OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement") dated as of the 3rd day of
June, 1997, between FNB CORP. ("FNB"), a North Carolina corporation, and HOME
SAVINGS BANK OF ▇▇▇▇▇ CITY, INC., SSB ("Home Savings"), a North Carolina state
savings bank.
RE C I T A L S :
WHEREAS, the Boards of Directors of FNB and Home Savings have approved
an Agreement and Plan of Reorganization and Merger (the "Merger Agreement"),
dated as of the date hereof, between FNB and Home Savings, providing for the
merger (the "Merger") of Home Savings into First National Bank and Trust
Company, a wholly owned subsidiary of FNB ("First National"), which Merger
Agreement has been executed by the parties concurrently with this Agreement, and
WHEREAS, as a condition to FNB's execution of the Merger Agreement, and
in consideration thereof, Home Savings has agreed to grant to FNB the option set
forth herein;
NOW, THEREFORE, in consideration of the premises herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned thereto in the Merger Agreement.
2. Grant of Option. Home Savings hereby grants to FNB an option (the
"Option") to purchase up to 183,615 shares of authorized but unissued shares of
Home Savings common stock, par value $1.00 per share (the "Home Savings Common
Stock"), at a price of $12.50 per share (the "Exercise Price") payable in cash
as provided in Section 4 below; provided, however, that such number of shares
shall be reduced if and to the extent necessary so that the number of shares for
which this Option is exercisable shall not exceed 19.9% of the issued and
outstanding Home Savings Common Stock as of the date hereof. The number of
shares of Home Savings Common Stock that may be received upon the exercise of
this Option is subject to adjustment as set forth herein.
3. Exercise of Option.
(a) Subject to compliance with applicable laws and regulations, and
unless FNB shall have breached in any material respect and failed to cure any
covenant or representation in the Merger Agreement, FNB may exercise the Option,
in whole or in part, at any time or from time to time following the occurrence
of a Purchase Event (as defined below) and prior to the occurrence of a
Termination Event (as defined below).
(b) (i) As used herein, a "Purchase Event" shall mean when:
(A) Home Savings shall have authorized, recommended,
proposed or publicly announced an intention to authorize,
recommend or propose a transaction with a person (other than
FNB or First National) to, or entered into an agreement with a
person (other than FNB or First National) to: (a) effect a
merger or consolidation with, or enter into any similar
business combination with, Home Savings, (b) sell, lease or
otherwise dispose of the assets of Home Savings to such
person, aggregating 15 percent or more of the consolidated
assets of Home Savings (other than a sale of loan receivables
in a financing transaction in the normal course of business
consistent with past practices), or (c) issue, sell or
otherwise dispose of to such person (including by way of
merger, consolidation, share exchange or any similar
transaction) securities representing more than 15 percent of
the voting power of Home Savings; or
(B) any person other than FNB or First National shall
have acquired beneficial ownership of more than 15 percent of
the outstanding shares of Home Savings Common Stock; or any
person shall have merged, consolidated with or consummated a
similar transaction with Home Savings or any person shall have
purchased, leased or otherwise acquired 15 percent or more of
the assets of Home Savings (other than a sale of loan
receivables in a financing transaction in the normal course of
business consistent with past practices); or
(C) a bona fide proposal is made by any person (other
than FNB or First National) by public announcement or written
communication that is or becomes the subject of public
disclosure, or disclosure in an application to any federal or
state regulatory authority, to (a) acquire, merge or
consolidate with, or enter into any similar transaction with
Home Savings, (b) purchase, lease or otherwise acquire 10
percent or more of the assets of Home Savings (other than a
sale of loan receivables in a financing transaction in the
normal course of business consistent with past practices), or
(c) purchase or otherwise acquire (including by way of tender
offer, merger, consolidation, share exchange, tender or
exchange offer or any similar transaction) securities
representing more than 10 percent of the voting power of Home
Savings.
(ii) The term "person" shall have the meaning specified in
Section 3(a)(9), and "beneficial ownership" shall have the meaning
specified under Section 13(d)(3), of the Securities Exchange Act of
1934, as amended.
(c) Home Savings shall notify FNB promptly in writing of the occurrence
of any transaction, offer or event giving rise to a Purchase Event.
(d) In the event FNB determines to exercise the Option, it shall send
to Home Savings a written notice (an "Exercise Notice," the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Home Savings Common Stock
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FNB will purchase pursuant to such exercise, and (ii) a place and date not
earlier than three business days nor later than 20 business days from the Notice
Date for the closing of such purchase with respect to such exercise (the "Option
Closing Date"); provided, that if the closing of the purchase and sale pursuant
to the Option cannot be consummated by reason of any applicable judgment,
decree, order, law or regulation, the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated; and provided
further, without limiting the foregoing, if prior notification to, or approval
of, any federal or state regulatory agency is required in connection with such
purchase, FNB, and Home Savings if required by applicable law, shall promptly
file the required notice or application for approval 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 the last required
notification period has expired or been terminated or such approvals have been
obtained and any requisite waiting periods shall have passed.
