Exhibit (2)A
AGREEMENT AND PLAN OF MERGER
BETWEEN
CNB HOLDINGS, INC.
AND
FNB CORPORATION
July 10, 2000
TABLE OF CONTENTS
ARTICLE 1
The Merger and Related Matters
Page
1.1 Definitions
1.2 The Merger
1.3 Name and Continuing Operations
1.4 Management of Surviving Corporation
1.5 The Closing and Effective Date
ARTICLE 2
Basis and Manner of Conversion
2.5 Allocation of Stock Election Shares
2.2 Allocation
2.3 Election
2.4 Allocation of Cash Election Shares
2.5 Allocation of Stock Election Shares
2.6 No Allocation
2.7 Computations
2.8 Cancellation of Shares
2.9 Outstanding Options for CNB Common Stock
ARTICLE 3
Manner of Exchange
3.1 Exchange Procedures
3.2 Distribution with Respect to Unexchanged Shares
3.3 No Fractional Securities
3.4 Certain Adjustments
3.5 Rights of Dissenting Shareholders
ARTICLE 4
Representations and Warranties
4.1 Representations and Warranties of CNB
(a) Organization, Standing and Power
(b) Authority
(c) Capital Structure
(d) Ownership Capital Structure and
Organization of Community National
(e) Financial Statements
(f) Absence of Undisclosed Liabilities
(g) Legal Proceedings; Compliance with Laws
(h) Regulatory Approvals
(i) Labor Relations
(j) Tax Matters
(k) Property
(l) Reports
(m) Employee Benefit Plans
(n) Investment Securities
(o) Certain Contacts
(p) Insurance
(q) Loans, OREO and Allowance for Loan Losses
(r) Absence of Material Changes and Events
(s) Statements True and Correct
(t) Brokers and Finders
(u) Repurchase Agreements
(v) Trust Accounts
(w) Environmental Matters
4.2 Representations and Warranties of FNB
(a) Organization, Standing and Power
(b) Authority
(c) Capital Structure
(d) Ownership of the FNB Subsidiaries; Capital Structure
of the FNB Subsidiaries; and Organization of the FNB
Subsidiaries
(e) Financial Statements
(f) Absence of Undisclosed Liabilities
(g) Legal Proceedings; Compliance with Laws
(h) Regulatory Approvals
(i) Labor Relations
(j) Tax Matters
(k) Property
(l) Reports
(m) Employee Benefit Plans
(n) Investment Securities
(o) Certain Contacts
(p) Insurance
(q) Loans, OREO, and Allowance for Loan Losses
(r) Absence of Material Changes and Events
(s) Statements True and Correct
(t) Brokers and Finders
(u) Repurchase Agreements
(v) Administration of Trust Accounts
(w) Environmental Matters
ARTICLE 5
Conduct Prior to the Effective Date
5.1 Access to Records and Properties
5.2 Confidentiality
5.3 Registration Statement, Proxy Statement and
Shareholder Approval
5.4 Operation of the Business of FNB and CNB
5.5 Dividends
5.6 No Solicitation
5.7 Regulatory Filings
5.8 Public Announcements
5.9 Notice of Breach
5.10 Accounting Treatment
5.11 Merger Consummation
5.12 FNB Acquisition Transaction
ARTICLE 6
Additional Agreements
6.1 Conversion of Stock Options
6.2 Benefit Plans
6.3 Indemnification
ARTICLE 7
Conditions to the Merger
7.1 Conditions to Each Party's Obligations to Effect the
Merger
(a) Shareholder Approval
(b) Regulatory Approvals
(c) Registration Statement
(d) Tax Opinion
(e) Opinions of Counsel
(f) Legal Proceedings
7.2 Conditions to Obligations of FNB
(a) Representations and Warranties
(b) Performance of Obligations
(c) Affiliate Letters
(d) Investment Banking Letter
7.3 Conditions to Obligations of CNB
(a) Representations and Warranties
(b) Performance of Obligations
(c) Investment Banking Letter
ARTICLE 8
Termination
8.1 Termination
8.2 Effect of Termination
8.3 Non-Survival of Representations, Warranties and Covenants
8.4 Expenses
ARTICLE 9
General Provisions
9.1 Entire Agreement
9.2 Waiver and Amendment
9.3 Descriptive Headings
9.4 Governing Law
9.5 Notices
9.6 Counterparts
9.7 Severability
9.8 Subsidiaries
Exhibit A - Plan of Merger between CNB Holdings, Inc. and
FNB Corporation
Exhibit B - Employment Contract with ▇▇▇▇▇▇▇ ▇▇▇▇▇
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of July 10, 2000 by and between FNB Corporation, a Virginia
corporation with its principal office located in Christiansburg, Virginia
("FNB"), and CNB Holdings, Inc., a Virginia corporation with its
principal office located in Pulaski, Virginia ("CNB").
WITNESSETH:
WHEREAS, FNB and CNB (the "Companies") desire to affiliate, so that
First National Bank ("First National") and Community National Bank
("Community National") (together, the "Banks") will be under common
control; and
WHEREAS, FNB and CNB have agreed to the affiliation of their two
companies through a merger under Virginia law, as a result of which CNB would
merge with and into FNB and the shareholders of CNB would become shareholders
of FNB Corporation, all as more specifically provided in this Agreement and
the Plan of Merger in the form attached hereto as Exhibit A (the "Plan");
and
WHEREAS, the Boards of Directors of FNB and CNB each believe it is in the
best interests of their respective corporations and their shareholders to
affiliate as provided herein and not in a transaction structured as an
acquisition of one by the other, and that the respective shareholder values of
FNB and CNB can be maximized over time through this affiliation; and
WHEREAS, the Boards of Directors of the Companies each believe that the
transaction contemplated in this Agreement is in the best interests of the
communities they serve and of their respective employees; and
WHEREAS, the Boards of Directors of FNB and CNB each believe that after
the affiliation the holding company structure should provide management and
technical assistance and support for recruitment, training and retention of
skilled officers and employees to the Banks in order to enable the combined
organization to operate more efficiently; and
WHEREAS, the respective Boards of Directors of FNB and CNB have resolved
that the transactions described herein are in the best interests of the
parties and their respective shareholders and have authorized and approved the
execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereby agree as
follows:
ARTICLE 1
The Merger and Related Matters
1.1 Definitions. Any term defined anywhere in this Agreement shall have
the meaning ascribed to it for all purposes of this Agreement (unless
expressly noted to the contrary). In addition:
(a) the term "knowledge" when used with respect to a party shall
mean the knowledge, after due inquiry, of any "Executive Officer" of such
party, as such term is defined in Regulation O, (12 C.F.R. 215);
(b) the term "Material Adverse Effect", when applied to a party,
shall mean an event, occurrence or circumstance (including without limitation
(i) the making of any provisions for possible loan and lease losses, write-
downs or other real estate and taxes and (ii) any breach of a representation
or warranty by such party) which (a) has or is reasonably likely to have a
material adverse effect on the financial position, results of operations or
business of the party and its subsidiaries, taken as a whole, or (b) would
materially impair the party's ability to perform its obligations under this
Agreement or the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that solely for purposes of
measuring whether an event, occurrence or circumstance has a material adverse
effect on such party's results of operations, the term "results of
operations" shall mean net interest income plus non-interest income (less
securities gains) less gross expenses (excluding provisions for possible loan
and lease losses, write-downs of other real estate and taxes); and provided
further, that material adverse effect and material impairment shall not be
deemed to include the impact of (i) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (ii) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks and bank holding
companies generally, and (iii) the Merger on the operating performance of the
parties to this Agreement; and
(c) the term "Previously Disclosed" by a party shall mean
information set forth in a written disclosure letter that is delivered by that
party to the other party prior to or contemporaneously with the execution of
this Agreement and specifically designated as information "Previously
Disclosed" pursuant to this Agreement.
1.2 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Date as defined in Section 1.5 hereof, CNB will be merged
with and into FNB (the "Merger"). At the Effective Date, the Merger shall
have the effect as provided in Section 13.1-721 of the Virginia Stock
Corporation Act.
1.3 Name and Continuing Operations. The respective names and banking
offices of the Banks will not change as a result of the Merger. After the
Effective Date, the surviving corporation shall be headquartered in
Christiansburg, Virginia.
1.4 Management of Surviving Corporation. The directors, officers and
employees of the Banks will not change as a result of the Merger except that
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. shall resign from the Board of Directors of Community
National Bank and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. shall be appointed to fill the vacancy
so created. FNB's Board of Directors presently has nine (9) members. On the
Effective Date, the number of Directors of FNB shall be increased by one
member in Class III whose terms expire at the 2002 annual meeting of
shareholders and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. shall be appointed to fill the vacancy
so created. At the next annual meeting of shareholders of FNB and at the
annual meeting in 2002, management of FNB will recommend to shareholders that
▇▇. ▇▇▇▇▇▇ be elected as a member of Class III of directors whose terms expire
at the 2002 and 2005, respectively, annual meetings of shareholders, provided
that he has not resigned, died or otherwise been removed from office. In
addition, on the Effective Date, FNB agrees to enter into a change of control
agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇, President and Chief Executive Officer of
Community National, in the form attached hereto as Exhibit B.
1.5 The Closing and Effective Date. The closing of the transactions
contemplated by this Agreement and the Plan of Merger shall take place at the
offices of FNB in Christiansburg, Virginia or at such other place as may be
mutually agreed upon by the parties. The Merger shall become effective on the
date shown on the Certificate of Merger issued by the State Corporation
Commission of Virginia effecting the Merger (the "Effective Date"). Unless
otherwise agreed upon in writing by the chief executive officers of FNB and
CNB, subject to the conditions to the obligations of the parties to effect the
Merger as set forth in Article 6, the parties shall use their best efforts to
cause the Effective Date to occur on the first day of the month following the
month in which the conditions set forth in Sections 6.1(a) and 6.1(b) are
satisfied. All documents required by the terms of this Agreement to be
delivered at or prior to consummation of the Merger will be exchanged by the
parties at the closing of the Merger (the "Merger Closing"), which shall be
held on or before the Effective Date. FNB and CNB shall execute and deliver
to the Virginia State Corporation Commission Articles of Merger containing a
Plan of Merger in substantially the form of Exhibit A hereto.
ARTICLE 2
Basis and Manner of Conversion
2.1 Conversion of CNB Stock and Stock Options. At the Effective
Date, by virtue of the Merger, each share of the common stock, par
value $5.00 per share, of CNB ("CNB Common Stock") issued and
outstanding immediately prior to the Effective Date will be converted
into either (i) $10.60 in cash ("Cash Consideration") or
(ii) shares of common stock, par value $5.00 per share, of FNB ("FNB
Common Stock") whose aggregate market value equals $10.60 ("Stock
Consideration"), provided that in no event shall FNB issue more than
0.642 shares or less than 0.544 shares for each outstanding share of
CNB Common Stock, which Stock Consideration together with the Cash
Consideration (the "Merger Consideration"), in each case as the
holder thereof shall have elected or be deemed to have elected in
accordance with Section 2.3. The market value of FNB Common Stock
will be the average of the closing sales prices per share of FNB
Common Stock as reported on the NASDAQ Exchange Composite
Transactions Tape (as reported in The Wall Street Journal, or, if not
reported thereby, another authoritative source as chosen by FNB) for
the thirty consecutive full trading days on such exchange (even if
FNB Common Stock does not trade in each such day) ending at the close
of trading on the tenth day before the Effective Date (the "Market
Value"). The ratio of shares of FNB's common stock that will be
exchanged for each outstanding share of CNB Common Stock shall be
referred to herein as the "Exchange Ratio" and shall be rounded to
the nearest third decimal point.
2.2 Allocation. Notwithstanding anything in this Agreement to the
contrary, the aggregate amount of cash to be issued to shareholders of CNB in
the Merger shall be equal to $4,909,915 (the "Cash Amount"); provided that
the Cash Amount may be changed by FNB to accommodate the exercise by FNB of
its option to change the Cash Number and the Stock Number pursuant to the last
sentence of this Section 2.2. As used in this Agreement, the Cash Number
shall mean the aggregate number of shares of CNB Common Stock to be converted
into the right to receive the Cash Consideration in the Merger, which shall be
equal to the Cash Amount divided by $10.60. The number of shares of CNB
Common Stock to be converted into the right to receive Stock Consideration
(the "Stock Number") will be equal to (i) the number of shares of CNB Common
Stock issued and outstanding immediately prior to the Effective Date of the
Merger less (ii) the sum of (A) the Cash Number and (B) the aggregate number
of shares of CNB Common Stock to be exchanged for cash pursuant to Section
3.3. FNB shall have the option to change the Cash Number and the Stock Number
to more closely follow the actual elections of CNB shareholders pursuant to
this Article 2, so long as such modification to the Cash Number and the Stock
Number does not prevent the condition set forth in Section 7.1(d) from being
satisfied.
2.3 Election. Subject to allocation in accordance with the provisions
of this Article, each record holder of shares of CNB Common Stock issued and
outstanding immediately prior to the Election Deadline (as defined in Section
3.1(i)) will be entitled, in accordance with Section 3.1, (i) to elect to
receive in respect of each such share (A) Cash Consideration (a "Cash
Election") or (B) Stock Consideration (a "Stock Election") or (ii) to
indicate that such record holder has no preference as to the receipt of Cash
Consideration or Stock Consideration for all such shares held by such holder
(a "Non-Election"). Shares of CNB Common Stock in respect of which a Non-
Election is made or as to which no election is made (collectively, "Non-
Election Shares") shall be deemed by FNB to be shares in respect of which
Cash Elections or Stock Elections have been made, as FNB shall determine.
2.4 Allocation of Cash Election Shares. In the event that the
aggregate number of shares in respect of which Cash Elections have
been made (the "Cash Election Shares") exceeds the Cash Number, all
shares of CNB Common Stock in respect of which Stock Elections have
been made (the "Stock Election Shares") and all Non-Election Shares
will be converted into the right to receive Stock Consideration (and
cash in lieu of fractional interests in accordance with Section 3.3),
and Cash Election Shares will be converted into the right to receive
Cash Consideration or Stock Consideration in the following manner:
(i) the number of Cash Election Shares covered by each
Form of Election (as defined in Section 3.1(i)) to be converted
into Cash Consideration will be determined by multiplying the
number of Cash Election Shares covered by such Form of Election by
a fraction, (A) the numerator of which is the Cash Number and (B)
the denominator of which is the aggregate number of Cash Election
Shares rounded down to the nearest whole number; and
(ii) all Cash Election Shares not converted into Cash
Consideration in accordance with Section 2.4(i) will be converted
into the right to receive Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 3.3).
2.5 Allocation of Stock Election Shares. In the event that the
aggregate number of Stock Election Shares exceeds the Stock Number,
all Cash Election Shares and all Non-Election Shares (together, the
" Cash Shares") will be converted into the right to receive Cash
Consideration, and all Stock Election Shares will be converted into
the right to receive Cash Consideration or Stock Consideration in
the following manner:
(i) the number of Stock Election Shares covered by each Form of
Election to be converted into Cash Consideration will be
determined by multiplying the number of Stock Election Shares
covered by such Form of Election by a fraction, (A) the numerator
of which is the Cash Number less the number of Cash Shares and
(B) the denominator of which is the aggregate number of Stock
Election Shares, rounded down to the nearest whole number; and
(ii) all Stock Election Shares not converted into Cash
Consideration in accordance with Section 2.5(i) will be converted
into the right to receive Stock Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3).
2.6 No Allocation. In the event that neither Section 2.4 nor
Section 2.5 is applicable, all Cash Election Shares will be
converted into the right to receive Cash Consideration, all Stock
Election Shares will be converted into the right to receive Stock
Consideration (and cash in lieu of fractional interests in accordance
with Section 3.3) and Non-Election Shares will be converted into the
right to receive Cash Consideration or Stock Consideration (and
cash in lieu of fractional interests in accordance with Section 3.3)
as FNB shall determine.
2.7 Computations. The Exchange Agent (as defined in Section
3.1(i)) will make all computations to give effect to this Article 2.
2.8 Cancellation of Shares. As of the Effective Date of the Merger,
all such shares of CNB Common Stock will no longer be outstanding and
automatically be cancelled and retired and will cease to exist and
each holder of a certificate formerly representing any such shares of
CNB Common Stock (a "CNB Certificate") will cease to have any
rights with respect thereto, except the right to receive Merger
Consideration and any additional cash in lieu of fractional shares of
FNB Common Stock to be issued or paid in consideration therefor upon
surrender of such CNB Certificate in accordance with Article 3,
without interest.
2.9 Outstanding Options for CNB Common Stock. At the Effective
Date, all rights with respect to CNB Common Stock pursuant to stock
options ("CNB Options") granted by CNB under a CNB stock option
plan which are outstanding on the Effective Date shall be treated as
follows: (i) fifty percent (50%) of the CNB Options held by a holder
thereof shall be converted into and become rights with respect to FNB
Common Stock as provided in Section 6.1 and (ii) with respect to the
remaining fifty percent (50%) of such CNB Options held by such
holder, the amount by which $10.60 exceeds the exercise price for
such options will be converted into Cash Consideration or Stock
Consideration as provided in Sections 2.1 through 2.8 of this Article
2 so long as such conversion does not prevent the condition set forth
in Section 7.1(d) from being satisfied.
ARTICLE 3
Manner of Exchange
3.1 Exchange Procedures.
(i) Not more than 60 days nor fewer than 30 days prior to the
Effective Date, FNB, acting as the exchange agent ("Exchange
Agent"), will mail a form of election (the "Form of Election")
to each shareholder of record of CNB as of a record date as close
as practicable to the date of mailing and mutually agreed to by
CNB and FNB. In addition, the Exchange Agent will use its best
efforts to make the Form of Election available to the persons who
become shareholders of CNB during the period between such record
date and the Effective Date. Any election to receive Merger
Consideration will have been properly made only if the Exchange
Agent shall have received on the fifth business day immediately
preceding the Effective Date (the "Election Deadline"), a Form
of Election properly completed and accompanied by a CNB
Certificate ("Certificate(s)") for the shares to which such Form
of Election relates, acceptable for transfer on the books of CNB
(or an appropriate guarantee of delivery), as set forth in such
Form of Election. An election may be revoked only by written
notice received by the Exchange Agent prior to 5:00 p.m. on the
Election Deadline. If an election is so revoked, the
Certificate(s) (or guarantee of delivery, as appropriate) to which
such election relates will be promptly returned to the person
submitting the same to the Exchange Agent.
(ii) As soon as reasonably practicable after the
Effective Date, the Exchange Agent will mail to each holder of
record of a Certificate, whose shares of CNB Common Stock were
converted into the right to receive Merger Consideration and those
who failed to return a properly completed Form of Election, (i) a
letter of transmittal (which will specify that delivery will be
effected, and risk of loss and title to the Certificates will
pass, only upon delivery of the Certificates to the Exchange Agent
and will be in such form and have such other provisions as the
Exchange Agent may specify consistent with this Agreement) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration.
(iii) With respect to properly made elections in
accordance with Section 3.1(i), and upon surrender in accordance
with Section 3.1(ii) of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such Certificate will be
entitled to receive in exchange therefor the Merger Consideration
that such holder has the right to receive pursuant to the
provisions of Article 2, and the Certificate so surrendered will
forthwith be canceled. In the event of a transfer of ownership of
Shares that are not registered in the transfer records of CNB, as
the case may be, payment may be issued to a person other than the
person in whose name the Certificate so surrendered is registered
if such Certificate is properly endorsed or otherwise in proper
form for transfer and the person requesting such issuance pays any
transfer or other taxes required by reason of such payment to a
person other than the registered holder of such Certificate or
establishes to the satisfaction of FNB that such tax has been paid
or is not applicable. Until surrendered as contemplated by this
Section 3.1, each Certificate will be deemed at any time after the
Effective Date to represent only the right to receive upon such
surrender the Merger Consideration that the holder thereof has the
right to receive in respect of such Certificate pursuant to the
provisions of Article 2. No interest will be paid or will accrue
on any cash payable to holders of Certificates pursuant to the
provisions of Article 2.
3.2 Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to the shares of CNB Common Stock
with a record date after the Effective Date shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of
CNB Common Stock represented thereby, and no cash payment in lieu of
any fractional shares shall be paid to any such holder pursuant to
Section 3.3. Subject to the effect of unclaimed property, escheat
and other applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the Certificate
representing whole shares of CNB Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of CNB
Common Stock to which such holder is entitled pursuant to Section
3.3, and (ii) the amount of dividends or other distributions, if any,
with a record date after the Effective Date.
3.3 No Fractional Securities. No FNB Certificates or scrip
representing fractional shares of FNB Common Stock shall be issued
upon the surrender for exchange of Certificates, and such fractional
shares shall not entitle the owner thereof to vote or to any other
rights of a holder of FNB Common Stock. A holder of Shares converted
in the Merger who would otherwise have been entitled to a fractional
share of FNB Common Stock shall be entitled to receive a cash payment
(without interest) in lieu of such fractional share in an amount
determined by multiplying (i) the fractional share interest to which
such holder would otherwise be entitled by (ii) the Market Value of
FNB Common Stock.
3.4 Certain Adjustments. If, after the date hereof and on or prior
to the Closing Date, the outstanding shares of CNB Common Stock shall
be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange
of shares, or any dividend payable in stock or other securities is
declared thereon with a record date within such period, or any
similar event shall occur, the Merger Consideration will be adjusted
accordingly to provide to the holders of CNB Common Stock,
respectively, the same economic effect as contemplated by this
Agreement prior to such reclassification, recapitalization, split-up,
combination, exchange or dividend or similar event.
3.5 Rights of Dissenting Shareholders. Shareholders of CNB who object
to the Merger will be entitled to the rights and remedies set forth in
sections 13.1-729 through 13.1-741 of the Virginia Stock Corporation Act.
ARTICLE 4
Representation and Warranties
4.1 Representations and Warranties of CNB. CNB represents and warrants
to FNB as follows:
(a) Organization, Standing and Power. (1) CNB is a corporation
duly organized, validly existing and in good standing under the laws of
Virginia. It has all requisite corporate power and authority to carry on its
business as now being conducted and to own and operate its assets, properties
and business, and CNB has the corporate power and authority to execute and
deliver this Agreement and perform the respective terms of this Agreement and
Plan of Merger. CNB is duly registered as a bank holding company under the
Bank Holding Company Act of 1956. Community National Bank is the only
subsidiary of CNB and is wholly-owned by it, and is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States, is in compliance in all material respects with all
rules and regulations promulgated by any relevant regulatory authority, has
all requisite corporate power and authority to carry on its business as now
being conducted and to own and operate its assets, properties and business, is
an "insured bank" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and its deposits are insured to the fullest
extent allowed by law by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation.
(2) Neither CNB nor Community National (collectively with
CNB, the "CNB Companies") owns any equity securities of any other
corporation or entity.
(b) Authority. (1) The execution and delivery of this Agreement
and the Plan of Merger and the consummation of the Merger have been duly and
validly authorized by all necessary corporate action on the part of CNB,
except the approval of shareholders. The Agreement represents the legal,
valid, and binding obligation of CNB, enforceable against CNB in accordance
with its terms (except in all such cases as enforceability may be limited by
applicable bankruptcy, insolvency, merger, 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).
