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable Law.
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5.13 Accounting, Tax and Regulatory Matters. No Promistar Company
or any Affiliate thereof has taken or agreed to take any action or has any
Knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a)(2)(D) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
5.14 Environmental Matters.
(a) To the Knowledge of Promistar, except as disclosed in Section
5.14 of the Promistar Disclosure Memorandum, each Promistar Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Promistar.
(b) Except as disclosed in Section 5.14 of the Promistar
Disclosure Memorandum, there is no Litigation pending, or, to the Knowledge of
Promistar, threatened before any court, governmental agency, or authority or
other forum in which any Promistar Company or any of its Loan Properties or
Participation Facilities (or any Promistar Company in respect of any such Loan
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material,
whether or not occurring at, on, under, or involving any of its Loan Properties
or Participation Facilities, except for such Litigation pending or threatened
that is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Promistar.
(c) To the Knowledge of Promistar, except as disclosed in Section
5.14 of the Promistar Disclosure Memorandum, there is no reasonable basis for
any Litigation of a type described above in Section 5.14(b), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Promistar.
(d) To the Knowledge of Promistar, except as disclosed in Section
5.14 of the Promistar Disclosure Memorandum, during the period of (i)
Promistar's or any of its Subsidiaries' ownership or operation of any of their
respective properties, (ii) Promistar's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (iii)
Promistar's or any of its Subsidiaries' holding a security interest in a Loan
Property, there has been no release of Hazardous Material in, on, under, or
affecting any Participation Facility or Loan Property of a Promistar Company,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Promistar.
5.15 Outstanding FNB Common Stock. As of the date of this
Agreement, Promistar Companies do not beneficially own any shares of FNB Common
Stock for their own accounts (not including those held in a fiduciary or trust
capacity for, or on behalf of, unaffiliated third parties). During the term of
this Agreement, no Promistar Company shall purchase or otherwise acquire
beneficial ownership of any FNB Common Stock except pursuant to the terms of
this Agreement.
5.16 Material Contracts. Except as set forth in the Promistar SEC
Reports or in Section 5.16 of the Promistar Disclosure Memorandum, no Promistar
Company is a party to or bound by any "material contract" as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC (each such contract a
"Promistar Contract"). With respect to each Promistar Contract and except as
disclosed in Section 5.16 of the Promistar Disclosure Memorandum: (i) such
Promistar Contract is in full force and effect; (ii) no Promistar Company is in
Default thereunder; (iii) no
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Promistar Company has repudiated or waived any material provision of any such
Promistar Contract; and (iv) no other party to any such Contract is, to the
Knowledge of Promistar, in Default in any respect or has repudiated or waived
any material provision thereunder.
5.17 Employee Benefit Plans.
(a) Promistar has disclosed in Section 5.17 of the Promistar
Disclosure Memorandum, and has delivered or made available to FNB prior to the
execution of this Agreement copies in each case of: (i) all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including, without limitation, "employee benefit
plans" (as that term is defined in Section 3(3) of ERISA), currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by any
Promistar Company or ERISA Affiliate (as defined below) thereof for the benefit
of employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "Promistar Benefit Plans"); (ii) all insurance
contracts, annuity contracts and other funding vehicles relating to the
Promistar Benefit Plans; (iii) all material agreements entered into with service
providers in connection with the Promistar Benefit Plans; and (iv) summary plan
descriptions, favorable Internal Revenue Service determination letters for each
Promistar ERISA Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code and the most recently available Form 5500 annual reports,
certified financial statement and actuarial reports for the Promistar Benefit
Plans. Any of the Promistar Benefit Plans which is an "employee pension benefit
plan" (as that term is defined in Section 3(2) of ERISA), is referred to herein
as a "Promistar ERISA Plan." Each Promistar ERISA Plan which is also a "defined
benefit plan" (as defined in Section 4140 of the Internal Revenue Code) is
referred to herein as a "Promistar Pension Plan." No Promistar Pension Plan is
or has been a multiemployer plan within the meaning of Section 3(37) of ERISA.
No Promistar Benefit Plan is a multiple employer plan within the meaning of
Section 413(c) of the Internal Revenue Code or is a multiple employer welfare
arrangement within the meaning of Section 3(40) of ERISA. Since the date the
foregoing documents were delivered or made available to FNB, no amendments to
any Promistar Benefit Plan have been made or will be made prior to the Closing
Date. Except as disclosed in Section 5.17 of the Promistar Disclosure
Memorandum, Promistar does not maintain any unwritten Promistar Benefit Plans.
No Promistar Company nor any ERISA Affiliate is a party to a collective
bargaining agreement. Promistar has disclosed in Section 5.17 of the Promistar
Disclosure Memorandum a complete and accurate list of (A) each ERISA Affiliate,
and (B) each Promistar ERISA Plan that has not been adopted by each ERISA
Affiliate that maintains a separate payroll.
(b) Except as disclosed in Section 5.17 of the Promistar
Disclosure Memorandum, all Promistar Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, COBRA (as defined below)
and any other applicable Laws the breach or violation of which are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Promistar, and each Promistar ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and Promistar is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter. Except as disclosed in Section 5.17 of the Promistar
Disclosure Memorandum, to the Knowledge of Promistar, no Promistar Company nor
any ERISA Affiliate has any liability to the Internal Revenue Service with
respect to any Promistar Benefit Plan, including any liability imposed by
Chapter 43 of the Internal Revenue Code, and no Promistar Company has engaged in
a transaction with respect to any Promistar Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
any Promistar Company to a Tax imposed by either Section 4975 of the Internal
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Revenue Code or Section 502(i) of ERISA in amounts which are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Promistar.
(c) Except as disclosed in Section 5.17 of the Promistar
Disclosure Memorandum, no Promistar Pension Plan has any "unfunded current
liability" (as that term is defined in Section 302(d)(8)(A) of ERISA) and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Except as disclosed in
Section 5.17 of the Promistar Disclosure Memorandum, since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any Promistar Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Promistar Pension Plan, and (iii) no
increase in benefits under any Promistar Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Promistar or
materially adversely affect the funding status of any such plan. Neither any
Promistar Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any Promistar
Company, or the single-employer plan of any entity which is considered one
employer with Promistar under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA, which is
reasonably likely to have a Material Adverse Effect on Promistar. No Promistar
Company has provided, or is required to provide, security to a Promistar Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by any Promistar Company with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which liability is reasonably likely to have a Material Adverse
Effect on Promistar. No Promistar Company has incurred any withdrawal liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
liability is reasonably likely to have a Material Adverse Effect on Promistar.
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 Promistar Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof. No Promistar Company nor
ERISA Affiliate has filed a notice of intent to terminate any ERISA Pension Plan
or has adopted any amendment to treat such Plan as terminated. The Pension
Benefit Guaranty Corporation has not instituted proceedings to treat any ERISA
Pension Plan as terminated. No event has occurred or circumstance exists that
may constitute grounds under Section 4042 of ERISA for the termination of, or
appointment of a trustee to administer, any Promistar Pension Plan.
(e) Except as disclosed in Section 5.17 of the Promistar
Disclosure Memorandum, no Promistar Company has any liability for retiree health
and life benefits under any of the Promistar Benefit Plans other than health
continuation coverage required by the Consolidated Omnibus Budget Reconciliation
Act of 1985 as amended and Sections 601 through 608 of ERISA ("COBRA") or by any
similar state law, and there are no restrictions on the rights of such Promistar
Company to amend or terminate any such plan without incurring any liability
thereunder, which liability is reasonably likely to have a Material Adverse
Effect on Promistar. There is no pending or, to the Knowledge of Promistar,
threatened complaint, claim (other than a routine claim for benefits submitted
by participants or beneficiaries), proceeding, audit or investigation of any
kind in or before any court, tribunal, or governmental agency with respect to
any Promistar Benefit Plan.
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(f) Except as disclosed in Section 5.17 of the Promistar
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Promistar Company
from any Promistar Company under any Promistar Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Promistar Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Promistar.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Promistar Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the Promistar Financial Statements to the
extent required by and in accordance with GAAP.
(h) Except as disclosed in Section 5.17(h) of the Promistar
Disclosure Memorandum, all contributions and payments made or accrued with
respect to all Promistar Benefit Plans are deductible under Sections 404 or 162
of the Internal Revenue Code and, if not made, are properly reflected on the
financial statements of the Promistar Companies and ERISA Affiliates. No event
has occurred or circumstance exists that could result in an increase in premium
costs of insured or self-insured Promistar Benefit Plans that would have a
Material Adverse Effect on Promistar. Levels of insurance reserves, trust
funding and accrued liabilities with respect to all ERISA Benefit Plans (to
which such reserves or liabilities do or should apply) are reasonable and
sufficient to provide for all incurred but unreported claims and any retroactive
or prospective premium adjustments.
5.18 State Takeover Laws. Promistar has taken all action required
to be taken by it in order to exempt this Agreement and the Stock Option
Agreement and the transactions contemplated hereby and thereby from, and the
Agreement and the Stock Option Agreement and the transactions contemplated
hereby and thereby are exempt from the requirements of any "moratorium,"
"control share," "fair price" or other anti-takeover Laws of the Commonwealth of
Pennsylvania.
5.19 Opinion of Financial Advisor. Promistar has received the
written opinion of Keefe, Bruyette and Woods, Inc., its financial advisor, to
the effect that, as of the date hereof, the consideration to be received by the
Promistar shareholders, based upon and subject to the limitations set forth in
such opinion, is fair to the Promistar shareholders from a financial point of
view.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FNB
FNB hereby represents and warrants to Promistar as follows:
6.1 Organization, Standing, and Power. FNB is a corporation duly
organized, validly existing, and in active status under the laws of the State of
Florida, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. FNB is duly
qualified or licensed to transact business as a foreign corporation and is in
good standing in each jurisdiction where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FNB.
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6.2 Authority; No Breach By Agreement.
(a) FNB has the corporate power and authority necessary to execute
and deliver this Agreement and, subject to the approval and adoption of this
Agreement by the shareholders of FNB and to such Consents of Regulatory
Authorities as required under applicable law, to perform its obligations under
this Agreement and consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement by FNB and the
consummation by FNB of the transactions contemplated herein, including the
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of FNB, subject to the approval of this Agreement
by its shareholders as contemplated by Section 8.1 of this Agreement. Subject to
such requisite shareholder approval (and assuming due authorization, execution
and delivery by Promistar) and to such Consents of Regulatory Authorities as
required by applicable law, this Agreement represents a legal, valid, and
binding obligation of FNB, enforceable against FNB in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by FNB,
nor the consummation by FNB of the transactions contemplated hereby, nor
compliance by FNB with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of FNB's Articles of Incorporation or
Bylaws, or, (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any FNB
Company under, any Contract or Permit of any FNB Company, where such Default or
Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB, or, (iii)
subject to receipt of the requisite Consents referred to in Section 9.1(a), (b)
and (c) of this Agreement, violate any Order, or to its Knowledge, any Law
applicable to any FNB Company or any of their respective material Assets which
will have a Material Adverse Effect on FNB.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of Nasdaq, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FNB, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
FNB of the Merger and the other transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of FNB consists of
(i) 100,000,000 shares of FNB Common Stock, of which 25,556,384 shares were
issued and outstanding as of the date of this Agreement and (ii) 20,000,000
shares of FNB Preferred Stock, of which 163,667 shares were issued and
outstanding as of the date of this Agreement ("FNB Capital Stock"). All of the
issued and outstanding shares of FNB Capital Stock are, and all of the FNB
Common Stock to be issued in exchange for Promistar Common Stock upon
consummation of the Merger will be authorized and reserved for issuance prior to
the Effective Time and, when issued in accordance with the terms of this
Agreement, will be, duly and validly issued and outstanding and fully paid and
nonassessable under the FBCA. None of the outstanding shares of FNB Capital
Stock has been, and none of the shares of FNB Common Stock to be issued in
exchange for shares of Promistar Common Stock upon consummation of the Merger
will be, issued in violation of any preemptive rights of the current or past
shareholders of FNB.
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6.4 FNB Subsidiaries. Except as disclosed in Section 6.4 of the
FNB Disclosure Memorandum, the list of Subsidiaries of FNB filed by FNB with its
Annual Report on Form 10-K for the fiscal year ended December 31, 2000, is a
true and complete list of all of the FNB Subsidiaries as of the date of this
Agreement. Except as disclosed in Section 6.4 of the FNB Disclosure Memorandum,
FNB or one of its Subsidiaries owns all of the issued and outstanding shares of
capital stock of each FNB Subsidiary. No equity securities of any FNB Subsidiary
are or may become required to be issued (other than to another FNB Company) by
reason of any Rights, and there are no Contracts by which any FNB Subsidiary is
bound to issue (other than to another FNB Company) additional shares of its
capital stock or Rights or by which any FNB Company is or may be bound to
transfer any shares of the capital stock of any FNB Subsidiary (other than to
another FNB Company). There are no Contracts relating to the rights of any FNB
Company to vote or to dispose of any shares of the capital stock of any FNB
Subsidiary. All of the shares of capital stock of each FNB Subsidiary held by a
FNB Company are fully paid and nonassessable under the applicable corporation
Law of the jurisdiction in which such Subsidiary is incorporated or organized
(except, in the case of Subsidiaries that are national banks, for the assessment
contemplated by 12 U.S.C. ss. 55), and are owned by the FNB Company free and
clear of any Lien. Each FNB Subsidiary is either a bank, a corporation or a
limited liability company, and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each FNB Subsidiary is duly qualified or licensed to transact
business as a foreign corporation and is in good standing in each jurisdiction
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB. Each
FNB Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder.
6.5 SEC Filings; Financial Statements.
(a) FNB has filed and made available to Promistar accurate and
complete copies of all forms, reports, and documents required to be filed by FNB
with the SEC since January 1, 1996 (collectively, the "FNB SEC Reports"). The
FNB SEC Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the 1933 Act and the 1934 Act, as the case may
be, and (ii) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such FNB SEC Reports or necessary in order to make the
statements in such FNB SEC Reports, in light of the circumstances under which
they were made, not misleading. Except for FNB Subsidiaries that are registered
as brokers, dealers, investment advisers, or associated persons thereof, none of
the FNB Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the FNB Financial Statements (including, in each case,
any related notes) contained in the FNB SEC Reports, including any FNB SEC
Reports filed after the date of this Agreement until the Effective Time,
complied, and each FNB SEC Report filed after the date of this Agreement until
the Effective Time will comply, as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
or will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC), and fairly presented the consolidated financial position
of FNB and its Subsidiaries at the respective dates and the consolidated results
of its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring adjustments which were not or are not expected to be material in
amount.
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6.6 Absence of Certain Changes or Events. Since March 31, 2001,
(i) there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB, and (ii) the FNB Companies have not taken any action, or failed
to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of FNB
provided in Articles 7 or 8 of this Agreement.
6.7 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of
the FNB Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 2000, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on FNB, and all Tax Returns filed are complete and accurate in
all material respects. All Taxes shown on filed Tax Returns have been paid.
