<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
F.N.B. CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------
<TABLE>
<S> <C> <C>
PENNSYLVANIA 6711 25-1255406
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
HERMITAGE SQUARE JOHN D. WATERS
HERMITAGE, PENNSYLVANIA 16148 F.N.B. CORPORATION
(412) 981-6000 HERMITAGE SQUARE
(ADDRESS, INCLUDING ZIP CODE, AND HERMITAGE, PENNSYLVANIA 16148
TELEPHONE NUMBER, INCLUDING AREA CODE, (412) 981-6000
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE
AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
</TABLE>
----------------------
COPIES TO:
<TABLE>
<S> <C>
MARLON F. STARR RICHARD A. DENMON
SMITH, GAMBRELL & RUSSELL, LLP CARLTON, FIELDS, WARD, EMMANUEL,
3343 Peachtree Road, N.E. SMITH & CUTLER, P.A.
Suite 1800 One Harbour Place
Atlanta, Georgia 30326 777 S. Harbour Island Boulevard
(404) 264-2620 Tampa, Florida 33602-5799
(813) 223-7000
</TABLE>
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
Upon the effective date of the merger of West Coast Bancorp, Inc.
with and into a wholly-owned subsidiary of the Registrant.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE PRICE FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $2.00 par value 1,367,193 shares (2) $33,792,406(3) $10,240
===========================================================================================================
</TABLE>
(1) Based on the maximum number of shares of the Registrant's
common stock which may be issued in connection with the proposed
merger ("Merger") of West Coast Bancorp, Inc. ("West Coast") with and
into Southwest Banks, Inc., a wholly-owned subsidiary of the
Registrant ("Southwest"). In accordance with Rule 416, this
Registration Statement shall also register any additional shares of
the Registrant's common stock which may become issuable to prevent
dilution resulting from stock splits, stock dividends or similar
transactions as provided by the agreement relating to the Merger.
(2) Not applicable.
(3) Computed in accordance with Rule 457(f) based on the average
of the high bid and low ask prices reported by the Nasdaq Stock Market
on February 28, 1997 of the maximum number of securities (1,721,906 shares
of common stock of West Coast, par value $1.00) to be received by the
Registrant in exchange for the securities registered hereby. A filing fee
of $6,023 was paid at the time of filing of the preliminary proxy
materials for this transaction on January 6, 1997 and, therefore, pursuant
to Securities Exchange Act Rule 0-11(a)(2), an additional $4,217 is being
paid with the filing of this Registration Statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
WEST COAST BANCORP, INC.
2724 Del Prado Boulevard South
Cape Coral, Florida 33904
March 7, 1997
Dear Shareholder:
On behalf of the Board of Directors, we cordially invite you to attend a
Special Meeting of Shareholders (the "Special Meeting") of West Coast Bancorp,
Inc. ("West Coast") to be held in the lobby of the First National Bank of
Southwest Florida headquarters at 2724 Del Prado Boulevard South, Cape Coral,
Florida 33904, on Tuesday, April 15, 1997, at 5:00 p.m., local time.
As described in the enclosed Proxy Statement-Prospectus, West Coast
shareholders will be asked to consider and vote upon a proposal to approve the
Agreement and Plan of Merger dated as of November 15, 1996 and amended as of
February 28, 1997 (the "Merger Agreement") among F.N.B. Corporation ("FNB"),
Southwest Banks, Inc., a wholly-owned subsidiary of FNB ("Southwest") and West
Coast, providing for the merger (the "Merger") of West Coast with and into
Southwest, with Southwest being the corporation surviving the Merger. Upon
consummation of the Merger, each issued and outstanding West Coast common share
will be converted into the right to receive 0.794 shares of FNB common stock,
$2.00 par value ("FNB Common Stock"), subject to certain adjustments as
described in the Proxy Statement-Prospectus, with cash to be paid in lieu of
fractional shares, which is expected to result in the issuance of up to
1,367,193 shares, or approximately 10.6% of the then outstanding FNB common
stock.
Further information concerning the Merger is contained in the accompanying
Notice of Special Meeting and the Proxy Statement-Prospectus. The Proxy
Statement-Prospectus contains a detailed description of the Merger Agreement,
its terms and conditions, and the transactions contemplated thereby. PLEASE
REVIEW THESE MATERIALS CAREFULLY AND CONSIDER THOUGHTFULLY THE INFORMATION SET
FORTH THEREIN.