(2) Neither the execution and delivery of the Agreement,
the consummation of the transactions contemplated therein, nor the compliance
by CNB with any of the provisions thereof will (i) conflict with or result in
a breach of any provision of the Articles of Incorporation or Bylaws of CNB,
(ii) except as Previously Disclosed, constitute or result in the breach of any
term, condition or provision of, or constitute default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon, any property
or assets of the CNB Companies pursuant to (A) any note, bond, mortgage,
indenture, or (B) any material license, agreement, lease or other instrument
or obligation, to which any of the CNB Companies is a party or by which any of
them or any of their properties or assets may be bound, or (iii) subject to
the receipt of the requisite approvals referred to in Section 4.7, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to any
of the CNB Companies or any of their properties or assets.
(c) Capital Structure. The authorized capital stock of CNB
consists of 10,000,000 shares of common stock, par value $5.00 per share
("CNB Common Stock), of which 926,399 shares are issued and outstanding,
fully paid and nonassessable, not subject to shareholder preemptive rights,
and not issued in violation of any agreement to which CNB is a party or
otherwise bound, or of any registration or qualification provisions of any
federal or state securities laws and outstanding options to purchase 231,833
shares of CNB Common Stock; 1,000,000 shares of preferred stock, par value
$1.00 per share ("CNB Preferred Stock"), none of which shares are issued and
outstanding. Except as Previously Disclosed, there are no outstanding
understandings or commitments of any character pursuant to which CNB and any
of the CNB Companies could be required or expected to issue shares of capital
stock.
(d) Ownership, Capital Structure, and Organization of Community
National. (1) CNB does not own, directly or indirectly, 5% or more of the
outstanding capital stock or other voting securities of any corporation, bank
or other organization actively engaged in business except Community National.
The outstanding shares of capital stock of Community National have been duly
authorized and are validly issued, and are fully paid and nonassessable and
all such shares are owned by CNB free and clear of all liens, claims and
encumbrances and were not issued in violation of any agreement or of any
regulation or qualification provisions of federal or state securities laws.
No rights are authorized, issued or outstanding with respect to the capital
stock of Community National and there are no agreements, understandings or
commitments relating to the right of CNB to vote or to dispose of said shares.
None of the shares of capital stock of Community National has been issued in
violation of the preemptive rights of any person.
(2) Community National is a duly organized association, validly
existing and in good standing under applicable laws. Community National (i)
has full corporate power and authority to own, lease and operate its
properties and to carry on its business as now conducted except where the
absence of such power or authority would not have a material adverse effect on
the financial condition, results of operations or business of CNB on a
consolidated basis, and (ii) is duly qualified to do business in the states of
the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification and where
failure to do qualify would have a material adverse effect on the financial
condition, results of operations or business of CNB on a consolidated basis.
Community National has all federal, state, local and foreign governmental
authorizations and licenses necessary for it to own or lease its properties
and assets and to carry on its business as it is now being conducted, except
where failure to obtain such authorization or license would not have a
material adverse effect on its business.
(e) Financial Statements. CNB's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, and all other documents filed or to
be filed subsequent to December 31, 1999 under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act"), in the form filed
with the SEC (in each such case, the "CNB Financial Statements") did not and
will not contain any untrue statement of a material fact or omit to state a
material face required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets in or incorporated by
reference into the CNB Financial Statements (including the related notes and
schedules thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in the CNB Financial Statements (including any
related notes and schedules thereto) fairly presents and will fairly present
the results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for
the periods set forth therein, in each case in accordance with generally
accepted accounting principles consistently applied to banks and bank
holding companies during the periods involved, except as may be noted therein,
subject to normal and recurring year-end audit adjustments in the case of
unaudited statements.
(f) Absence of Undisclosed Liabilities. At December 31, 1999,
and at any subsequent date reflected in such Financial Statements, none of the
CNB Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the CNB Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.
(g) Legal Proceedings; Compliance with Laws. Except as
Previously Disclosed, there are no actions, suits or proceedings instituted or
pending or, to the best knowledge of CNB's management, threatened or probable
of assertion against any of the CNB Companies, or against any property, asset,
interest or right of any of them, that are reasonably expected to have, either
individually or in the aggregate, a material adverse effect on the financial
condition of CNB on a consolidated basis or that are reasonably expected to
threaten or impede the consummation of the transactions contemplated by this
Agreement. None of the CNB Companies is a party to any agreement or
instrument or subject to any judgment, order, writ, injunction, decree or rule
that might reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business or prospects of CNB on a
consolidated basis. Except as Previously Disclosed, as of the date of this
Agreement, none of the CNB Companies nor any of their properties is a party to
or is subject to any order, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar submission to, any
federal or state governmental agency or authority charged with the supervision
or regulation of depository institutions or mortgage lenders or engaged in the
insurance of deposits which restricts or purports to restrict in any material
respect the conduct of the business of it or any of its subsidiaries or
properties, or in any manner relates to the capital, liquidity, credit
policies or management of it; and except as Previously Disclosed, none of the
CNB Companies has been advised by any such regulatory authority that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter or similar submission. To the
best knowledge of CNB, the CNB Companies have complied in all material
respects with all laws, ordinances, requirements, regulations or orders
applicable to its business (including environmental laws, ordinances,
requirements, regulations or orders).
(h) Regulatory Approvals. CNB knows of no reason why the
regulatory approvals referred to in Section 7.1(b) should not be obtained
without the imposition of any condition of the type referred to in Section
7.1(b).
(i) Labor Relations. None of the CNB Companies is a party to,
or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
the subject of a proceeding asserting that is has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or seeking
to compel it to bargain with any labor organization as to wages and conditions
of employment, nor is there any strike or other labor dispute involving it,
pending or, to the best of its knowledge, threatened, nor is it aware of any
activity involving its employees seeking to certify a collective bargaining
unit or engaging in any other organizational activity.
(j) Tax Matters. The CNB Companies have filed all federal,
state, and local tax returns and reports required to be filed, and all taxes
shown by such returns to be due and payable have been paid or are reflected as
a liability in the CNB Financial Statements or are being contested in good
faith and have been Previously Disclosed. Except to the extent that
liabilities therefor are specifically reflected in the CNB Financial
Statements, there are no federal, state or local tax liabilities of the CNB
Companies other than liabilities that have arisen since December 31, 1999, all
of which have been properly accrued or otherwise provided for on the books and
records of the CNB Companies. Except as Previously Disclosed, no tax return
or report of any of the CNB Companies is under examination by any taxing
authority or the subject of any administrative or judicial proceeding, and no
unpaid tax deficiency has been asserted against any of the CNB Companies by
any taxing authority.
(k) Property. Except as disclosed or reserved against in the
CNB Financial Statements, all of the CNB Companies have good and marketable
title free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the CNB Financial Statements as being
owned by the CNB Companies as of the dates thereof. To the best knowledge of
CNB, all buildings, and all fixtures, equipment, and other property and assets
which are material to its business on a consolidated basis, held under leases
or subleases by the CNB Companies are held under valid instruments enforceable
in accordance with their respective terms, subject to bankruptcy, insolvency,
merger, moratorium and similar laws. The buildings, structures, and
appurtenances owned, leased, or occupied by the CNB Companies are, to the best
knowledge of CNB, in good operating condition, in a state of good maintenance
and repair and (i) comply with applicable zoning and other municipal laws and
regulations, and (ii) there are no defects therein.
(l) Reports. Since January 1, 1998, the CNB Companies have filed
all reports and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with the SEC, the Federal
Reserve, the SCC, and any other governmental or regulatory authority or agency
having jurisdiction over their operations.
(m) Employee Benefit Plans. (1) CNB will deliver for FNB's review,
as soon as practicable, true and complete copies of all material pension,
retirement, profit-sharing, deferred compensation, stock option, bonus,
vacation or other material incentive plans or agreements, all material
medical, dental or other health plans, all cafeteria or flexible benefits
plans, all life insurance plans and all other material employee benefit plans
or fringe benefit plans and any related trust or other funding instrument,
including, without limitation, all "employee benefit plans" as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by CNB or Community National for the
benefit of current or former employees, retirees or other beneficiaries
eligible to participate (collectively, the "CNB Benefit Plans"). No CNB
Benefit Plan is an "employee pension benefit plan," as that term is defined
in Section 3(2) of ERISA. No CNB Benefit Plan is or has been a multi-employer
plan within the meaning of Section 3(37) of ERISA or a plan subject to the
minimum funding standards of Section 302 of ERISA or Section 412 of the
Internal Revenue Code of 1986, as amended (the "IRC").
(2) Except as Previously Disclosed, all CNB Benefit Plans
are in compliance with the applicable terms of ERISA, the IRC and any other
applicable laws, rules and regulations the breach or violation of which could
result in a material liability to CNB on a consolidated basis. In the case of
any plan intended to be qualified under IRC Section 401, compliance with such
qualification requirements shall mean the receipt of a current, favorable
determination letter from the Internal Revenue Service based on laws changes
effective through 1994 and operation of the plan in accordance with its terms
or in accordance with any subsequently enacted law for which the remedial
amendment period has not yet ended.
(n) Investment Securities. Except as Previously Disclosed and
except for pledges to secure public and trust deposits and obligations under
agreements pursuant to which any of the CNB Companies has sold securities
subject to an obligation to repurchase, none of the investment securities
reflected in the CNB Financial Statements is subject to any restriction,
contractual, statutory, or otherwise, which would impair materially the
ability of the holder of such investment to dispose freely of any such
investment at any time.
(o) Certain Contracts. (1) Except as Previously Disclosed,
neither CNB nor any CNB subsidiary is a party to, or is bound by, (i) any
material agreement, arrangement or commitment, (ii) any agreement, indenture
or other instrument relating to the borrowing of money by CNB or Community
National or the guarantee by CNB or Community National of any such obligation,
(iii) any agreement, arrangement or commitment relating to the employment of a
consultant or the employment, election, retention in office or severance of
any present or former director or officer, (iv) any agreement to make loans or
for the provision, purchase or sale of goods, services or property between CNB
or Community National and any director or officer of CNB or Community
National, or any member of the immediate family or affiliate of any of the
foregoing, or (v) any agreement between CNB or Community National and any 5%
or more shareholder of CNB; in each case other than agreements entered into in
the ordinary course of the banking business of CNB or Community National
consistent with past practice.
(2) Neither CNB or Community National, nor to the knowledge of
CNB, the other party thereto, is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other instrument whether
entered into in the ordinary course of business or otherwise, nor has there
occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default, other than defaults of loan agreements by
borrowers from CNB or Community National in the ordinary course of its
business.
(p) Insurance. A complete list of all policies or binders of
fire, liability, product liability, workmen's compensation, vehicular and
other insurance held by or on behalf of the CNB Companies has previously been
furnished to FNB and all such policies or binders are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner customary for the
industry and are deemed appropriate and sufficient by CNB. The CNB Companies
are not in default with respect to any provision contained in any such policy
or binder and have not failed to give any notice or present any claim under
any such policy or binder in due and timely fashion. None of the CNB
Companies has received notice of cancellation or non-renewal of any such
policy or binder. None of the CNB Companies has knowledge of any inaccuracy
in any application for such policies or binders, any failure to pay premiums
when due or any similar state of facts or the occurrence of any event that is
reasonably likely to form the basis for any material claim against it not
fully covered (except to the extent of any applicable deductible) by the
policies or binders referred to above. None of the CNB Companies has received
notice from any of its insurance carriers that any insurance premiums will be
increased materially in the future or that any such insurance coverage will
not be available in the future on substantially the same terms as now in
effect.
(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of CNB, to CNB's best knowledge each loan reflected as an asset in
the CNB Financial Statements or the financial statements of Community National
(i) is evidenced by notes, agreements, or other evidences of indebtedness
which are true, genuine and what they purport to be, (ii) to the extent
secured, has been secured by valid liens and security interests which have
been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles. All loans
and extensions of credit which are subject to regulation of the Federal
Reserve which have been made by CNB and Community National comply therewith.
(2) The classification on the books and records of CNB and
Community National of loans and/or non-performing assets as nonaccrual,
troubled debt restructuring, OREO or other similar classification, complies in
all material respects with generally accepted accounting principles and
applicable regulatory accounting principles.
(3) Except for liens, security interests, claims, charges,
or such other encumbrances as have been appropriately reserved for in the CNB
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no adverse claims or encumbrances on the OREO. All
title, hazard and other insurance claims and mortgage guaranty claims with
respect to the OREO have been timely filed and neither CNB nor Community
National has been received any notice of denial of any such claim.
(4) CNB and Community National are in possession of all of
the OREO or, if any of the OREO remains occupied by the mortgagor, eviction or
summary proceedings have been commenced or rental arrangements providing for
market rental rates have been agreed upon and CNB and/or Community National
are diligently pursuing such eviction of summary proceedings or such rental
arrangements. Except as Previously Disclosed, no legal proceeding or quasi-
legal proceeding is pending or, to the knowledge of CNB and Community
National, threatened concerning any OREO or any servicing activity or omission
to provide a servicing activity with respect to any of the OREO.
(5) Except as Previously Disclosed, all loans made by any
of the CNB Companies to facilitate the disposition of OREO are performing in
accordance with their terms.
(6) The allowance for possible loan losses shown on the CNB
Financial Statements was, and the allowance for possible loan losses shown on
the financial statements of CNB as of dates subsequent to the execution of
this Agreement will be, in each case as of the dates thereof, adequate in all
material respects to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including accrued
interest receivable) of the CNB Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit)
by CNB.
(r) Absence of Material Changes and Events. Since December 31,
1999, there has not been any material adverse change in the condition
(financial or otherwise), aggregate assets or liabilities, cash flow, earnings
or business or CNB, and CNB has conducted its business only in the ordinary
course consistent with past practice.
(s) Statements True and Correct. None of the information supplied
or to be supplied by CNB for inclusion in the Registration Statement, the
Proxy Statement/Prospectus or any other document to be filed 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, in the case of the Registration Statement, when it becomes effective and
with respect to the Proxy Statement/Prospectus, when first mailed to CNB
shareholders, be false or misleading with respect to any material fact or omit
to state any material fact necessary in order to make the statements therein
not misleading, or, in the case of the Proxy Statement/Prospectus or any
supplement thereto, at the time of the CNB 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 CNB Shareholders' Meeting.
All documents that CNB is responsible for filing with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of federal and state
securities law.
(t) Brokers and Finders. Neither CNB nor Community National,
nor any of their respective officers, directors or employees, has employed any
broker, finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein, except
for ▇▇▇▇▇▇▇▇▇ & Company, LLC.
(u) Repurchase Agreements. With respect to all agreements
pursuant to which CNB or Community National has purchased securities subject
to an agreement to resell, if any, CNB or Community National, as the case may
be, has a valid, perfected first lien or security interest in the government
securities or other collateral securing the repurchase agreement, and the
value of such collateral equals or exceeds the amount of the debt secured
thereby.
(v) Trust Accounts. Community National does not provide trust
services.
(w) Environmental Matters. (1) Except as Previously Disclosed,
to the best of CNB's knowledge, neither CNB nor Community National owns or
leases any properties affected by toxic waste, radon gas or other hazardous
conditions or constructed in part with the use of asbestos. Each of CNB and
Community National is in substantial compliance with all Environmental Laws
applicable to real or personal properties in which it has a direct fee
ownership or, with respect to a direct interest as lessee, applicable to the
leasehold premises or, to the best knowledge of CNB and Community National,
the premises on which the leasehold is situated. Neither CNB nor Community
National has received any Communication alleging that CNB or Community
National is not in such compliance and, to the best knowledge of CNB and
Community National, there are no present circumstances (including
Environmental Laws that have been adopted but are not yet effective) that
would prevent or interfere with the continuation of such compliance.
(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on CNB and Community
National of any liability arising under any Environmental Laws pending or, to
the best knowledge of CNB and Community National, threatened against (A) CNB
or Community National, (B) any person or entity whose liability for any
Environmental Claim, CNB or Community National has or may have retained or
assumed either contractually or by operation of law, or (C)any real or
personal property which CNB or Community National owns or leases, or has been
or is judged to have managed or to have supervised or participated in the
management of, which liability might have a material adverse effect on the
business, financial condition or results of operations of CNB. CNB and
Community National are not subject to any agreement, order, judgment, decree
or memorandum by or with any court, governmental authority, regulatory agency
or third party imposing any such liability.
(3) To the best knowledge of CNB and Community National,
there are no legal, administrative, arbitral or other proceedings, or
Environmental Claims or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that could result in the
imposition, on CNB or Community National of any liability arising under any
Environmental Laws pending or threatened against any real or personal property
in which CNB or Community National holds a security interest in connection
with a loan or a loan participation which liability might have a material
adverse effect on the business, financial condition or results of operations
of CNB. CNB and Community National are not subject to any agreement, order,
judgment, decree or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability.
(4) With respect to all real and personal property owned or
leased by CNB or Community National, other than OREO, CNB has made available
to FNB copies of any environmental audits, analyses and surveys that have been
prepared relating to such properties. With respect to all OREO held by CNB or
Community National and all real or personal property which CNB or Community
National has been or is judged to have managed or to have supervised or
participated in the management of, CNB has made available to FNB the
information relating to such OREO available to CNB. CNB and Community
National are in compliance in all material respects with all recommendations
contained in any environmental audits, analyses and surveys relating to any
of the properties, real or personal, described in this subsection (4).
(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against CNB or Community National or
against any person or entity whose liability for any Environmental Claim CNB
or Community National has or may have retained or assumed either contractually
or by operation of law.
.2 Representations and Warranties of FNB. FNB represents and warrants to
CNB as follows:
(a) Organization, Standing and Power. (1) FNB is a corporation duly
organized, validly existing and in good standing under the laws of Virginia.
It has all requisite corporate power and authority to carry on its business as
now being conducted and to own and operate its assets, properties and
business, and FNB has the corporate power and authority to execute and deliver
this Agreement and perform the respective terms of this Agreement and Plan of
Merger. FNB is duly registered as a bank holding company under the Bank
Holding Company Act of 1956. First National Bank, a wholly owned subsidiary
of FNB, is a national banking association, duly organized, validly existing
and in good standing under the laws of the United States, is in compliance in
all material respects with all rules and regulations promulgated by any
relevant regulatory authority, it has all requisite corporate power and
authority to carry on its business as now being conducted and to own and
operate its assets, properties and business, is an "insured bank" as defined
in the Federal Deposit Insurance Act and applicable regulations thereunder and
its deposits are insured to the fullest extent allowed by law by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation.
(2) FNB has Previously Disclosed its subsidiary
corporations (and the subsidiaries thereof) (the "FNB Subsidiaries" and,
collectively with FNB, the "FNB Companies"). Except as Previously
Disclosed, none of the FNB Companies owns any equity securities of any other
corporation or entity.
(b) Authority. (1) The execution and delivery of this Agreement
and the Plan of Merger and the consummation of the Merger have been duly and
validly authorized by all necessary corporate action on the part of FNB,
except the approval of shareholders. The Agreement represents the legal,
valid, and binding obligation of FNB, enforceable against FNB in accordance
with its terms (except in all such cases as enforceability may be limited by
applicable bankruptcy, insolvency, merger, 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).
(2) Neither the execution and delivery of the Agreement,
the consummation of the transactions contemplated therein, nor the compliance
by FNB with any of the provisions thereof will (i) conflict with or result in
a breach of any provision of the Articles of Incorporation or Bylaws of FNB,
(ii) except as Previously Disclosed, constitute or result in the breach of any
term, condition or provision of, or constitute default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon, any property
or assets of the FNB Companies pursuant to (A) any note, bond, mortgage,
indenture, or (B) any material license, agreement, lease or other instrument
or obligation, to which any of the FNB Companies is a party or by which any of
them or any of their properties or assets may be bound, or (iii) subject to
the receipt of the requisite approvals referred to in Section 4.7, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to any
of the FNB Companies or any of their properties or assets.
(c) Capital Structure. The authorized capital stock of FNB
consists of: 10,000,000 shares of common stock, par value $5.00 per share
("FNB Common Stock), of which 4,097,266 shares are issued and outstanding,
fully paid and nonassessable, not subject to shareholder preemptive rights,
and not issued in violation of any agreement to which FNB is a party or
otherwise bound, or of any registration or qualification provisions of any
federal or state securities laws. The shares of FNB Common Stock to be issued
in exchange for shares of CNB Common Stock upon consummation of the Merger
will have been duly authorized and, when issued in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights. Except as Previously Disclosed, there are no
outstanding understandings or commitments of any character pursuant to which
FNB and any of the FNB Companies could be required or expected to issue shares
of capital stock.
(d) Ownership of the FNB Subsidiaries; Capital Structure of FNB
Subsidiaries; and Organization of the FNB Subsidiaries. (1) FNB does not own,
directly or indirectly, 5% or more of the outstanding capital stock or other
voting securities of any corporation, bank or other organization actively
engaged in business except as Previously Disclosed. The outstanding shares of
capital stock of each FNB Subsidiary have been duly authorized and are validly
issued, and are fully paid and nonassessable and all such shares are owned by
FNB or an FNB Subsidiary free and clear of all liens, claims and encumbrances
and were not issued in violation of any agreement or of any regulation or
qualification provisions of federal or state securities laws. No rights are
authorized, issued or outstanding with respect to the capital stock of any FNB
Subsidiary and there are no agreements, understandings or commitments relating
to the right of FNB to vote or to dispose of said shares. None of the shares
of capital stock of any FNB Subsidiary has been issued in violation of the
preemptive rights of any person.
(2) Each FNB Subsidiary is a duly organized corporation or
association, validly existing and in good standing under applicable laws.
Each FNB Subsidiary (i) has full corporate power and authority to own, lease
and operate its properties and to carry on its business as now conducted
except where the absence of such power or authority would not have a material
adverse effect on the financial condition, results of operations or business
of FNB on a consolidated basis, and (ii) is duly qualified to do business in
the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification and where failure to do qualify would have a material adverse
effect on the financial condition, results of operations or business of FNB on
a consolidated basis. Each FNB Subsidiary has all federal, state, local and
foreign governmental authorizations and licenses necessary for it to own or
lease its properties and assets and to carry on its business as it is now
being conducted, except where failure to obtain such authorization or license
would not have a material adverse effect on the business of such FNB
Subsidiary.
(e) Financial Statements. FNB's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, and all other documents filed or to
be filed subsequent to December 31, 1999 under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act"), in the form filed
with the SEC (in each such case, the "FNB Financial Statements") did not and
will not contain any untrue statement of a material fact or omit to state a
material face required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets in or incorporated by
reference into the FNB Financial Statements (including the related notes and
schedules thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in the FNB Financial Statements (including any
related notes and schedules thereto) fairly presents and will fairly present
the results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for
the periods set forth therein, in each case in accordance with generally
accepted accounting principles consistently applied to banks and bank holding
companies during the periods involved, except as may be noted therein, subject
to normal and recurring year-end audit adjustments in the case of unaudited
statements.
(f) Absence of Undisclosed Liabilities. At December 31, 1999,
and at any subsequent date reflected in such Financial Statements, none of the
FNB Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the FNB Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.