There is no audit examination, deficiency, or refund Litigation with respect to
any Taxes that is reasonably likely to result in a determination that would
have, individually or in the aggregate, a Material Adverse Effect on FNB, except
as reserved against in the FNB Financial Statements delivered prior to the date
of this Agreement. All Taxes and other liabilities due with respect to completed
and settled examinations or concluded Litigation have been paid.
(b) Adequate provision for any Taxes due or, to the knowledge of
FNB, to become due for any of the FNB Companies for the period or periods
through and including the date of the respective FNB Financial Statements has
been made and is reflected on such FNB Financial Statements.
(c) Deferred Taxes of the FNB Companies have been adequately
provided for in the FNB Financial Statements.
(d) To the Knowledge of FNB, each of the FNB Companies is in
compliance with, and its records contain all information and documents
(including properly completed Internal Revenue Service Forms W-9) necessary to
comply with, all applicable information reporting and Tax withholding
requirements under federal, state and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FNB.
6.8 Compliance With Laws. FNB is duly registered as a financial
holding company under the BHC Act. Each FNB Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB. None of the FNB Companies is presently in Default under
or in violation of any such Permit, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
FNB. No FNB Company:
(i) is in violation of any Laws, Orders, or Permits applicable to
its business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB; or
(ii) has received any notification or communication from any agency
or department of federal, state, or local government or any Regulatory Authority
or the staff thereof (i) asserting that any FNB Company is not in compliance
with any of the Laws or Orders which such governmental authority or
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Regulatory Authority enforces, where such noncompliance is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FNB, or
(iii) requiring any FNB Company to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment, or memorandum
of understanding, or to adopt any board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies, its management or the
payment of dividends.
6.9 Assets. Except as disclosed in Section 6.9 of the FNB
Disclosure Memorandum, the FNB Companies have good and marketable title, free
and clear of all Liens (except for those Liens which are not likely to have a
Material Adverse Effect on FNB or its Subsidiaries taken as a whole), to all of
their respective Assets. All material tangible properties used in the businesses
of the FNB Companies are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with FNB's past
practices. All Assets which are material to FNB's business on a consolidated
basis, held under leases or subleases by any of the FNB Companies, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. The FNB Companies currently maintain
insurance in amounts, scope, and coverage as disclosed in Section 6.9 of the FNB
Disclosure Memorandum. None of the FNB Companies has received written notice
from any insurance carrier that (i) such insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. Except as
disclosed in Section 6.9 of the FNB Disclosure Memorandum, to the Knowledge of
FNB there are presently no occurrences giving rise to a claim under such
policies of insurance and no notices have been given by any FNB Company under
such policies.
6.10 Legal Proceedings. Except as disclosed in Section 6.10 of the
FNB Disclosure Memorandum, there is no Litigation instituted or pending, or, to
the Knowledge of FNB, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any FNB Company, or against any Asset, employee
benefit plan, interest, or right of any of them, that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any FNB Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB.
6.11 Reports. Since January 1, 1996, or the date of organization if
later, each FNB Company has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB). As of its
respective date, each such report and document, including the financial
statements, exhibits, and schedules thereto, (i) complied in all material
respects with all applicable Laws, and (ii) did not, in all material respects,
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, which
untrue statement of material fact or omission to state a material fact is likely
to have, individually, or in the aggregate, a Material Adverse Effect on FNB.
6.12 Statements True and Correct. None of the information supplied
or to be supplied by any FNB Company or any Affiliate thereof for inclusion in
the Registration Statement will, when the
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Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any FNB Company or any Affiliate thereof for inclusion in the Joint
Proxy Statement or any other documents to be filed by FNB or Promistar with the
SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby will, at the respective time such documents are filed, and
with respect to the Joint Proxy Statement, when first mailed to the shareholders
of FNB or Promistar, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Joint Proxy Statement or any amendment thereof or supplement
thereto, at the time of the FNB Shareholders' Meeting or the Promistar
Shareholders' Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the FNB
Shareholders' Meeting or the Promistar Shareholders' Meeting. All documents that
any FNB Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
6.13 Accounting, Tax and Regulatory Matters. No FNB Company or any
Affiliate thereof has taken or agreed to take any action or has any Knowledge of
any fact or circumstance that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a)(2)(D) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
6.14 Environmental Matters.
(a) To the Knowledge of FNB, except as disclosed in Section 6.14
of the FNB Disclosure Memorandum, each FNB Company, its Participation
Facilities, and its Loan Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB.
(b) Except as disclosed in Section 6.14 of the FNB Disclosure
Memorandum, there is no Litigation pending, or, to the Knowledge of FNB,
threatened before any court, governmental agency, or authority or other forum in
which any FNB Company or any of its Loan Properties or Participation Facilities
(or any FNB Company in respect of any such Loan Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving any of its Loan Properties or
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB.
(c) To the Knowledge of FNB, except as disclosed in Section 6.14
of the FNB Disclosure Memorandum, there is no reasonable basis for any
Litigation of a type described above in Section 6.14(b), except such as is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB.
(d) To the Knowledge of FNB, except as disclosed in Section 6.14
of the FNB Disclosure Memorandum, during the period of (i) FNB's or any of its
Subsidiaries' ownership or operation of any of their respective properties, (ii)
FNB's or any of its Subsidiaries' participation in the management of any
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Participation Facility, or (iii) FNB's or any of its Subsidiaries' holding a
security interest in a Loan Property, there have been no releases of Hazardous
Material in, on, under, or affecting any Participation Facility or Loan Property
of a FNB Company, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on FNB.
6.15 Outstanding Promistar Common Stock. Except as disclosed in
Section 6.15 of the FNB Disclosure Memorandum, as of the date of this Agreement,
FNB Companies do not beneficially own any shares of Promistar Common Stock for
their own accounts (not including those held in a fiduciary or trust capacity
for, or on behalf of, unaffiliated third parties). During the term of this
Agreement, no FNB Company shall purchase or otherwise acquire beneficial
ownership of any additional Promistar Common Stock except pursuant to the terms
of this Agreement.
6.16 Material Contracts. Except as set forth in the FNB SEC
Reports, no FNB Company is a party to or bound by any "material contract" as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC (each such
contract a "FNB Contract"). With respect to each FNB Contract and except as
disclosed in Section 6.16 of the FNB Disclosure Memorandum: (i) such FNB
Contract is in full force and effect; (ii) no FNB Company is in Default
thereunder; (iii) no FNB Company has repudiated or waived any material provision
of any such FNB Contract; and (iv) no other party to any such FNB Contract is,
to the Knowledge of FNB, in Default in any respect or has repudiated or waived
any material provision thereunder.
6.17 Employee Benefit Plans.
(a) FNB has disclosed in Section 6.17 of the FNB Disclosure
Memorandum, and has delivered or made available to Promistar prior to the
execution of this Agreement copies in each case of: (i) all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including, without limitation, "employee benefit
plans" (as that term is defined in Section 3(3) of ERISA), currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by any FNB
Company or ERISA Affiliate (as defined below) thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "FNB Benefit Plans"); (ii) all insurance
contracts, annuity contracts and other funding vehicles relating to the FNB
Benefit Plans; (iii) all material agreements entered into with service providers
in connection with the FNB Benefit Plans; and (iv) summary plan descriptions,
favorable Internal Revenue Service determination letters for each FNB ERISA Plan
intended to be qualified under Section 401(a) of the Internal Revenue Code and
the most recently available Form 5500 annual reports, certified financial
statement and actuarial reports for the FNB Benefit Plans. Any of the FNB
Benefit Plans which is an "employee pension benefit plan" (as that term is
defined in Section 3(2) of ERISA), is referred to herein as a "FNB ERISA Plan."
Each FNB ERISA Plan which is also a "defined benefit plan" (as defined in
Section 4140) of the Internal Revenue Code) is referred to herein as a "FNB
Pension Plan." No FNB Pension Plan is or has been a multiemployer plan within
the meaning of Section 3(37) of ERISA. No FNB Benefit Plan is a multiple
employer plan within the meaning of Section 413(c) of the Internal Revenue Code
or is a multiple employer welfare arrangement within the meaning of Section
3(40) of ERISA. Since the date the foregoing documents were delivered or made
available to Promistar, no amendments to any FNB Benefit Plan have been made or
will be made prior to the Closing Date. Except as disclosed in Section 6.17 of
the FNB Disclosure Memorandum, FNB does not maintain any unwritten FNB Benefit
Plans. No FNB Company nor any ERISA Affiliate is a party to a collective
bargaining agreement. FNB has disclosed in Section 6.17 of the FNB Disclosure
Memorandum a complete and accurate list of (A) each ERISA
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Affiliate, and (B) each FNB ERISA Plan that has not been adopted by each ERISA
Affiliate that maintains a separate payroll.
(b) Except as disclosed in Section 6.17 of the FNB Disclosure
Memorandum, all FNB Benefit Plans are in compliance with the applicable terms of
ERISA, the Internal Revenue Code, COBRA (as defined below) and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB, and each FNB
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and FNB is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. Except as
disclosed in Section 6.17 of the FNB Disclosure Memorandum, to the Knowledge of
FNB, no FNB Company nor any ERISA Affiliate has any liability to the Internal
Revenue Service with respect to any FNB Benefit Plan, including any liability
imposed by Chapter 43 of the Internal Revenue Code, and no FNB Company has
engaged in a transaction with respect to any FNB Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
any FNB Company to a Tax imposed by either Section 4975 of the Internal Revenue
Code or Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB.
(c) Except as disclosed in Section 6.17 of the FNB Disclosure
Memorandum, no FNB Pension Plan has any "unfunded current liability" (as that
term is defined in Section 302(d)(8)(A) of ERISA) and the fair market value of
the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Except as disclosed in Section 6.17 of the FNB
Disclosure Memorandum, since the date of the most recent actuarial valuation,
there has been (i) no material change in the financial position of any FNB
Pension Plan, (ii) no change in the actuarial assumptions with respect to any
FNB Pension Plan, and (iii) no increase in benefits under any FNB Pension Plan
as a result of plan amendments or changes in applicable Law which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
FNB or materially adversely affect the funding status of any such plan. Neither
any FNB Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any FNB
Company, or the single-employer plan of any entity which is considered one
employer with FNB under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA, which is
reasonably likely to have a Material Adverse Effect on FNB. No FNB Company has
provided, or is required to provide, security to a FNB Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by any FNB Company with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which liability is reasonably likely to have a Material Adverse
Effect on FNB. No FNB Company has incurred any withdrawal liability with respect
to a multiemployer plan under Subtitle B of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate), which liability is
reasonably likely to have a Material Adverse Effect on FNB. 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 FNB Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof. No FNB Company nor ERISA Affiliate has filed a notice
of intent to terminate any ERISA Pension Plan or has adopted any amendment to
treat such Plan as terminated. The Pension Benefit Guaranty Corporation has not
instituted proceedings to treat any ERISA Pension Plan as
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terminated. No event has occurred or circumstance exists that may constitute
grounds under Section 4042 of ERISA for the termination of, or appointment of a
trustee to administer, any FNB Pension Plan.
(e) Except as disclosed in Section 6.17 of the FNB Disclosure
Memorandum, no FNB Company has any liability for retiree health and life
benefits under any of the FNB Benefit Plans other than health continuation
coverage required by the Consolidated Omnibus Budget Reconciliation Act of 1985
as amended and Sections 601 through 608 of ERISA ("COBRA") or by any similar
state law, and there are no restrictions on the rights of such FNB Company to
amend or terminate any such plan without incurring any liability thereunder,
which liability is reasonably likely to have a Material Adverse Effect on FNB.
There is no pending or, to the Knowledge of FNB, threatened complaint, claim
(other than a routine claim for benefits submitted by participants or
beneficiaries), proceeding, audit or investigation of any kind in or before any
court, tribunal, or governmental agency with respect to any FNB Benefit Plan.
(f) Except as disclosed in Section 6.17 of the FNB Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any FNB Company from
any FNB Company under any FNB Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any FNB Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, where such
payment, increase, or acceleration is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on FNB.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any FNB Company and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the FNB Financial Statements to the extent required
by and in accordance with GAAP.
(h) All contributions and payments made or accrued with respect to
all FNB Benefit Plans are deductible under Sections 404 or 162 of the Internal
Revenue Code and, if not made, are properly reflected on the financial
statements of the FNB Companies and ERISA Affiliates. No event has occurred or
circumstance exists that could result in an increase in premium costs of insured
or self-insured FNB Benefit Plans that would have a Material Adverse Effect on
FNB. Levels of insurance reserves, trust funding and accrued liabilities with
respect to all ERISA Benefit Plans (to which such reserves or liabilities do or
should apply) are reasonable and sufficient to provide for all incurred but
unreported claims and any retroactive or prospective premium adjustments.
6.18 Opinion of Financial Advisor. FNB has received the written
opinion of The Robinson-Humphrey Company, LLC, its financial advisor, to the
effect that, as of the date hereof, the consideration to be paid to the
Promistar shareholders, based upon and subject to the limitations set forth in
such opinion, is fair to the FNB shareholders from a financial point of view.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Mutual Covenants. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, except as
expressly contemplated by this Agreement, (i) without the prior written consent
of Promistar (which consent shall not be unreasonably withheld or delayed), FNB
will not, and will cause each of its Subsidiaries not to, and (ii) without the
prior written consent of FNB
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(which consent shall not be unreasonably withheld or delayed), Promistar will
not, and will cause each of its Subsidiaries not to:
(a) take any action that would (i) adversely affect the ability of
any Party to obtain any necessary approvals of any Regulatory Authorities
required for the transactions contemplated hereby or (ii) adversely affect its
ability to perform any of its material obligations under this Agreement; or
(b) except as set forth on Section 7.1(b) of such Party's
Disclosure Memorandum, (i) enter into or amend any written employment, severance
or similar agreements or arrangements with any of its directors or executive
officers, (ii) enter into or amend any material written employment, severance or
similar agreements or arrangements with any of its officers or employees, or
(iii) grant any salary or wage increase or increase any employee benefit
(including incentive or bonus payments), except for (A) normal individual
increases in compensation to employees in the ordinary course of business
consistent with past practice or (B) other changes as are provided for herein or
as may be required by law or to satisfy contractual obligations existing as of
the date hereof or additional grants of awards to newly hired employees
consistent with past practice; provided, however, that each officer and employee
of Promistar entitled, pursuant to either Promistar's Key Employee Incentive
Compensation Plan of 1996 or Promistar's Annual Management Incentive Plan, to
receive a bonus at the end of the fiscal year in which the Closing occurs, shall
be paid a pro rata portion of such bonus at the Effective Time; or
(c) except as set forth on Section 7.1(c) of such Party's
Disclosure Memorandum, enter into or amend (except as may be required by
applicable law, to satisfy contractual obligations existing as of the date
hereof or amendments which, either individually or in the aggregate, would not
reasonably be expected to result in a material liability to FNB, Promistar or
their respective Subsidiaries) 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 the vesting or exercise of any benefits payable
thereunder; or
(d) amend its Articles of Incorporation or Bylaws; or
(e) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP; or
(f) (i) knowingly take any action that would, or would be
reasonably likely to, prevent or impede the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code or for
"pooling of interests" accounting treatment under GAAP; or (ii) knowingly take
any action that is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, (B) any
of the conditions to the Merger set forth in Article 9 not being satisfied or
(C) a material violation of any provision of this Agreement except, in each
case, as may be required by applicable law; or
(g) agree or commit to do anything prohibited by this Section 7.1.