(e) The Option shall expire and terminate, to the extent not previously
exercised, upon the earliest to occur of the following (each a "Termination
Event"):
(i) the Effective Time of the Merger; or
(ii) the termination of the Merger Agreement without a
Purchase Event having occurred, other than a termination based upon,
following, or in connection with, either (A) a willful and material
breach by Home Savings of any of its covenants or agreements in the
Merger Agreement, or (B) the failure of Home Savings to obtain
shareholder approval of the transactions contemplated by the Merger
Agreement by the vote required under applicable law; or
(iii) 18 months after the first occurrence of a Purchase
Event; or
(iv) 36 months after the date hereof.
(f) Notwithstanding the termination of the Option, FNB shall be
entitled to purchase any shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the termination of the
Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
4. Payment and Delivery of Certificates.
(a) On each Option Closing Date, FNB shall pay to Home Savings the
aggregate purchase price for the shares being purchased on that Option Closing
Date in immediately available funds by a wire transfer to a financial
institution designated by Home Savings.
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(b) At each closing relating to an exercise of the Option,
simultaneously with the delivery of cash by FNB as provided in subsection (a)
with respect to the Option, Home Savings shall deliver to FNB a certificate or
certificates representing the number of shares of Home Savings Common Stock
purchased by FNB, and FNB shall deliver to Home Savings a letter agreeing that
FNB will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement and providing such
undertakings and representations as necessary for the issuance and sale of such
shares to be exempt from registration under applicable securities laws.
5. Representation by Home Savings. Home Savings hereby represents and
warrants to, and covenants with, FNB as follows:
(a) Home Savings has all requisite corporate power and authority to
enter into this Option Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Option Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Home Savings. This Option Agreement has been duly executed and
delivered by Home Savings and constitutes a valid and binding obligation of Home
Savings, enforceable in accordance with its terms.
(b) Home Savings has taken all necessary corporate action to authorize
and reserve for issuance the full number of shares of Home Savings Common Stock
issuable upon exercise of the Option, and shall continue to reserve such shares
until the Option is exercised or until this Agreement is terminated as provided
herein.
(c) The shares of Home Savings Common Stock to be issued upon due
exercise, in whole or in part, of the Option, when paid for as provided herein,
will be duly authorized, validly issued, fully paid and nonassessable and shall
be delivered free and clear of all liens, claims, charges and encumbrances of
any kind or nature whatsoever, including any preemptive rights of any
shareholder of Home Savings, but subject to restrictions on transfer imposed by
applicable securities laws.
(d) The execution and delivery of this Option Agreement does not, and
the consummation of the transactions contemplated hereby will not, conflict with
or result in any violation of any provision of the Articles of Incorporation or
Bylaws of Home Savings or, subject to obtaining any approvals or consents
contemplated hereby, result in any violation of any loan or credit agreement,
note, mortgage, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Home Savings or its
properties or assets.
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6. Adjustment upon Changes in Capitalization, etc. In the event of any
change in the outstanding Home Savings Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, exchanges of
shares or the like, the number of shares subject to the Option and the exercise
price per share shall be adjusted appropriately so that the Option will entitle
the holder thereof to acquire, at a price economically equivalent to the
Exercise Price, all of the shares or other securities, property, or rights to
which ownership of the underlying shares of Home Savings Common Stock would have
entitled the holder had they been outstanding immediately prior to such change.
In the event that any shares of Home Savings Common Stock are issued after the
date of this Agreement other than in a transaction described in the first
sentence of this Section 6 or upon the exercise of the Option, the number of
shares subject to the Option shall be adjusted so that, immediately after such
issuance, the number of shares subject to the Option (together with the number
of shares previously issued under the Option) equals 19.9 percent of the number
of the then-outstanding shares of Home Savings Common Stock. Nothing contained
in this Section 6 shall be deemed to authorize Home Savings to breach any
provision of the Merger Agreement.