(g) Legal Proceedings; Compliance with Laws. Except as
Previously Disclosed, there are no actions, suits or proceedings instituted or
pending or, to the best knowledge of FNB's management, threatened or probable
of assertion against any of the FNB Companies, or against any property, asset,
interest or right of any of them, that are reasonably expected to have, either
individually or in the aggregate, a material adverse effect on the financial
condition of FNB on a consolidated basis or that are reasonably expected to
threaten or impede the consummation of the transactions contemplated by this
Agreement. None of the FNB Companies is a party to any agreement or
instrument or subject to any judgment, order, writ, injunction, decree or rule
that might reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business or prospects of FNB on a
consolidated basis. Except as Previously Disclosed, as of the date of this
Agreement, none of the FNB Companies nor any of their properties is a party to
or is subject to any order, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar submission to, any
federal or state governmental agency or authority charged with the supervision
or regulation of depository institutions or mortgage lenders or engaged in the
insurance of deposits which restricts or purports to restrict in any material
respect the conduct of the business of it or any of its subsidiaries or
properties, or in any manner relates to the capital, liquidity, credit
policies or management of it; and except as Previously Disclosed, none of the
FNB Companies has been advised by any such regulatory authority that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter or similar submission. To the
best knowledge of FNB, the FNB Companies have complied in all material
respects with all laws, ordinances, requirements, regulations or orders
applicable to its business (including environmental laws, ordinances,
requirements, regulations or orders).
(h) Regulatory Approvals. FNB knows of no reason why the
regulatory approvals referred to in Section 7.1(b) should not be obtained
without the imposition of any condition of the type referred to in Section
7.1(b).
(i) Labor Relations. None of the FNB Companies is a party to, or
is bound by any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor is it the
subject of a proceeding asserting that is has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or seeking
to compel it to bargain with any labor organization as to wages and conditions
of employment, nor is there any strike or other labor dispute involving it,
pending or, to the best of its knowledge, threatened, nor is it aware of any
activity involving its employees seeking to certify a collective bargaining
unit or engaging in any other organizational activity.
(j) Tax Matters. The FNB Companies have filed all federal,
state, and local tax returns and reports required to be filed, and all taxes
shown by such returns to be due and payable have been paid or are reflected as
a liability in the FNB Financial Statements or are being contested in good
faith and have been Previously Disclosed. Except to the extent that
liabilities therefor are specifically reflected in the FNB Financial
Statements, there are no federal, state or local tax liabilities of the FNB
Companies other than liabilities that have arisen since December 31, 1999, all
of which have been properly accrued or otherwise provided for on the books and
records of the FNB Companies. Except as Previously Disclosed, no tax return
or report of any of the FNB Companies is under examination by any taxing
authority or the subject of any administrative or judicial proceeding, and no
unpaid tax deficiency has been asserted against any of the FNB Companies by
any taxing authority.
(k) Property. Except as disclosed or reserved against in
the FNB Financial Statements, all of the FNB Companies have good and
marketable title free and clear of all material liens, encumbrances, charges,
defaults or equities of whatever character to all of the material properties
and assets, tangible or intangible, reflected in the FNB Financial Statements
as being owned by the FNB Companies as of the dates thereof. To the best
knowledge of FNB, all buildings, and all fixtures, equipment, and other
property and assets which are material to its business on a consolidated
basis, held under leases or subleases by the FNB Companies are held under
valid instruments enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, merger, moratorium and similar laws. The
buildings, structures, and appurtenances owned, leased, or occupied by the FNB
Companies are, to the best knowledge of FNB, in good operating condition, in a
state of good maintenance and repair and (i) comply with applicable zoning and
other municipal laws and regulations, and (ii) there are no latent defects
therein.
(l) Reports. Since January 1, 1998, the FNB Companies have filed
all reports and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with the SEC, the Federal
Reserve, the SCC, and any other governmental or regulatory authority or agency
having jurisdiction over their operations.
(m) Employee Benefit Plans. (1) FNB will deliver for CNB's
review, as soon as practicable, true and complete copies of all material
pension, retirement, profit-sharing, deferred compensation, stock option,
bonus, vacation or other material incentive plans or agreements, all material
medical, dental or other health plans, all cafeteria or flexible benefits
plans, all life insurance plans and all other material employee benefit plans
or fringe benefit plans and any related trust or other funding instrument,
including, without limitation, all "employee benefit plans" as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by FNB or any FNB Subsidiary for the
benefit of current or former employees, retirees or other beneficiaries
eligible to participate (collectively, 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." No FNB Benefit Plan is or has been a multi-employer plan within the
meaning of Section 3(37) of ERISA.
(2) Except as Previously Disclosed, all FNB Benefit Plans
are in compliance with the applicable terms of ERISA and the Internal Revenue
Code of 1986, as amended (the "IRC") and any other applicable laws, rules
and regulations the breach or violation of which could result in a material
liability to FNB on a consolidated basis. In the case of any plan intended to
be qualified under IRC Section 401, compliance with such qualification
requirements shall mean the receipt of a current, favorable determination
letter from the Internal Revenue Service based on laws changes effective
through 1994 and operation of the plan in accordance with its terms or in
accordance with any subsequently enacted law for which the remedial amendment
period has not yet ended.
(3) No FNB ERISA Plan which is a defined benefit pension
plan has any "unfunded current liability," as that term is defined in
Section 302(d)(8)(A) of ERISA, and the present 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 was terminated in accordance with all
applicable legal requirements.
(n) Investment Securities. Except for pledges to secure public
and trust deposits and obligations under agreements pursuant to which any of
the FNB Companies has sold securities subject to an obligation to repurchase,
none of the investment securities reflected in the FNB Financial Statements is
subject to any restriction, contractual, statutory, or otherwise, which would
impair materially the ability of the holder of such investment to dispose
freely of any such investment at any time.
(o) Certain Contracts. (1) Except as Previously Disclosed,
neither FNB nor any FNB subsidiary is a party to, or is bound by, (i) any
material agreement, arrangement or commitment, (ii) any agreement, indenture
or other instrument relating to the borrowing of money by FNB or any FNB
Subsidiary or the guarantee by FNB or any FNB Subsidiary of any such
obligation, (iii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election, retention in office or
severance of any present or former director or officer, (iv) any agreement to
make loans or for the provision, purchase or sale of goods, services or
property between FNB or any FNB Subsidiary and any director or officer of FNB
or any FNB Subsidiary, or any member of the immediate family or affiliate of
any of the foregoing, or (v) any agreement between FNB or any FNB Subsidiary
and any 5% or more shareholder of FNB; in each case other than agreements
entered into in the ordinary course of the banking business of FNB or a FNB
Subsidiary consistent with past practice.
(2) Neither FNB or any FNB Subsidiary, nor to the knowledge
of FNB, the other party thereto, is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other instrument whether
entered into in the ordinary course of business or otherwise, nor has there
occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default, other than defaults of loan agreements by
borrowers from FNB or a FNB Subsidiary in the ordinary course of its business.
(p) Insurance. A complete list of all policies or binders of
fire, liability, product liability, workmen's compensation, vehicular and
other insurance held by or on behalf of the FNB Companies has previously been
furnished to CNB and all such policies or binders are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner customary for the
industry and are deemed appropriate and sufficient by FNB. The FNB Companies
are not in default with respect to any provision contained in any such policy
or binder and have not failed to give any notice or present any claim under
any such policy or binder in due and timely fashion. None of the FNB
Companies has received notice of cancellation or non-renewal of any such
policy or binder. None of the FNB Companies has knowledge of any inaccuracy
in any application for such policies or binders, any failure to pay premiums
when due or any similar state of facts or the occurrence of any event that is
reasonably likely to form the basis for any material claim against it not
fully covered (except to the extent of any applicable deductible) by the
policies or binders referred to above. None of the FNB Companies has received
notice from any of its insurance carriers that any insurance premiums will be
increased materially in the future or that any such insurance coverage will
not be available in the future on substantially the same terms as now in
effect.
(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of FNB, to FNB's best knowledge each loan reflected as an asset in
the FNB Financial Statements or the financial statements of any FNB Subsidiary
(i) is evidenced by notes, agreements, or other evidences of indebtedness
which are true, genuine and what they purport to be, (ii) to the extent
secured, has been secured by valid liens and security interests which have
been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles. All loans
and extensions of credit which are subject to regulation of the Federal
Reserve which have been made by FNB and the FNB Subsidiaries comply therewith.
(2) The classification on the books and records of FNB and
each FNB Subsidiary of loans and/or non-performing assets as nonaccrual,
troubled debt restructuring, OREO or other similar classification, complies in
all material respects with generally accepted accounting principles and
applicable regulatory accounting principles.
(3)Except for liens, security interests, claims, charges,
or such other encumbrances as have been appropriately reserved for in the FNB
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no adverse claims or encumbrances on the OREO. All
title, hazard and other insurance claims and mortgage guaranty claims with
respect to the OREO have been timely filed and neither FNB nor any FNB
Subsidiary has been received any notice of denial of any such claim.
(4) FNB and each FNB Subsidiary are in possession of all of
the OREO or, if any of the OREO remains occupied by the mortgagor, eviction or
summary proceedings have been commenced or rental arrangements providing for
market rental rates have been agreed upon and FNB and/or each FNB Subsidiary
are diligently pursuing such eviction of summary proceedings or such rental
arrangements. Except as Previously Disclosed, no legal proceeding or quasi-
legal proceeding is pending or, to the knowledge of FNB and each FNB
Subsidiary, threatened concerning any OREO or any servicing activity or
omission to provide a servicing activity with respect to any of the OREO.
(5) Except as Previously Disclosed, all loans made by any
of the FNB Companies to facilitate the disposition of OREO are performing in
accordance with their terms.
(6) The allowance for possible loan losses shown on the FNB
Financial Statements was, and the allowance for possible loan losses shown on
the financial statements of FNB as of dates subsequent to the execution of
this Agreement will be, in each case as of the dates thereof, adequate in all
material respects to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including accrued
interest receivable) of the FNB Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit)
by FNB.
(r) Absence of Material Changes and Events. Since December 31,
1999, there has not been any material adverse change in the condition
(financial or otherwise), aggregate assets or liabilities, cash flow, earnings
or business or FNB, and FNB has conducted its business only in the ordinary
course consistent with past practice.
(s) Statements True and Correct. None of the information supplied
or to be supplied by FNB for inclusion in the Registration Statement, the
Proxy Statement/Prospectus or any other document to be filed 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, in the case of the Registration Statement, when it becomes effective and
with respect to the Proxy Statement/Prospectus, when first mailed to CNB
shareholders, be false or misleading with respect to any material fact or omit
to state any material fact necessary in order to make the statements therein
not misleading, or, in the case of the Proxy Statement/Prospectus or any
supplement thereto, at the time of the CNB 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 CNB Shareholders' Meeting.
All documents that FNB is responsible for filing with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of federal and state
securities law.
(t) Brokers and Finders. Neither FNB nor any FNB Subsidiary, nor
any of their respective officers, directors or employees, has employed any
broker, finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein, except
for The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Company.
(u) Repurchase Agreements. With respect to all agreements
pursuant to which FNB or any FNB Subsidiary has purchased securities subject
to an agreement to resell, if any, FNB or such FNB Subsidiary, as the case may
be, has a valid, perfected first lien or security interest in the government
securities or other collateral securing the repurchase agreement, and the
value of such collateral equals or exceeds the amount of the debt secured
thereby.
(v) Administration of Trust Accounts. FNB and FNB Subsidiaries
have properly administered, in all respects material and which could
reasonably be expected to be material to the business, operations or financial
condition of FNB and FNB Subsidiaries, taken as a whole, all accounts for
which they act as fiduciaries including but not limited to accounts for which
they serve as trustees, agents, custodians, personal representatives,
guardians, conservators or investment advisors, in accordance with the terms
of the governing documents and applicable state and federal law and regulation
and common law. Neither FNB nor a FNB Subsidiary, nor any director, officer
or employee of FNB or a FNB Subsidiary has committed any breach of trust with
respect to any such fiduciary account which is material to or could reasonably
be expected to be material to the business, operations or financial condition
of FNB, or a FNB Subsidiary, taken as a whole, and the accountings for each
such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account in all material
respects.
(w) Environmental Matters. (1) Except as Previously Disclosed,
to the best of FNB's knowledge, neither FNB nor any FNB Subsidiary owns or
leases any properties affected by toxic waste, radon gas or other hazardous
conditions or constructed in part with the use of asbestos. Each of FNB and
the FNB Subsidiaries is in substantial compliance with all Environmental
Laws applicable to real or personal properties in which it has a direct fee
ownership or, with respect to a direct interest as lessee, applicable to the
leasehold premises or, to the best knowledge of FNB and the FNB Subsidiaries,
the premises on which the leasehold is situated. Neither FNB nor any FNB
Subsidiary has received any Communication alleging that FNB or such FNB
Subsidiary is not in such compliance and, to the best knowledge of FNB and the
FNB Subsidiaries, there are no present circumstances (including
Environmental Laws that have been adopted but are not yet effective) that
would prevent or interfere with the continuation of such compliance.
(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on FNB and the FNB
Subsidiaries of any liability arising under any Environmental Laws pending or,
to the best knowledge of FNB and the FNB Subsidiaries, threatened against (A)
FNB or any FNB Subsidiary, (B) any person or entity whose liability for any
Environmental Claim, FNB or any FNB Subsidiary has or may have retained or
assumed either contractually or by operation of law, or (C)any real or
personal property which FNB or any FNB Subsidiary owns or leases, or has been
or is judged to have managed or to have supervised or participated in the
management of, which liability might have a material adverse effect on the
business, financial condition or results of operations of FNB. FNB and the
FNB Subsidiaries are not subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.
(3) To the best knowledge of FNB and the FNB
Subsidiaries, there are no legal, administrative, arbitral or other
proceedings, or Environmental Claims or other claims, causes of action or
governmental investigations of any nature, seeking to impose, or that could
result in the imposition, on FNB or any FNB Subsidiary of any liability
arising under any Environmental Laws pending or threatened against any real or
personal property in which FNB or any FNB Subsidiary holds a security interest
in connection with a loan or a loan participation which liability might have a
material adverse effect on the business, financial condition or results of
operations of FNB. FNB and the FNB Subsidiaries are not subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
(4) With respect to all real and personal property owned or
leased by FNB or any FNB Subsidiary, other than OREO, FNB has made available
to CNB copies of any environmental audits, analyses and surveys that have been
prepared relating to such properties. With respect to all OREO held by FNB or
any FNB Subsidiary and all real or personal property which FNB or any FNB
Subsidiary has been or is judged to have managed or to have supervised or
participated in the management of, FNB has made available to CNB the
information relating to such OREO available to FNB. FNB and the FNB
Subsidiaries are in compliance in all material respects with all
recommendations contained in any environmental audits, analyses and surveys
relating to any of the properties, real or personal, described in this
subsection (4).
(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against FNB or any FNB Subsidiary or
against any person or entity whose liability for any Environmental Claim FNB
or any FNB Subsidiary has or may have retained or assumed either contractually
or by operation of law.
ARTICLE 5
Conduct Prior to the Effective Date
5.1 Access to Records and Properties. CNB will keep FNB, and FNB will
keep CNB advised of all material developments relevant to their respective
businesses prior to consummation of the Merger. Prior to the Effective Date,
FNB, on the one hand, and CNB on the other, agree to give to the other party
reasonable access to all the premises and books and records (including tax
returns filed and those in preparation) of it and its subsidiaries and to
cause its officers to furnish the other with such financial and operating data
and other information with respect to the business and properties as the other
shall from time to time request for the purposes of verifying the warranties
and representations set forth herein; provided, however, that any such
investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the respective business of the other.
5.2 Confidentiality. Between the date of this Agreement and the
Effective Date, FNB and CNB each will maintain in confidence, and cause its
directors, officers, employees, agents and advisors to maintain in confidence,
and not use to the detriment of the other party, any written, oral or other
information obtained in confidence from the other party or a third party in
connection with this Agreement or the transactions contemplated hereby unless
such information is already known to such party or to others not bound by a
duty of confidentiality or unless such information becomes publicly available
through no fault of such party, unless use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the transactions contemplated hereby or unless the
furnishing or use of such information is required by or necessary or
appropriate in connection with legal proceedings. If the Merger is not
consummated, each party will return or destroy as much of such written
information as may reasonably be requested.
5.3 Registration Statement, Proxy Statement and Shareholder Approval.
The Board of Directors of CNB will duly call and will hold a meeting of its
shareholders as soon as practicable for the purpose of approving the Merger
(the "CNB Shareholders' Meeting") and, subject to the fiduciary duties of
the Board of Directors of CNB (as advised in writing by its counsel), CNB
shall use its best efforts to solicit and obtain votes of the holders of its
Common Stock in favor of the Merger and will comply with the provisions in its
Articles of Incorporation and Bylaws relating to the call and holding of a
meeting of shareholders for such purpose; each member of the Board of
Directors of CNB shall vote all shares of CNB Common Stock under his or her
control (and not held in a fiduciary capacity) in favor of the Merger; and CNB
shall, at FNB's request, recess or adjourn the meeting if such recess or
adjournment is deemed by the other to be necessary or desirable. FNB and CNB
will jointly prepare the proxy statement/prospectus to be used in connection
with the CNB Shareholders' Meeting (the "Proxy Statement"). FNB and CNB
will jointly prepare and file with the SEC the Registration Statement, of
which such Proxy Statement shall be a part and will use its best efforts to
have the Registration Statement declared effective as promptly as possible.
When the Registration Statement or any post-effective amendment or supplement
thereto shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the CNB Shareholders' Meeting,
such Registration Statement and all amendments or supplements thereto, with
respect to all information set forth therein furnished or to be furnished by
CNB relating to the CNB Companies and by FNB relating to the FNB Companies,
(i) will comply in all material respects with the provisions of the Securities
Act of 1933 and any other applicable statutory or regulatory requirements,
including applicable state blue-sky and securities laws, and (ii) will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading; provided, however, in no event shall any
party hereto be liable for any untrue statement of a material fact or omission
to state a material fact in the Registration Statement made in reliance upon,
and in conformity with, written information concerning another party furnished
by such other party specifically for use in the Registration Statement.
5.4 Operation of the Business of FNB and CNB. From the date hereof to
the Effective Date, FNB and CNB will operate their respective businesses
substantially as presently operated and only in the ordinary course, and,
consistent with such operation, they will use their best efforts to preserve
intact their relationships with persons having business dealings with them.
Without limiting the generality of the foregoing, and except as provided in
Section 5.12, neither FNB nor CNB will, without the prior written consent of
the other:
(a) Make any change in its authorized capital stock, or issue or
sell any additional shares of, securities convertible into or exchangeable
for, or options (excluding those options provided for in the 2000 FNB
Corporation Incentive Stock Compensation Plan, but the number of such options
to be issued shall not exceed 50,000), warrants or rights to purchase, its
capital stock, nor shall it purchase, redeem or otherwise acquire any of its
outstanding shares of capital stock, provided that FNB or CNB may issue shares
of common stock pursuant to options granted or issued prior to the date
hereof:
(b) Voluntarily make any changes in the composition of its
officers, directors or other key management personnel;
(c) Make any change in the compensation or title of any officer,
director or key management employee or make any change in the compensation or
title of any other employee, other than permitted by current employment
policies in the ordinary course of business, any of which changes shall be
reported promptly to the other party;
(d) Enter into any bonus, incentive compensation, stock option,
deferred compensation, profit sharing, thrift, retirement, pension, group
insurance or other benefit plan or any employment or consulting agreement;
(e) Incur any obligation or liability (whether absolute or
contingent, excluding suits instituted against it), make any pledge, or
encumber any of its assets, nor dispose of any of its assets in any other
manner, except in the ordinary course of its business and for adequate value,
or as otherwise specifically permitted in this Agreement;
(f) Except as permitted by Section 5.4(a) hereof, issue or
contract to issue any shares of its Common Stock, options for shares of its
Common Stock, or securities exchangeable for or convertible into such shares;
(g) Knowingly waive any right to substantial value:
(h) Enter into material transactions otherwise than in the
ordinary course of its business;
(i) Alter, amend or repeal its Bylaws or Articles of
Incorporation; or
(j) Propose or take any other action which would make any
representation or warranty in Section 4.1 or Section 4.2 hereof untrue.
5.5 Dividends. FNB and CNB may declare and pay only regular periodic
cash dividends in the ordinary course of business and consistent with past
practice from the date of this Agreement through the Effective Date. Any
dividend increase by CNB or FNB in excess of $.01 per share must be approved
by the other.
5.6 No Solicitation. Without the prior written consent of FNB, CNB
shall not, and shall cause its officers, directors, agents, advisors and
affiliates not to, solicit or encourage inquires or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, an Acquisition Transaction (as hereinafter defined);
provided, however, that nothing contained in this Section 5.6 shall prohibit
the Board of Directors of CNB from furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited, written bona fide proposal regarding an Acquisition Transaction
if, and only to the extent that (A) the Board of Directors of CNB concludes in
good faith, after consultation with and consideration of the written advice of
outside counsel, that the failure to furnish such information or enter into
such discussions or negotiations would constitute a breach of its fiduciary
duties to shareholders under applicable law, (B) prior to taking such action,
CNB receives from such person or entity an executed confidentiality agreement,
and (C) the Board of Directors of CNB concludes in good faith that the
proposal regarding the Acquisition Transaction contains an offer of
consideration that is superior to the consideration set forth herein. CNB
shall immediately notify FNB orally and in writing of its receipt of any such
proposal or inquiry, of the material terms and conditions thereof, and of the
identity of the person making such proposal or inquiry. For purposes of this
Agreement, "Acquisition Transaction" means any merger, consolidation, share
exchange, joint venture, business combination or similar transaction or any
purchase of all or any material portion of the assets of an entity.
5.7 Regulatory Filings. FNB and CNB shall prepare jointly all
regulatory filings required to consummate the transactions contemplated by the
Agreement and the Plan of Merger and submit the filings for approval with the
Federal Reserve Board and the SCC, and any other governing regulatory
authority, as soon as practicable after the date hereof. FNB and CNB shall
use their best efforts to obtain approvals of such filings.
5.8 Public Announcements. Each party will consult with the other
before issuing any press release or otherwise making any public statements
with respect to the Merger and shall not issue any such press release or make
any such public statement prior to such consultations except as may be
required by law.
5.9 Notice of Breach. FNB and CNB will give written notice to the
other promptly upon becoming aware of the impending or threatened occurrence
of any event which would cause or constitute a breach of any of the
representations, warranties or covenants made to the other party in this
Agreement and will use its best efforts to prevent or promptly remedy the
same.
5.10 Accounting Treatment. FNB and CNB acknowledge that the Merger
shall be accounted for as a purchase under generally accepted accounting
principles.
5.11 Merger Consummation. Subject to the terms and conditions of
this Agreement, each party shall use its best efforts in good faith to take,
or cause to be taken, all actions, and to do or cause to be done all things
necessary, proper or desirable, or advisable under applicable laws, as
promptly as practicable so as to permit consummation of the Merger at the
earliest possible date, consistent with Section 1.3 herein, and to otherwise
enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other parties hereto to that end, and each of FNB and
CNB shall use, and shall cause each of their respective subsidiaries to use,
its best efforts to obtain all consents (governmental or other) necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
5.12 FNB Acquisition Transaction. Nothing contained in this Agreement
shall prevent FNB from entering into an Acquisition Transaction with a third
party so long as (i) FNB is the "acquiring" and surviving entity and
(ii) FNB complies with the terms of the Merger with CNB.