THE BOARD OF DIRECTORS OF WEST COAST BELIEVES THE MERGER IS IN THE BEST
INTERESTS OF WEST COAST'S SHAREHOLDERS, HAS APPROVED UNANIMOUSLY THE MERGER
AGREEMENT, AND RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
YOUR VOTE IS IMPORTANT! West Coast's management team would greatly
appreciate your attendance at the Special Meeting. However, since the
affirmative vote of the holders of a majority of the outstanding West Coast
common shares is necessary to adopt the Merger Agreement and to approve the
Merger, it is important that your shares be represented at the meeting, whether
or not you plan to attend the Special Meeting. Accordingly, we urge you to
complete, sign, and date the enclosed proxy card and return it in the enclosed
prepaid envelope as soon as possible, even if you currently plan to attend the
Special Meeting. Submitting a proxy will not prevent you from voting in
person, but will assure that your vote is counted if you should be unable to
attend the Special Meeting. If you do attend the Special Meeting and desire to
vote in person, you may do so by withdrawing your proxy at that time. Your
prompt cooperation will be greatly appreciated.
Very truly yours,
Thomas R. Cronin Michael P. Geml
Chairman of the Board President and Chief Executive Officer
<PAGE> 3
WEST COAST BANCORP, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 15, 1997
To the Shareholders of
West Coast Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the
"Special Meeting") of West Coast Bancorp, Inc. ("West Coast"), will be held in
the lobby of the First National Bank of Southwest Florida headquarters at 2724
Del Prado Boulevard South, Cape Coral, Florida 33904, on Tuesday, April 15,
1997, at 5:00 p.m., local time, for the following purposes:
(1) To consider and vote upon a proposal to adopt the
Agreement and Plan of Merger, dated as of November 15, 1996 and
amended as of February 28, 1997 (the "Merger Agreement"), among F.N.B.
Corporation ("FNB") Southwest Banks, Inc., a wholly-owned subsidiary
of FNB ("Southwest") and West Coast, pursuant to which West Coast will
be merged with and into Southwest, and in which each issued and
outstanding West Coast common share will be converted into the right
to receive 0.794 of a share of FNB Common Stock; and
(2) To transact such other business as may properly come
before the Special Meeting or any adjournments or postponements
thereof.
The Merger Agreement is more completely described in the accompanying
Proxy Statement-Prospectus, and a copy of the Merger Agreement is attached as
Appendix A to the accompanying Proxy Statement-Prospectus.
Action may be taken on the foregoing proposal at the Special Meeting
on the date specified above or on any date or dates to which the Special
Meeting may be adjourned. Only holders of record of West Coast common shares
at the close of business on February 28, 1997 will be entitled to notice of,
and to vote at, the Special Meeting or any adjournments or postponements
thereof. The affirmative vote of the holders of a majority of the outstanding
West Coast common shares is required for adoption of the Merger Agreement.
Each shareholder, whether or not he or she plans to attend the Special
Meeting in person, is requested to complete, sign, and date the enclosed proxy
and return it promptly in the enclosed postage prepaid envelope. This will
assure your representation at the Special Meeting and may avoid the costs of
additional communications. This will not prevent a shareholder from voting in
person at the Special Meeting. Your proxy may be revoked at any time before it
is voted by signing and returning a later dated proxy with respect to the same
shares, by filing with the Secretary of West Coast a written revocation bearing
a later date, or by attending and voting at the Special Meeting.