7.2 Covenants of Promistar. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, except
as expressly contemplated by this Agreement, Promistar covenants and agrees that
it will not, and will cause each of its Subsidiaries not to, do any of the
following without the prior consent (except as specifically provided otherwise
in this Agreement) of FNB:
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(a) operate its business other than in the usual, regular and
ordinary course; or
(b) fail to use its reasonable best efforts to preserve intact its
business organization and Assets and maintain its rights and franchises; or
(c) fail to use its reasonable best efforts to maintain its
current employee relationships; or
(d) make any unsecured loan or other extension of credit to any
Person if, immediately after making such loan or extension of credit, such
Person would be indebted to the Promistar Companies, collectively, in an
aggregate amount in excess of $3,000,000, or make any fully secured loan to any
Person (except for loans secured by a first mortgage on single family
owner-occupied real estate and except for any loan to any Person who has
received from Promistar a commitment for a loan or extension of credit prior to
the date of this Agreement) if, immediately after making such loan, such Person
would be indebted to the Promistar Companies, collectively, in an aggregate
amount in excess of $5,000,000 (in either case FNB shall object thereto within
two business days, and the failure to provide a written objection within two
business days shall be deemed as the approval of FNB to make such loan or extend
such credit); or
(e) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Promistar Company to another
Promistar Company) in excess of an aggregate of $1,000,000 (for the Promistar
Companies on a consolidated basis) except in the ordinary course of the business
of Promistar Subsidiaries consistent with past practices (it being understood
and agreed that the incurrence of indebtedness in the ordinary course of
business shall include, without limitation, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank, and entry
into repurchase agreements fully secured by U.S. government or agency
securities, but shall not include advances from the Federal Home Loan Bank), or
impose, or suffer the imposition, on any Asset of any Promistar Company of any
Lien or permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of the date
hereof that are disclosed in the Promistar Disclosure Memorandum); or
(f) except as disclosed in Section 7.2(f) of the Promistar
Disclosure Memorandum, repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of Promistar; or
(g) except for this Agreement, or pursuant to the Stock Option
Agreement or pursuant to the exercise of stock options outstanding as of the
date hereof and pursuant to the terms thereof in existence on the date hereof,
or as disclosed in Section 7.2(g) of the Promistar Disclosure Memorandum, issue,
sell, pledge, encumber, authorize the issuance of, enter into any Contract to
issue, sell, pledge, encumber, or authorize the issuance of, or otherwise permit
to become outstanding, any additional Promistar Common Shares or any other
capital stock of any Promistar Company, or any stock appreciation rights, or any
option, warrant, conversion, or other right to acquire any such stock, or any
security convertible into any such stock; or
(h) adjust, split, combine, or reclassify any capital stock of any
Promistar Company or issue or authorize the issuance of any other securities in
respect of or in substitution for Promistar Common Shares, or sell, lease,
mortgage, or otherwise dispose of or otherwise encumber (i) any shares of
capital stock of any Promistar Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another Promistar Company) or (ii) any Asset
other than in the ordinary course of business for reasonable and adequate
consideration; or
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(i) except for purchases of United States Treasury securities or
United States Government agency securities, which in either case have maturities
of five years or less, and except as disclosed in Section 7.2(i) of the
Promistar Disclosure Memorandum, purchase any securities or make any material
investment, either by purchase of stock or securities, contributions to capital,
Asset transfers, or purchase of any Assets, in any Person other than a wholly
owned Promistar Subsidiary, or otherwise acquire direct or indirect control over
any Person, other than in connection with (i) foreclosures in the ordinary
course of business, (ii) acquisitions of control by a depository institution
Subsidiary in its fiduciary capacity, or (iii) the creation of new wholly owned
Subsidiaries organized to conduct or continue activities otherwise permitted by
this Agreement in which case FNB shall object thereto within two business days,
and the failure to provide written objection within two business days shall be
deemed to be approval of FNB to make such purchase or investment; or
(j) except as disclosed in Section 7.2(j) of the Promistar
Disclosure Memorandum, commence any Litigation other than in accordance with
past practice or settle any Litigation involving any liability of any Promistar
Company for material money damages or restrictions upon the operations of any
Promistar Company; or
(k) except in the ordinary course of business, modify, amend, or
terminate any material Contract other than renewals without material adverse
change of terms, or waive, release, compromise, or assign any material rights or
claims; or
(l) except as disclosed in Section 7.2(l) of the Promistar
Disclosure Memorandum, except for transactions in the ordinary course of
business consistent with past practice, make any investment in excess of
$250,000 either by purchase of stock or securities, contributions to capital,
property transfers, or purchase of any property or assets of any other
individual, corporation or other entity other than a wholly owned Subsidiary
thereof; or
(m) sell, transfer, mortgage, encumber or otherwise dispose of any
of its material properties or assets to any individual, corporation or other
entity other than a direct or indirect wholly owned Subsidiary, or cancel,
release or assign any indebtedness to any such Person or any claims held by any
such Person, except in the ordinary course of business consistent with past
practice or pursuant to contracts or agreements in force at the date of this
Agreement; or
(n) agree or commit to do anything prohibited by this Section 7.2.
7.3 Covenants of FNB. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, FNB
covenants and agrees that it shall continue to conduct its business and the
business of FNB Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the FNB Common Stock and the business prospects
of the FNB Companies; provided, that nothing in this Agreement shall prevent any
FNB Company from (i) discontinuing or disposing of any of its Assets or business
or (ii) acquiring all or any portion of the business of any other entity, if
such action is, in the judgment of FNB, desirable in the conduct of the business
of FNB and its Subsidiaries.
7.4 Dividends.
(a) Promistar covenants and agrees that it shall not make,
declare, or pay any dividend or make any other distribution in respect of
Promistar's capital stock, except for (i) the acquisition of Promistar Common
Shares by Promistar in a fiduciary or trust capacity in the ordinary course of
business, (ii) regular and ordinary cash dividends on Promistar Common Shares in
an amount per share not to
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exceed the per share amount of Promistar's most recent cash dividend as of the
date of this Agreement, and (iii) dividends from wholly owned Subsidiaries of
Promistar to Promistar or to another wholly owned Subsidiary of Promistar.
(b) FNB covenants and agrees that it shall not make, declare, or
pay any dividend or make any other distribution in respect of FNB's capital
stock, except for (i) quarterly cash dividends on FNB Common Stock in an amount
not to exceed the greater of (A) the rate payable on such FNB Common Stock as of
the date of this Agreement or (B) an amount equal to 40% of the after-tax net
income of FNB for FNB's fiscal quarter immediately preceding the record date for
such dividend, (ii) dividends payable on FNB Preferred Stock at a rate not
exceeding the rate provided for in the terms thereof, and (iii) dividends from
wholly owned Subsidiaries of FNB to FNB or to another wholly owned Subsidiary of
FNB, as applicable.
(c) After the date of this Agreement, each Party covenants and
agrees to coordinate with the other Party the declaration of any dividends in
respect of Promistar Common Stock and FNB Common Stock and the record dates and
payment dates relating thereto, it being the intention of the Parties that
holders of Promistar Common Stock or FNB Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with
respect to their shares of Promistar Common Stock and/or FNB Common Stock and
any shares of Promistar Common Stock any such holder receives in exchange
therefor in the Merger.
7.5 Adverse Changes In Condition. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable best efforts to prevent or promptly
to remedy the same.
7.6 Reports. Each Party and its respective Subsidiaries shall file
all reports required to be filed by each of them with Regulatory Authorities
between the date of this Agreement and the Effective Time and shall deliver to
the other Party copies of all such reports promptly after the same are filed. If
financial statements are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material and except for the absence of certain footnote information in the
unaudited financial statements). As of their respective dates, such reports
filed with the SEC will comply in all material respects with the Securities Laws
and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any financial statements contained in any other reports to
another Regulatory Authority shall be prepared in accordance with the Laws
applicable to such reports.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Shareholder Approval.
(a) As soon as practicable after execution of this Agreement (in
no event later than August 15, 2001), FNB shall file the Registration Statement
with the SEC, and shall use its reasonable best efforts to cause the
Registration Statement to become effective under the 1933 Act and take any
action required to be taken under the applicable state blue sky or securities
Laws in connection with the issuance of the shares of FNB Common Stock upon
consummation of the Merger. Promistar shall furnish all information concerning
it and the holders of its capital stock as FNB may reasonably request in
connection with such action.
(b) Each of the Parties shall take, in accordance with applicable
Law and its respective articles of incorporation and bylaws, all action
necessary to convene, respectively, an appropriate meeting of the shareholders
of such Party, each such meeting to be held as promptly as practical after the
date hereof, for the purpose of voting upon approval of this Agreement and such
other related matters as each deems appropriate. Except as disclosed in Section
8.1(b) of the Promistar Disclosure Memorandum, in connection with such
shareholders' meetings, (i) each of the Parties shall mail the Joint Proxy
Statement to its respective shareholders, (ii) the Parties shall furnish to each
other all information concerning them that they may reasonably request in
connection with the Registration Statement and the Joint Proxy Statement, (iii)
the Board of Directors of each Party shall recommend (subject to compliance with
their fiduciary duties under applicable law as advised by counsel) to such
Party's shareholders the approval of this Agreement, (iv) each member of the
Board of Directors of each Party shall vote all of the shares of each of the
Parties beneficially owned by such director in favor of the approval of this
Agreement, and (v) the Board of Directors and officers of each Party shall
(subject to compliance with their fiduciary duties under applicable law as
advised by counsel) use their reasonable best efforts to obtain such
shareholders' approval.
8.2 Applications. FNB shall use its reasonable best efforts to
prepare and file, not later than August 15, 2001, applications with all
Regulatory Authorities having jurisdiction over the transactions contemplated by
this Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement and thereafter use its reasonable
best efforts to cause the Merger to be consummated as expeditiously as possible,
and Promistar shall cooperate in the preparation and, where appropriate, filing
of such applications. Further, FNB shall, prior to the Closing, prepare and file
with the National Association of Securities Dealers the required documents and
make payment of the required fees for the shares of FNB Common Stock to be
issued to holders of Promistar Common Stock in connection with the Merger.
8.3 Filings With State Offices. Upon the terms and subject to the
conditions of this Agreement, FNB and Promistar shall, in connection with the
Closing, execute the Florida Articles of Merger and the Pennsylvania Articles of
Merger, and FNB shall cause the Florida Articles of Merger and the Pennsylvania
Articles of Merger to be filed with the Florida Secretary of State and the
Pennsylvania Secretary of State, respectively.
8.4 Agreement as to Efforts to Consummate. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including the use of their respective reasonable best efforts to
lift or rescind any Order adversely affecting its ability to consummate the
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transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its reasonable
best efforts to obtain all Permits and Consents of all third parties and
Regulatory Authorities necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.5 Access to Information; Confidentiality.
(a) From the date hereof to the earlier to occur of the Effective
Time or the termination of this Agreement pursuant to Article 10 hereof, upon
reasonable notice and subject to applicable Laws, FNB and Promistar shall afford
each other, and each other's accountants, counsel, and other representatives,
during normal working hours for the period of time prior to the Effective Time
or termination of this Agreement pursuant to Article 10 hereof, reasonable
access to all of its and its Subsidiaries' properties, books, contracts,
commitments, and records and, during such period, each shall furnish promptly to
the other Party (i) a copy of each report, schedule, and other document filed or
received by it or any of its Subsidiaries during such period pursuant to the
requirements of the Securities Laws, (ii) a copy of all filings made with any
Regulatory Authorities or other governmental entities in connection with the
transactions contemplated by this Agreement and all written communications
received from such Regulatory Authorities and governmental entities related
thereto, and (iii) all other information concerning either Party or its
respective Subsidiaries' business, properties and personnel as the other Party
may reasonably request, including reports of condition filed with Regulatory
Authorities. In this regard, without limiting the generality of the foregoing,
FNB and its Subsidiaries and Affiliates shall notify Promistar promptly upon the
receipt by it of any comments from the SEC, or its staff, and of any requests by
the SEC for amendments or supplements to the Registration Statement or for
additional information and will supply Promistar with copies of all
correspondence between it and its representatives, on the one hand, and the SEC
or the members of its staff or any other government official, on the other hand,
with respect to the Registration Statement. Each Party hereto shall, and shall
cause its advisors and representatives to (x) conduct its investigation in such
a manner which will not unreasonably interfere with the normal operations,
customers or employee relations of the other and shall be in accordance with
procedures established by the Parties having the due regard for the foregoing,
and (y) refrain from using for any purposes other than as set forth in this
Agreement, and shall treat as confidential, all information obtained by each
hereunder or in connection herewith and not otherwise known to them prior to the
Effective Time.
(b) FNB, the FNB Companies and their Affiliates will hold, and
will use their best efforts to cause their officers, directors, employees,
consultants, advisors, representatives, and agents to hold, in confidence,
unless compelled by judicial or other legal process, all confidential documents
and information furnished by Promistar to FNB, any FNB Company, or their
Affiliates in connection with the transactions contemplated by this Agreement,
including information provided in accordance with this Section 8.5, except to
the extent that such information can clearly be demonstrated by FNB to have been
(i) previously known on a nonconfidential basis by FNB, (ii) in the public
domain other than as a result of disclosure by FNB, any FNB Company, or any of
their Affiliates, or (iii) later lawfully acquired by FNB from sources other
than Promistar; provided, however, that FNB may disclose such information to its
officers, directors, employees, consultants, advisors, representatives, and
agents in connection with the transactions contemplated by this Agreement only
to the extent that such Persons who, in FNB's reasonable judgment, need to know
such information for the purpose of evaluating Promistar (provided that such
Persons shall be informed of the confidential nature of such information and
shall agree to be bound by the terms of this provision) and, in any event, such
disclosures shall be made only to the extent necessary for such purposes. If
this Agreement is terminated in accordance with Article 10 hereof, FNB, the FNB
Companies and their Affiliates shall maintain the confidence of such information
and will use their best efforts to cause its officers, directors, employees,
consultants, advisors, representatives, and
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agents to, return to Promistar all documents and other materials, and all
copies made thereof, obtained by FNB, any FNB Company, or any of their
Affiliates in connection with this Agreement that are subject to this Section
8.5.