ARTICLE 6
Additional Agreements
6.1 Conversion of Stock Options. (a) On the Effective Date, all CNB
Options governed by Section 2.9(i), whether or not they are exercisable, shall
be converted into and become rights with respect to FNB Common Stock, and FNB
shall assume each CNB Option in accordance with the terms of the stock option
plan under which it was issued and the stock option agreement by which it is
evidenced. From the Effective Date forward, (i) each CNB Option assumed by
FNB may be excised solely for shares of FNB Common Stock, (ii) the number of
shares of FNB Common Stock subject to each CNB Option shall be equal to the
number of shares of CNB Common Stock subject to such option immediately prior
to the Effective Date multiplied by the Exchange Ratio and (iii) the per share
exercise price under each such CNB Option shall be adjusted by dividing the
per share exercise price under each such option by the Exchange Ratio and
rounding down to the nearest cent; provided, however, that the terms of each
CNB Option shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction after the Effective Date. It is
intended that the foregoing assumption shall be undertaken in a manner that
will not constitute a "modification" as defined in Section 425 of the Code,
as to any stock option which is an "incentive stock option."
6.2 Benefit Plans.
(a) After consummation of the Merger, at the option of FNB (which
may be applied on a plan or program by plan or program basis) and subject to
FNB's best efforts, employees of CNB and Community National shall be entitled
to participate either (x) in one or more combined plans or programs of FNB and
CNB on substantially the same basis as similarly situated employees (taking
into account all applicable factors, including but not limited to position,
employment classification, age, length of service, pay, part time or full time
status, and the like, as well as changes made in such plans and programs in
the future), or (y) in plans and programs which, subject to changes required
by applicable laws or by limitations imposed by insurance companies providing
plan benefits, are comparable to (or a continuation of), and provide for
participation on substantially the same basis, as CNB's employee benefit plans
and programs currently in effect. If and to the extent option (x) is
effectuated:
(1) (A) Coverage under FNB's plans and programs shall be
available to each employee of CNB and Community National and his or her
dependents without regard to any waiting period, evidence or requirement of
insurability, actively at work requirement or preexisting condition exclusion
or limitation (except to the extent and in the manner any such waiting period,
evidence or requirement of insurability, actively at work requirement or
exclusion or limitation applies immediately prior to the effectuation of
option (x)) and (B) amounts paid or payable by employees for health care
expenses for the portion of the annual benefit period prior to the date as of
which option (x) becomes effective shall be credited in satisfaction of any
deductible requirement and any out-of-pocket limit for the balance of the
annual benefit period which includes such date.
(2) FNB's welfare plans and programs (including cafeteria
plans) generally shall offer coverage options and costs to employees not less
favorable in the aggregate (but including reasonable cost sharing for premium
or other cost changes due to experience or other factors) than the most
favorable welfare benefits package provided to employees of either CNB or FNB
immediately before the consummation of the Merger.
(3) FNB shall treat service with CNB and Community
National before the consummation of the Merger as service with FNB for
purposes of eligibility to begin participation and vesting (but not benefit
accruals, except in the case of a continuation of any plan maintained by CNB
or Community National) for purposes of all employee benefit and seniority
based plans and programs, including but not limited to annual, sick and
personal leave accruing following the consummation of the Merger.
(b) Except to extent individually negotiated replacement contracts
or settlement agreements are entered into, FNB shall honor all employment
severance, consulting and other compensation contracts and agreements
Previously Disclosed and executed in writing by CNB on the one hand and any
individual current or former director, officer or employee thereof on the
other hand, copies of which have been previously delivered by CNB to FNB.
6.3 Indemnification. Following the Effective Date, FNB shall
indemnify and hold harmless any person who has rights to indemnification
from CNB, to the same extent and on the same conditions as such person is
entitled to indemnification pursuant to Virginia law and CNB's Articles of
Incorporation or Bylaws, as in effect on the date of this Agreement, to the
extent legally permitted to do so, with respect to matters occurring on or
prior to the Effective Date. FNB further agrees that any such person who has
rights to indemnification pursuant to this Section 5.4 is expressly made a
third party beneficiary of this Section 5.4 and may directly, in such person's
personal capacity, enforce such rights through an action at law or in equity
or through any other manner or means of redress allowable under Virginia law
to the same extent as if such person were a party hereto. Without limiting
the foregoing, in any case in which corporate approval may be required to
effectuate any indemnification, FNB shall direct, at the election of the party
to be indemnified, that the determination of permissibility of indemnification
shall be made by independent counsel mutually agreed upon between FNB and the
indemnified party. FNB shall use its reasonable best efforts to maintain
CNB's existing directors' and officers' liability policy, or some other
policy, including FNB's existing policy, providing at least comparable
coverage, covering persons who are currently covered by such insurance of CNB
for a period of five years after the Effective Date on terms no less favorable
than those in effect on the date hereof.
ARTICLE 7
Conditions to the Merger
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each of FNB and CNB to effect the Merger and the
other transactions contemplated by this Agreement shall be subject to the
fulfillment or waiver at or prior to the Effective Date of the following
conditions:
(a) Shareholder Approval. Shareholders of CNB shall have
approved all matters relating to this Agreement and the Merger required to
be approved by such shareholders in accordance with Virginia law.
(b) Regulatory Approvals. This Agreement and the Plan of Merger
shall have been approved by the Federal Reserve, the SCC, and any other
regulatory authority whose approval is required for consummation of the
transactions contemplated hereby, and such approvals shall not have imposed
any condition or requirement which would so materially adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement as to render inadvisable the consummation of the Merger in the
reasonable opinion of the Board of Directors of FNB or CNB.
(c) Registration Statement. The Registration Statement shall
have been declared effective and shall not be subject to a stop order or any
threatened stop order.
(d) Tax Opinion. FNB and CNB shall have received an opinion of
▇▇▇▇ & Valentine, L.L.P., or other counsel reasonably satisfactory to FNB and
CNB, to the effect that the Merger will constitute a merger within the meaning
of Section 368 of the Internal Revenue Code and that no gain or loss will be
recognized by the shareholders of CNB to the extent they receive FNB Common
Stock solely in exchange for their CNB Common Stock in the Merger.
(e) Opinions of Counsel. CNB shall have delivered to FNB and FNB
shall have delivered to CNB opinions of counsel, dated as of the Effective
Date, as to such matters as they may each reasonably request with respect to
the transactions contemplated by this Agreement and in a form reasonably
acceptable to each of them.
(f) Legal Proceedings. Neither FNB nor CNB shall be subject to
any order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the Merger.
7.2 Conditions to Obligations of FNB. The obligations of FNB to effect
the Merger shall be subject to the fulfillment or waiver at or prior to the
Effective Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties contained herein of CNB shall be true and correct as of the
date of this Agreement and upon the Effective Date with the same effect as
though all such representations and warranties had been made on the Effective
Date, except (i) for any such representations and warranties made as of a
specified date, which shall be true and correct as of such date, (ii) as
expressly contemplated by this Agreement, or (iii) for representations and
warranties the inaccuracies of which relate to matters that, individually or
in the aggregate, do not materially adversely affect the Merger and the other
transactions contemplated by this Agreement and FNB shall have received a
certificate or certificates signed by the Chief Executive Officer and Chief
Financial Officer of CNB dated the Effective Date, to such effect.
(b) Performance of Obligations. CNB shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and FNB shall have received a
certificate signed by the Chief Executive Officer of CNB to that effect.
(c) Affiliate Letters. Each director and shareholder of CNB who
may be deemed by counsel for FNB to be an "affiliate" of CNB within the
meaning of Rule 145 under the Securities Act of 1933 shall have executed and
delivered a commitment and undertaking to the effect that (1) such shareholder
will dispose of the shares of FNB Common Stock received by him in connection
with the Merger only in accordance with the provisions of paragraph (d) of
Rule 145; (2) such shareholders will not dispose of any such shares until FNB
has received an opinion of counsel acceptable to it that such proposed
disposition will not violate the provisions of any applicable security laws;
and (3) the certificates representing said shares may bear a conspicuous
legend referring to the forgoing restrictions.
(d) Investment Banking Letter. FNB shall have received a
written opinion in form and substance satisfactory to FNB from The ▇▇▇▇▇▇
▇▇▇▇▇▇ Company addressed to FNB and dated the date the Proxy
Statement/Prospectus is mailed to shareholders of CNB, to the effect that the
terms of the Merger, including the Exchange Ratio, are fair, from a financial
point of view, to FNB.
7.3 Conditions to Obligations of CNB. The obligations of CNB to effect
the Merger shall be subject to the fulfillment or waiver at or prior to the
Effective Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties contained herein of FNB shall be true and correct as of the
date of this Agreement and upon the Effective Date with the same effect as
though all such representations and warranties had been made on the Effective
date, except (i) for any such representations and warranties made as of a
specified date, which shall be true and correct as of such date, (ii) as
expressly contemplated by this Agreement, or (iii) for representations and
warranties the inaccuracies of which relate to matters that, individually or
in the aggregate, do not materially adversely affect the Merger and the other
transactions contemplated by this Agreement and CNB shall have received a
certificate or certificates signed by the Chief Executive Officer and Chief
Financial Officer of FNB dated the Effective Date, to such effect.
(b) Performance of Obligations. FNB shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and CNB shall have received a
certificate signed by Chief Executive Officer of FNB to that effect.
(c) Investment Banking Letter. CNB shall have received a written
opinion in form and substance satisfactory to CNB from ▇▇▇▇▇▇▇▇▇ & Company LLC
addressed to CNB and dated the date the Proxy Statement/Prospectus is
mailed to shareholders of CNB, to the effect that the terms of the Merger,
including the Exchange Ratio, are fair, from a financial point of view, to
CNB.
ARTICLE 8
Termination
8.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement and the Plan of
Merger by the shareholders of CNB, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Date:
(a) By the mutual consent of the Board of Directors of each of
FNB and CNB;
(b) By the respective Boards of Directors of FNB or CNB if the
conditions set forth in Section 7.1 have not been met or waived by FNB and
CNB;
(c) By the Board of Directors of FNB if the conditions set forth
in Section 7.2 have not been met or waived by FNB;
(d) By the Board of Directors of CNB if the conditions set forth
in Section 7.3 have not been met or waived by CNB;
(e) By the respective Boards of Directors FNB or CNB if the
Merger is not consummated by January 10, 2001.
(f) By the Board of Directors of FNB if the Board of Directors of
CNB receives a subsequent offer to acquire CNB and does not within fourteen
(14) days after receipt of such subsequent offer confirm in writing to FNB
that each member of the Board of Directors of CNB supports the Merger, will
vote his shares of CNB Common Stock in favor of the Merger, and will recommend
to the shareholders of CNB that they approve the Merger.
8.2 Effect of Termination. In the event of the termination and
abandonment of this agreement and the Merger pursuant to Section 8.1, this
Agreement shall become void and have no effect, except that (i) the last
sentence of Section 5.2 and all of Sections 5.8 and 8.4 shall survive any such
termination and abandonment and (ii) no party shall be relieved or released
from any liability arising out of an intentional breach of any provision of
this Agreement.
8.3 Non-Survival of Representations, Warranties and Covenants. Except
for Sections 1.2, 1.4, 2.1, 2.2, 2.3, 2.4, 6.2, 6.3 and 8.4 of this Agreement,
none of the respective representations and warranties, obligations, covenants
and agreements of the parties shall survive the Effective Date, provided that
no such representations, warranties, obligations, covenants and agreements
shall be deemed to be terminated or extinguished so as to deprive FNB or CNB
(or any director, officer, or controlling person thereof) of any defense in
law or equity which otherwise would be available against the claims of any
person, including without limitation any shareholder or former shareholder
of either FNB or CNB.
8.4 Expenses. The parties provide for the payment of expenses as
follows:
(a) Except as provided below, each of the parties shall bear and
pay all costs and expenses incurred by it in connection with the transactions
contemplated herein, including fees and expenses of its own financial
consultants, accountants and counsel, except that printing expenses shall be
shared equally between FNB and CNB.
(b) In the event FNB terminates this Agreement based on the
occurrence of a Termination Event (as defined below), CNB shall pay to FNB a
termination fee of Five Hundred Thousand Dollars ($500,000.00) in cash within
five business days after written notice of such termination. For the purposes
of this Agreement, a "Termination Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) CNB, without having received FNB's prior written
consent, shall have entered into an agreement with any person to
(A) acquire, merger or consolidate, or enter into any similar
transaction, with CNB, (B) purchase, lease or otherwise acquire
all or substantially all of the assets of CNB, or (C) purchase or
otherwise acquire directly from CNB securities representing 10% or
more of the voting power of CNB;
(ii) any person shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 20% or more of the
outstanding shares of CNB Common Stock after the date hereof (the
term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the regulations promulgated thereunder); or
(iii) any person shall have made a bona fide proposal to CNB by public
announcement or written communication that is or becomes the
subject of public disclosure to acquire CNB by merger, shares
exchange, consolidation, purchase of all or substantially all of
its assets or any other similar transaction, and following such
bona fide proposal the shareholders of CNB vote not to approve the
Agreement.
Notwithstanding the foregoing, CNB shall not be obligated to pay to FNB the
termination fee described in this Section 8.4(b) in the event that at or prior
to such time as such fee becomes payable (i) FNB and CNB validly terminate
this Agreement pursuant to Section 8.1(a), (ii) FNB or CNB validly terminates
this Agreement pursuant to Sections 8.1(b) [other than as a result of such
Termination Event], 8.1(c) [other than as a result of such Termination Event],
8.1(d) [other than as a result of such Termination Event] or 8.1(e) [other
than as a result of such Termination Event]. Upon payment of the termination
fee and any other amounts that may be due by CNB to FNB hereunder, this
Agreement shall terminated as provided in Section 8.2.
(c) Notwithstanding the provisions of Section 8.4(a) hereof, if
for any reason the Merger is not approved by the shareholders of CNB as
required, CNB shall bear and pay 50% of the costs and expenses incurred by FNB
with respect to the fees and expenses of accountants, counsel, printers and
persons involved in the transactions contemplated by this Agreement, including
the preparation of the Registration Statement and the Proxy Statement not to
exceed $10,000.
(d) If this Agreement is terminated by FNB or CNB because of a
willful and material breach by the other of any representation, warranty,
covenant, undertaking or restriction set forth herein, and provided that the
terminating party shall not have been in breach (in any material respect) of
any representation and warranty, covenant, undertaking or restriction
contained herein, then the breaching party shall bear and pay all such costs
and expenses of the other party, including fees and expenses of consultants,
investment bankers, accountants, counsel, printers, and persons involved in
the transactions contemplated by this Agreement, including the preparation of
the Registration Statement and the Joint Proxy Statement.
(e) Final settlement with respect to the payment of such fees and
expenses by the parties shall be made within thirty (30) days after the
termination of this Agreement.
ARTICLE 9
General Provisions
9.1 Entire Agreement. This Agreement contains the entire agreement
among FNB and CNB with respect to the Merger and the related transactions and
supersedes all prior arrangements or understandings with respect thereto.
9.2 Waiver and Amendment. Any term or provision of this Agreement may
be waived in writing at any time by the party which is, or whose shareholders
are, entitled to the benefits thereof, and this Agreement may be amended or
supplemented by written instructions duly executed by the parties hereto at
any time, whether before or after the meetings of CNB shareholders referred to
in Section 7.1(a) hereof, except statutory requirements and requisite
approvals of shareholders and regulatory authorities.
9.3 Descriptive Headings. Descriptive headings are for convenience
only and shall not control or affect the meaning and construction of any
provisions of this Agreement.
9.4 Governing Law. Except as required otherwise or otherwise indicated
herein, this Agreement shall be construed and enforced according to the laws
of the Commonwealth of Virginia.
9.5 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally, telecopied or sent by recognized overnight courier service or
registered or certified mail, postage prepaid, addressed as follows:
If to FNB:
J. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. , President
FNB Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
Copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
First National Bank
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, Esquire
▇▇▇▇ & Valentine, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor (23219)
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
If to CNB:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
CNB Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
9.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts
together shall constitute one and the same agreement.
9.7 Severability. In the event any provisions of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof. Any provision of this Agreement held invalid or unenforceable only in
part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable. Further, the parties agree that a court of
competent jurisdiction may reform any provision of this Agreement held invalid
or unenforceable so as to reflect the intended agreement of the parties
hereto.
9.8 Subsidiaries. All representations, warranties, and covenants
herein, where pertinent, include and shall apply to the Subsidiaries of the
party making such representations, warranties, and covenants.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seals to be affixed hereto, all as of the dates first written above.
FNB Corporation
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
J. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
ATTEST:
/s/ Secretary
CNB Holdings, Inc.
By: /s/
ATTEST:
/s/
Secretary
CNB HOLDINGS, INC.
BOARD OF DIRECTORS
Each of the undersigned members of the Board of Directors of CNB
Holdings, Inc. agrees to be bound by his personal obligations as provided in
Section 5.3 and 5.6 of this Agreement.
751372v5
Exhibit (2)B
AGREEMENT AND PLAN OF MERGER
BETWEEN
SWVA BANCSHARES, INC.
AND
FNB CORPORATION
August 7, 2000
TABLE OF CONTENTS
ARTICLE 1
The Merger and Related Matters
Page
1.1 Definitions
1.2 The Merger
1.3 Name and Continuing Operations
1.4 Management of FNB and the Banks
1.5 The Closing and Effective Date
ARTICLE 2
Basis and Manner of Conversion
2.1 Conversion of SWVA Stock
2.2 Allocation
2.3 Election
2.4 Allocation of Cash Election Shares
2.5 Allocation of Stock Election Shares
2.6 No Allocation
2.7 Computations
2.8 Cancellation of Shares
ARTICLE 3
Manner of Exchange
3.1 Exchange Procedures
3.2 Distributions with Respect to Unexchanged Shares
3.3 No Fractional Securities
3.4 Certain Adjustments
3.5 Rights of Dissenting Shareholders
ARTICLE 4
Representations and Warranties
4.1 Representations and Warranties of SWVA
(a) Organization, Standing and Power
(b) Authority
(c) Capital Structure
(d) Ownership Capital Structure and
Organization of SVSB
(e) Financial Statements
(f) Absence of Undisclosed Liabilities
(g) Legal Proceedings; Compliance with Laws
(h) Regulatory Approvals
(i) Labor Relations
(j) Tax Matters
(k) Property
(l) Reports
(m) Employee Benefit Plans
(n) Investment Securities
(o) Certain Contracts
(p) Insurance
(q) Loans, OREO and Allowance for Loan Losses
(r) Absence of Material Changes and Events
(s) Statements True and Correct
(t) Brokers and Finders
(u) Repurchase Agreements
(v) Trust Accounts
(w) Environmental Matters
4.2 Representations and Warranties of FNB
(a) Organization, Standing and Power
(b) Authority
(c) Capital Structure
(d) Ownership of the FNB Subsidiaries; Capital Structure
of the FNB Subsidiaries; and Organization of the FNB
Subsidiaries
(e) Financial Statements
(f) Absence of Undisclosed Liabilities
(g) Legal Proceedings; Compliance with Laws
(h) Regulatory Approvals
(i) Labor Relations
(j) Tax Matters
(k) Property
(l) Reports
(m) Employee Benefit Plans
(n) Investment Securities
(o) Certain Contracts
(p) Insurance
(q) Loans, OREO, and Allowance for Loan Losses
(r) Absence of Material Changes and Events
(s) Statements True and Correct
(t) Brokers and Finders
(u) Repurchase Agreements
(v) Administration of Trust Accounts
(w) Environmental Matters
ARTICLE 5
Conduct Prior to the Effective Date
5.1 Access to Records and Properties
5.2 Confidentiality
5.3 Registration Statement, Proxy Statement and
Shareholder Approval
5.4 Operation of the Business of FNB and SWVA
5.5 Dividends
5.6 No Solicitation
5.7 Regulatory Filings
5.8 Public Announcements
5.9 Notice of Breach
5.10 Accounting Treatment
5.11 Merger Consummation
5.12 FNB Acquisition Transaction
5.13 Affiliate Agreements
ARTICLE 6
Additional Agreements
6.1 Conversion of Stock Options
6.2 Benefit Plans
6.3 Indemnification
ARTICLE 7
Conditions to the Merger
7.1 Conditions to Each Party's Obligations to Effect the
Merger
(a) Shareholder Approval
(b) Regulatory Approvals
(c) Registration Statement
(d) Tax Opinion
(e) Opinions of Counsel
(f) Legal Proceedings
(g) Amendment of SVSB ESOP
7.2 Conditions to Obligations of FNB
(a) Representations and Warranties
(b) Performance of Obligations
7.3 Conditions to Obligations of SWVA
(a) Representations and Warranties
(b) Performance of Obligations
(c) Investment Banking Letter
ARTICLE 8
Termination
8.1 Termination
8.2 Effect of Termination
8.3 Non-Survival of Representations, Warranties and Covenants
8.4 Expenses
ARTICLE 9
General Provisions
9.1 Entire Agreement
9.2 Waiver and Amendment
9.3 Descriptive Headings
9.4 Governing Law
9.5 Notices
9.6 Counterparts
9.7 Severability
9.8 Subsidiaries
Exhibit 1.4 - Addendum to Employment Agreements
Exhibit A - Plan of Merger between SWVA Bancshares, Inc. and
FNB Corporation
Exhibit B - Exchange Agent Agreement
Exhibit C - Affiliate Agreement
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of August 7, 2000 by and between FNB Corporation, a Virginia
corporation with its principal office located in Christiansburg, Virginia
("FNB"), and SWVA Bancshares, Inc., a Virginia corporation with its
principal office located in Roanoke, Virginia ("SWVA").
WITNESSETH:
WHEREAS, FNB and SWVA (together, the "Companies") desire to affiliate,
so that First National Bank ("First National") and Southwest Virginia
Savings Bank, FSB ("SVSB") (together, the "Banks") will be under the
common control of FNB; and
WHEREAS, FNB and SWVA have agreed to the affiliation of their two
companies through a merger under Virginia law, as a result of which SWVA would
merge with and into FNB and the shareholders of SWVA would become shareholders
of FNB, all as more specifically provided in this Agreement and the Plan of
Merger in the form attached hereto as Exhibit A (the "Plan"); and
WHEREAS, the Boards of Directors of the Companies each believe it is in
the best interests of their respective corporations and their shareholders to
affiliate as provided herein and that the respective shareholder values of FNB
and SWVA can be maximized over time through this affiliation; and
WHEREAS, the Boards of Directors of the Companies each believe that the
transaction contemplated in this Agreement is in the best interests of the
communities they serve and of their respective employees; and
WHEREAS, the Boards of Directors of the Companies each believe that
after the affiliation the holding company structure should provide management
and technical assistance and support for recruitment, training and retention
of skilled officers and employees to the Banks in order to enable the combined
organization to operate more efficiently; and
WHEREAS, the respective Boards of Directors of the Companies have
resolved that the transactions described herein are in the best interests of
the parties and their respective shareholders and have authorized and approved
the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereby agree as
follows:
ARTICLE 1
The Merger and Related Matters
1.1 Definitions. Any term defined anywhere in this Agreement shall have
the meaning ascribed to it for all purposes of this Agreement (unless
expressly noted to the contrary). In addition:
(a) the term "knowledge" when used with respect to a party shall
mean the knowledge of any "Executive Officer" of such party, as such term is
defined in Regulation O, (12 C.F.R. 215);
(b) the term "Material Adverse Effect", when applied to a party,
shall mean an event, occurrence or circumstance (including without limitation
(i) the making of any provisions for possible loan and lease losses, write-
downs or other real estate and taxes and (ii) any breach of a representation
or warranty by such party) which (a) has or is reasonably likely to have a
material adverse effect on the financial position, results of operations or
business of the party and its subsidiaries, taken as a whole, or (b) would
materially impair the party's ability to perform its obligations under this
Agreement or the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that solely for purposes of
measuring whether an event, occurrence or circumstance has a material adverse
effect on such party's results of operations, the term "results of
operations" shall mean net interest income plus non-interest income (less
securities gains) less gross expenses (excluding provisions for possible loan
and lease losses, write-downs of other real estate and taxes); and provided
further, that material adverse effect and material impairment shall not be
deemed to include the impact of (i) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (ii) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks and bank holding
companies generally, and (iii) the Merger and related expenses associated with
the transactions contemplated by this Agreement on the operating performance
of the parties to this Agreement; and
(c) the term "Previously Disclosed" by a party shall mean
information set forth in a written disclosure letter that is delivered by that
party to the other party prior to or contemporaneously with the execution of
this Agreement and specifically designated as information "Previously
Disclosed" pursuant to this Agreement.