By Order of the Board of Directors
Stephen R. Zellner
Secretary
Cape Coral, Florida
March 7, 1997
----------------------------------
WHETHER OR NOT YOU PLAN
TO ATTEND THIS MEETING
PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD
------------------------------------
<PAGE> 4
PROXY STATEMENT
OF
WEST COAST BANCORP, INC.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
APRIL 15, 1997
_________________________
PROSPECTUS
OF
F.N.B. CORPORATION
COMMON STOCK, $2.00 PAR VALUE
This Proxy Statement-Prospectus (this "Proxy Statement-Prospectus") is
being furnished to holders (the "Shareholders") of common stock, par value
$1.00 per share ("West Coast Common Shares"), of West Coast Bancorp, Inc., a
Florida corporation ("West Coast"), in connection with the solicitation of
proxies by the Board of Directors of West Coast (the "West Coast Board") for
use at a special meeting of such holders to be held on Tuesday, April 15, 1997,
commencing at 5:00 p.m., local time, and at any adjournment or postponement
thereof (the "Special Meeting"). At the Special Meeting, holders of West Coast
Common Shares will be asked to consider and vote upon a proposal to approve the
Agreement and Plan of Merger, dated as of November 15, 1996 and amended as of
February 28, 1997, by and among F.N.B. Corporation, a Pennsylvania corporation
("FNB"), Southwest Banks, Inc., a Florida corporation and wholly-owned
subsidiary of FNB ("Southwest"), and West Coast (the "Merger Agreement"), and
the transactions contemplated thereby, pursuant to which, among other things,
West Coast would be acquired by FNB by means of a merger of West Coast with and
into Southwest (the "Merger"). A copy of the Merger Agreement is attached
hereto as Appendix A and is incorporated herein by reference.
Pursuant to the Merger Agreement, upon consummation of the Merger,
except as described herein, each issued and outstanding West Coast Common Share
(other than shares held by West Coast, FNB or any of their subsidiaries, in
each case, other than in a fiduciary capacity or as a result of debts
previously contracted, which shares will be canceled and retired without
consideration being paid) will be converted into 0.794 of a share of common
stock, par value $2.00 per share, of FNB ("FNB Common Stock"), subject to
certain further adjustments as described in this Proxy Statement- Prospectus
(the "Exchange Ratio"). See "THE MERGER -- Modification, Waiver, Termination."
Any options, warrants or other rights to purchase West Coast Common Shares
pursuant to stock options, warrants, or stock appreciation rights
(collectively, the "West Coast Options") remaining unexercised upon
consummation of the Merger will become options, warrants, or other rights to
purchase an adjusted number of shares of FNB Common Stock at an adjusted
exercise price, both of which are computed in accordance with the Exchange
Ratio. See "THE MERGER -- Conversion of West Coast Options." Each holder of
West Coast Common Shares or West Coast Options who would otherwise be entitled
to receive a fraction of a share of FNB Common Stock (after taking into
account all of a shareholder's certificates) will receive, in lieu thereof, the
equivalent cash value of such fraction of a share, without interest. See "THE
MERGER -- Description of the Merger." In addition, the Merger Agreement
permits West Coast to declare and pay quarterly cash dividends to its
shareholders in an amount equivalent to the regular quarterly cash dividend
paid by FNB to its shareholders multiplied by the Exchange Ratio.
(continued on next page)
_______________
THE FNB COMMON STOCK TO BE ISSUED IN THE MERGER, IF ANY, HAS NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF FNB COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS
OR BANK DEPOSITS, ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANKING OR
NONBANKING AFFILIATE OF FNB, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
_______________
The date of this Proxy Statement-Prospectus is March __, 1997.
<PAGE> 5
Consummation of the Merger is subject to several conditions,
including, among others, the affirmative vote to approve the Merger Agreement
by the holders of a majority of the issued and outstanding West Coast Common
Shares as of the Record Date entitled to vote on the matter and the approval of
appropriate regulatory authorities. See "THE MERGER -- Conditions Precedent to
the Merger."
The FNB Common Stock trades on the SmallCap Market Tier of the Nasdaq
Stock Market (the "Nasdaq SmallCap Market") under the trading symbol "FBAN."
The last reported bid price of FNB Common Stock as reported by the Dow Jones
News Retrieval Service (the "Dow Jones") on November 14, 1996, the last trading
day preceding public announcement of the proposed Merger, was $23.50 per share.