(c) Promistar and its Affiliates will hold, and will use their
best efforts to cause their officers, directors, employees, consultants,
advisors, representatives, and agents to hold, in confidence, unless compelled
by judicial or other legal process, all confidential documents and information
concerning FNB furnished to Promistar or its Affiliates in connection with the
transactions contemplated by this Agreement, including information provided in
accordance with this Section 8.5, except to the extent that such information can
clearly be demonstrated by Promistar to have been (i) previously known on a
nonconfidential basis by Promistar, (ii) in the public domain other than as a
result of disclosure by Promistar or any of its Affiliates, or (iii) later
lawfully acquired by Promistar from sources other than FNB; provided, however,
that Promistar may disclose such information to its officers, directors,
employees, consultants, advisors, representatives, and agents in connection with
the transactions contemplated by this Agreement only to the extent that such
Persons who, in Promistar's reasonable judgment, need to know such information
for the purpose of evaluating FNB (provided that such Persons shall be informed
of the confidential nature of such information and shall agree to be bound by
the terms of this provision) and, in any event, such disclosures shall be made
only to the extent necessary for such purposes. If this Agreement is terminated
in accordance with Article 10 hereof, Promistar and its Affiliates shall
maintain the confidence of such information and will, and will use their best
efforts to cause its officers, directors, employees, consultants, advisors,
representatives, and agents to, return to FNB all documents and other materials,
and all copies made thereof, obtained by Promistar or any of its Affiliates in
connection with this Agreement that are subject to this Section 8.5.
8.6 Press Releases. Prior to the Effective Time, Promistar and FNB
shall, prior to any release or disclosure, consult with each other as to the
form and substance of any press release or other public disclosure materially
related to this Agreement or any other transaction contemplated hereby;
provided, that nothing in this Section 8.6 shall be deemed to prohibit any Party
from making any disclosure which its counsel deems necessary or advisable in
order to satisfy such Party's disclosure obligations imposed by Law.
8.7 Current Information. During the period from the date of this
Agreement until the earlier to occur of the Effective Time or termination of
this Agreement pursuant to Article 10 hereof, each of Promistar and FNB shall,
and shall cause its representatives to, confer on a regular and frequent basis
with representatives of the other. Each of Promistar and FNB shall promptly
notify the other of (i) any material change in its business or operations, (ii)
any material complaints, investigations, or hearings (or communications
indicating that the same may be contemplated) of any Regulatory Authority, (iii)
the institution or threat of material Litigation involving such Party, or (iv)
the occurrence, or nonoccurrence, of an event or condition, the occurrence, or
nonoccurrence, of which would be reasonably expected to cause any of such
party's representations or warranties set forth herein to be untrue in any
respect as of the Effective Time; and in each case shall keep the other fully
informed with respect thereto.
8.8 Other Actions. No Party shall, or shall permit any of its
Subsidiaries, if any, to take any action, except in every case as may be
required by applicable Law, that would or is intended to result in (i) any of
its representations and warranties set forth in this Agreement that are
qualified as to materiality being or becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material manner having a Material Adverse Effect, (iii) any of the conditions
set forth in this Agreement not being satisfied or in a violation of any
material provision of this Agreement, or (iv) adversely affecting the ability of
any of them to obtain any of the Consents or Permits from Regulatory Authorities
(unless such action is required by sound banking practice).
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8.9 No Solicitation.
(a) From and after the date of this Agreement and until the
earlier of the termination of this Agreement or the Effective Time, except in
compliance with this Section 8.9, Promistar will not, and will not permit its
directors, officers, employees, investment bankers, attorneys, accountants or
other representatives, agents or Affiliates to, directly or indirectly, (i)
solicit, initiate, or encourage any Acquisition Proposals; (ii) engage in
discussions with third parties, or negotiations concerning, or provide any
non-public information to any person or entity in connection with, any
Acquisition Proposal; or (iii) agree to, approve, recommend or otherwise endorse
or support any Acquisition Proposal. As used herein, the term "Acquisition
Proposal" shall mean any proposal relating to a possible (i) merger,
consolidation or similar transaction involving Promistar or any of its
Subsidiaries (other than a transaction with respect to which an acquisition
agreement has been executed and publicly announced as of the date hereof); (ii)
sale, lease or other disposition, directly or indirectly, involving Promistar or
any of its Subsidiaries representing, in the aggregate, 10% or more of the
Assets of Promistar on a consolidated basis; (iii) issuance, sale or other
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase or
securities convertible into, such securities) representing 10% or more of the
votes attached to the outstanding securities of Promistar; (iv) transaction with
Promistar in which any person shall acquire beneficial ownership (as such term
is defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, 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, 10% or more of the outstanding shares of Promistar
Common Stock; or (v) liquidation, dissolution, recapitalization or other similar
type of transaction with respect to Promistar; or (vi) transaction which is
similar in form, substance or purpose to any of the foregoing transactions;
provided, however, that the term "Acquisition Proposal" shall not include the
Merger and the transactions contemplated hereby. Promistar will, and will direct
all its directors, officers, employees, investment bankers, attorneys,
accountants and other representatives, agents and Affiliates to, immediately
cease any and all existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
(b) Notwithstanding the provisions of Section 8.9(a) above, if a
corporation, limited liability company, limited liability partnership,
partnership, person or other entity or group (a "Third Party") after the date of
this Agreement submits to Promistar's Board of Directors an unsolicited, bona
fide, written Acquisition Proposal, and Promistar's Board of Directors
reasonably determines in good faith, after receipt of advice from outside legal
counsel that the failure to engage in discussions with the Third Party
concerning such Acquisition Proposal would likely cause Promistar's Board of
directors to breach its fiduciary duties to Promistar and its shareholders, and
after consultation with Keefe, Bruyette & Woods, Inc., or any other nationally
recognized investment bank, then, in such case, (i) Promistar may (A) furnish
information about its business to the Third Party under protection of an
appropriate confidentiality agreement containing customary limitations on the
use and disclosure of all non-public written or oral information furnished to
such Third Party, provided that Promistar must contemporaneously furnish to FNB
all such non-public information furnished to the Third Party and (B) negotiate
and participate in discussions and negotiations with such Third Party; and (ii)
if Promistar's Board of Directors determines that such an Acquisition Proposal
is a Superior Proposal (defined below), Promistar's Board of Directors may
(subject to the provisions of this Section 8.9) (A) withdraw or adversely modify
its approval or recommendation of the Merger and recommend such Superior
Proposal or (B) terminate this Agreement, in each case, at any time after the
second business day following delivery of written notice to FNB (a "Notice of
Superior Proposal") advising FNB that Promistar's Board of Directors has
received a Superior Proposal, identifying the Third Party and specifying the
material terms and conditions of such Superior Proposal. Promistar may take any
of the foregoing actions pursuant to the preceding sentence if, and only if, an
Acquisition Proposal that was a Superior Proposal continues to be a Superior
Proposal in light of any improved proposal submitted by FNB, considered in good
faith by Promistar and with the advice of a
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financial advisor of nationally recognized reputation, including, without
limitation, Keefe, Bruyette & Woods, Inc., prior to the expiration of the two
business day period specified in the preceding sentence. Promistar shall provide
FNB with a final written notice, at least twenty-four (24) hours before
accepting any Superior Proposal. For purposes of this Agreement, "Superior
Proposal" means any unsolicited, bona fide, written Acquisition Proposal for
consideration consisting of cash (not subject to a financing contingency) and/or
securities, and otherwise on terms which Promistar's Board of Directors
determines (based on the written advice of a financial advisor of nationally
recognized reputation, including, without limitation, Keefe, Bruyette & Woods,
Inc.) are more favorable to Promistar's shareholders from financial point of
view than the Merger (or other revised proposal submitted by FNB as contemplated
above), after consultation with its outside legal counsel and that the Third
Party is reasonably likely to consummate the Superior Proposal on the terms
proposed. Nothing contained herein shall prohibit Promistar from taking, and
disclosing to its shareholders, a position required by Rule 14d-9(e) under the
Exchange Act prior to the second business day following FNB's receipt of a
Notice of Superior Proposal, provided that Promistar does not withdraw or modify
its position with respect to the Merger or approve or recommend an Acquisition
Proposal.
(c) Promistar will notify FNB immediately, and in any event within
24 hours, if (i) a bona fide Acquisition Proposal is made or is modified in any
respect (including any written material provided by the offeror, the principal
terms and conditions of any such Acquisition Proposal or modification thereto
and the identity of the offeror) or (ii) Promistar furnishes non-public
information to, or enters into discussions or negotiations with respect to an
acquisition Proposal with, any Third Party.
(d) In addition to the obligations of Promistar set forth in
paragraph (a), (b) and (c) of this Section 8.9, Promistar, as promptly as
practicable, will advise FNB orally and in writing of any request for
information which Promistar reasonably believes could lead to an Acquisition
Proposal or of any Acquisition Proposal, and the material terms and conditions
of such request, Acquisition Proposal or inquiry, Promistar will keep FNB
informed in all material respects of the status of any such request, Acquisition
Proposal or inquiry. In addition to the foregoing, Promistar will (i) provide
FNB with prior written notice of any meeting of Promistar's Board of Directors
(or any committee thereof) at which Promistar's Board of Directors is expected
to consider a Superior Proposal and (ii) provide FNB with prior written notice
of a meeting of Promistar's Board of Directors (or any committee thereof) at
which Promistar's Board of Directors is expected to recommend a Superior
Proposal to its shareholders and together with such notice a copy of the
definitive documentation relating to such Superior Proposal to the extent such
documentation is then available (and otherwise provide such definitive
documentation as soon as available).
(e) It is understood and agreed that, without limitation of
Promistar's obligations hereunder, any violation of this Section 8.9 by any
director, officer, Affiliate, investment bank, financial advisor, accountant,
attorney or other advisor or representative of Promistar, whether or not such
person or entity is purporting to act on behalf of Promistar, shall be deemed to
be a breach of this Section 8.9 by Promistar. Promistar agrees that, as of the
date hereof, it, its Affiliates and their respective directors, officers,
employees, investment bankers, attorneys, accountants and other representatives
and agents, shall immediately cease and cause to be terminated any existing
activities, discussions and negotiations with any Third Party (other than FNB
and its representatives) conducted heretofore with respect to any Acquisition
Proposal.
8.10 Accounting and Tax Treatment. Each of the Parties undertakes
and agrees to use its reasonable best efforts to cause the Merger to qualify,
and to take no action which would cause the Merger to not qualify, for treatment
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code for federal income tax purposes. FNB and Promistar undertake and
agree to use
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their respective reasonable best efforts to cause the Merger to qualify, and to
take no action that would cause the Merger to not qualify, for
pooling-of-interests accounting treatment.
8.11 Articles of Incorporation Provisions. Each Promistar Company
shall take all necessary action to ensure that the entering into of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to any
Person under the Articles of Incorporation, Bylaws, or other governing
instruments of any Promistar Company or restrict or impair the ability of FNB or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any Promistar Company that may be
directly or indirectly acquired or controlled by it.
8.12 Agreement of Affiliates. Promistar has disclosed in Section
8.12 of the Promistar Disclosure Memorandum all Persons whom it reasonably
believes are "affiliates" of Promistar as that term is defined in SEC Accounting
Series Releases 130 and 135 and in Rule 145 under the 1933 Act. Promistar shall
use its reasonable best efforts to cause each Person who may be deemed an
affiliate of Promistar to execute and deliver to FNB not later than the date of
mailing of the Joint Proxy Statement, a written agreement, substantially in the
form of Exhibit 2 hereto, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of Promistar Common Stock held by
such Person except as contemplated by such agreement or by this Agreement and
will not sell, pledge, transfer, or otherwise dispose of the shares of FNB
Common Stock to be received by such Person upon consummation of the Merger
except in compliance with applicable provisions of the 1933 Act and the rules
and regulations thereunder and until such time as financial results covering at
least 30 days of combined operations of FNB and Promistar have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies. Shares of FNB Common Stock issued to such affiliates of
Promistar in exchange for shares of Promistar Common Stock shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of FNB and Promistar have been published within the meaning
of Section 201.01 of the SEC's Codification of Financial Reporting Policies,
regardless of whether each such affiliate has provided the written agreement
referred to in this Section 8.12 (and FNB shall be entitled to place restrictive
legends upon certificates for shares of FNB Common Stock issued to affiliates of
Promistar pursuant to this Agreement to enforce the provisions of this Section
8.12). FNB shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of FNB
Common Stock by such affiliates.
8.13 Employment Contracts. At the Effective Time, FNB shall enter
into an employment agreement with each of Steven C. Ackmann and Kim Craig
containing such terms and conditions as mutually agreeable. In consideration of
the entering into such employment agreements, Steven C. Ackmann and Kim Craig
shall, at the Effective Time, cancel and terminate any employment agreements
entered into with Promistar.
8.14 Indemnification.
(a) FNB shall indemnify, defend and hold harmless the present and
former directors, officers, employees, and agents of Promistar (each, an
"Indemnified Party") after the Effective Time against all costs, fees, or
expenses (including reasonable attorneys' fees), judgments, fines, penalties,
losses, claims, damages, liabilities, and amounts paid in settlement in
connection with any Litigation as incurred, in connection with any claim, action
or proceeding arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement) to
the same extent such Persons are indemnified as of the date of this Agreement by
Promistar under Promistar's Articles of Incorporation and Bylaws as in effect on
the date hereof, including provisions relating to advances of
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expenses incurred in the defense of any Litigation. Without limiting the
foregoing, in any case in which approval of FNB is required to effectuate any
indemnification, FNB shall direct or cause such FNB Company to direct, at the
election of the Indemnified Party, that the determination of any such approval
shall be made by independent counsel mutually agreed upon between FNB and the
Indemnified Party. FNB shall, and shall cause all other relevant FNB Companies,
to apply such rights of indemnification in good faith and to the fullest extent
permitted by applicable law.
(b) Prior to Closing, Promistar shall purchase for, and on behalf
of, its current and former officers and directors, extended coverage under the
current directors' and officers' liability insurance policy maintained by
Promistar to provide for continued coverage of such insurance for a period of
six years following the date of Closing with respect to matters occurring prior
to the Effective Time.
(c) If FNB or any of its successors or assigns shall consolidate
with or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all or substantially
all of its assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of FNB shall assume the obligations
set forth in this Section 8.14.
(d) The provisions of this Section 8.14 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party, his or her heirs
and representatives.
8.15 Additional Reports. In accordance with Section 8.5, Promistar
and FNB shall each furnish to the other copies of any Promistar SEC Documents or
FNB SEC Documents, as the case may be, which it files with the SEC on or after
the date hereof, and Promistar and FNB, as the case may be, represents and
warrants that as of the respective dates thereof, such reports 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 statement therein, in
light of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present, in all material
respects, the financial position of Promistar or FNB, as the case may be, as of
the dates thereof and the results of operations and changes in financial
position or other information included therein for the periods or as of the
dates then ended, in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except that such unaudited
financial statement exclude footnote disclosures necessary for a fair
presentation which would make them in compliance with GAAP, and such financial
statements are subject, where appropriate, to normal year-end adjustments).