7. Registration Rights. Home Savings shall, upon request by FNB at any
time and from time to time within two years of the first exercise of the Option,
as expeditiously as possible, prepare and file an offering circular under the
applicable regulations of the Office of Thrift Supervision or Federal Deposit
Insurance Corporation or, if Home Savings is then subject to the registration
provisions of the Securities Act, prepare and file a registration statement
under the Securities Act, in order to permit the sale or other disposition of
any or all shares or securities that have been acquired by or are issuable to
FNB upon exercise of the Option in accordance with the intended method of sale
or other disposition stated by FNB, including a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision. Home Savings
shall use its best efforts to qualify such shares or other securities under any
applicable state securities laws, to cause any such offering circular or
registration statement to become effective, to obtain all consents or waivers of
other parties which are required for such offering circular or registration
statement, and to keep any such offering circular or registration statement
updated and effective for such period not to exceed of 360 days from the day
such offering circular or registration statement first becomes effective as may
be reasonably necessary to effect such sale or other disposition. The
obligations of Home Savings hereunder may be suspended for one or more periods
of time not exceeding 60 days in the aggregate if the Board of Directors of Home
Savings shall have determined that the distribution of such offering circular or
the filing of such registration statement or the maintenance of its
effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Home Savings. Any offering circular or
registration statement prepared under this Section 7, and any sale covered
thereby, shall be at Home Savings' expense except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of FNB's counsel
related thereto. FNB shall provide all information reasonably requested by Home
Savings for inclusion in any offering circular or registration statement to be
prepared hereunder. If during the time periods referred to in the first sentence
of this Section 7 Home Savings distributes an offering circular or effects a
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registration under the Securities Act of Home Savings Common Stock for its own
account or for any other shareholders of Home Savings (other than on Form S-4 or
Form S-8, or any successor form), it shall first allow FNB the right to
participate in such offering, and such participation shall not affect the
obligation of Home Savings to effect the offering circulars or registration
statements for FNB under this Section 7; provided that, if the managing
underwriters of such offering advise Home Savings in writing that in their
opinion the number of shares of Home Savings Common Stock requested to be
included in such offering circular or registration statement exceeds the number
which can be sold in such offering, Home Savings shall include the shares
requested to be included therein by FNB only to the maximum extent such managing
underwriter determines to be feasible. In connection with any offering circular
or registration statement pursuant to this Section 7, Home Savings and FNB shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution in
connection therewith.
8. Listing. If Home Savings Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NASDAQ National
Market or any other national market or exchange, Home Savings, upon the request
of FNB, will promptly file an application to list the shares of Home Savings
Common Stock or other securities to be acquired upon exercise of the Option on
the NASDAQ National Market or such other market or exchange and will use its
best efforts to obtain approval of such listing as soon as practicable.
9. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of FNB, upon presentation and
surrender of this Option Agreement at the principal office of Home Savings for
other Agreements providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Home
Savings Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by Home
Savings 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, Home Savings will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement executed
and delivered shall constitute an additional contractual obligation on the part
of Home Savings, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by anyone.
10. Severability 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, 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 Option will not permit the holder to acquire the full
number of shares of
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Home Savings Common Stock provided in Section 2 hereof (as adjusted pursuant to
Section 6 hereof), it is the express intention of Home Savings to allow the
holder to acquire such lesser number of shares as may be permissible, without
any amendment or modification hereof.
11. Miscellaneous.
(a) Expenses. Except as otherwise 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 transaction contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein,
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 thereto, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party other than the parties hereto, and
their respective successor and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
(c) Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement to any other person, without the
express written consent of the other party, except that FNB may assign in whole
or in part the Option and other benefits and obligations hereunder without
limitation to any of its wholly owned subsidiaries and FNB may assign in whole
or in part the Option and other benefits and obligations hereunder without
limitation if a Purchase Event has occurred and FNB shall have delivered to Home
Savings a copy of a letter from the staff of the Commission, or an opinion of
counsel, in form and substance reasonably satisfactory to Home Savings, to the
effect that such assignment will not violate the requirements of the Securities
Act; provided, that prior to any such assignment, FNB shall give written notice
of the proposed assignment to Home Savings, and within 24 hours of receipt of
such notice of a bona fide proposed assignment, Home Savings may purchase the
Option at a price and on other terms at least as favorable to FNB as that set
forth in the notice of assignment.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally recognized overnight express or by facsimile transmission,
addressed or directed as follows:
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If to Home Savings:
Home Savings Bank of ▇▇▇▇▇ City, Inc., SSB
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC
One Hanover Square
Suite 1700
P.O. Box 26507
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to FNB:
FNB Corp.
▇.▇. ▇▇▇ ▇▇▇▇ (27204)
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ & ▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ P.L.L.C
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Any party may by notice change the address to which notice or other
communications to it are to be delivered or mailed.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
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(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Agreement by Home
Savings and that this Agreement may be enforced by FNB through injunctive or
other equitable relief.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, each of the parities hereto has executed
this Agreement as of the day and year first above written.
FNB CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
HOME SAVINGS BANK OF ▇▇▇▇▇ CITY, INC., SSB
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
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