The last reported bid price of FNB Common Stock as reported by the Dow Jones on
February 28, 1997 was $25.00 per share. Based on such last reported bid price,
as of February 28, 1997, the Exchange Ratio would have resulted in a per share
purchase price for the West Coast Common Shares of $19.85. The West Coast
Common Shares trade on the Nasdaq Stock Market as a National Market Security
(the "Nasdaq National Market") under the trading symbol "WBAN." The last sale
price per share of West Coast Common Shares as reported by the Dow Jones on
November 14, 1996, the last trading day preceding public announcement of the
proposed Merger, was $15.375 per share. The last sale price of West Coast
Common Shares as reported by the Dow Jones on February 28, 1997 was $19.375 per
share. See "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
Because the Exchange Ratio is fixed, a change in the market price of
FNB Common Stock before the Merger would affect the value of the FNB Common
Stock to be received in the Merger in exchange for the West Coast Common
Shares. However, if the average of the high bid and low ask prices of FNB
Common Stock during a specified period of time prior to the Merger is less than
$20.625, West Coast will not be required to consummate the Merger and, at its
option, may terminate the Merger Agreement. THERE CAN BE NO ASSURANCE AS TO
THE MARKET PRICE OF THE FNB COMMON STOCK AT ANY TIME BEFORE THE DATE ON WHICH
THE MERGER BECOMES EFFECTIVE (THE "EFFECTIVE TIME") OR AS TO THE MARKET PRICE
OF THE FNB COMMON STOCK AT ANY TIME THEREAFTER. The Board of Directors of
West Coast may, consistent with its fiduciary duties under Florida law to act
in the best interests of its shareholders, determine not to exercise its option
to terminate and consummate the Merger without any additional shareholder
action or solicitation. Shareholders are urged to obtain current market
quotations.
Advest, Inc. ("Advest") has rendered its opinion, dated March 4, 1997,
confirming and updating its prior opinion of November 15, 1996, to the West
Coast Board that the consideration as provided in the Merger Agreement is fair,
from a financial point of view, to the holders of West Coast Common Shares.
See "THE MERGER -- Opinion of West Coast's Financial Advisor."
THE WEST COAST BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF WEST COAST
VOTE TO APPROVE THE MERGER AGREEMENT. FAILURE TO VOTE IS EQUIVALENT TO VOTING
AGAINST THE MERGER AGREEMENT.
West Coast shareholders should note that certain members of management
and directors of West Coast have certain interests in and may derive certain
benefits as a result of the Merger. See "THE MERGER -- Interests of Certain
Persons in the Merger."
This Proxy Statement-Prospectus also constitutes a prospectus of FNB
with respect to the shares of FNB Common Stock issuable to shareholders of West
Coast upon consummation of the Merger. FNB has supplied all information
contained in this Proxy Statement-Prospectus relating to FNB and its
subsidiaries, and West Coast has supplied all information contained in this
Proxy Statement-Prospectus relating to West Coast and its subsidiaries.
This Proxy Statement-Prospectus is included as part of a Registration
Statement on Form S-4 (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission") by FNB relating to the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of up to
1,367,193 shares of FNB Common Stock to be issued in connection with the
Merger.
This Proxy Statement-Prospectus, Notice of Special Meeting, and the
accompanying form of proxy for the Special Meeting are first being sent to the
shareholders of West Coast on or about March 7, 1997.
ii
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . 1
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FNB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
West Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Special Meeting and Vote Required to Approve the Merger . . . . . . . . . . . . . . . . . . 4
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Recommendation of the West Coast Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Opinion of West Coast's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certain Differences in the Rights of Shareholders . . . . . . . . . . . . . . . . . . . . . 7
Modification, Waiver and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 8
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Resales by Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Share Information and Market Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Unaudited Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
THE SPECIAL MEETING OF SHAREHOLDERS OF WEST COAST . . . . . . . . . . . . . . . . . . . . . . . 14
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Voting and Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Record Date and Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Recommendation of the West Coast Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Description of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conversion of West Coast Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
West Coast Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
FNB Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Opinion of West Coast's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . 25
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Valuation Methodologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Conditions Precedent to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Conduct of Business Prior to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Modification, Waiver and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 35
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Management Post-Merger; West Coast Employment Agreements . . . . . . . . . . . . . . . . . 35
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
West Coast Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Other Matters Relating to West Coast Employee Benefit Plans . . . . . . . . . . . . . . . 37
Ownership of West Coast Common Shares by FNB and Southwest . . . . . . . . . . . . . . . . 37
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Dissenters' Rights of West Coast Shareholders . . . . . . . . . . . . . . . . . . . . . . . 42
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
iii
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Bank Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Status of Regulatory Approvals and Other Information . . . . . . . . . . . . . . . . . . . 43