8.16 Exemption from Liability under Section 16(b).
(a) Provided that Promistar delivers to FNB the Section 16
Information (as defined below) with respect to Promistar prior to the Effective
Time, the Board of Directors of FNB, or a committee of Non-Employee Directors
thereof (as such term is defined for purposes of Rule 16b-3(d) under the
Exchange Act), will adopt a resolution in advance of the Effective Time
providing that the receipt by Promistar Insiders (as defined below) of FNB
Common Stock in exchange for shares of Promistar Common Stock, pursuant to the
transactions contemplated hereby and to the extent such securities are listed in
the Section 16 Information, are intended to be exempt from liability pursuant to
Rule 16b-3 under the Exchange Act.
(b) "Section 16 Information" shall mean information accurate in
all respects regarding Promistar Insiders, the number of shares of Promistar
Common Stock or other Promistar equity securities deemed to be beneficially
owned by each Promistar Insider and expected to be exchanged for FNB Common
Stock in connection with the Merger.
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(c) "Promistar Insiders" shall mean those officers and directors
of Promistar who are subject to the reporting requirements of Section 16(a) of
the Exchange Act who are listed in the Section 16 Information.
8.17 Right to Update Disclosure Memoranda. Each Party shall have
the right, without being in breach of its representations and warranties set
forth in this Agreement, to supplement or amend its Disclosure Memorandum, and
to add additional references to its Disclosure Memorandum to its representations
and warranties contained in this Agreement, with respect to any matter arising
after the date hereof or discovered between the date hereof and the date of the
Closing. A copy of the amended or supplemented Disclosure Memorandum and the
additional Disclosure Memorandum references shall be promptly provided to the
other Party. Any such amended or supplemented Disclosure Memorandum and
additional Disclosure Memorandum references shall not give the other Party the
right not to proceed to Closing, unless the facts underlying such amended or
supplemented Disclosure Memorandum or additional Disclosure Memorandum
references have a Material Adverse Effect.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.7 of this Agreement:
(a) Shareholder Approvals. The shareholders of each of Promistar
and FNB shall have approved this Agreement, and the consummation of the
transactions contemplated hereby, including the Merger, as and to the extent
required by Law.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of the Board of Directors of either Party would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement that, had such condition or requirement been known, such Party
would not, in its reasonable judgment, have entered into this Agreement.
(c) Consents and Approvals. Other than filing the Florida Articles
of Merger and the Pennsylvania Articles of Merger, each Party shall have
obtained any and all Consents required for consummation of the Merger (other
than those referred to in Section 9.1(b) of this Agreement or listed in Section
9.1(c) of the Promistar Disclosure Memorandum) or for the preventing of any
default under any Contract or Permit of such Party which, if not obtained or
made, is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on such Party.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced, or entered any Law or Order (whether temporary, preliminary, or
permanent) or taken any other action which prohibits, restricts, or makes
illegal consummation of the transactions contemplated by this Agreement.
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(e) Registration Statement. The Registration Statement shall have
been declared effective under the 1933 Act, and no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, and no
action, suit, proceeding, or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing.
(f) Pooling of Interests. Ernst & Young LLP, FNB's independent
public accountants, shall have issued a letter, dated as of the Closing Date, to
each of Promistar and FNB to the effect that the Merger shall be accounted for
as a pooling-of-interests under GAAP.
(g) Tax Matters. Each Party shall have received a written opinion
or opinions from Smith, Gambrell & Russell, LLP, and in a form reasonably
satisfactory to such Parties (the "Tax Opinion"), to the effect that (i) the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code and (ii) the exchange in the Merger of Promistar
Common Stock for FNB Common Stock will not give rise to gain or loss to the
shareholders of Promistar with respect to such exchange (except to the extent of
any cash received). In rendering such Tax Opinion, such counsel shall be
entitled to rely upon representations of officers of Promistar and FNB
reasonably satisfactory in form and substance to such counsel.
9.2 Conditions to Obligations of FNB. The obligations of FNB to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by FNB pursuant to Section 11.7(a) of this Agreement:
(a) Representations and Warranties. The representations and
warranties of Promistar contained herein shall be true and correct both as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Effective Time, except where
the failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) would not have, individually or in the
aggregate, a Material Adverse Effect on Promistar.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Promistar to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Closing Date shall have been duly performed and complied with in all material
respects.
(c) Certificates. Promistar shall have delivered to FNB (i) a
certificate, dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.2(a) and 9.2(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by Promistar's Board of Directors and shareholders evidencing the taking
of all corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as FNB and its counsel shall
request.
(d) Affiliates Agreements. FNB shall have received from each
affiliate of Promistar the affiliates letter referred to in Section 8.12 of this
Agreement, to the extent necessary to assure in the reasonable judgment of FNB
that the transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
(e) Non-Competition Agreements. FNB shall have received an
executed copy of a Non-Compete Agreement in the form attached to this Agreement
as Exhibit 3 from not less than 90% of the directors of Promistar who are not
executive officers of Promistar.
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(f) Opinion of Counsel. FNB shall have received a written opinion
of Kirkpatrick & Lockhart LLP, counsel to Promistar, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit 4.
9.3 Conditions to Obligations of Promistar. The obligations of
Promistar to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Promistar pursuant to Section 11.7(b) of
this Agreement:
(a) Representations and Warranties. The representations and
warranties of FNB contained herein shall be true and correct both as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date, except where the failure of
such representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "Material Adverse Effect" set
forth therein) would not have, individually or in the aggregate, a Material
Adverse Effect on FNB.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of FNB to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the Closing
Date shall have been duly performed and complied with in all material respects.
(c) Certificates. FNB shall have delivered to Promistar (i) a
certificate, dated as of the Closing Date and signed on its behalf by its chief
executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by FNB's Board of Directors or the Executive Committee thereof
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, and the consummation of
the transactions contemplated hereby, all in such reasonable detail as Promistar
and its counsel shall request.
(d) Opinion of Counsel. Promistar shall have received a written
opinion of Smith, Gambrell & Russell, LLP, counsel to FNB, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit 5.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual written consent of the Board of Directors of FNB and
the Board of Directors of Promistar; or
(b) By the Board of Directors of either Party (provided that the
terminating Party (i) is not then in breach of any representations or warranties
contained in this Agreement such that the other Party would have the ability to
refuse to consummate the Merger pursuant to Section 9.2(a) or Section 9.3(a) of
this Agreement and (ii) is not in material breach of any covenant or other
agreement contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement which
cannot be or has not been cured within 40 days after the giving of written
notice to the breaching Party of such inaccuracy and which inaccuracy would
provide the terminating Party the ability to refuse to consummate the Merger
pursuant to Section 9.2(a) or Section 9.3(a) of this Agreement; or
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(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant, agreement, or obligation
contained in this Agreement which breach cannot be or has not been cured within
40 days after the giving of written notice to the breaching Party of such
breach; or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger and
the other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the shareholders of
Promistar or FNB fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by applicable Law; or
(e) By the Board of Directors of either Party in the event that
the Merger shall not have been consummated by March 31, 2002, if the failure to
consummate the transactions contemplated hereby on or before such date is not
caused by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Promistar and Section 9.3(a) in the case
of FNB or in material breach of any covenant or other agreement contained in
this Agreement) in the event that any of the conditions precedent to the
obligations of such Party to consummate the Merger cannot be satisfied or
fulfilled by the date specified in Section 10.1(e) of this Agreement; or
(g) By Promistar on any date during the four business day period
commencing on the first day following the Approval Date, if both of the
following conditions are satisfied on such date:
(1) the FNB Ratio on such date shall be less than 0.80;
and
(2) the FNB Ratio on such date shall be less than the
difference obtained by subtracting 0.15 from the Index Ratio on such
date;
subject, however, to the following three sentences. If Promistar
determines not to consummate the Merger pursuant to this Section 10.1(g), it
shall give prompt written notice of its election to terminate to FNB, which
notice may be withdrawn at any time prior to the lapse of the four business day
period commencing on the Approval Date. During the five business day period
commencing on the date of its receipt of such notice (the "Adjustment Date"),
FNB shall have the option to elect to increase the Exchange Ratio to a number
equal to the Adjusted Exchange Ratio. The election contemplated by the preceding
sentence shall be made by giving notice to Promistar of such election and of the
Adjusted Exchange Ratio, whereupon no termination shall have occurred pursuant
to this Section 10.1(g), and this 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 Agreement to "Exchange Ratio" shall thereafter be deemed
to refer to Adjusted Exchange Ratio.
For purposes of this Section 10.1(g), the following terms shall have
the meanings indicated:
"Adjusted Exchange Ratio" shall mean the lesser of:
(1) a number (rounded to the nearest thousandth) obtained
by dividing (A) the product of the Initial FNB Price, 0.80 and the
Exchange Ratio (as then in effect) by (B) the FNB
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Price on the Approval Date, and
(2) a number (rounded to the nearest one one-thousandth)
equal to the product of (A) the Exchange Ratio (as then in effect)
multiplied by (B) a fraction, the numerator of which is the Index Radio
on the Approval Date less 0.15, and the denominator of which is the FNB
Ratio on the Approval Date.
"FNB Price," with respect to any particular date, shall mean the
average closing price per share of FNB Common Stock, as reported by Nasdaq, for
the five most recent trading days ending on the last trading date prior to such
date.
"FNB Ratio," with respect to any particular date, shall mean the
quotient obtained by dividing the FNB Price on such date by the Initial FNB
Price.
"Initial FNB Price" shall mean $24.952.
"Index Group" shall mean the bank and bank holding companies listed on
Exhibit 6 hereto, the common stocks of all of which shall be publicly traded and
as to which there shall not have been, after the date of this Agreement and
before the Adjustment Date, any public announcement of a proposal for such
entity to be acquired or for such entity to acquire another entity in
transactions with a value exceeding 25% of the acquiror's market capitalization.
In the event that one or more of such entities are removed from the Index Group,
the weights (which have been determined based upon market capitalizations on May
18, 2001) shall be redistributed proportionately (based on market
capitalizations on May 18, 2001) for purposes of determining the Index Price.
The weight attributed to each of the entities composing the Index Group is set
forth on Exhibit 6 hereto. If any entity belonging to the Index Group or FNB
declares or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares, or similar transaction between the
date hereof and the Adjustment Date, the prices for the common stock of such
entity or FNB shall be appropriately adjusted for the purposes of applying this
Section 10.1(g).
"Index Price," with respect to any particular date, shall mean the
weighted average (weighted in accordance with the "Percentage Weighting" set
forth on Exhibit 6 hereto) of the closing sales prices of the companies
composing the Index Group (as reported by The Wall Street Journal) for each of
the five most recent trading days ending on the last trading date prior to such
date.
"Initial Index Price" shall mean the Index Price on May 19, 2001.
"Index Ratio," with respect to any particular date, shall mean the
quotient obtained by dividing the Index Price on such date by the Initial Index
Price.
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10.2 Effect of Termination.
(a) In the event of the termination and abandonment of this
Agreement pursuant to Section 10.1 of this Agreement, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Sections 8.5 and 11.1 of this Agreement shall survive any such
termination and abandonment, and (ii) a termination pursuant to Sections 10.1(b)
or 10.1(c), of this Agreement shall not relieve the breaching Party from
liability for an uncured willful breach of a representation, warranty, covenant,
or agreement giving rise to such termination; provided, further, that in the
event of any termination of this Agreement following the occurrence of an
Initial Triggering Event (as defined in the Stock Option Agreement), FNB shall
be entitled to a cash payment from Promistar in an amount equal to $1,000,000
upon the occurrence of any Subsequent Triggering Event (as defined in the Stock
Option Agreement) within twelve (12) months following the date of such
termination (or such longer period as shall exist under the Stock Option
Agreement until the occurrence of an Exercise Termination Date (as defined in
the Stock Option Agreement).
(b) In the event this Agreement is terminated as a result of FNB's
failure to satisfy any of its representations, warranties or covenants set forth
herein, FNB shall reimburse Promistar for its reasonable out-of-pocket expenses
relating to the Merger in an amount not to exceed $250,000, which amount shall
not be deemed an exclusive remedy or liquidated damages.
10.3 Non-Survival of Representations and Covenants. The respective
representations and warranties of the Parties shall not survive the Effective
Time. All agreements of the Parties to this Agreement which by their terms are
to be performed following the Effective Time shall survive the Effective Time
until performed in accordance with their terms.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Acquisition Proposal" shall have the meaning set forth in Section 8.9
of this Agreement.
"Affiliate" of a Person shall mean any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person.
"Agreement" shall mean this Agreement and Plan of Merger, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"Approval Date" shall mean the date on which the last of the following
occurs: (i) the effective date (including expiration of any applicable waiting
period required by Law) of the last required Consent of any Regulatory Authority
having authority over and approving or exempting the Merger, (ii) the date on
which the shareholders of Promistar approve this Agreement to the extent that
such approval is
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required by applicable Law; and (iii) the date on which the shareholders of FNB
approve this Agreement to the extent that such approval is required by
applicable Law.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Closing" shall have the meaning set forth in Section 1.2 of this
Agreement.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person.
"Contract" shall mean any written agreement, commitment, contract,
note, bond, mortgage, indenture, instrument, lease, obligation, or plan of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock or Assets.
"Default" shall mean (i) any breach or violation of or default under
any Contract, (ii) any occurrence of any event that with the passage of time or
the giving of notice or both would constitute a breach or violation of or
default under any Contract, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to a right
to terminate or revoke, change the current terms of, or renegotiate, or to
accelerate, increase, or impose any liability under, any Contract where, in any
such event, such default is reasonably likely to have a Material Adverse Effect
on a Party.
"Effective Time" shall have the meaning set forth in Section 1.3 of
this Agreement.
"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq., the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq., and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Agent" shall have the meaning set forth in Section 4.1 of
this Agreement.
"Exchange Ratio" shall have the meaning set forth in Section 3.1(b) of
this Agreement.
"Exhibits" 1, 2, 3, 4, 5 and 6 shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
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"FBCA" shall mean the Florida Business Corporation Act.
"Florida Articles of Merger" shall mean the Articles of Merger to be
executed by the Parties and filed with the Secretary of State of the State of
Florida relating to the Merger as contemplated by Section 1.3 of this Agreement.
"FNB" shall have the meaning set forth in the first paragraph of this
Agreement.
"FNB Capital Stock" shall have the meaning set forth in Section 6.3 of
this Agreement.
"FNB Common Stock" shall mean the common stock of FNB.
"FNB Companies" shall mean, collectively, FNB and all FNB Subsidiaries.
"FNB Contract" shall have the meaning set forth in Section 6.16 of this
Agreement.
"FNB Disclosure Memorandum" shall mean the written information entitled
"FNB Corporation Disclosure Memorandum" delivered prior to the date of this
Agreement to Promistar, and all amendments or supplements thereto occurring
between the date of this Agreement and the date of the Closing, describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"FNB Financial Statements" shall mean certain financial statements of
FNB consisting of (i) the consolidated balance sheets and the related statements
of income, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) as of and for each of the three years ended
December 31, 2000, 1999, and 1998, as filed by FNB in SEC Documents, and (ii)
the consolidated balance sheets and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) included in SEC Documents filed with respect to any period ended subsequent
to December 31, 2000.
"FNB Preferred Stock" shall mean the preferred stock of FNB.