1.2 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Date as defined in Section 1.5 hereof, SWVA will be merged
with and into FNB (the "Merger"). At the Effective Date, the Merger shall
have the effect as provided in Section 13.1-721 of the Virginia Stock
Corporation Act.
1.3 Name and Continuing Operations. The respective names and banking
offices of the Banks will not change as a result of the Merger. After the
Effective Date, FNB shall continue to be headquartered in Christiansburg,
Virginia.
1.4 Management of FNB and the Banks. The directors, officers and
employees of the Banks will not change as a result of the Merger except that
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. shall be appointed to the Board of SVSB. On the
Effective Date, the number of Directors of FNB shall be increased by two
members by adding one member in Class I whose terms expire at the 2003 annual
meeting of shareholders and by adding one member in Class III whose terms
expire at the 2002 annual meeting of shareholders. ▇. ▇. ▇▇▇▇▇ shall be
appointed to fill the vacancy created in Class I and ▇▇▇▇▇▇▇▇ ▇▇▇▇ shall be
appointed to fill the vacancy created in Class III. At the next annual
meeting of shareholders of FNB, management of FNB will recommend to
shareholders that those gentlemen be elected as a member of Class I and Class
III, respectively. In addition, on the Effective Date, FNB agrees to assume
the employment agreements between SWVA and ▇. ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
and as of the Effective Time, FNB shall enter into an Addendum to the
employment agreement for ▇. ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as attached hereto
as Exhibit 1.4. In addition, as of the Effective Date, FNB shall enter into
an agreement with ▇. ▇. ▇▇▇▇▇ in which FNB agrees to pay ▇▇. ▇▇▇▇▇ $17,000 in
consideration for his agreement not to compete with FNB and its affiliates for
a period of one year.
1.5 The Closing and Effective Date. The closing of the transactions
contemplated by this Agreement and the Plan of Merger shall take place at the
offices of FNB in Christiansburg, Virginia or at such other place as may be
mutually agreed upon by the parties. The Merger shall become effective on the
date shown on the Certificate of Merger issued by the State Corporation
Commission of Virginia effecting the Merger (the "Effective Date"). Unless
otherwise agreed upon in writing by the chief executive officers of FNB and
SWVA, subject to the conditions to the obligations of the parties to effect
the Merger as set forth in Article 6, the parties shall use their best efforts
to cause the Effective Date to occur on the first day of the month following
the month in which the conditions set forth in Sections 7.1(a) and 7.1(b) are
satisfied. All documents required by the terms of this Agreement to be
delivered at or prior to consummation of the Merger will be exchanged by the
parties at the closing of the Merger (the "Merger Closing"), which shall be
held on or before the Effective Date. FNB and SWVA shall execute and deliver
to the Virginia State Corporation Commission Articles of Merger containing a
Plan of Merger in substantially the form of Exhibit A hereto.
ARTICLE 2
Basis and Manner of Conversion
2.1 Conversion of SWVA Stock. At the Effective Date, by virtue of
the Merger, each share of the common stock, par value $0.10 per
share, of SWVA ("SWVA Common Stock") issued and outstanding
immediately prior to the Effective Date will be converted into either
cash (the "Cash Consideration") or shares of common stock, par
value $5.00 per share, of FNB ("FNB Common Stock"), the "Stock
Consideration," which Stock Consideration together with the Cash
Consideration (the "Merger Consideration"), in each case as the
holder thereof shall have elected or be deemed to have elected in
accordance with Section 2.3.
In the case that the Market Value of FNB Common Stock (as defined
later in this Section 2.1) is equal to or greater than $15.30 per
share and equal to or less than $18.70 per share, the Cash
Consideration will be $20.25 per share and the Stock Consideration
will equal shares of FNB Common Stock with a Market Value of $20.25.
In the case that the Market Value of FNB Common Stock is greater
than $18.70 and less than or equal to $20.00, the Stock Consideration
will equal 1.083 shares of FNB Common Stock for each outstanding
share of SWVA Common Stock, and the Cash Consideration will be
$20.25. In the case that the Market Value of FNB Common Stock is
less than $15.30 and equal to or greater than $14.00, the Stock
Consideration will equal 1.324 shares of FNB Common Stock for each
outstanding share of SWVA Common Stock, and the Cash Consideration
will be $20.25.
The Market Value of FNB Common Stock will be the average of the last
reported sales prices per share of FNB Common Stock as reported on
the NASDAQ Exchange Composite Transactions Tape (as reported in The
Wall Street Journal, or, if not reported thereby, another
authoritative source as chosen by FNB) for the thirty consecutive
full trading days on such exchange (even if FNB Common Stock does not
trade in each such day) ending at the close of trading on the tenth
calendar day before the Effective Date (the "Market Value" and the
"Measurement Period"). The ratio of shares of FNB's Common Stock
that will be exchanged for each outstanding share of SWVA Common
Stock shall be referred to herein as the "Exchange Ratio" and shall
be rounded to the nearest thousandth decimal point.
2.2 Allocation. Notwithstanding anything in this Agreement to the
contrary, the aggregate amount of cash to be issued to shareholders of SWVA in
the Merger shall be equal to $1,785,742 (the "Cash Amount"); provided that
the Cash Amount may be changed by FNB to accommodate the exercise by FNB of
its option to change the Cash Number and the Stock Number pursuant to the last
sentence of this Section 2.2. As used in this Agreement, the Cash Number
shall mean the aggregate number of shares of SWVA Common Stock to be converted
into the right to receive the Cash Consideration in the Merger, which shall be
equal to the Cash Amount divided by $20.25. The number of shares of SWVA
Common Stock to be converted into the right to receive Stock Consideration
(the "Stock Number") will be equal to (i) the number of shares of SWVA
Common Stock issued and outstanding immediately prior to the Effective Date of
the Merger less (ii) the sum of (A) the Cash Number and (B) the aggregate
number of shares of SWVA Common Stock to be exchanged for cash pursuant to
Section 3.3. FNB shall have the option to change the Cash Number and the
Stock Number to more closely follow the actual elections of SWVA shareholders
pursuant to this Article 2, so long as such modification to the Cash Number
and the Stock Number does not prevent the condition set forth in Section
7.1(d) from being satisfied.
2.3 Election. Subject to allocation in accordance with the provisions
of this Article, each record holder of shares of SWVA Common Stock issued and
outstanding immediately prior to the Election Deadline (as defined in Section
3.1(i)) will be entitled, in accordance with Section 3.1, (i) to elect to
receive in respect of each such share held in such manner (A) Cash
Consideration (a "Cash Election") or (B) Stock Consideration (a "Stock
Election") thus, making an election for all Cash Consideration, all Stock
Consideration, or a mixture thereof or (ii) to indicate that such record
holder has no preference as to the receipt of Cash Consideration or Stock
Consideration for all such shares held by such holder (a "Non-Election").
Shares of SWVA Common Stock in respect of which a Non-Election is made or as
to which no election is made (collectively, "Non-Election Shares") shall be
deemed by FNB to be shares in respect of which Cash Elections or Stock
Elections have been made, as FNB shall determine. Holders of record of shares
of SWVA Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Representative") may submit multiple Forms of
Election (as hereinafter defined), provided that each such Form of Election
covers all the shares of SWVA Common Stock held by that Representative for a
particular beneficial owner.
2.4 Allocation of Cash Election Shares. In the event that the
aggregate number of shares in respect of which Cash Elections have
been made (the "Cash Election Shares") exceeds the Cash Number, all
shares of SWVA Common Stock in respect of which Stock Elections have
been made (the "Stock Election Shares") and all Non-Election Shares
will be converted into the right to receive Stock Consideration (and
cash in lieu of fractional interests in accordance with Section 3.3),
and Cash Election Shares will be converted into the right to receive
Cash Consideration or Stock Consideration in the following manner:
(i) the number of Cash Election Shares covered by each
Form of Election (as defined in Section 3.1(i)) to be converted
into Cash Consideration will be determined by multiplying the
number of Cash Election Shares covered by such Form of Election by
a fraction, (A) the numerator of which is the Cash Number and (B)
the denominator of which is the aggregate number of Cash Election
Shares rounded down to the nearest whole number; and
(ii) all Cash Election Shares not converted into Cash
Consideration in accordance with Section 2.4(i) will be converted
into the right to receive Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 3.3).
Provided, however, that cash in lieu of fractional interests and cash
to be paid in connection with rights of dissenting shareholders, as
provided in Sections 3.3 and 3.5, respectively, shall not be included
in any determination of whether this Section 2.4 shall be given
effect.
2.5 Allocation of Stock Election Shares. In the event that the
aggregate number of Stock Election Shares exceeds the Stock Number,
all Cash Election Shares and all Non-Election Shares (together, the
" Cash Shares") will be converted into the right to receive Cash
Consideration, and all Stock Election Shares will be converted into
the right to receive Cash Consideration or Stock Consideration in
the following manner:
(i) the number of Stock Election Shares covered by each Form of
Election to be converted into Cash Consideration will be
determined by multiplying the number of Stock Election Shares
covered by such Form of Election by a fraction, (A) the numerator
of which is the Cash Number less the number of Cash Shares and
(B) the denominator of which is the aggregate number of Stock
Election Shares, rounded down to the nearest whole number; and
(ii) all Stock Election Shares not converted into Cash
Consideration in accordance with Section 2.5(i) will be converted
into the right to receive Stock Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3).
2.6 No Allocation. In the event that neither Section 2.4 nor
Section 2.5 is applicable, all Cash Election Shares will be
converted into the right to receive Cash Consideration, all Stock
Election Shares will be converted into the right to receive Stock
Consideration (and cash in lieu of fractional interests in accordance
with Section 3.3) and Non-Election Shares will be converted into the
right to receive Cash Consideration or Stock Consideration (and
cash in lieu of fractional interests in accordance with Section 3.3)
as the Exchange Agent shall determine.
2.7 Computations. The Exchange Agent (as defined in Section 3.1(i))
will make all computations to give effect to this Article 2.
2.8 Cancellation of Shares. As of the Effective Date of the Merger,
all such shares of SWVA Common Stock will no longer be
outstanding and automatically be cancelled and retired and will
cease to exist and each holder of a certificate formerly
representing any such shares of SWVA Common Stock (a "SWVA
Certificate") will cease to have any rights with respect
thereto, except the right to receive Merger Consideration and
any additional cash in lieu of fractional shares of FNB Common
Stock to be issued or paid in consideration therefor upon
surrender of such SWVA Certificate in accordance with Article
3, without interest, subject to rights of dissenting
shareholders as provided under Section 3.5.
ARTICLE 3
Manner of Exchange
3.1 Exchange Procedures.
(i) Not more than 45 days nor fewer than 30 days prior to the
Effective Date, First National, as the exchange agent ("Exchange
Agent"), will mail a form of election (the "Form of Election")
to each shareholder of record of SWVA as of a record date as close
as practicable to the date of mailing and mutually agreed to by
SWVA and FNB. The Exchange Agent shall enter into a written
agreement with FNB and SWVA detailing its duties and
responsibilities and shall furnish evidence of liability insurance
for such activities in a form substantially similar to Exhibit B.
In addition, the Exchange Agent will use its best efforts to make
the Form of Election available to the persons who become
shareholders of SWVA during the period between such record date
and the Effective Date. Any election to receive Merger
Consideration will have been properly made only if the Exchange
Agent shall have received on the fifth business day immediately
preceding the Effective Date (the "Election Deadline"), a Form
of Election properly completed and accompanied by a SWVA
Certificate ("Certificate(s)") for the shares to which such Form
of Election relates, acceptable for transfer on the books of SWVA
(or an appropriate guarantee of delivery), as set forth in such
Form of Election. An election may be revoked only by written
notice received by the Exchange Agent prior to 5:00 p.m. on the
Election Deadline. If an election is so revoked, the
Certificate(s) (or guarantee of delivery, as appropriate) to which
such election relates will be promptly returned to the person
submitting the same to the Exchange Agent.
(ii) As soon as reasonably practicable after the
Effective Date, the Exchange Agent will mail to each holder of
record of a Certificate, whose shares of SWVA Common Stock were
converted into the right to receive Merger Consideration and those
who failed to return a properly completed Form of Election, (i) a
letter of transmittal (which will specify that delivery will be
effected, and risk of loss and title to the Certificates will
pass, only upon delivery of the Certificates to the Exchange Agent
and will be in such form and have such other provisions as the
Exchange Agent may specify consistent with this Agreement) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration.
(iii) With respect to properly made elections in
accordance with Section 3.1(i), and upon surrender in accordance
with Section 3.1(ii) of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such Certificate will be
entitled to receive in exchange therefor the Merger Consideration
that such holder has the right to receive pursuant to the
provisions of Article 2, and the Certificate so surrendered will
forthwith be canceled. In the event of a transfer of ownership of
Shares that are not registered in the transfer records of SWVA, as
the case may be, payment may be issued to a person other than the
person in whose name the Certificate so surrendered is registered
if such Certificate is properly endorsed or otherwise in proper
form for transfer and the person requesting such issuance pays any
transfer or other taxes required by reason of such payment to a
person other than the registered holder of such Certificate or
establishes to the satisfaction of FNB that such tax has been paid
or is not applicable. Until surrendered as contemplated by this
Section 3.1, each Certificate will be deemed at any time after the
Effective Date to represent only the right to receive upon such
surrender the Merger Consideration that the holder thereof has the
right to receive in respect of such Certificate pursuant to the
provisions of Article 2. No interest will be paid or will accrue
on any cash payable to holders of Certificates pursuant to the
provisions of Article 2.
3.2 Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to the shares of SWVA Common
Stock with a record date after the Effective Date shall be paid to
the holder of any unsurrendered Certificate with respect to the
shares of SWVA Common Stock represented thereby, and no cash payment
in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 3.3. Subject to the effect of unclaimed
property, escheat and other applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the
Certificate representing whole shares of SWVA Common Stock issued in
exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional
share of SWVA Common Stock to which such holder is entitled pursuant
to Section 3.3, and (ii) the amount of dividends or other
distributions, if any, with a record date after the Effective Date.
3.3 No Fractional Securities. No FNB Certificates or scrip
representing fractional shares of FNB Common Stock shall be issued
upon the surrender for exchange of Certificates, and such fractional
shares shall not entitle the owner thereof to vote or to any other
rights of a holder of FNB Common Stock. A holder of Shares converted
in the Merger who would otherwise have been entitled to a fractional
share of FNB Common Stock shall be entitled to receive a cash payment
(without interest) in lieu of such fractional share in an amount
determined by multiplying (i) the fractional share interest to which
such holder would otherwise be entitled by (ii) the Market Value of
FNB Common Stock.
3.4 Certain Adjustments. If, after the date hereof and on or prior
to the Closing Date, the outstanding shares of SWVA Common Stock
shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange
of shares, or any dividend payable in stock or other securities is
declared thereon with a record date within such period, or any
similar event shall occur, the Merger Consideration will be adjusted
accordingly to provide to the holders of SWVA Common Stock,
respectively, the same economic effect as contemplated by this
Agreement prior to such reclassification, recapitalization, split-up,
combination, exchange or dividend or similar event.
3.5 Rights of Dissenting Shareholders. Shareholders of SWVA who object
to the Merger will be entitled to the rights and remedies set forth in
sections 13.1-729 through 13.1-741 of the Virginia Stock Corporation Act.
ARTICLE 4
Representation and Warranties
4.1 Representations and Warranties of SWVA. SWVA represents and
warrants to FNB as follows:
(a) Organization, Standing and Power. (1) SWVA is a corporation
duly organized, validly existing and in good standing under the laws of
Virginia. It has all requisite corporate power and authority to carry on its
business as now being conducted and to own and operate its assets, properties
and business, and SWVA has the corporate power and authority to execute and
deliver this Agreement and perform the respective terms of this Agreement and
Plan of Merger. SWVA is duly registered as a unitary savings and loan holding
company under the 12 U.S.C. 1467a. SVSB is the only subsidiary of SWVA and
is wholly-owned by it, and is a federal savings bank, duly organized, validly
existing and in good standing under the laws of the United States, is in
compliance in all material respects with all rules and regulations promulgated
by any relevant regulatory authority, has all requisite corporate power and
authority to carry on its business as now being conducted and to own and
operate its assets, properties and business, is an "insured bank" as defined
in the Federal Deposit Insurance Act and applicable regulations thereunder,
and its deposits are insured to the fullest extent allowed by law by the
Federal Deposit Insurance Corporation.
(2) Except as Previously Disclosed, neither SWVA nor SVSB
(collectively with SWVA, the "SWVA Companies") owns any equity securities of
any other corporation or entity.
(b) Authority. (1) The execution and delivery of this Agreement
and the Plan of Merger and the consummation of the Merger have been duly and
validly authorized by all necessary corporate action on the part of SWVA,
except the approval of shareholders. The Agreement has been approved by more
than two-thirds of SWVA's Board of Directors and represents the legal, valid,
and binding obligation of SWVA, enforceable against SWVA in accordance with
its terms (except in all such cases as enforceability may be limited by
applicable bankruptcy, insolvency, merger, 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).
(2) Neither the execution and delivery of the Agreement,
the consummation of the transactions contemplated therein, nor the compliance
by SWVA with any of the provisions thereof will (i) conflict with or result in
a breach of any provision of the Articles of Incorporation or Bylaws of SWVA,
(ii) except as Previously Disclosed, constitute or result in the breach of any
term, condition or provision of, or constitute default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon, any property
or assets of the SWVA Companies pursuant to (A) any note, bond, mortgage,
indenture, or (B) any material license, agreement, lease or other instrument
or obligation, to which any of the SWVA Companies is a party or by which any
of them or any of their properties or assets may be bound, or (iii) subject to
the receipt of the requisite approvals referred to in Section 4.7, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to any
of the SWVA Companies or any of their properties or assets.
(c) Capital Structure. The authorized capital stock of SWVA
consists of 2,225,000 shares of common stock, par value $0.10 per share
("SWVA Common Stock"), of which 423,612 shares (including 4,328 shares held
by the Management Stock Bonus Plan of SVSB, which have not been awarded under
such plan and for which a Cash Election shall be made) are issued and
outstanding, fully paid and nonassessable, not subject to shareholder
preemptive rights, and not issued in violation of any agreement to which SWVA
is a party or otherwise bound, or of any registration or qualification
provisions of any federal or state securities laws outstanding options to
purchase 64,049 shares of SWVA Common Stock; 275,000 shares of preferred
stock, par value $0.10 per share ("SWVA Preferred Stock"), none of which
shares are issued and outstanding. Except as Previously Disclosed, there are
no outstanding understandings or commitments of any character pursuant to
which SWVA and any of the SWVA Companies could be required or expected to
issue shares of capital stock.
(d) Ownership, Capital Structure, and Organization of SVSB. (1)
SWVA does not own, directly or indirectly, 5% or more of the outstanding
capital stock or other voting securities of any corporation, bank or other
organization actively engaged in business except SVSB and a service
corporation wholly-owned by SVSB, Southwest Virginia Service Corporation, Inc.
The outstanding shares of capital stock of SVSB have been duly authorized and
are validly issued, and are fully paid and nonassessable and all such shares
are owned by SWVA free and clear of all liens, claims and encumbrances and
were not issued in violation of any agreement or of any regulation or
qualification provisions of federal or state securities laws. No rights are
authorized, issued or outstanding with respect to the capital stock of SVSB
and there are no agreements, understandings or commitments relating to the
right of SWVA to vote or to dispose of said shares. None of the shares of
capital stock of SVSB has been issued in violation of the preemptive rights of
any person.
(2) SVSB is a duly organized federal savings bank, validly
existing and in good standing under applicable laws. SVSB (i) has full
corporate power and authority to own, lease and operate its properties and to
carry on its business as now conducted except where the absence of such power
or authority would not have a material adverse effect on the financial
condition, results of operations or business of SWVA on a consolidated basis,
and (ii) is duly qualified to do business in the states of the United States
and foreign jurisdictions where its ownership or leasing of property or the
conduct of its business requires such qualification and where failure to do
qualify would have a material adverse effect on the financial condition,
results of operations or business of SWVA on a consolidated basis. SVSB has
all federal, state, local and foreign governmental authorizations and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as it is now being conducted, except where failure to obtain such
authorization or license would not have a material adverse effect on its
business.
(e) Financial Statements. SWVA's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1999, and all other documents filed or to
be filed subsequent to June 30, 1999 under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (together with the rules
and regulations thereunder, the "Exchange Act"), in the form filed with the
SEC (in each such case, the "SWVA Financial Statements") did not and will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets in or incorporated by
reference into the SWVA Financial Statements (including the related notes and
schedules thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in the SWVA Financial Statements (including any
related notes and schedules thereto) fairly presents and will fairly present
the results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for
the periods set forth therein, in each case in accordance with generally
accepted accounting principles consistently applied to banks and savings and
loan holding companies during the periods involved, except as may be noted
therein, subject to normal and recurring year-end audit adjustments in the
case of unaudited statements.
(f) Absence of Undisclosed Liabilities. At June 30, 1999, and at
any subsequent date reflected in such Financial Statements, none of the SWVA
Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the SWVA Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.
(g) Legal Proceedings; Compliance with Laws. Except as
Previously Disclosed, there are no actions, suits or proceedings instituted or
pending or, to the best knowledge of SWVA, threatened or probable of assertion
against any of the SWVA Companies, or against any property, asset, interest or
right of any of them, that are reasonably expected to have, either
individually or in the aggregate, a material adverse effect on the financial
condition of SWVA on a consolidated basis or that are reasonably expected to
threaten or impede the consummation of the transactions contemplated by this
Agreement. None of the SWVA Companies is a party to any agreement or
instrument or subject to any judgment, order, writ, injunction, decree or rule
that might reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business or prospects of SWVA on a
consolidated basis. Except as Previously Disclosed, as of the date of this
Agreement, none of the SWVA Companies nor any of their properties is a party
to or is subject to any order, decree, agreement, memorandum of understanding
or similar arrangement with, or a commitment letter or similar submission to,
any federal or state governmental agency or authority charged with the
supervision or regulation of depository institutions or mortgage lenders or
engaged in the insurance of deposits which restricts or purports to restrict
in any material respect the conduct of the business of it or any of its
subsidiaries or properties, or in any manner relates to the capital,
liquidity, credit policies or management of it; and except as Previously
Disclosed, none of the SWVA Companies has been advised by any such regulatory
authority that such authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, commitment letter or similar
submission. To the best knowledge of SWVA, the SWVA Companies have complied
in all material respects with all laws, ordinances, requirements, regulations
or orders applicable to its business (including environmental laws,
ordinances, requirements, regulations or orders).