Restrictions on Resales by Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Voluntary Dividend Reinvestment and Stock
Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
PRICE RANGE OF COMMON STOCK AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Market Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
INFORMATION ABOUT FNB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
INFORMATION ABOUT WEST COAST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
DESCRIPTION OF FNB CAPITAL STOCK AND WEST COAST CAPITAL STOCK . . . . . . . . . . . . . . . . . 49
FNB Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Voting and Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
FNB Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
FNB Series A Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
FNB Series B Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
West Coast Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
West Coast Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
COMPARISON OF SHAREHOLDER RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Removal of Directors; Filling Vacancies on the Board of Directors . . . . . . . . . . . . . 51
Quorum of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Adjournment and Notice of Shareholder Meetings . . . . . . . . . . . . . . . . . . . . . . . 52
Call of Special Shareholder Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Shareholder Consent in Lieu of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Derivative Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Director Qualifications and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Indemnification of Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . 54
Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Amendment of Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . 56
Vote Required for Extraordinary Corporate Transactions . . . . . . . . . . . . . . . . . . . 57
Interested Shareholder Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Provisions with Possible Anti-Takeover Effects . . . . . . . . . . . . . . . . . . . . . . . 60
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
APPENDIX A -- Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B -- Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C -- Opinion of Advest, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
iv
<PAGE> 8
AVAILABLE INFORMATION
FNB has filed with the Commission the Registration Statement under the
Securities Act, relating to the shares of FNB Common Stock to be issued in
connection with the Merger. For further information pertaining to the shares of
FNB Common Stock to which this Proxy Statement-Prospectus relates, reference is
made to such Registration Statement, including the exhibits and schedules filed
as a part thereof. This Proxy Statement-Prospectus constitutes the Prospectus
of FNB filed as part of the Registration Statement and does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission. In
addition, FNB and West Coast are subject to certain of the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file certain reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference room of the
Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
copies of such materials can be obtained by mail from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, at prescribed rates. Such documents may also be obtained at the Web
site maintained by the Commission (http://www.sec.gov). In addition, copies of
such materials are available for inspection and reproduction at the public
reference facilities of the Commission at its New York Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048; and at its Chicago Regional
Office, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511.
Reports, proxy statements and other information concerning FNB and West Coast
also may be inspected at the offices of the Nasdaq Stock Market, 1735 K Street,
N.W., Washington, D.C. 20006-1500.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents previously filed by FNB (SEC File No. 0-8144)
with the Commission are hereby incorporated by reference in this Proxy
Statement-Prospectus: (a) the FNB Annual Report on Form 10-K for the year ended
December 31, 1995, as amended by Amendment No. 1 on Form 10-K/A filed on June
27, 1996; (b) the FNB Quarterly Report on Form 10-Q for the quarter ended March
31, 1996; (c) the FNB Quarterly Report on Form 10-Q for the quarter ended June
30, 1996; (d) the FNB Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996; (e) the description of FNB Common Stock contained in the
FNB registration statement filed pursuant to Section 12 of the Exchange Act and
any amendment or report filed for the purpose of updating such description; (f)
the FNB Current Reports on Form 8-K filed February 9, 1996, May 15, 1996, June
28, 1996, August 13, 1996, November 13, 1996, November 25, 1996, January 24,
1997 and March 5, 1997.
In addition, all documents filed by FNB with the Commission pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date
hereof and prior to the time at which the Special Meeting has been finally
adjourned are hereby deemed to be incorporated by reference herein. Any
statements contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement- Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement-
Prospectus.
The following documents previously filed by West Coast (SEC File No.
0-21564) with the Commission are hereby incorporated by reference in this Proxy
Statement-Prospectus: (a) the West Coast Annual Report on Form 10-KSB for the
year ended December 31, 1996; and (b) the West Coast Current Report on Form
8-K filed December 2, 1996.
<PAGE> 9
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE DOCUMENTS RELATING TO
FNB (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON
REQUEST FROM DAVID B. MOGLE, SECRETARY AND TREASURER, F.N.B. CORPORATION,
HERMITAGE SQUARE, HERMITAGE, PENNSYLVANIA 16148, TELEPHONE (412) 981-6000. THE
DOCUMENTS RELATING TO WEST COAST (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH
EXHIBITS ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST FROM NICHOLAS J. PANICARO, CHIEF
FINANCIAL OFFICER, WEST COAST BANCORP, INC., 2724 DEL PRADO BOULEVARD SOUTH,
CAPE CORAL, FLORIDA 33904, TELEPHONE (941) 772-2220. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY APRIL 1, 1997. PERSONS
REQUESTING COPIES OF EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS WILL BE CHARGED THE COSTS OF
REPRODUCTION AND MAILING.