"FNB SEC Reports" shall have the meaning set forth in Section 6.5(a) of
this Agreement.
"FNB Shareholders' Meeting" shall mean the meeting of the shareholders
of FNB to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"FNB Subsidiaries" shall mean the Subsidiaries of FNB, which shall
include any corporation, bank, savings association, or other organization
acquired as a Subsidiary of FNB in the future and owned by FNB at the Effective
Time.
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied during the periods involved applicable to
banks or bank holding companies, as the case may be.
"Hazardous Material" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or
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oil (and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities, and any
polychlorinated biphenyls).
"HSR Act" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.
"Indemnified Party" shall have the meaning set forth in Section 8.14 of
this Agreement.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Joint Proxy Statement" shall mean the proxy statement used by
Promistar and FNB to solicit the approval of their respective shareholders of
the transactions contemplated by this Agreement, which shall include the
prospectus of FNB relating to the issuance of the FNB Common Stock to holders of
Promistar Common Stock.
"Knowledge" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean the personal
knowledge of the chairman, president, chief financial officer, chief accounting
officer, chief credit officer, or any executive vice president of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
liabilities, or business, including those promulgated, interpreted, or enforced
by any Regulatory Authority.
"Lien" with respect to any Asset, shall mean any conditional sale
agreement, default of title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction, security
interest, title retention, or other security arrangement, or any adverse right
or interest, charge, or claim of any nature whatsoever of, on, or with respect
to any property or property interest, other than (i) Liens for current property
Taxes not yet due and payable or being contested in good faith, (ii) for
depository institution Subsidiaries of a Party, pledges to secure deposits, and
(iii) other Liens incurred in the ordinary course of the banking business.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice by any Person alleging potential liability.
"Loan Property" shall mean any property owned, leased, or operated by
the Party in question or by any of its Subsidiaries or in which such Party or
its Subsidiary holds a security or other interest (including an interest in a
fiduciary capacity), and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
"market price" shall have the meaning set forth in Section 3.4 of this
Agreement.
"Material Adverse Effect" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in GAAP or
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regulatory accounting principles generally applicable to banks and their holding
companies, (c) actions and omissions of a Party (or any of its Subsidiaries)
taken with the prior informed consent of the other Party in contemplation of the
transactions contemplated hereby, (d) circumstances affecting regional bank
holding companies generally, or (e) the Merger and compliance with the
provisions of this Agreement on the operating performance of the Parties.
"Merger" shall have the meaning set forth in the Preamble of this
Agreement.
"Nasdaq" shall mean the Nasdaq Stock Market, Inc.
"Order" shall mean any decree, injunction, judgment, order, decision or
award, ruling, or writ of any federal, state, local, or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the management
and, where required by the context, said term means the owner or operator of
such facility or property, but only with respect to such facility or property.
"Party" shall mean either Promistar or FNB, and "Parties" shall mean
Promistar and FNB.
"PBCL" shall mean the Pennsylvania Business Corporation Law.
"Pennsylvania Articles of Merger" shall mean the Articles of Merger to
be executed by the Parties and filed with the Secretary of State of Pennsylvania
relating to the Merger as contemplated by Section 1.3 of this Agreement.
"Permit" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person.
"Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Promistar" shall have the meaning set forth in the first paragraph of
this Agreement.
"Promistar Benefits Plans" shall have the meaning set forth in Section
5.17(a) of this Agreement.
"Promistar Common Stock" shall mean the $5.00 par value common stock of
Promistar.
"Promistar Companies" shall mean, collectively, Promistar and all
Promistar Subsidiaries.
"Promistar Contract" shall have the meaning set forth in Section 5.16.
"Promistar Disclosure Memorandum" shall mean the written information
entitled "Promistar Disclosure Memorandum" delivered prior to the date of this
Agreement to FNB, and all amendments and supplements thereto occurring between
the date of this Agreement and the date of the Closing, describing in reasonable
detail the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under which
such disclosure is being made.
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Information disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced with
respect thereto.
"Promistar ERISA Plan" shall have the meaning set forth in Section
5.17(a) of this Agreement.
"Promistar Financial Statements" shall mean certain financial
statements of Promistar consisting of (i) the consolidated balance sheets and
the related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) as of and for each of the
three years ended December 31, 2000, 1999 and 1998, as filed by Promistar in SEC
Documents, and (ii) the consolidated balance sheets and related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to any
period ended subsequent to December 31, 2000.
"Promistar Options" shall have the meaning set forth in Section 3.5(a)
of this Agreement.
"Promistar SEC Reports" shall have the meaning set forth in Section
5.5(a) of this Agreement.
"Promistar Shareholders' Meeting" shall mean the meeting of the
shareholders of Promistar to be held pursuant to Section 8.1 of this Agreement,
including any adjournment or adjournments thereof.
"Promistar Stock Plans" shall have the meaning set forth in Section
3.5(a) of this Agreement.
"Promistar Subsidiaries" shall mean the Subsidiaries of Promistar,
which shall include the Promistar Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Promistar in the future and owned by Promistar at
the Effective Time.
"Registration Statement" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by FNB under the 1933 Act
with respect to the shares of FNB Common Stock to be issued to the shareholders
of Promistar in connection with the transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, the SEC, NASD, Nasdaq and all state
regulatory agencies having jurisdiction over the Parties and their respective
Subsidiaries.
"Rights" shall mean all arrangements, calls, commitments, options,
rights to subscribe to, scrip, understandings, warrants, or other binding
obligations of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of a Person or
any contract, commitments or other arrangements by which a Person is or may be
bound to issue additional shares of its capital stock or options, warrants,
rights to purchase or acquire any additional shares of its capital stock, or
options, warrants, or rights to purchase or acquire any additional shares of its
capital stock.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
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"Securities Laws" shall mean the Securities Act of 1933, as amended
(the "1933 Act"), the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"Stock Option Agreement" shall have the meaning set forth in the
Preamble of this Agreement.
"Subsidiaries" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or more
of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, there shall
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"Tax" or "Taxes" shall mean all federal, state, local, and foreign
taxes, charges, fees, levies, imposts, duties, or other assessments, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
the United States or any state, local, foreign government or subdivision or
agency thereof, including any interest, penalties or additions thereto.
"Tax Opinion" shall have the meaning set forth in Section 9.1(g) of
this Agreement.
"Taxable Period" shall mean any period prescribed by any governmental
authority, including the United States or any state, local, foreign government
or subdivision or agency thereof for which a Tax Return is required to be filed
or Tax is required to be paid.
"Tax Return" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in connection
with Taxes, including any return of an affiliated or combined or unitary group
that includes a Party or its Subsidiaries.
(b) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2 and Section
10.2, each of FNB and Promistar shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration, and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that each of FNB and Promistar shall
each bear and pay one-half of the printing costs incurred in connection with the
printing of the Registration Statement and the Joint Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or
shall be deemed to constitute an exclusive remedy or liquidated damages for the
willful breach by a Party of the terms of this Agreement or otherwise limit the
rights of the nonbreaching Party.
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11.3 Brokers and Finders. Each of the Parties represents and
warrants that no action has been taken by it that would give rise to any valid
claim against either Party for a brokerage commission, finder's fee or other
like payment with respect to the transactions contemplated by this Agreement,
excluding, in the case of FNB, fees to be paid to The Robinson-Humphrey Company,
LLC, and in the case Promistar, fees to be paid to Keefe, Bruyette & Woods, in
each case pursuant to letter agreements which have been heretofore disclosed to
the other Party.
11.4 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement constitutes the entire agreement between the Parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral. Other than
as provided in Section 8.14, nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the Parties upon the
approval of the Board of Directors of each of the Parties, whether before or
after shareholder approval of this Agreement has been obtained; provided, that
after any such approval by the shareholders of a Party, there shall be made no
amendment that modifies in any material respect the consideration to be received
by holders of Promistar Common Stock without the further approval of such
shareholders.
11.6 Obligations of FNB. Whenever this Agreement requires FNB or
Promistar to take any action, such requirement shall be deemed to include an
undertaking by such Party to cause the Subsidiaries of such Party to take such
action.
11.7 Waivers.
(a) Prior to or at the Effective Time, FNB, acting through its
Board of Directors, chief executive officer, president, or other authorized
officer, shall have the right to waive any default in the performance of any
term of this Agreement by Promistar, to waive or extend the time for the
compliance or fulfillment by Promistar of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of FNB under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of FNB.
(b) Prior to or at the Effective Time, Promistar, acting through
its Board of Directors, chief executive officer, president or other authorized
officer, shall have the right to waive any default in the performance of any
term of this Agreement by FNB, to waive or extend the time for the compliance or
fulfillment by FNB of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of Promistar
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Promistar.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
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11.8 Assignment. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by the Parties and their respective successors and assigns.
11.9 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
Promistar: Promistar Financial Corporation
551 Main Street
P.O. Box 1146
Johnstown, Pennsylvania 15901-1146
Telecopy Number: 814-536-2278
Attention: Chairman and Chief Executive Officer
Copy to Counsel: Kirkpatrick & Lockhart LLP
Henry W. Oliver Building
535 Smithfield Street
Pittsburgh, Pennsylvania 15222
Telecopy Number: 412-355-6501
Attention: Kristen L. Stewart, Esq.
FNB: F.N.B. Corporation
F.N.B. Center
2150 Goodlette Road North
Naples, Florida 34102
Telecopy Number: 941-435-7658
Attention: President and Chief Executive Officer
Copy to Counsel: Smith, Gambrell & Russell, LLP
1230 Peachtree Road, NE
Suite 3100, Promenade II
Atlanta, Georgia 30309
Telecopy Number: 404-685-7058
Attention: Robert C. Schwartz, Esq.
11.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Florida, without regard to
any applicable conflicts of Laws, except to the extent that the Laws of the
Commonwealth of Pennsylvania relate to the consummation of the Merger.
11.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.12 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
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11.13 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
[Remainder of this Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officer as of the day and year
first above written.
F.N.B. CORPORATION
By: /s/ Gary L. Tice
--------------------------------------------
Gary L. Tice
President and Chief Executive Officer
PROMISTAR FINANCIAL CORPORATION
By: /s/ John H. Anderson
--------------------------------------------
John H. Anderson
Chairman and Chief Executive Officer
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APPENDIX B
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Agreement") is entered into this
13th day of June, 2001, between F.N.B. CORPORATION, a Florida corporation
having its principal office located in Naples, Florida ("FNB"), and PROMISTAR
FINANCIAL CORPORATION, a Pennsylvania corporation having its principal office
located in Johnstown, Pennsylvania ("Promistar").
WITNESSETH:
WHEREAS, FNB and Promistar have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to FNB's pursuit of the
transactions contemplated by the Merger Agreement and in consideration therefor,
Promistar has agreed to grant FNB the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Promistar hereby grants to FNB an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to 2,975,830 authorized
but unissued fully paid and nonassessable Common Shares, $5.00 par value, of
Promistar ("Common Shares"), at a price per Common Share equal to $17.306 (as
adjusted as set forth herein, the "Option Price"); provided, that in no event
shall the number of Common Shares for which this Option is exercisable, when
combined with the Promistar Common Shares beneficially owned at such time by
FNB, exceed 19.9% of the issued and outstanding Common Shares. The number of
Common Shares that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional Common Shares are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of Common Shares subject to the Option
shall be increased so that, after such issuance, it equals 19.9% of the number
of Common Shares then issued and outstanding including Common Shares
beneficially owned by FNB, but without giving effect to any Shares subject or
issued pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Agreement shall be deemed to authorize Promistar or FNB to
breach any provision of the Merger Agreement.
2. (a) Subject to compliance with applicable laws and regulations,
the Holder (as hereinafter defined) may exercise the Option, notwithstanding the
provisions of the Confidentiality Agreements (as defined in the Merger
Agreement) in whole or part, if, but only if, both an Initial Triggering Event
(as hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time (as defined in the Merger Agreement)
of the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event (other than termination due to
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the failure of FNB to satisfy a condition to closing; (iii) the passage of 12
months (or such longer period as provided in Section 9) after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event; or (iv) such other date as to which the Holder and Promistar
agree. The term "Holder" shall mean the holder or holders of the Option. The
rights set forth in Section 7 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) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Promistar or any of its Subsidiaries (as hereinafter
defined) (each a "Promistar Subsidiary"), without having received FNB's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934 (the "1934
Act"), and the rules and regulations thereunder) other than FNB or any of its
Subsidiaries (each a "FNB Subsidiary") or the Board of Directors of Promistar
shall have recommended that the shareholders of Promistar approve or accept any
Acquisition Transaction other than as contemplated by the Merger Agreement or
this Agreement. For purposes of this Agreement, (a) "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction, involving
Promistar or any Significant Subsidiary (as defined in Rule 1-02 of Regulation
S-X promulgated by the Securities and Exchange Commission (the "SEC")) of
Promistar, (y) a purchase, lease or other acquisition of all or substantially
all of the assets or deposits of Promistar or any Significant Subsidiary of
Promistar, or (z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 15% or
more of the voting power of Promistar or any Significant Subsidiary of
Promistar, and (b) "Subsidiary" shall have the meaning set forth in Rule 12b-2
under the 1934 Act;
(ii) Any person (excluding the officers and directors of
Promistar) other than FNB, any FNB Subsidiary or any Promistar Subsidiary acting
in a fiduciary capacity shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 15% or more of the outstanding Common Shares
(the term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iii) The shareholders of the Promistar shall not have
approved the transactions contemplated by the Merger Agreement at the meeting
held for that purpose or any adjustment thereof, or such meeting shall not have
been held or shall have been canceled prior to termination of the Merger
Agreement, in either case, after Promistar's Board of Directors shall have
withdrawn or modified (or publicly announced its intention to withdraw or modify
or interest in withdrawing or modifying) its recommendation that the
shareholders of Promistar approve the transactions contemplated by the Merger
Agreement, or Promistar or any Promistar Subsidiary, without having received
FNB's prior written consent, shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose or interest
in authorizing, recommending or proposing) an agreement to engage in an
Acquisition Transaction, with any person other than FNB or a FNB Subsidiary;
(iv) Any person other than FNB or any FNB Subsidiary shall
have made a bona fide proposal to Promistar or its shareholders to engage in an
Acquisition Transaction, which proposal has an economic value equivalent to or
in excess of that of FNB.
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(v) Promistar shall have willfully and materially breached
any material covenant or obligation contained in the Merger Agreement in
anticipation of engaging in an Acquisition Transaction, and such breach would
entitle FNB to terminate the Merger Agreement; or
(vi) Any person other than FNB or any FNB Subsidiary, other
than in connection with a transaction to which FNB has given its prior written
consent, shall have filed an application or notice with the Federal Reserve
Board or other federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of
25% or more of the then outstanding Common Shares; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) shall be 25%.
(d) Promistar shall notify FNB promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Promistar shall not be a condition to the right of the Holder to
exercise the Option.