(h) Regulatory Approvals. SWVA knows of no reason why the
regulatory approvals referred to in Section 7.1(b) should not be obtained
without the imposition of any condition of the type referred to in Section
7.1(b). SVSB is in material compliance with the applicable provisions of the
Community Reinvestment Act and the regulations promulgated thereunder, and
SVSB currently has a CRA rating of satisfactory or better. To the knowledge
of SWVA, there is no fact or circumstance or set of facts or circumstances
that would cause SVSB to fail to comply with such provisions or cause the
rating of SVSB to fall below satisfactory.
(i) Labor Relations. None of the SWVA Companies is a party to,
or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
the subject of a proceeding asserting that is has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or seeking
to compel it to bargain with any labor organization as to wages and conditions
of employment, nor is there any strike or other labor dispute involving it,
pending or, to the best of its knowledge, threatened, nor is it aware of any
activity involving its employees seeking to certify a collective bargaining
unit or engaging in any other organizational activity.
(j) Tax Matters. The SWVA Companies have filed all federal,
state, and local tax returns and reports required to be filed, and all taxes
shown by such returns to be due and payable have been paid or are reflected as
a liability in the SWVA Financial Statements or are being contested in good
faith and have been Previously Disclosed. Except to the extent that
liabilities therefor are specifically reflected in the SWVA Financial
Statements, there are no federal, state or local tax liabilities of the SWVA
Companies other than liabilities that have arisen since December 31, 1999, all
of which have been properly accrued or otherwise provided for on the books and
records of the SWVA Companies. Except as Previously Disclosed, no tax return
or report of any of the SWVA Companies is under examination by any taxing
authority or the subject of any administrative or judicial proceeding, and no
unpaid tax deficiency has been asserted against any of the SWVA Companies by
any taxing authority.
(k) Property. Except as disclosed or reserved against in the
SWVA Financial Statements, all of the SWVA Companies have good and marketable
title free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the SWVA Financial Statements as being
owned by the SWVA Companies as of the dates thereof. To the best knowledge of
SWVA, all buildings, and all fixtures, equipment, and other property and
assets which are material to its business on a consolidated basis, held under
leases or subleases by the SWVA Companies are held under valid instruments
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, merger, moratorium and similar laws. The buildings, structures,
and appurtenances owned, leased, or occupied by the SWVA Companies are, to the
best knowledge of SWVA, in good operating condition, in a state of good
maintenance and repair and (i) comply with applicable zoning and other
municipal laws and regulations, and (ii) there are no defects therein.
(l) Reports. Since January 1, 1998, the SWVA Companies have
filed all reports and statements, together with any amendments required to be
made with respect thereto, that were required to be filed with the SEC, the
Federal Reserve, the SCC, and any other governmental or regulatory authority
or agency having jurisdiction over their operations.
(m) Employee Benefit Plans. (1) SWVA will deliver for FNB's
review, as soon as practicable, true and complete copies of all material
pension, retirement, profit-sharing, deferred compensation, stock option,
bonus, vacation or other material incentive plans or agreements, all material
medical, dental or other health plans, all cafeteria or flexible benefits
plans, all life insurance plans and all other material employee benefit plans
or fringe benefit plans and any related trust or other funding instrument,
including, without limitation, all "employee benefit plans" as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by SWVA or SVSB for the benefit of
current or former employees, retirees or other beneficiaries eligible to
participate (collectively, the "SWVA Benefit Plans"). Any of the SWVA
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 "SWVA ERISA
Plan." No SWVA Benefit Plan is or has been a "multiemployer plan," as
defined in Section 3(37) of ERISA.
(2) Except as Previously Disclosed, all SWVA Benefit Plans
are in compliance with the applicable terms of ERISA, the Internal Revenue
Code of 1986, as amended (the "IRC") and any other applicable laws, rules
and regulations the breach or violation of which could result in a material
liability to SWVA on a consolidated basis. In the case of any plan intended
to be qualified under IRC Section 401, compliance with such qualification
requirements shall mean the receipt of a current, favorable determination
letter from the Internal Revenue Service based on laws changes effective
through 1994 and operation of the plan in accordance with its terms or in
accordance with any subsequently enacted law for which the remedial amendment
period has not yet ended.
(3) No SWVA ERISA Plan which is subject to the minimum
funding standards of Section 302 of ERISA or IRC Section 412 has any
"unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan which is a "defined benefit plan," as that term is defined in
Section 3(35) of ERISA, 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 was terminated in accordance
with all applicable legal requirements.
(n) Investment Securities. Except as Previously Disclosed and
except for pledges to secure public and trust deposits and obligations under
agreements pursuant to which any of the SWVA Companies has sold securities
subject to an obligation to repurchase, none of the investment securities
reflected in the SWVA Financial Statements is subject to any restriction,
contractual, statutory, or otherwise, which would impair materially the
ability of the holder of such investment to dispose freely of any such
investment at any time.
(o) Certain Contracts. (1) Except as Previously Disclosed,
neither SWVA nor any SWVA subsidiary is a party to, or is bound by, (i) any
material agreement, arrangement or commitment, (ii) any agreement, indenture
or other instrument relating to the borrowing of money by SWVA or SVSB or the
guarantee by SWVA or SVSB of any such obligation, (iii) any agreement,
arrangement or commitment relating to the employment of a consultant or the
employment, election, retention in office or severance of any present or
former director or officer, (iv) any agreement to make loans or for the
provision, purchase or sale of goods, services or property between SWVA or
SVSB and any director or officer of SWVA or SVSB, or any member of the
immediate family or affiliate of any of the foregoing, or (v) any agreement
between SWVA or SVSB and any 5% or more shareholder of SWVA; in each case
other than agreements entered into in the ordinary course of the banking
business of SWVA or SVSB consistent with past practice.
(2) Neither SWVA or SVSB, nor to the knowledge of SWVA, the
other party thereto, is in default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument whether entered into
in the ordinary course of business or otherwise, nor has there occurred any
event that, with the lapse of time or giving of notice or both, would
constitute such a default, other than defaults of loan agreements by borrowers
from SWVA or SVSB in the ordinary course of its business.
(p) Insurance. A complete list of all policies or binders of
fire, liability, product liability, workmen's compensation, vehicular and
other insurance held by or on behalf of the SWVA Companies has previously been
furnished to FNB and all such policies or binders are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner customary for the
industry and are deemed appropriate and sufficient by SWVA. The SWVA
Companies are not in default with respect to any provision contained in any
such policy or binder and have not failed to give any notice or present any
claim under any such policy or binder in due and timely fashion. None of the
SWVA Companies has received notice of cancellation or non-renewal of any such
policy or binder. None of the SWVA Companies has knowledge of any inaccuracy
in any application for such policies or binders, any failure to pay premiums
when due or any similar state of facts or the occurrence of any event that is
reasonably likely to form the basis for any material claim against it not
fully covered (except to the extent of any applicable deductible) by the
policies or binders referred to above. None of the SWVA Companies has
received notice from any of its insurance carriers that any insurance premiums
will be increased materially in the future or that any such insurance coverage
will not be available in the future on substantially the same terms as now in
effect.
(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of SWVA, to SWVA's best knowledge each loan reflected as an asset in
the SWVA Financial Statements or the financial statements of SVSB (i) is
evidenced by notes, agreements, or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has
been secured by valid liens and security interests which have been perfected,
and (iii) is the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. All loans and extensions
of credit which are subject to regulation of the Federal Reserve which have
been made by SWVA and SVSB comply therewith.
(2) The classification on the books and records of SWVA and
SVSB of loans and/or non-performing assets as nonaccrual, troubled debt
restructuring, OREO or other similar classification, complies in all material
respects with generally accepted accounting principles and applicable
regulatory accounting principles.
(3) Except for liens, security interests, claims, charges,
or such other encumbrances as have been appropriately reserved for in the SWVA
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no adverse claims or encumbrances on the OREO. All
title, hazard and other insurance claims and mortgage guaranty claims with
respect to the OREO have been timely filed and neither SWVA nor SVSB has been
received any notice of denial of any such claim.
(4) SWVA and SVSB are in possession of all of the OREO or,
if any of the OREO remains occupied by the mortgagor, eviction or summary
proceedings have been commenced or rental arrangements providing for market
rental rates have been agreed upon and SWVA and/or SVSB are diligently
pursuing such eviction of summary proceedings or such rental arrangements.
Except as Previously Disclosed, no legal proceeding or quasi-legal proceeding
is pending or, to the knowledge of SWVA and SVSB, threatened concerning any
OREO or any servicing activity or omission to provide a servicing activity
with respect to any of the OREO.
(5) Except as Previously Disclosed, all loans made by any
of the SWVA Companies to facilitate the disposition of OREO are performing in
accordance with their terms.
(6) The allowance for possible loan losses shown on the
SWVA Financial Statements was, and the allowance for possible loan losses
shown on the financial statements of SWVA as of dates subsequent to the
execution of this Agreement will be, in each case as of the dates thereof,
adequate in all material respects to provide for possible losses, net of
recoveries relating to loans previously charged off, on loans outstanding
(including accrued interest receivable) of the SWVA Companies and other
extensions of credit (including letters of credit and commitments to make
loans or extend credit) by SWVA.
(r) Absence of Material Changes and Events. Since June 30, 1999,
there has not been any material adverse change in the condition (financial or
otherwise), aggregate assets or liabilities, cash flow, earnings or business
or SWVA, and SWVA has conducted its business only in the ordinary course
consistent with past practice.
(s) Statements True and Correct. None of the information
supplied or to be supplied by SWVA for inclusion in the Registration
Statement, the Proxy Statement/Prospectus or any other document to be filed
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, in the case of the Registration Statement, when it becomes
effective and with respect to the Proxy Statement/Prospectus, when first
mailed to SWVA shareholders, be false or misleading with respect to any
material fact or omit to state any material fact necessary in order to make
the statements therein not misleading, or, in the case of the Proxy
Statement/Prospectus or any supplement thereto, at the time of the SWVA
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 SWVA Shareholders' Meeting. All documents that SWVA is responsible for
filing with the SEC or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law, including applicable
provisions of federal and state securities law.
(t) Brokers and Finders. Neither SWVA nor SVSB, nor any of
their respective officers, directors or employees, has employed any broker,
finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein, except
for RP Financial.
(u) Repurchase Agreements. With respect to all agreements
pursuant to which SWVA or SVSB has purchased securities subject to an
agreement to resell, if any, SWVA or SVSB, as the case may be, has a valid,
perfected first lien or security interest in the government securities or
other collateral securing the repurchase agreement, and the value of such
collateral equals or exceeds the amount of the debt secured thereby.
(v) Trust Accounts. SVSB does not provide trust services.
(w) Environmental Matters. (1) Except as Previously Disclosed,
to the best of SWVA's knowledge, neither SWVA nor SVSB owns or leases any
properties affected by toxic waste, radon gas or other hazardous conditions or
constructed in part with the use of asbestos. Each of SWVA and SVSB is in
substantial compliance with all Environmental Laws applicable to real or
personal properties in which it has a direct fee ownership or, with respect to
a direct interest as lessee, applicable to the leasehold premises or, to the
best knowledge of SWVA and SVSB, the premises on which the leasehold is
situated. Neither SWVA nor SVSB has received any Communication alleging that
SWVA or SVSB is not in such compliance and, to the best knowledge of SWVA and
SVSB, there are no present circumstances (including Environmental Laws that
have been adopted but are not yet effective) that would prevent or interfere
with the continuation of such compliance.
(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on SWVA and SVSB of any
liability arising under any Environmental Laws pending or, to the best
knowledge of SWVA and SVSB, threatened against (A) SWVA or SVSB, (B) any
person or entity whose liability for any Environmental Claim, SWVA or SVSB has
or may have retained or assumed either contractually or by operation of law,
or (C) any real or personal property which SWVA or SVSB owns or leases, or has
been or is judged to have managed or to have supervised or participated in the
management of, which liability might have a material adverse effect on the
business, financial condition or results of operations of SWVA. SWVA and
SVSB are not subject to any agreement, order, judgment, decree or memorandum
by or with any court, governmental authority, regulatory agency or third party
imposing any such liability.
(3) To the best knowledge of SWVA and SVSB, there are no
legal, administrative, arbitral or other proceedings, or Environmental
Claims or other claims, causes of action or governmental investigations of
any nature, seeking to impose, or that could result in the imposition, on SWVA
or SVSB of any liability arising under any Environmental Laws pending or
threatened against any real or personal property in which SWVA or SVSB holds a
security interest in connection with a loan or a loan participation which
liability might have a material adverse effect on the business, financial
condition or results of operations of SWVA. SWVA and SVSB are not subject to
any agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
(4) With respect to all real and personal property owned or
leased by SWVA or SVSB, other than OREO, SWVA has made available to FNB copies
of any environmental audits, analyses and surveys that have been prepared
relating to such properties. With respect to all OREO held by SWVA or SVSB
and all real or personal property which SWVA or SVSB has been or is judged to
have managed or to have supervised or participated in the management of, SWVA
has made available to FNB the information relating to such OREO available to
SWVA. SWVA and SVSB are in compliance in all material respects with all
recommendations contained in any environmental audits, analyses and surveys
relating to any of the properties, real or personal, described in this
subsection (4).
(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against SWVA or SVSB or against any
person or entity whose liability for any Environmental Claim SWVA or SVSB has
or may have retained or assumed either contractually or by operation of law.
4.2 Representations and Warranties of FNB. FNB represents and warrants
to SWVA as follows:
(a) Organization, Standing and Power. (1) FNB is a corporation
duly organized, validly existing and in good standing under the laws of
Virginia. It has all requisite corporate power and authority to carry on its
business as now being conducted and to own and operate its assets, properties
and business, and FNB has the corporate power and authority to execute and
deliver this Agreement and perform the respective terms of this Agreement and
Plan of Merger. FNB is duly registered as a bank holding company under the
Bank Holding Company Act of 1956. First National Bank, a wholly owned
subsidiary of FNB, is a national banking association, duly organized, validly
existing and in good standing under the laws of the United States, is in
compliance in all material respects with all rules and regulations promulgated
by any relevant regulatory authority, it has all requisite corporate power and
authority to carry on its business as now being conducted and to own and
operate its assets, properties and business, is an "insured bank" as defined
in the Federal Deposit Insurance Act and applicable regulations thereunder and
its deposits are insured to the fullest extent allowed by law by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation.
(2) FNB has Previously Disclosed its subsidiary
corporations (and the subsidiaries thereof) (the "FNB Subsidiaries" and,
collectively with FNB, the "FNB Companies"). Except as Previously
Disclosed, none of the FNB Companies owns any equity securities of any other
corporation or entity.
(b) Authority. (1) The execution and delivery of this Agreement
and the Plan of Merger and the consummation of the Merger have been duly and
validly authorized by all necessary corporate action on the part of FNB,
except the approval of shareholders. The Agreement represents the legal,
valid, and binding obligation of FNB, enforceable against FNB in accordance
with its terms (except in all such cases as enforceability may be limited by
applicable bankruptcy, insolvency, merger, 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).
(2) Neither the execution and delivery of the Agreement,
the consummation of the transactions contemplated therein, nor the compliance
by FNB with any of the provisions thereof will (i) conflict with or result in
a breach of any provision of the Articles of Incorporation or Bylaws of FNB,
(ii) except as Previously Disclosed, constitute or result in the breach of any
term, condition or provision of, or constitute default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon, any property
or assets of the FNB Companies pursuant to (A) any note, bond, mortgage,
indenture, or (B) any material license, agreement, lease or other instrument
or obligation, to which any of the FNB Companies is a party or by which any of
them or any of their properties or assets may be bound, or (iii) subject to
the receipt of the requisite approvals referred to in Section 4.7, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to any
of the FNB Companies or any of their properties or assets.
(c) Capital Structure. The authorized capital stock of FNB
consists of: 10,000,000 shares of common stock, par value $5.00 per share
("FNB Common Stock"), of which 4,084,172 shares are issued and outstanding,
fully paid and nonassessable, not subject to shareholder preemptive rights,
and not issued in violation of any agreement to which FNB is a party or
otherwise bound, or of any registration or qualification provisions of any
federal or state securities laws. The shares of FNB Common Stock to be issued
in exchange for shares of SWVA Common Stock upon consummation of the Merger
will have been duly authorized and, when issued in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights. Except as Previously Disclosed, there are no
outstanding understandings or commitments of any character pursuant to which
FNB and any of the FNB Companies could be required or expected to issue shares
of capital stock.
(d) Ownership of the FNB Subsidiaries; Capital Structure of FNB
Subsidiaries; and Organization of the FNB Subsidiaries. (1) FNB does not own,
directly or indirectly, 5% or more of the outstanding capital stock or other
voting securities of any corporation, bank or other organization actively
engaged in business except as Previously Disclosed. The outstanding shares of
capital stock of each FNB Subsidiary have been duly authorized and are validly
issued, and are fully paid and nonassessable and all such shares are owned by
FNB or an FNB Subsidiary free and clear of all liens, claims and encumbrances
and were not issued in violation of any agreement or of any regulation or
qualification provisions of federal or state securities laws. No rights are
authorized, issued or outstanding with respect to the capital stock of any FNB
Subsidiary and there are no agreements, understandings or commitments relating
to the right of FNB to vote or to dispose of said shares. None of the shares
of capital stock of any FNB Subsidiary has been issued in violation of the
preemptive rights of any person.
(2) Each FNB Subsidiary is a duly organized corporation or
association, validly existing and in good standing under applicable laws.
Each FNB Subsidiary (i) has full corporate power and authority to own, lease
and operate its properties and to carry on its business as now conducted
except where the absence of such power or authority would not have a material
adverse effect on the financial condition, results of operations or business
of FNB on a consolidated basis, and (ii) is duly qualified to do business in
the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification and where failure to do qualify would have a material adverse
effect on the financial condition, results of operations or business of FNB on
a consolidated basis. Each FNB Subsidiary has all federal, state, local and
foreign governmental authorizations and licenses necessary for it to own or
lease its properties and assets and to carry on its business as it is now
being conducted, except where failure to obtain such authorization or license
would not have a material adverse effect on the business of such FNB
Subsidiary.
(e) Financial Statements. FNB's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, and all other documents filed or to
be filed subsequent to December 31, 1999 under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the "Exchange Act"), in the form filed
with the SEC (in each such case, the "FNB Financial Statements") did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets in or incorporated by
reference into the FNB Financial Statements (including the related notes and
schedules thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in the FNB Financial Statements (including any
related notes and schedules thereto) fairly presents and will fairly present
the results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for
the periods set forth therein, in each case in accordance with generally
accepted accounting principles consistently applied to banks and bank holding
companies during the periods involved, except as may be noted therein, subject
to normal and recurring year-end audit adjustments in the case of unaudited
statements.
(f) Absence of Undisclosed Liabilities. At December 31, 1999,
and at any subsequent date reflected in such Financial Statements, none of the
FNB Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the FNB Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.
(g) Legal Proceedings; Compliance with Laws. Except as
Previously Disclosed, there are no actions, suits or proceedings instituted or
pending or, to the best knowledge of FNB, threatened or probable of assertion
against any of the FNB Companies, or against any property, asset, interest or
right of any of them, that are reasonably expected to have, either
individually or in the aggregate, a material adverse effect on the financial
condition of FNB on a consolidated basis or that are reasonably expected to
threaten or impede the consummation of the transactions contemplated by this
Agreement. None of the FNB Companies is a party to any agreement or
instrument or subject to any judgment, order, writ, injunction, decree or rule
that might reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business or prospects of FNB on a
consolidated basis. Except as Previously Disclosed, as of the date of this
Agreement, none of the FNB Companies nor any of their properties is a party to
or is subject to any order, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar submission to, any
federal or state governmental agency or authority charged with the supervision
or regulation of depository institutions or mortgage lenders or engaged in the
insurance of deposits which restricts or purports to restrict in any material
respect the conduct of the business of it or any of its subsidiaries or
properties, or in any manner relates to the capital, liquidity, credit
policies or management of it; and except as Previously Disclosed, none of the
FNB Companies has been advised by any such regulatory authority that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter or similar submission. To the
best knowledge of FNB, the FNB Companies have complied in all material
respects with all laws, ordinances, requirements, regulations or orders
applicable to its business (including environmental laws, ordinances,
requirements, regulations or orders).
(h) Regulatory Approvals. FNB knows of no reason why the
regulatory approvals referred to in Section 7.1(b) should not be obtained
without the imposition of any condition of the type referred to in Section
7.1(b). First National is in material compliance with the applicable
provisions of the Community Reinvestment Act and the regulations promulgated
thereunder, and First National currently has a CRA rating of satisfactory or
better. To the knowledge of FNB, there is no fact or circumstance or set of
facts or circumstances that would cause First National to fail to comply with
such provisions or cause the rating of First National to fall below
satisfactory.
(i) Labor Relations. None of the FNB Companies is a party to, or
is bound by any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor is it the
subject of a proceeding asserting that is has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or seeking
to compel it to bargain with any labor organization as to wages and conditions
of employment, nor is there any strike or other labor dispute involving it,
pending or, to the best of its knowledge, threatened, nor is it aware of any
activity involving its employees seeking to certify a collective bargaining
unit or engaging in any other organizational activity.
(j) Tax Matters. The FNB Companies have filed all federal,
state, and local tax returns and reports required to be filed, and all taxes
shown by such returns to be due and payable have been paid or are reflected as
a liability in the FNB Financial Statements or are being contested in good
faith and have been Previously Disclosed. Except to the extent that
liabilities therefor are specifically reflected in the FNB Financial
Statements, there are no federal, state or local tax liabilities of the FNB
Companies other than liabilities that have arisen since December 31, 1999, all
of which have been properly accrued or otherwise provided for on the books and
records of the FNB Companies. Except as Previously Disclosed, no tax return
or report of any of the FNB Companies is under examination by any taxing
authority or the subject of any administrative or judicial proceeding, and no
unpaid tax deficiency has been asserted against any of the FNB Companies by
any taxing authority.
(k) Property. Except as disclosed or reserved against in the FNB
Financial Statements, all of the FNB Companies have good and marketable title
free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the FNB Financial Statements as being
owned by the FNB Companies as of the dates thereof. To the best knowledge of
FNB, all buildings, and all fixtures, equipment, and other property and assets
which are material to its business on a consolidated basis, held under leases
or subleases by the FNB Companies are held under valid instruments enforceable
in accordance with their respective terms, subject to bankruptcy, insolvency,
merger, moratorium and similar laws. The buildings, structures, and
appurtenances owned, leased, or occupied by the FNB Companies are, to the best
knowledge of FNB, in good operating condition, in a state of good maintenance
and repair and (i) comply with applicable zoning and other municipal laws and
regulations, and (ii) there are no latent defects therein.
(l) Reports. Since January 1, 1998, the FNB Companies have filed
all reports and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with the SEC, the Federal
Reserve, the SCC, and any other governmental or regulatory authority or agency
having jurisdiction over their operations.
(m) Employee Benefit Plans. (1) FNB will deliver for SWVA's
review, as soon as practicable, true and complete copies of all material
pension, retirement, profit-sharing, deferred compensation, stock option,
bonus, vacation or other material incentive plans or agreements, all material
medical, dental or other health plans, all cafeteria or flexible benefits
plans, all life insurance plans and all other material employee benefit plans
or fringe benefit plans and any related trust or other funding instrument,
including, without limitation, all "employee benefit plans" as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by FNB or any FNB Subsidiary for the
benefit of current or former employees, retirees or other beneficiaries
eligible to participate (collectively, 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." No FNB Benefit Plan is or has been a "multiemployer plan," as
defined in Section 3(37) of ERISA.
(2) Except as Previously Disclosed, all FNB Benefit Plans
are in compliance with the applicable terms of ERISA, the Internal Revenue
Code of 1986, as amended (the "IRC") and any other applicable laws, rules
and regulations the breach or violation of which could result in a material
liability to FNB on a consolidated basis. In the case of any plan intended to
be qualified under IRC Section 401, compliance with such qualification
requirements shall mean the receipt of a current, favorable determination
letter from the Internal Revenue Service based on laws changes effective
through 1994 and operation of the plan in accordance with its terms or in
accordance with any subsequently enacted law for which the remedial amendment
period has not yet ended.
(3) No FNB ERISA Plan which is subject to the minimum
funding standards of Section 302 of ERISA or IRC Section 412 has any
"unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan which is a "defined benefit plan," as that term is defined in
Section 3(35) of ERISA, 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 was terminated in accordance
with all applicable legal requirements.
(n) Investment Securities. Except for pledges to secure public
and trust deposits and obligations under agreements pursuant to which any of
the FNB Companies has sold securities subject to an obligation to repurchase,
none of the investment securities reflected in the FNB Financial Statements is
subject to any restriction, contractual, statutory, or otherwise, which would
impair materially the ability of the holder of such investment to dispose
freely of any such investment at any time.
(o) Certain Contracts. (1) Except as Previously Disclosed,
neither FNB nor any FNB subsidiary is a party to, or is bound by, (i) any
material agreement, arrangement or commitment, (ii) any agreement, indenture
or other instrument relating to the borrowing of money by FNB or any FNB
Subsidiary or the guarantee by FNB or any FNB Subsidiary of any such
obligation, (iii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election, retention in office or
severance of any present or former director or officer, (iv) any agreement to
make loans or for the provision, purchase or sale of goods, services or
property between FNB or any FNB Subsidiary and any director or officer of FNB
or any FNB Subsidiary, or any member of the immediate family or affiliate of
any of the foregoing, or (v) any agreement between FNB or any FNB Subsidiary
and any 5% or more shareholder of FNB; in each case other than agreements
entered into in the ordinary course of the banking business of FNB or a FNB
Subsidiary consistent with past practice.
(2) Neither FNB or any FNB Subsidiary, nor to the knowledge
of FNB, the other party thereto, is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other instrument whether
entered into in the ordinary course of business or otherwise, nor has there
occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default, other than defaults of loan agreements by
borrowers from FNB or a FNB Subsidiary in the ordinary course of its business.
(p) Insurance. A complete list of all policies or binders of
fire, liability, product liability, workmen's compensation, vehicular and
other insurance held by or on behalf of the FNB Companies has previously been
furnished to SWVA and all such policies or binders are valid and enforceable
in accordance with their terms, are in full force and effect, and insure
against risks and liabilities to the extent and in the manner customary for
the industry and are deemed appropriate and sufficient by FNB. The FNB
Companies are not in default with respect to any provision contained in any
such policy or binder and have not failed to give any notice or present any
claim under any such policy or binder in due and timely fashion. None of the
FNB Companies has received notice of cancellation or non-renewal of any such
policy or binder. None of the FNB Companies has knowledge of any inaccuracy
in any application for such policies or binders, any failure to pay premiums
when due or any similar state of facts or the occurrence of any event that is
reasonably likely to form the basis for any material claim against it not
fully covered (except to the extent of any applicable deductible) by the
policies or binders referred to above. None of the FNB Companies has received
notice from any of its insurance carriers that any insurance premiums will be
increased materially in the future or that any such insurance coverage will
not be available in the future on substantially the same terms as now in
effect.
(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of FNB, to FNB's best knowledge each loan reflected as an asset in
the FNB Financial Statements or the financial statements of any FNB Subsidiary
(i) is evidenced by notes, agreements, or other evidences of indebtedness
which are true, genuine and what they purport to be, (ii) to the extent
secured, has been secured by valid liens and security interests which have
been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles. All loans
and extensions of credit which are subject to regulation of the Federal
Reserve which have been made by FNB and the FNB Subsidiaries comply therewith.
(2) The classification on the books and records of FNB and
each FNB Subsidiary of loans and/or non-performing assets as nonaccrual,
troubled debt restructuring, OREO or other similar classification, complies in
all material respects with generally accepted accounting principles and
applicable regulatory accounting principles.
(3) Except for liens, security interests, claims, charges,
or such other encumbrances as have been appropriately reserved for in the FNB
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no adverse claims or encumbrances on the OREO. All
title, hazard and other insurance claims and mortgage guaranty claims with
respect to the OREO have been timely filed and neither FNB nor any FNB
Subsidiary has been received any notice of denial of any such claim.
(4) FNB and each FNB Subsidiary are in possession of all of
the OREO or, if any of the OREO remains occupied by the mortgagor, eviction or
summary proceedings have been commenced or rental arrangements providing for
market rental rates have been agreed upon and FNB and/or each FNB Subsidiary
are diligently pursuing such eviction of summary proceedings or such rental
arrangements. Except as Previously Disclosed, no legal proceeding or quasi-
legal proceeding is pending or, to the knowledge of FNB and each FNB
Subsidiary, threatened concerning any OREO or any servicing activity or
omission to provide a servicing activity with respect to any of the OREO.
(5) Except as Previously Disclosed, all loans made by any
of the FNB Companies to facilitate the disposition of OREO are performing in
accordance with their terms.
(6) The allowance for possible loan losses shown on the FNB
Financial Statements was, and the allowance for possible loan losses shown on
the financial statements of FNB as of dates subsequent to the execution of
this Agreement will be, in each case as of the dates thereof, adequate in all
material respects to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including accrued
interest receivable) of the FNB Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit)
by FNB.
(r) Absence of Material Changes and Events. Since December 31,
1999, there has not been any material adverse change in the condition
(financial or otherwise), aggregate assets or liabilities, cash flow, earnings
or business or FNB, and FNB has conducted its business only in the ordinary
course consistent with past practice.
(s) Statements True and Correct. None of the information
supplied or to be supplied by FNB for inclusion in the Registration Statement,
the Proxy Statement/Prospectus or any other document to be filed 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, in the case of the Registration Statement, when it becomes effective and
with respect to the Proxy Statement/Prospectus, when first mailed to SWVA
shareholders, be false or misleading with respect to any material fact or omit
to state any material fact necessary in order to make the statements therein
not misleading, or, in the case of the Proxy Statement/Prospectus or any
supplement thereto, at the time of the SWVA 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 SWVA Shareholders' Meeting.
All documents that FNB is responsible for filing with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of federal and state
securities law.
(t) Brokers and Finders. Neither FNB nor any FNB Subsidiary, nor
any of their respective officers, directors or employees, has employed any
broker, finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein, except
for The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Company.
(u) Repurchase Agreements. With respect to all agreements
pursuant to which FNB or any FNB Subsidiary has purchased securities subject
to an agreement to resell, if any, FNB or such FNB Subsidiary, as the case may
be, has a valid, perfected first lien or security interest in the government
securities or other collateral securing the repurchase agreement, and the
value of such collateral equals or exceeds the amount of the debt secured
thereby.
(v) Administration of Trust Accounts. FNB and FNB Subsidiaries
have properly administered, in all respects material and which could
reasonably be expected to be material to the business, operations or financial
condition of FNB and FNB Subsidiaries, taken as a whole, all accounts for
which they act as fiduciaries including but not limited to accounts for which
they serve as trustees, agents, custodians, personal representatives,
guardians, conservators or investment advisors, in accordance with the terms
of the governing documents and applicable state and federal law and regulation
and common law. Neither FNB nor a FNB Subsidiary, nor any director, officer
or employee of FNB or a FNB Subsidiary has committed any breach of trust with
respect to any such fiduciary account which is material to or could reasonably
be expected to be material to the business, operations or financial condition
of FNB, or a FNB Subsidiary, taken as a whole, and the accountings for each
such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account in all material
respects.
(w) Environmental Matters. (1) Except as Previously Disclosed,
to the best of FNB's knowledge, neither FNB nor any FNB Subsidiary owns or
leases any properties affected by toxic waste, radon gas or other hazardous
conditions or constructed in part with the use of asbestos. Each of FNB and
the FNB Subsidiaries is in substantial compliance with all Environmental
Laws applicable to real or personal properties in which it has a direct fee
ownership or, with respect to a direct interest as lessee, applicable to the
leasehold premises or, to the best knowledge of FNB and the FNB Subsidiaries,
the premises on which the leasehold is situated. Neither FNB nor any FNB
Subsidiary has received any Communication alleging that FNB or such FNB
Subsidiary is not in such compliance and, to the best knowledge of FNB and the
FNB Subsidiaries, there are no present circumstances (including
Environmental Laws that have been adopted but are not yet effective) that
would prevent or interfere with the continuation of such compliance.
(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on FNB and the FNB
Subsidiaries of any liability arising under any Environmental Laws pending or,
to the best knowledge of FNB and the FNB Subsidiaries, threatened against (A)
FNB or any FNB Subsidiary, (B) any person or entity whose liability for any
Environmental Claim, FNB or any FNB Subsidiary has or may have retained or
assumed either contractually or by operation of law, or (C)any real or
personal property which FNB or any FNB Subsidiary owns or leases, or has been
or is judged to have managed or to have supervised or participated in the
management of, which liability might have a material adverse effect on the
business, financial condition or results of operations of FNB. FNB and the
FNB Subsidiaries are not subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.
(3) To the best knowledge of FNB and the FNB
Subsidiaries, there are no legal, administrative, arbitral or other
proceedings, or Environmental Claims or other claims, causes of action or
governmental investigations of any nature, seeking to impose, or that could
result in the imposition, on FNB or any FNB Subsidiary of any liability
arising under any Environmental Laws pending or threatened against any real or
personal property in which FNB or any FNB Subsidiary holds a security interest
in connection with a loan or a loan participation which liability might have a
material adverse effect on the business, financial condition or results of
operations of FNB. FNB and the FNB Subsidiaries are not subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
(4) With respect to all real and personal property owned or
leased by FNB or any FNB Subsidiary, other than OREO, FNB has made available
to SWVA copies of any environmental audits, analyses and surveys that have
been prepared relating to such properties. With respect to all OREO held by
FNB or any FNB Subsidiary and all real or personal property which FNB or any
FNB Subsidiary has been or is judged to have managed or to have supervised or
participated in the management of, FNB has made available to SWVA the
information relating to such OREO available to FNB. FNB and the FNB
Subsidiaries are in compliance in all material respects with all
recommendations contained in any environmental audits, analyses and surveys
relating to any of the properties, real or personal, described in this
subsection (4).
(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against FNB or any FNB Subsidiary or
against any person or entity whose liability for any Environmental Claim FNB
or any FNB Subsidiary has or may have retained or assumed either contractually
or by operation of law.
ARTICLE 5
Conduct Prior to the Effective Date
5.1 Access to Records and Properties. SWVA will keep FNB, and FNB will
keep SWVA advised of all material developments relevant to their respective
businesses prior to consummation of the Merger. Prior to the Effective Date,
FNB, on the one hand, and SWVA on the other, agree to give to the other party
reasonable access to all the premises and books and records (including tax
returns filed and those in preparation) of it and its subsidiaries and to
cause its officers to furnish the other with such financial and operating data
and other information with respect to the business and properties as the other
shall from time to time request for the purposes of verifying the warranties
and representations set forth herein; provided, however, that any such
investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the respective business of the other.
5.2 Confidentiality. Between the date of this Agreement and the
Effective Date, FNB and SWVA each will maintain in confidence, and cause its
directors, officers, employees, agents and advisors to maintain in confidence,
and not use to the detriment of the other party, any written, oral or other
information obtained in confidence from the other party or a third party in
connection with this Agreement or the transactions contemplated hereby unless
such information is already known to such party or to others not bound by a
duty of confidentiality or unless such information becomes publicly available
through no fault of such party, unless use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the transactions contemplated hereby or unless the
furnishing or use of such information is required by or necessary or
appropriate in connection with legal proceedings. If the Merger is not
consummated, each party will return or destroy as much of such written
information as may reasonably be requested.
5.3 Registration Statement, Proxy Statement and Shareholder Approval.
The Board of Directors of SWVA will duly call and will hold a meeting of its
shareholders as soon as practicable for the purpose of approving the Merger
(the "SWVA Shareholders' Meeting") and, subject to the fiduciary duties of
the Board of Directors of SWVA (as determined after consultation with its
counsel and as presented in writing), SWVA shall use its best efforts to
solicit and obtain votes of the holders of its Common Stock in favor of the
Merger and will comply with the provisions in its Articles of Incorporation
and Bylaws relating to the call and holding of a meeting of shareholders for
such purpose; and SWVA shall, at its own discretion, recess or adjourn the
meeting if such recess or adjournment is deemed by SWVA to be necessary or
desirable. FNB and SWVA agree to cooperate in the preparation of the
Registration Statement to be filed by FNB with the SEC (the "Registration
Statement") in connection with the issuance of FNB Common Stock in the
Merger, including the proxy statement and other proxy material of SWVA
constituting a part thereof (the "Proxy Statement"), and FNB will use its
best efforts to have the Registration Statement declared effective as promptly
as possible. When the Registration Statement or any post-effective amendment
or supplement thereto shall become effective, and at all times subsequent to
such effectiveness, up to and including the date of the SWVA Shareholders'
Meeting, such Registration Statement and all amendments or supplements
thereto, with respect to all information set forth therein furnished or to be
furnished by SWVA relating to the SWVA Companies and by FNB relating to the
FNB Companies, (i) will comply in all material respects with the provisions of
the Securities Act of 1933 and any other applicable statutory or regulatory
requirements, including applicable state blue-sky and securities laws, and
(ii) will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements contained therein not misleading; provided, however, in no event
shall any party hereto be liable for any untrue statement of a material fact
or omission to state a material fact in the Registration Statement made in
reliance upon, and in conformity with, written information concerning another
party furnished by such other party specifically for use in the Registration
Statement.
5.4 Operation of the Business of FNB and SWVA. From the date hereof to
the Effective Date, FNB and SWVA will operate their respective businesses
substantially as presently operated and only in the ordinary course, and,
consistent with such operation, they will use their best efforts to preserve
intact their relationships with persons having business dealings with them.
Without limiting the generality of the foregoing, and except as provided in
Section 5.12, neither FNB nor SWVA will, without the prior written consent of
the other, which consent shall not be unreasonably withheld:
(a) Make any change in its authorized capital stock, or issue or
sell any additional shares of, securities convertible into or exchangeable
for, or options (excluding those options provided for in the 2000 FNB
Corporation Incentive Stock Compensation Plan, but the number of such options
to be issued shall not exceed 50,000), warrants or rights to purchase, its
capital stock, nor shall it purchase, redeem or otherwise acquire any of its
outstanding shares of capital stock, provided that FNB or SWVA may issue
shares of common stock pursuant to options granted or issued prior to the date
hereof and FNB may repurchase FNB Common Stock consistent with past practices;
(b) Voluntarily make any changes in the composition of its
officers, directors or other key management personnel;
(c) Make any change in the compensation or title of any officer,
director or key management employee or make any change in the compensation or
title of any other employee, other than permitted by current employment
policies in the ordinary course of business, any of which changes shall be
reported promptly to the other party provided, however, that on or before the
Effective Date, SWVA may extend the term of the employment agreements of ▇. ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ for terms not to exceed 36 months and 12 months
from the Effective Date, respectively;
(d) Enter into any bonus, incentive compensation, stock option,
deferred compensation, profit sharing, thrift, retirement, pension, group
insurance or other benefit plan or any employment or consulting agreement
(excluding calendar year bonuses and 2001 Sales Incentives consistent with
past practice);
(e) Incur any obligation or liability (whether absolute or
contingent, excluding suits instituted against it), make any pledge, or
encumber any of its assets, nor dispose of any of its assets in any other
manner, except in the ordinary course of its business and for adequate value,
or as otherwise specifically permitted in this Agreement, and excluding FHLB
borrowings consistent with past practice;
(f) Except as permitted by Section 5.4(a) hereof, issue or
contract to issue any shares of its Common Stock, options for shares of its
Common Stock, or securities exchangeable for or convertible into such shares;
(g) Knowingly waive any right to substantial value;
(h) Enter into material transactions otherwise than in the
ordinary course of its business;
(i) Alter, amend or repeal its Bylaws or Articles of
Incorporation (excluding any amendment with respect to SVSB in order to add
one director to SVSB's Board); or
(j) Propose or take any other action which would make any
representation or warranty in Section 4.1 or Section 4.2 hereof untrue.
5.5 Dividends. FNB and SWVA may declare and pay only regular periodic
cash dividends in the ordinary course of business and consistent with past
practice from the date of this Agreement through the Effective Date. Any
dividend increase by SWVA or FNB in excess of $.01 per share must be approved
by the other.
5.6 No Solicitation. Without the prior written consent of FNB, SWVA
shall not, and shall cause its officers, directors, agents, advisors and
affiliates not to, solicit or encourage inquires or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, an Acquisition Transaction (as hereinafter defined);
provided, however, that nothing contained in this Section 5.6 shall prohibit
the Board of Directors of SWVA from furnishing information to, or entering
into discussions or negotiations with, any person or entity that makes an
unsolicited, written bona fide proposal regarding an Acquisition Transaction
if, and only to the extent that (A) the Board of Directors of SWVA concludes
in good faith, after consultation with and consideration of the written advice
of outside counsel, that the failure to furnish such information or enter into
such discussions or negotiations would constitute a breach of its fiduciary
duties to shareholders under applicable law, and (B) the Board of Directors of
SWVA concludes in good faith that the proposal regarding the Acquisition
Transaction contains an offer of consideration that is superior to the
consideration set forth herein. SWVA shall immediately notify FNB orally and
in writing of its receipt of any such proposal or inquiry, of the material
terms and conditions thereof, and, if possible, of the identity of the person
making such proposal or inquiry. For purposes of this Agreement,
"Acquisition Transaction" means any merger, consolidation, share exchange,
joint venture, business combination or similar transaction or any purchase of
all or any material portion of the assets of an entity.
5.7 Regulatory Filings. FNB and SWVA shall prepare jointly all
regulatory filings required to consummate the transactions contemplated by the
Agreement and the Plan of Merger and submit the filings for approval with the
Federal Reserve Board and the SCC, and any other governing regulatory
authority, as soon as practicable after the date hereof. FNB and SWVA shall
use their best efforts to obtain approvals of such filings.
5.8 Public Announcements. Each party will consult with the other
before issuing any press release or otherwise making any public statements
with respect to the Merger and shall not issue any such press release or make
any such public statement prior to such consultations except as may be
required by law.
5.9 Notice of Breach. FNB and SWVA will give written notice to the
other promptly upon becoming aware of the impending or threatened occurrence
of any event which would cause or constitute a breach of any of the
representations, warranties or covenants made to the other party in this
Agreement and will use its best efforts to prevent or promptly remedy the
same.
5.10 Accounting Treatment. FNB and SWVA acknowledge that the Merger
shall be accounted for as a purchase under generally accepted accounting
principles.
5.11 Merger Consummation. Subject to the terms and conditions of
this Agreement, each party shall use its best efforts in good faith to take,
or cause to be taken, all actions, and to do or cause to be done all things
necessary, proper or desirable, or advisable under applicable laws, as
promptly as practicable so as to permit consummation of the Merger at the
earliest possible date, consistent with Section 1.5 herein, and to otherwise
enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other parties hereto to that end, and each of FNB and
SWVA shall use, and shall cause each of their respective subsidiaries to use,
its best efforts to obtain all consents (governmental or other) necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
5.12 FNB Acquisition Transaction. Nothing contained in this Agreement
shall prevent FNB from entering into an Acquisition Transaction with a third
party so long as FNB and its successors comply with the terms of the Merger
with SWVA.
5.13 Affiliate Agreements. SWVA shall use its best efforts to cause
each director, executive officer and other person who is an "affiliate" of
SWVA under Rule 145 of the Securities Act to deliver to FNB as soon as
practicable, and prior to the mailing of the Proxy Statement/Prospectus,
executed letter agreements in the form of Exhibit C attached hereto providing
that such person will comply with Rule 145 and will vote in favor of the
Merger.
ARTICLE 6
Additional Agreements
6.1 Conversion of Stock Options. (a) On the Effective Date, all rights
with respect to SWVA Common Stock pursuant to stock options ("SWVA Options")
granted by SWVA under a SWVA stock option plan which are outstanding on the
Effective Date, whether or not they are exercisable, shall be converted into
and become rights with respect to FNB Common Stock, and FNB shall assume each
SWVA Option in accordance with the terms of the stock option plan under which
it was issued and the stock option agreement by which it is evidenced. From
the Effective Date forward, (i) each SWVA Option assumed by FNB may be excised
solely for shares of FNB Common Stock, (ii) the number of shares of FNB Common
Stock subject to each SWVA Option shall be equal to the number of shares of
SWVA Common Stock subject to such option immediately prior to the Effective
Date multiplied by the Exchange Ratio and (iii) the per share exercise price
under each such SWVA Option shall be adjusted by dividing the per share
exercise price under each such option by the Exchange Ratio and rounding down
to the nearest cent; provided, however, that the terms of each SWVA Option
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapitalization or
other similar transaction after the Effective Date. It is intended that the
foregoing assumption shall be undertaken in a manner that will not constitute
a "modification" as defined in Section 425 of the Code, as to any stock
option which is an "incentive stock option." Shares of FNB Common Stock
issuable upon exercise of SWVA Options shall be covered by an effective
registration statement on Form S-8, and FNB shall use its reasonable best
efforts to file a registration statement on Form S-8 covering such shares as
soon as possible after the Effective Date, but in no event, no later than 30
days after the Effective Date.
6.2 Benefit Plans.
(a) Effective with the consummation of the Merger, the Management
Stock Bonus Plan of SVSB shall be terminated and all unawarded shares (and the
Merger Consideration attributable thereto) shall be forfeited to SVSB. In
addition, the SVSB ESOP (as defined in Section 6.2(c)) shall be continued and
then merged as provided Section 6.2(c) below, the SVSB Defined Benefit Plan
(as defined in Section 6.2(d)) shall be continued and then terminated as
provided Section 6.2(d) below, and participation in the FNB 401(k) plan shall
be made available to SVSB employees as provided Section 6.2(e) below.