(e) No shares shall be issued pursuant to the exercise of this
Option if (i) at the time of the Initial Triggering Event and at the time of
exercise, FNB is in material breach under the Merger Agreement, or (ii) a
preliminary or permanent injunction has been issued by a court of proper
jurisdiction with respect to this Option or the Merger Agreement or the
transactions contemplated hereby or thereby.
(f) In the event the Holder is entitled to and wishes to exercise
the Option, it shall send to Promistar a written notice prior to an Exercise
Termination Event (the date of which being herein referred to as the "Notice
Date") specifying (i) the total number of shares it will purchase pursuant to
such exercise and (ii) a place and date not earlier than three business days nor
later than 10 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if prior notification to or
approval of the Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall promptly file the required
notice or application for approval, shall promptly notify the Promistar of such
filing, and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(g) At the closing referred to in subsection (e) of this Section
2, the Holder shall pay to Promistar the aggregate purchase price for the Common
Shares purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Promistar, provided that
failure or refusal of Promistar to designate such a bank account shall not
preclude the Holder from exercising the Option.
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(h) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Promistar shall deliver to the Holder a certificate or certificates representing
the number of Common Shares purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable thereunder. In addition, the
Holder shall provide to Promistar a letter agreeing that Holder will not offer
to sell or dispose of such shares in violation of applicable law or this
Agreement
(i) Certificates for Common Shares delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Promistar and to resale
restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the principal
office of Promistar and will be provided to the holder hereof
without charge upon receipt by Promistar of a written request
therefor."
It is understood and agreed that: (1) the reference to the
resale restrictions of the Securities Act of 1933 (the "1933
Act") in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder
shall have delivered to Promistar a copy of a letter from the
staff of the SEC, or an opinion of counsel, in form and
substance satisfactory to Promistar, to the effect that such
legend is not required for purposes of the 1933 Act; (ii) the
reference to the provisions of this Agreement in the above
legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the proceeding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by
law.
(j) Upon the giving by the Holder to Promistar of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds the Holder shall be deemed to be the holder of record of the
Common Shares issuable upon such exercise, notwithstanding that the stock
transfer books of Promistar shall then be closed or that certificates
representing such Common Shares shall not then be actually delivered to the
Holder. Promistar shall pay all expenses, and any and all United States federal,
state and local taxes and other charges that may be payable in connection with
the preparation, issue and delivery of stock certificates under this Section 2
in the name of the Holder or its assignee, transferee or designee.
3. Promistar agrees: (a) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Shares so that the Option may be exercised without additional
authorization of Common Shares after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Shares; (b)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations
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or conditions to be observed or performed hereunder by Promistar; (c) promptly
to take all action as may from time to time be required (including (i) complying
with all premerger notification, reporting and waiting period requirements
specified in 15 U.S.C. Section 18a and regulations promulgated thereunder and
(ii) in the event, under the Bank Holding Company Act of 1956, as amended, or
any state or other federal banking law, prior approval of or notice to the
Federal Reserve Board or to any state or other federal regulatory authority is
necessary before the Option may be exercised, cooperating fully with the Holder
in preparing such applications or notices and providing such information to the
Federal Reserve Board or such state or other federal regulatory authority as
they may require) in order to permit the Holder to exercise the Option and
Promistar duly and effectively to issue Common Shares pursuant hereto; and (d)
promptly to take all action provided herein to protect the rights of the Holder
against dilution as set forth in Section 5 hereof.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Promistar, for other Agreements
providing for Options of different denominations entitling the holder thereof to
purchase, on the same terms and subject to the same conditions as are set forth
herein, in the aggregate the same number of Common Shares purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Promistar 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, Promistar
will execute and deliver a new Agreement of like tenor and date.
5. The number of Common Shares purchasable upon the exercise of the
Option shall be subject to adjustment from time to time as provided in this
Section 5.
(a) In the event of any change in Common Shares by reason of stock
dividends, splitups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of Common
Shares purchasable upon exercise hereof shall be appropriately adjusted and
proper provision shall be made so that, in the event that any additional Common
Shares are to be issued or otherwise become outstanding as a result of any such
change (other than pursuant to an exercise of the Option), the number of Common
Shares that remain subject to the Option shall be increased so that, after such
issuance and together with Common Shares previously issued pursuant to the
exercise of the Option (together with the number of Shares previously issued
under this Option and the number of Shares otherwise beneficially owned by FNB)
(as adjusted on account of any of the foregoing changes in the Common Shares),
it equals 19.9% of the number of Common Shares then issued and outstanding.
(b) Whenever the number of Common Shares purchasable upon exercise
hereof is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of Common Shares purchasable prior to the
adjustment and the denominator of which shall be equal to the number of Common
Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Promistar shall, at the request of FNB
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 9) (whether on its own behalf or on behalf of any subsequent
holder of this Option (or part thereof) or any of the Common Shares issued
pursuant hereto), promptly prepare, file and keep current a registration
statement under the 1933 Act covering any shares
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issued and issuable pursuant to this Option and shall use its best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any Common Shares issued upon
total or partial exercise of this Option ("Option Shares") in accordance with
any plan of disposition requested by FNB. Promistar will use its best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 120 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. FNB shall have
the right to demand two such registrations. The first demand registration
effected under this Section 6 shall be at Promistar's expense except for
underwriting commissions and the fees and expenses of FNB's counsel attributable
to the registration of the Common Shares. The second demand registration shall
be at FNB's expense. In addition, if at any time after the occurrence of a
Subsequent Triggering Event that occurs prior to an Exercise Termination Event,
Promistar proposes to register any of its equity securities under the 1933 Act,
whether for sale for its own account or for the account of any other person, on
a form and in a manner which would permit registration of the Common Shares
issued pursuant hereto for sale to the public under the 1933 Act, it will each
such time give prompt written notice to FNB of its intention to do so,
describing such securities and specifying the form and manner and the other
relevant facts involved in such proposed registration, and upon the written
request of FNB delivered to the Company within 10 business days after the giving
of any such notice (which request shall specify the Common Shares intended to be
disposed of and the intended method or methods of disposition thereof),
Promistar will use its best efforts to effect the registration under the 1933
Act of all Common Shares which Promistar has been so requested to register by
FNB, to the extent requisite to permit the disposition of the Common Shares in
accordance with the intended methods thereof as specified by FNB. Promistar
shall be obligated to effect only one such piggy-back registration pursuant to
this Section 6. FNB shall pay such incremental expenses incurred by Promistar in
connection with registering the Common Shares requested to be registered by FNB
pursuant to its piggy-back registration rights under this Section 6, which
expenses are in addition to the expenses that Promistar would have otherwise
incurred in registering equity securities under the 1933 Act. The foregoing
notwithstanding, if, at the time of any request by FNB for registration of
Option Shares as provided above, Promistar has initiated discussions with
investment bankers concerning, or is in registration with respect to an
underwritten public offering of Common Shares, and if in the good faith judgment
of the managing underwriter or managing underwriters, or, if none, the sole
underwriter or underwriters, of such offering the inclusion of the Option Shares
would interfere with the successful marketing of the Common Shares offered by
Promistar, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction the number of Option Shares to be
included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and Promistar
in the aggregate; and provided further, however, that if such reduction occurs,
then the Promistar shall file a registration statement for the balance as
promptly as practical thereafter as to which no reduction pursuant to this
Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration at Holder's expense. Each such Holder
shall provide all information reasonably requested by Promistar for inclusion in
any registration statement to be filed hereunder. If requested by any such
Holder in connection with such registration, Promistar shall become a party to
any underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for Promistar. In any such registration, Promistar and FNB shall
agree to indemnify each other on customary terms with regard to any information
provided by such party. Upon receiving any request under this Section 6 from any
Holder, Promistar agrees to send a copy thereof to any other person known to
Promistar to be entitled to registration rights under this Section 6, in each
case by promptly mailing the same, postage prepaid, to the address of record of
the persons entitled to receive such copies.
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7. (a) Upon the occurrence of a Repurchase Event (as hereinafter
defined) that occurs prior to an Exercise Termination Event, (i) at the request
of the Holder, delivered prior to an Exercise Termination Event (or such later
period as provided in Section 9), Promistar shall repurchase the Option from the
Holder at a price (the "Option Repurchase Price") equal to the amount by which
(A) the Market/Offer Price (as defined below) exceeds (B) the Option Price,
multiplied by the number of shares for which this Option may then be exercised
and (ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered prior to the occurrence of an Exercise Termination Event (or
such later period as provided in Section 9), Promistar shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the Market/Offer Price
multiplied by the number of Option Shares so designated. The term "Repurchase
Event" shall occur if (i) any person other than FNB or any of its Subsidiaries
shall have acquired beneficial ownership, or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the 1934 Act) shall
have been formed which beneficially owns or has the right to acquire beneficial
ownership of 50% or more of the then-outstanding Common Shares, or (ii) any of
the transactions described in Section 8(a)(i), 8(a)(ii), or 8(a)(iii) hereof
shall be consummated. The term "Market/Offer Price" shall mean the highest of
(i) the price per share of Common Shares at which a tender or exchange offer
therefor has been made, (ii) the price per share of Common Shares to be paid by
any third party pursuant to an agreement with Promistar, (iii) the highest
closing price for Common Shares within the three-month period immediately
preceding the date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of Option Shares, as
the case may be, or (iv) in the event of a sale of all or substantially all of
Promistar's assets or deposits, the sum of the net price paid in such sale for
such assets or deposits, the sum of the net price paid in such sale for such
assets or deposits and the current market value of the remaining net assets of
Promistar as determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, divided by the number
of Common Shares of Promistar outstanding at the time of such sale. In
determining the Market/Offer Price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Promistar to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Promistar, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Promistar to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within ten business days
after the surrender of the Option and/or certificates representing Option Shares
and the receipt of such notice or notices relating thereto, Promistar shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Promistar is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that Promistar is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Promistar shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within ten business days after the date on which Promistar is no longer so
prohibited; provided, however, that if Promistar at any time after delivery of a
notice of repurchase pursuant to
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paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivery to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Promistar hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares whether in whole or to the extent
of the prohibition, whereupon, in the latter case, Promistar shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that Promistar is not
prohibited from delivering, and (ii) deliver, as appropriate, either (A) to the
Holder, a new Agreement evidencing the right of the Holder to purchase that
number of Common Shares obtained by multiplying the number of Common Shares for
which the surrendered Agreement was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
8. (a) In the event that, prior to an Exercise Termination Event,
Promistar shall enter into an agreement (i) to consolidate with or merge into
any person, other than FNB or a FNB Subsidiary, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than FNB or a FNB Subsidiary, to merge into Promistar and
Promistar shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding Common Shares shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property or the then outstanding Common Shares 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
or any Significant Subsidiary's assets or deposits to any person, other than FNB
or a FNB Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Promistar (if other than
Promistar), (ii) Promistar in a merger in which Promistar is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Promistar's assets or deposits (or the assets or deposits of a Significant
Subsidiary of Promistar).
(ii) "Substitute Common Shares" shall mean the common shares
issued by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of
the Substitute Common Share for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the substitute Common Shares on the day preceding such
consolidation, merger or sale; provided that if Promistar is the issuer of the
Substitute Option, the Average Price shall be computed with respect to common
shares issued by the person merging into Promistar or by any company which
controls or is controlled by such person, as the Holder may elect.
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(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which agreement shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
Substitute Common Shares as is equal to the Assigned Value multiplied by the
number of Common Shares for which the Option is then exercisable, divided by the
Average Price. The exercise price of the Substitute Option per Substitute Common
Share shall then be equal to the Option Price multiplied by a fraction, the
numerator of which shall be the number of Common Shares for which the Option is
then exercisable and the denominator of which shall be the number of Substitute
Common Shares for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares which together
with shares of the Acquiring Corporation then beneficially owned by FNB,
constitutes more than 19.9% of the shares of Substitute Common Shares
outstanding prior to exercise of the Substitute Option.
9. The periods for exercise of certain rights under Sections 2, 6,
and 7 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder is using
commercially reasonable efforts to obtain such regulatory approvals), and for
the expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason or
such exercise.
10. Promistar hereby represents and warrants to FNB as follows:
(a) Promistar has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Promistar and no other corporate proceedings on the part
of Promistar are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Promistar.
(b) Promistar has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
Common Shares equal to the maximum number of Common Shares at any time and from
time to time issuable hereunder, and all such shares, upon issuance pursuant
thereto, will be duly authorized, validly issued, fully paid, nonassessable.
11. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, FNB, subject to the express provisions hereof, may assign in
whole or in part its rights and obligations hereunder following such Subsequent
Triggering Event; provided, however that
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until the date 30 days following the date on which the Federal Reserve Board has
approved applications by FNB to acquire the Common Shares subject to the Option,
FNB may not assign its rights under the Option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one party acquires the
right to purchase in excess of 2% of the voting shares of issuer, (iii) an
assignment to a single party (i.e., a broker or investment banker) for the
purpose of conducting a widely disbursed public distribution on FNB's behalf, or
(iv) any other manner approved by the Federal Reserve Board.
12. Each of FNB and Promistar will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation applying to the Federal Reserve
Board under the Bank Holding Company Act for approval to acquire the shares
issuable hereunder, but FNB shall not be obligated to apply to state banking
authorities for approval to acquire the Common Shares issuable hereunder until
such time, if ever, as it deems appropriate to do so.
13. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
14. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Promistar is not permitted to
repurchase pursuant to Section 7, the full number of Common Shares provided in
Section 1(a) hereof (as adjusted pursuant to Section 5 hereof), it is the
express intention of Promistar to allow the Holder to acquire or to require
Promistar to repurchase such lesser number of shares as may be permissible,
without any amendment or modification hereof.
15. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
17. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
18. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
19. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
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and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
20. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officer thereunto duly authorized,
all as of the date first above written.
F.N.B. CORPORATION
By: /s/ Gary L. Tice
------------------------------------------
Gary L. Tice
President and Chief Executive Officer
PROMISTAR FINANCIAL CORPORATION
By: /s/ John H. Anderson
------------------------------------------
John H. Anderson
Chairman and Chief Executive Officer
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APPENDIX C
June 13, 2001
The Board of Directors
Promistar Financial Corporation
Promistar Plaza
551 Main Street
Johnstown, PA 15901
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the stockholders of Promistar
Financial Corporation ("Promistar") of the exchange ratio in the proposed merger
(the "Merger") of Promistar into F.N.B. Corporation ("F.N.B."), pursuant to the
Agreement and Plan of Merger, dated as of June 13, 2001, between Promistar and
F.N.B. (the "Agreement"). Pursuant to the terms of the Agreement, each
outstanding share of common stock, par value $5.00 per share, of Promistar (the
"Common Shares") will be converted into 0.926 shares of common stock, par value
$2.00 per share, of F.N.B.
Keefe, Bruyette & Woods, Inc., as part of its investment banking
business, is continually engaged in the valuation of bank and bank holding
company securities in connection with acquisitions, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for various other purposes. As specialists in the securities of
banking companies, we have experience in, and knowledge of, the valuation of the
banking enterprises. In the ordinary course of our business as a broker-dealer,
we may, from time to time purchase securities from, and sell securities to,
Promistar and F.N.B., and as a market maker in securities, we may from time to
time have a long or short position in, and buy or sell, debt or equity
securities of Promistar and F.N.B. for our own account and for the accounts of
our customers. To the extent we have any such position as of the date of this
opinion it has been disclosed to Promistar. We have acted exclusively for the
Board of Directors of Promistar in rendering this fairness opinion and will
receive a fee from Promistar for our services.
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In connection with this opinion, we have reviewed, analyzed and relied
upon material bearing upon the financial and operating condition of Promistar
and F.N.B. and the Merger, including among other things, the following: (i) the
Agreement; (ii) the Annual Reports to Stockholders and Annual Reports on Form
10-K for the three years ended December 31, 2000 of Promistar and F.N.B.; (iii)
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of
Promistar and F.N.B. and certain other communications from Promistar and F.N.B.
to their respective stockholders; and (iv) other financial information
concerning the businesses and operations of Promistar and F.N.B. furnished to us
by Promistar and F.N.B. for purposes of our analysis. We have also held
discussions with senior management of Promistar and F.N.B. regarding the past
and current business operations, regulatory relations, financial condition and
future prospects of their respective companies and such other matters as we have
deemed relevant to our inquiry. In addition, we have compared certain financial
and stock market information for Promistar and F.N.B. with similar information
for certain other companies the securities of which are publicly traded,
reviewed the financial terms of certain recent business combinations in the
banking industry and performed such other studies and analyses as we considered
appropriate.
In conducting our review and arriving at our opinion, we have relied
upon the accuracy and completeness of all of the financial and other information
provided to us or publicly available and we have not assumed any responsibility
for independently verifying the accuracy or completeness of any such
information. We have relied upon the management of Promistar and F.N.B. as to
the reasonableness and achievability of the financial and operating forecasts
and projections (and the assumptions and bases therefor) provided to us, and we
have assumed that such forecasts and projections reflect the best currently
available estimates and judgments of such managements and that such forecasts
and projections will be realized in the amounts and in the time periods
currently estimated by such managements. We are not experts in the independent
verification of the adequacy of allowances for loan and lease losses and we have
assumed, with your consent, that the aggregate allowances for loan and lease
losses for Promistar and F.N.B. are adequate to cover such losses. In rendering
our opinion, we have not made or obtained any evaluations or appraisals of the
property of Promistar or F.N.B., nor have we examined any individual credit
files.
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We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others, the following: (i)
the historical and current financial position and results of operations of
Promistar and F.N.B.; (ii) the assets and liabilities of Promistar and F.N.B.;
and (iii) the nature and terms of certain other merger transactions involving
banks and bank holding companies. We have also taken into account our assessment
of general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and knowledge of
the banking industry generally. Our opinion is necessarily based upon conditions
as they exist and can be evaluated on the date hereof and the information made
available to us through the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the exchange ratio in the Merger is fair, from a financial
point of view, to holders of the Common Shares.
Very truly yours,
/s/ Keefe, Bruyette & Woods, Inc.
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APPENDIX D
June 13, 2001
Board of Directors
F.N.B. Corporation
2150 Goodlette Road North
Naples, FL 34102
Ladies and Gentlemen:
We understand that F.N.B. Corporation (the "Company") is considering a
proposed merger of Promistar Financial Corporation ("Promistar") with and into
the Company (the "Proposed Transaction"). We understand that under the terms of
the Proposed Transaction, the Company will issue 0.926 shares of F.N.B.
Corporation common stock for each outstanding share of Promistar common stock
(the "Exchange Ratio"). The terms and conditions of the Proposed Transaction are
set forth in more detail in the Agreement and Plan of Merger between the Company
and Promistar, dated June 13, 2001 (the "Merger Agreement").
You have asked us whether, in our opinion, the Exchange Ratio to be
paid to the shareholders of Promistar in the Proposed Transaction is fair, from
a financial point of view, to the shareholders of the Company.
In arriving at our opinion, we reviewed and analyzed: (1) the Merger
Agreement and exhibits thereto; (2) certain publicly available information
concerning the Company and Promistar which we believe to be relevant to our
inquiry; (3) financial and operating information with respect to the business,
operations and prospects of the Company and Promistar furnished to us by the
Company and Promistar, respectively; (4) a trading history of Promistar's common
stock from June 6, 1996 to the present and a comparison of that trading history
with those of other publicly traded companies which we deemed relevant; (5) a
comparison of the historical financial results and present financial condition
of each of the Company and Promistar with those of publicly traded companies
which we deemed relevant; (6) historical data relating to percentage premiums
paid in acquisitions of publicly traded bank holding companies from January 1,
1999 to the present; and (7) a comparison of the financial terms of the Proposed
Transaction with the publicly available financial terms of certain other recent
transactions which we deemed relevant. In addition, we have had discussions with
the respective senior management personnel of the Company and Promistar
concerning their respective businesses, operations, assets, liabilities, present
condition and future prospects and the potential cost savings, operating
synergies, incremental revenues and other strategic benefits expected by the
senior management of the Company to result from a combination of the businesses
of Promistar and the Company and undertook such other studies, analyses and
investigations as we deemed appropriate.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the financial and other information discussed with
or reviewed by us in arriving at our opinion. With respect to the financial
forecasts, including the synergies and other benefits expected to result from
the Proposed Transaction, provided to or discussed with us, we have assumed, at
the direction of the management of the Company and without independent
verification or investigation, that such forecasts have been reasonably prepared
on bases reflecting the best currently available information, estimates and
judgments of the respective managements of the Company and Promistar as to the
future financial performance of each company. In arriving at our opinion, we
have not conducted a physical inspection of the properties and
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Board of Directors
F.N.B. Corporation
June 13, 2001
Page 2
facilities of either the Company or Promistar and have not made nor obtained any
evaluations or appraisals of the assets or liabilities (including, without
limitation, any potential environmental liabilities), contingent or otherwise,
of either the Company or Promistar. We have also assumed that the Proposed
Transaction will be consummated in accordance with the terms of the Merger
Agreement and that the Proposed Transaction will be accounted for as a
pooling-of-interests under generally accepted accounting principles and will be
treated as a tax-free reorganization for federal income tax purposes. We have
also assumed that all material governmental, regulatory or other consents and
approvals necessary for the consummation of the Proposed Transaction will be
obtained without any adverse effect on the Company or Promistar or on the
expected benefits of the Proposed Transaction. Our opinion is necessarily based
upon market, economic and other conditions as they exist on, and can be
evaluated as of, the date of this letter. We express no opinion as to the
underlying valuation, future performance or long-term viability of the Company
or Promistar. We do not have any obligation to update or revise the opinion.
We have been retained by the Board of Directors of the Company to act
as financial advisor to the Company in connection with the Proposed Transaction
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Proposed Transaction. In addition, the
Company has agreed to indemnify us for certain liabilities arising out of our
engagement. We have also performed various investment banking services for the
Company in the past (including acting as the Company's financial advisor on
previous acquisitions) and have received customary fees for such services. In
the ordinary course of our business, we and our affiliates may actively trade in
the securities of the Company or Promistar for our own account and for the
accounts of our customers and, accordingly, may at any time hold a long or short
position in such securities.
Based upon and subject to the forgoing, we are of the opinion as of the
date hereof that the Exchange Ratio to be paid by the Company to the
shareholders of Promistar in the Proposed Transaction is fair, from a financial
point of view, to the shareholders of the Company. This opinion is for the
benefit of the Board in its evaluation of the Proposed Transaction, and does not
constitute a recommendation as to how any stockholder should act or vote with
respect to any matters relating to the Proposed Transaction. This opinion may be
referred to and may be reproduced in full in any filing made by the Company with
the Securities and Exchange Commission in connection with the Proposed Merger.
/s/ THE ROBINSON-HUMPHREY COMPANY, LLC
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PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida Business Corporation Act, as amended (the "Florida Act"),
provides that, in general, a business corporation may indemnify any person who
is or was a party to any proceeding (other than an action by, or in the right
of, the corporation) by reason of the fact that he or she is or was a director
or officer of the corporation, against liability incurred in connection with
such proceeding, including any appeal thereof, provided certain standards are
met, including that such officer or director acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, and provided further that, with respect to any criminal action
or proceeding, the officer or director had no reasonable cause to believe his or
her conduct was unlawful. In the case of proceedings by or in the right of the
corporation, the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he or she is or was a director or officer of the corporation
against expenses and amounts paid in settlement actually and reasonably incurred
in connection with the defense or settlement of such proceeding, including any
appeal thereof, provided that such person acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made in respect of any
claim as to which such person is adjudged liable unless a court of competent
jurisdiction determines upon application that such person is fairly and
reasonably entitled to indemnity. To the extent that any officers or directors
are successful on the merits or otherwise in the defense of any of the
proceedings described above, the Florida Act provides that the corporation is
required to indemnify such officers or directors against expenses actually and
reasonably incurred in connection therewith. However, the Florida Act further
provides that, in general, indemnification or advancement of expenses shall not
be made to or on behalf of any officer or director if a judgment or other final
adjudication establishes that his or her actions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe it
was unlawful; (ii) a transaction from which the director or officer derived an
improper personal benefit; (iii) in the case of a director, a circumstance under
which the director has voted for or assented to a distribution made in violation
of the Florida Act or the corporation's Articles of Incorporation; or (iv)
willful misconduct or a conscious disregard for the best interests of the
corporation in a proceeding by or in the right of the corporation to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
FNB's Articles of Incorporation provide that FNB shall indemnify its
directors and officers to the fullest extent permitted by law in connection with
any actual or threatened action, suit or proceedings, civil, criminal,
administrative, investigative or other (whether brought by or in the right of
FNB or otherwise) arising out of their service to FNB or to another organization
at FNB's request, or because of their positions with FNB. The Articles further
provide that FNB may purchase and maintain insurance to protect itself and any
such director or officer against any liability, cost or expense asserted against
or incurred by him in respect of such service, whether or not FNB would have the
power to indemnify him against such liability by law or under the provisions of
this paragraph.
FNB's Bylaws provide that to the fullest extent permitted by law, no
director of the Corporation shall be personally liable for monetary damages for
any action taken, or any failure to take any action.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed with or incorporated by reference in
this Registration Statement:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
2.1 Agreement and Plan of Merger, by and between F.N.B.
Corporation and Promistar Financial Corporation (included as
Appendix A to the proxy statement/prospectus)
5.1 Opinion of Smith, Gambrell & Russell, LLP
8.1* Form of Tax Opinion of Opinion of Smith, Gambrell & Russell, LLP
10.1 Stock Option Agreement by and between FNB and Promistar
(included as Appendix B to the proxy statement/prospectus)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Bobbitt, Pittenger & Company, P.A.
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of Smith, Gambrell & Russell, LLP (included in Exhibit 5.1)
23.5* Consent of Smith, Gambrell & Russell, LLP (included in Exhibit 8.1)
23.6 Consent of Keefe, Bruyette & Woods, Inc.
23.7 Consent of The Robinson-Humphrey Company, LLC (included in Exhibit 99.4)
24.1 Powers of Attorney
99.1* Form of Proxy for Special Meeting of Shareholders of Promistar
99.2* Form of Proxy for Special Meeting of Shareholders of FNB
99.3 Opinion of Keefe, Bruyette & Woods, Inc. (included as Appendix
C to the proxy statement/prospectus)
99.4 Opinion of The Robinson-Humphrey Company, LLC (included as
Appendix D to the proxy statement/prospectus)
---------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price
156
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change in such
information in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report, to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act;
and, where interim financial information required to be presented by Article 3
of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) (1) The undersigned Registrant hereby undertakes as
follows: that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of
this Registration Statement, by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of the
Securities Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for
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157
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(f) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Naples,
State of Florida, on August 1, 2001.
F.N.B. CORPORATION
By: /s/ Gary L. Tice
---------------------------------------
Gary L. Tice
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board August 1, 2001
--------------------------------------------------
Peter Mortensen
/s/ Gary L. Tice
--------------------------------------------------
Gary L. Tice President, Chief Executive Officer August 1, 2001
and Director (principal executive
officer)
* Vice Chairman August 1, 2001
--------------------------------------------------
Stephen J. Gurgovits
/s/ John D. Waters Vice President and Chief Financial August 1, 2001
-------------------------------------------------- Officer (principal financial and
John D. Waters accounting officer)
* Director August 1, 2001
--------------------------------------------------
W. Richard Blackwood
Director
--------------------------------------------------
Alan C. Bomstein
* Director August 1, 2001
--------------------------------------------------
William B. Campbell
* Director August 1, 2001
--------------------------------------------------
Charles T. Cricks
* Director August 1, 2001
--------------------------------------------------
Henry M. Ekker
* Director August 1, 2001
--------------------------------------------------
James S. Lindsey
159
* Director August 1, 2001
--------------------------------------------------
Paul P. Lynch
* Director August 1, 2001
--------------------------------------------------
Edward J. Mace
* Director August 1, 2001
--------------------------------------------------
Robert S. Moss
* Director August 1, 2001
--------------------------------------------------
William A. Quinn
* Director August 1, 2001
--------------------------------------------------
William J. Strimbu
* Director August 1, 2001
--------------------------------------------------
Archie O. Wallace
* Director August 1, 2001
--------------------------------------------------
James T. Weller
* Director August 1, 2001
--------------------------------------------------
Eric J. Werner
* Director August 1, 2001
--------------------------------------------------
Robert B. Wiley
* Director August 1, 2001
--------------------------------------------------
Donna C. Winner
* By: /s/ John D. Waters
--------------------------------------------
John D. Waters, as Attorney-in-Fact,
pursuant to Powers of Attorney filed as
Exhibit 24.1 to this Registration Statement
160
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
2.1 Agreement and Plan of Merger, by and between F.N.B.
Corporation and Promistar Financial Corporation (included as
Appendix A to the proxy statement/prospectus)
5.1 Opinion of Smith, Gambrell & Russell, LLP
8.1* Form of Tax Opinion of Opinion of Smith, Gambrell & Russell, LLP
10.1 Stock Option Agreement by and between FNB and Promistar
(included as Appendix B to the proxy statement/prospectus)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Bobbitt, Pittenger & Company, P.A.
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of Smith, Gambrell & Russell, LLP (included in Exhibit 5.1)
23.5* Consent of Smith, Gambrell & Russell, LLP (included in Exhibit 8.1)
23.6 Consent of Keefe, Bruyette & Woods, Inc.
23.7 Consent of The Robinson-Humphrey Company, LLC (included in Exhibit 99.4)
24.1 Powers of Attorney
99.1* Form of Proxy for Special Meeting of Shareholders of Promistar
99.2* Form of Proxy for Special Meeting of Shareholders of FNB
99.3 Opinion of Keefe, Bruyette & Woods, Inc. (included as Appendix
C to the proxy statement/prospectus)
99.4 Opinion of The Robinson-Humphrey Company, LLC (included as
Appendix D to the proxy statement/prospectus)
---------------
* To be filed by amendment.