Otherwise, after consummation of the Merger, at the option of FNB (which may
be applied on a plan or program by plan or program basis) and subject to FNB's
best efforts, employees of SWVA and SVSB shall be entitled to participate
either (x) in one or more combined plans or programs of FNB and SWVA on
substantially the same basis as similarly situated employees of FNB or First
National (taking into account all applicable factors, including but not
limited to position, employment classification, age, length of service, pay,
part time or full time status, and the like, as well as changes made in such
plans and programs in the future), or (y) in plans and programs which, subject
to changes required by applicable laws or by limitations imposed by insurance
companies providing plan benefits, are comparable to (or a continuation of),
and provide for participation on substantially the same basis, as SWVA's
employee benefit plans and programs currently in effect. If and to the extent
option (x) is effectuated:
(1) (A) Coverage under FNB's plans and programs shall be
available to each employee of SWVA and SVSB and his or her dependents without
regard to any waiting period, evidence or requirement of insurability,
actively at work requirement or preexisting condition exclusion or limitation
(except to the extent and in the manner any such waiting period, evidence or
requirement of insurability, actively at work requirement or exclusion or
limitation applies to such employee or dependents immediately prior to the
effectuation of option (x)) and (B) amounts paid or payable by employees for
health care expenses for the portion of the annual benefit period prior to the
date as of which option (x) becomes effective shall be credited in
satisfaction of any deductible requirement and any out-of-pocket limit for the
balance of the annual benefit period which includes such date.
(2) FNB shall treat service with SWVA and SVSB before the
consummation of the Merger as service with FNB for purposes of eligibility to
begin participation and vesting (but not benefit accruals, except in the case
of a continuation of any plan maintained by SWVA or SVSB) for purposes of all
employee benefit and seniority based plans and programs, including but not
limited to annual, sick and personal leave accruing following the consummation
of the Merger.
Nothing contained in this Section is intended to provide any third party
beneficiary rights in any current or former employee, or any spouse or
dependent thereof, of SWVA, SVSB, FNB or any FNB Subsidiary, except as
otherwise required by ERISA or other applicable law (determined without regard
to third party beneficiary contract law).
(b) Except to extent individually negotiated replacement
contracts or settlement agreements are entered into, FNB shall honor all
employment severance, consulting and other compensation contracts and
agreements Previously Disclosed and executed in writing by SWVA on the one
hand and any individual current or former director, officer or employee
thereof on the other hand, copies of which have been previously delivered by
SWVA to FNB.
(c) As of the Effective Date, all SWVA and SVSB employees who
are participants in the SVSB Employee Stock Ownership Plan (the "SVSB ESOP")
shall be fully vested in their accrued benefits under the SVSB ESOP, and the
SVSB ESOP shall be continued and shall be merged into the FNB Employee Stock
Ownership Plan no later than two years after the Merger, with participation in
the FNB Employee Stock Ownership Plan extended to eligible employees of SVSB
as of the time of such plan merger. FNB shall treat service with SWVA and
SVSB before the consummation of the Merger as service with FNB for purposes of
eligibility to begin participation, vesting and future benefit accrual under
its Employee Stock Ownership Plan.
(d) As of the Effective Date, all SWVA and SVSB employees who are
participants in the SWVA defined benefit plan maintained through the Financial
Institutions Retirement Fund (the "SWVA Defined Benefit Plan") shall be
fully vested in their accrued benefits under the SWVA Defined Benefit Plan,
and all necessary steps shall be taken to cause the SWVA Defined Benefit Plan
to be terminated no later than the end of its plan year in which the Merger
occurs, in accordance with applicable law. If the SWVA Defined Benefit Plan
is fully funded on termination, any funding surplus shall be used to increase
accrued benefits on a basis which is nondiscriminatory under the IRC in a
manner mutually agreeable to FNB, SWVA and SVSB.
(e) Effective no later than the beginning of the first plan year
of FNB's 401(k) plan commencing after the effective date of the termination of
the SWVA Defined Benefit Plan, FNB shall make participation in its 401(k) plan
available to the eligible employees of SWVB. FNB shall treat service with
SWVA and SVSB before the consummation of the Merger as service with FNB for
purposes of eligibility to begin participation, vesting and future benefit
accrual under its 401(k) plan.
6.3 Indemnification. Following the Effective Date, FNB shall
indemnify and hold harmless any person who has rights to indemnification
from SWVA, to the maximum extent permitted under Virginia law and in
accordance with SWVA's Articles of Incorporation or Bylaws, as in effect on
the date of this Agreement, to the extent legally permitted to do so, with
respect to matters occurring on or prior to the Effective Date. FNB further
agrees that any such person who has rights to indemnification pursuant to this
Section 6.3 is expressly made a third party beneficiary of this Section 6.3
and may directly, in such person's personal capacity, enforce such rights
through an action at law or in equity or through any other manner or means of
redress allowable under Virginia law to the same extent as if such person were
a party hereto. Without limiting the foregoing, in any case in which
corporate approval may be required to effectuate any indemnification, FNB
shall direct, at the election of the party to be indemnified, that the
determination of permissibility of indemnification shall be made by
independent counsel mutually agreed upon between FNB and the indemnified
party. Upon written application, and in accordance with, and to the extent
permitted by, Virginia law, FNB will advance reasonable expenses to any person
who has rights to indemnification from SWVA. FNB shall use its reasonable
best efforts to maintain SWVA's existing directors' and officers' liability
policy, or some other policy, including FNB's existing policy, providing at
least comparable coverage, covering persons who are currently covered by such
insurance of SWVA for a period of six years after the Effective Date on terms
no less favorable than those in effect on the date hereof.
ARTICLE 7
Conditions to the Merger
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each of FNB and SWVA to effect the Merger and the
other transactions contemplated by this Agreement shall be subject to the
fulfillment or waiver at or prior to the Effective Date of the following
conditions:
(a) Shareholder Approval. Shareholders of SWVA shall have
approved all matters relating to this Agreement and the Merger required to
be approved by such shareholders in accordance with Virginia law.
(b) Regulatory Approvals. This Agreement and the Plan of Merger
shall have been approved by the Federal Reserve, the SCC, the Office of Thrift
Supervision and any other regulatory authority whose approval is required for
consummation of the transactions contemplated hereby, and such approvals shall
not have imposed any condition or requirement which would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement as to render inadvisable the consummation of
the Merger in the reasonable opinion of the Board of Directors of FNB or SWVA.
(c) Registration Statement. The Registration Statement shall
have been declared effective and shall not be subject to a stop order or any
threatened stop order.
(d) Tax Opinion. FNB and SWVA shall have received an opinion of
▇▇▇▇ & Valentine, L.L.P., or other counsel reasonably satisfactory to FNB and
SWVA, to the effect that the Merger will constitute a merger within the
meaning of Section 368 of the Internal Revenue Code and that no gain or loss
will be recognized by the shareholders of SWVA to the extent they receive FNB
Common Stock solely in exchange for their SWVA Common Stock in the Merger.
(e) Opinions of Counsel. SWVA shall have delivered to FNB and
FNB shall have delivered to SWVA opinions of counsel, dated as of the
Effective Date, as to such matters as they may each reasonably request with
respect to the transactions contemplated by this Agreement and in a form
reasonably acceptable to each of them.
(f) Legal Proceedings. Neither FNB nor SWVA shall be subject to
any order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the Merger.
(g) Amendment of SVSB ESOP. Prior to Merger, SVSB shall have
amended the SVSB ESOP (as defined in Section 6.2(c)) to eliminate the
provision thereof (i.e., section 8.2(c)) requiring satisfaction of any
acquisition loan, allocation to participants of the remaining value of
collateral not used to satisfy any acquisition loan, and termination of such
plan on the consummation of a transaction such as the Merger.
7.2 Conditions to Obligations of FNB. The obligations of FNB to effect
the Merger shall be subject to the fulfillment or waiver at or prior to the
Effective Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties contained herein of SWVA shall be true and correct in all
material respects as of the date of this Agreement and upon the Effective Date
with the same effect as though all such representations and warranties had
been made on the Effective Date, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, (ii) as expressly contemplated by this Agreement, or (iii) for
representations and warranties the inaccuracies of which relate to matters
that, individually or in the aggregate, do not materially adversely affect the
Merger and the other transactions contemplated by this Agreement and FNB shall
have received a certificate or certificates signed by the Chief Executive
Officer and Chief Financial Officer of SWVA dated the Effective Date, to such
effect.
(b) Performance of Obligations. SWVA shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and FNB shall have received a
certificate signed by the Chief Executive Officer of SWVA to that effect.
7.3 Conditions to Obligations of SWVA. The obligations of SWVA to
effect the Merger shall be subject to the fulfillment or waiver at or prior to
the Effective Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties contained herein of FNB shall be true and correct in all
material respects as of the date of this Agreement and upon the Effective Date
with the same effect as though all such representations and warranties had
been made on the Effective date, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, (ii) as expressly contemplated by this Agreement, or (iii) for
representations and warranties the inaccuracies of which relate to matters
that, individually or in the aggregate, do not materially adversely affect the
Merger and the other transactions contemplated by this Agreement and SWVA
shall have received a certificate or certificates signed by the Chief
Executive Officer and Chief Financial Officer of FNB dated the Effective Date,
to such effect.
(b) Performance of Obligations. FNB shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and SWVA shall have received a
certificate signed by Chief Executive Officer of FNB to that effect.
(c) Investment Banking Letter. SWVA shall have received a
written opinion in form and substance satisfactory to SWVA from RP Financial
addressed to SWVA and dated the date the Proxy Statement/Prospectus is mailed
to shareholders of SWVA, to the effect that the terms of the Merger, including
the Exchange Ratio, are fair, from a financial point of view, to SWVA.
ARTICLE 8
Termination
8.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement and the Plan of
Merger by the shareholders of SWVA, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Date:
(a) By the mutual consent of the Board of Directors of each of
FNB and SWVA;
(b) By the respective Boards of Directors of FNB or SWVA if the
conditions set forth in Section 7.1 have not been met or waived by FNB and
SWVA;
(c) By the Board of Directors of FNB if the conditions set forth
in Section 7.2 have not been met or waived by FNB;
(d) By the Board of Directors of SWVA if the conditions set forth
in Section 7.3 have not been met or waived by SWVA;
(e) By the respective Boards of Directors FNB or SWVA if the
Merger is not consummated by June 1, 2001.
(f) By the Board of Directors of SWVA, within five business days
after the end of the Measurement Period (as defined in Section 2.1), if the
Market Value (as defined in Section 2.1) is less than $14.00; provided,
however, that if within five calendar days after receipt of notice of
termination pursuant to this paragraph 8.1(f), FNB provides written notice to
SWVA that it shall increase the Exchange Ratio to an amount (rounded to the
nearest one-thousandth) so as to provide the same Stock Consideration that
would be received were the Market Value equal to $14.00 per share, in which
case no termination shall be deemed to have occurred pursuant to this Section
8.1(f) and this Agreement shall remain in full force and effect in accordance
with its terms (except the Exchange Ratio shall have been so modified).
(g) By the Board of Directors of FNB, within five business days
after the end of the Measurement Period (as defined in Section 2.1), if the
Market Value (as defined in Section 2.1) is greater than $20.00; provided,
however, that if within five calendar days after receipt of notice of
termination pursuant to this paragraph 8.1(g), SWVA provides written notice to
FNB that it will agree to decrease the Exchange Ratio to an amount (rounded to
the nearest one-thousandth) so as to provide the same Stock Consideration that
would be received were the Market Value equal to $20.00 per share, in which
case no termination shall be deemed to have occurred pursuant to this Section
8.1(g) and this Agreement shall remain in full force and effect in accordance
with its terms (except the Exchange Ratio shall have been so modified); and
further provided, however, that (i) if the Market Value (as defined in Section
2.1) is greater than $20.00, and (ii) FNB shall have, prior to the Effective
Date of the Merger, publicly announced that it has agreed to a transaction in
which control of FNB will be acquired by another entity in an Acquisition
Transaction, the Board of Directors of FNB may not terminate the Merger
pursuant to this Section 8.1(g) and the Exchange Ratio shall be 1.083.
8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement and the Merger pursuant to Section 8.1, this
Agreement shall become void and have no effect, except that (i) the last
sentence of Section 5.2 and all of Sections 5.8 and 8.4 shall survive any such
termination and abandonment and (ii) no party shall be relieved or released
from any liability arising out of an intentional breach of any provision of
this Agreement.
8.3 Non-Survival of Representations, Warranties and Covenants. Except
for Sections 1.3, 1.4, Article 2, Article 3, 5.4(c), 6.2, 6.3 and 8.4 of this
Agreement, none of the respective representations and warranties, obligations,
covenants and agreements of the parties shall survive the Effective Date,
provided that no such representations, warranties, obligations, covenants and
agreements shall be deemed to be terminated or extinguished so as to deprive
FNB or SWVA (or any director, officer, or controlling person thereof) of any
defense in law or equity which otherwise would be available against the claims
of any person, including without limitation any shareholder or former
shareholder of either FNB or SWVA.
8.4 Expenses. The parties provide for the payment of expenses as
follows:
(a) Except as provided below, each of the parties shall bear and
pay all costs and expenses incurred by it in connection with the transactions
contemplated herein, including fees and expenses of its own financial
consultants, accountants and counsel, except that printing expenses shall be
shared equally between FNB and SWVA.
(b) In the event FNB terminates this Agreement based on the
occurrence of a Termination Event (as defined below), SWVA shall pay to FNB a
termination fee of Two Hundred Fifty Thousand Dollars ($250,000.00) in cash
within five business days after written notice of such termination. For the
purposes of this Agreement, a "Termination Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) SWVA, without having received FNB's prior written
consent, shall have entered into an agreement with any person to
(A) acquire, merger or consolidate, or enter into any similar
transaction, with SWVA, (B) purchase, lease or otherwise acquire
all or substantially all of the assets of SWVA, or (C) purchase or
otherwise acquire directly from SWVA securities representing 10%
or more of the voting power of SWVA;
(ii) any person shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 20% or more of the
outstanding shares of SWVA Common Stock after the date hereof (the
term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the regulations promulgated thereunder); or
(iii) any person shall have made a bona fide proposal to SWVA by public
announcement or written communication that is or becomes the
subject of public disclosure to acquire SWVA by merger, shares
exchange, consolidation, purchase of all or substantially all of
its assets or any other similar transaction, and following such
bona fide proposal the shareholders of SWVA vote not to approve
the Agreement.
Notwithstanding the foregoing, SWVA shall not be obligated to pay to FNB the
termination fee described in this Section 8.4(b) in the event that at or prior
to such time as such fee becomes payable (i) FNB and SWVA validly terminate
this Agreement pursuant to Section 8.1(a), (ii) FNB or SWVA validly terminates
this Agreement pursuant to Sections 8.1(b) [other than as a result of such
Termination Event], 8.1(c) [other than as a result of such Termination Event],
8.1(d) [other than as a result of such Termination Event] or 8.1(e) [other
than as a result of such Termination Event]. Upon payment of the termination
fee and any other amounts that may be due by SWVA to FNB hereunder, this
Agreement shall terminated as provided in Section 8.2.
(c) If this Agreement is terminated by FNB or SWVA because of a
willful and material breach by the other of any representation, warranty,
covenant, undertaking or restriction set forth herein, and provided that the
terminating party shall not have been in breach (in any material respect) of
any representation and warranty, covenant, undertaking or restriction
contained herein, then the breaching party shall bear and pay all such
reasonable and documented costs and expenses of the other party actually
incurred, including fees and expenses of consultants, investment bankers,
accountants, counsel, printers, and persons involved in the transactions
contemplated by this Agreement, including the preparation of the Registration
Statement and the Joint Proxy Statement.
(d) Except for the payment of the termination fee which shall be
paid as required by Section 8.4(b), final settlement with respect to the
payment of other fees and expenses by the parties shall be made within thirty
(30) days after the termination of this Agreement.
ARTICLE 9
General Provisions
9.1 Entire Agreement. This Agreement contains the entire agreement
among FNB and SWVA with respect to the Merger and the related transactions and
supersedes all prior arrangements or understandings with respect thereto.
9.2 Waiver and Amendment. Any term or provision of this Agreement may
be waived in writing at any time by the party which is, or whose shareholders
are, entitled to the benefits thereof, and this Agreement may be amended or
supplemented by written instructions duly executed by the parties hereto at
any time, whether before or after the meetings of SWVA shareholders referred
to in Section 7.1(a) hereof, except statutory requirements and requisite
approvals of shareholders and regulatory authorities.
9.3 Descriptive Headings. Descriptive headings are for convenience
only and shall not control or affect the meaning and construction of any
provisions of this Agreement.
9.4 Governing Law. Except as required otherwise or otherwise indicated
herein, this Agreement shall be construed and enforced according to the laws
of the Commonwealth of Virginia.
9.5 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally, telecopied or sent by recognized overnight courier service or
registered or certified mail, postage prepaid, addressed as follows:
If to FNB:
J. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. , President
FNB Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
Copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
First National Bank
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, Esquire
▇▇▇▇ & Valentine, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor (23219)
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
If to SWVA:
▇. ▇. ▇▇▇▇▇▇▇▇, President
SWVA Bancshares, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(Tel: ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
Copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, Spidi & ▇▇▇▇▇, PC
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
(Tel. ▇▇▇-▇▇▇-▇▇▇▇)
(Fax: ▇▇▇-▇▇▇-▇▇▇▇)
9.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts
together shall constitute one and the same agreement.
9.7 Severability. In the event any provisions of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof. Any provision of this Agreement held invalid or unenforceable only in
part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable. Further, the parties agree that a court of
competent jurisdiction may reform any provision of this Agreement held invalid
or unenforceable so as to reflect the intended agreement of the parties
hereto.
9.8 Subsidiaries. All representations, warranties, and covenants
herein, where pertinent, include and shall apply to the Subsidiaries of the
party making such representations, warranties, and covenants.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seals to be affixed hereto, all as of the dates first written above.
FNB Corporation
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
J. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
ATTEST:
/s/
Secretary
SWVA Bancshares, Inc.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
ATTEST:
/s/
Secretary
CERTIFICATE OF THE DIRECTORS OF
SWVA BANCSHARES, INC.
SOUTHWEST VIRGINIA SAVINGS BANK, FSB
Reference is made to the Agreement and Plan of Merger, dated as of
August 7, 2000 (the "Agreement"), among SWVA Bancshares, Inc. ("SWVA") and
FNB Corporation. Capitalized terms used herein have the meanings given to
them in the Agreement.
Each of the following persons, being all of the directors of SWVA and
Southwest Virginia Savings Bank, FSB, express their intention to vote or cause
to be voted all shares of SWVA common stock which are held by such person, or
over which such person exercises full voting control (other than shares with
respect to which such person exercises control in a fiduciary capacity, as to
which no agreement is made hereby), in favor of the Merger.
760479v4
ADDENDUM TO EMPLOYMENT AGREEMENT
WHEREAS, Southwest Virginia Savings Bank, FSB (the "Bank") and ▇▇
▇▇▇▇▇▇▇▇ (the "Employee") have previously entered into an
Employment Agreement, as amended (the "Agreement") dated May 19,
1999, and
WHEREAS, Section 12 of this Agreement provides that amendments to this
Agreement may be made in writing and signed by the parties, and
WHEREAS, SWVA Bancshares, Inc. ("Company") and FNB Corporation
("FNB") have entered into an Agreement of Merger whereby the
Company shall merge into FNB, with FNB as the survivor and new parent
corporation of the Bank ("Merger"), and
WHEREAS, FNB and the Bank seek to retain the employment of the Employee
as the President and CEO of the Bank after the Merger,
NOW THEREFORE, BE IT RESOLVED that this Addendum to the Agreement is
hereby authorized and agreed to by FNB and the Bank, and that this Addendum to
the Agreement shall be executed by FNB and the Bank prior to the Merger and be
presented to the Employee for acceptance and execution immediately upon and
coincident with the effective time of the Merger as follows:
1. As of the effective time of the Merger, the term of the Agreement
shall be amended at Section 2 of the Agreement to be for a period
commencing on the date of the Merger and ending thirty-six (36) months
thereafter.
2. As of the effective time of the Merger, the Base Salary of the
Employee as specified at Section 3(a) of the Agreement shall be $112,800
per annum.
3. After the Merger, the Bank shall continue to maintain and operate
the automobile presently owned by the Bank and utilized by the Employee
for business use.
4. That the Employee shall be entitled to participate in any
supplemental executive retirement plan and any stock option plan
maintained or implemented for senior management of FNB or its
subsidiaries.
5. That Employee hereby waives any rights or claims to voluntarily
terminate employment pursuant to Section 9(b) of the Agreement as it
relates to any changes in employee benefit plans of the Bank detailed at
Section 9(b)(ii) of the Agreement resulting from the Merger. Such
waiver shall not include a waiver of the right to terminate employment
in the event that the Bank shall fail to maintain the Employee's Base
Salary as detailed at Section 2. of this Addendum.
6. FNB shall reimburse the Employee for the reasonable fees and
expenses associated with maintaining a membership in a local country
club in order to facilitate the conduct of Bank business in an effective
manner.
This Addendum to the Agreement is hereby executed and agreed to by
the parties as evidenced below:
Southwest Virginia Savings Bank, FSB
By:
Its:
Date:
As Secretary to the Bank, I hereby certify that the foregoing Addendum
was adopted and approved by a majority vote of a meeting of the Board of
Directors of the Bank, held on , 2000, a quorum being present, with
▇▇ ▇▇▇▇▇▇▇▇ absent from the discussion or the voting.
SEAL
Secretary
FNB Corporation
By:
Its:
Date:
▇▇ ▇▇▇▇▇▇▇▇, Employee
Date:
ADDENDUM TO EMPLOYMENT AGREEMENT
WHEREAS, Southwest Virginia Savings Bank, FSB (the "Bank") and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Employee") have previously entered into an
Employment Agreement, as amended (the "Agreement") dated May 19,
1999, and
WHEREAS, Section 12 of this Agreement provides that amendments to this
Agreement may be made in writing and signed by the parties, and
WHEREAS, SWVA Bancshares, Inc. ("Company") and FNB Corporation
("FNB") have entered into an Agreement of Merger whereby the Company shall
merge into FNB, with FNB as the survivor and new parent corporation of the
Bank ("Merger"), and
WHEREAS, FNB and the Bank seek to retain the employment of the Employee
as the President and CEO of the Bank after the Merger,
NOW THEREFORE, BE IT RESOLVED that this Addendum to the Agreement is
hereby authorized and agreed to by FNB and the Bank, and that this Addendum to
the Agreement shall be executed by FNB and the Bank prior to the Merger and be
presented to the Employee for acceptance and execution immediately upon and
coincident with the effective time of the Merger as follows:
1. As of the effective time of the Merger, the term of the Agreement
shall be amended at Section 2 of the Agreement to be for a period
commencing on the date of the Merger and ending twelve (12) months
thereafter.
2. As of the effective time of the Merger, the Base Salary of the
Employee as specified at Section 3(a) of the Agreement shall be $
per annum.
3. That Employee hereby waives any rights or claims to voluntarily
terminate employment pursuant to Section 9(b) of the Agreement as it
relates to any changes in employee benefit plans of the Bank detailed at
Section 9(b)(ii) of the Agreement resulting from the Merger. Such
waiver shall not include a waiver of the right to terminate employment
in the event that the Bank shall fail to maintain the Employee's Base
Salary as detailed at Section 2. of this Addendum.
This Addendum to the Agreement is hereby executed and agreed to by
the parties as evidenced below:
Southwest Virginia Savings Bank, FSB
By:
Its:
Date:
As Secretary to the Bank, I hereby certify that the foregoing Addendum
was adopted and approved by a majority vote of a meeting of the Board of
Directors of the Bank, held on , 2000, a quorum being present, with
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ absent from the discussion or the voting.
SEAL
Secretary
FNB Corporation
By:
Its:
Date:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Employee
Date:
#760479v4