---------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED IN THIS PROXY
STATEMENT-PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FNB OR WEST COAST.
THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
EXCHANGE OR SELL, OR A SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT-PROSPECTUS, NOR DOES IT CONSTITUTE
THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS SPEAKS AS
OF THE DATE HEREOF UNLESS OTHERWISE SPECIFICALLY INDICATED.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY
DISTRIBUTION OF THIS SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF WEST
COAST OR FNB SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS OR THAT THE
INFORMATION IN THIS PROXY STATEMENT-PROSPECTUS OR IN THE DOCUMENTS INCORPORATED
BY REFERENCE IS CORRECT AT ANY TIME SUBSEQUENT TO THAT DATE.
THIS PROXY STATEMENT-PROSPECTUS DOES NOT COVER ANY RESALES OF THE FNB
COMMON STOCK OFFERED HEREBY TO BE RECEIVED BY SHAREHOLDERS OF WEST COAST DEEMED
TO BE "AFFILIATES" OF WEST COAST OR FNB UPON THE CONSUMMATION OF THE MERGER. NO
PERSON IS AUTHORIZED TO MAKE USE OF HIS PROXY STATEMENT-PROSPECTUS IN
CONNECTION WITH ANY SUCH RESALES.
2
<PAGE> 10
SUMMARY
The following is a brief summary of certain information set forth
elsewhere in this Proxy Statement-Prospectus and is not intended to be
complete. It should be read in conjunction with, and is qualified in its
entirety by reference to, the more detailed information contained elsewhere in
this Proxy Statement-Prospectus, the accompanying Appendices, and the documents
incorporated herein by reference.
Certain statements contained or incorporated by reference in this
Proxy Statement-Prospectus are "forward looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, such as statements
relating to financial results, plans for future business development
activities, capital spending or financing sources, capital structure and the
effects of regulation and competition and are thus prospective. Such forward
looking statements are subject to risks, uncertainties and other factors which
could cause actual results to differ materially from future results expressed
or implied by such forward looking statements. Potential risks and
uncertainties include, but are not limited to, economic conditions, competition
and other uncertainties detailed from time to time in West Coast's and FNB's
filings with the Commission.
GENERAL
This Proxy Statement-Prospectus, Notice of Special Meeting of West
Coast shareholders to be held on Tuesday, April 15, 1997, and form of proxy
solicited in connection therewith are first being mailed to West Coast
shareholders on or about March 7, 1997. At the Special Meeting, the holders of
West Coast Common Shares will consider and vote on whether to approve the
Merger Agreement and the transactions contemplated thereby. A copy of the
Merger Agreement is attached hereto as Appendix A.
THE COMPANIES
FNB. FNB is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). FNB was organized under the laws
of the Commonwealth of Pennsylvania in 1974 and has as its principal assets the
stock of its subsidiaries. FNB provides a full range of financial services,
primarily to consumers and small- to medium-sized businesses through its
subsidiaries and their network of 94 offices in Pennsylvania, eastern Ohio and
southwestern New York. On January 21, 1997, FNB acquired 100% of the
outstanding common shares of Southwest, a Florida corporation and registered
bank holding company under the BHCA. Through its two subsidiary banks,
Southwest provides commercial banking services through a network of seven
offices in southwestern Florida, including Collier and Lee Counties. On
September 30, 1996, Southwest had total assets of $425 million. On September
30, 1996, FNB had total assets of approximately $1.7 billion and total deposits
of approximately $1.4 billion, before giving effect to the acquisition of
Southwest, which was accounted for as a pooling-of-interests. The principal
executive offices of FNB are located at Hermitage Square, Hermitage,
Pennsylvania 16148, and its telephone number is (412) 981-6000. All references
herein to FNB refer to FNB Corporation and its subsidiaries, unless the context
otherwise requires.
FNB continues to evaluate additional potential acquisition candidates,
and may after the date of this Proxy Statement-Prospectus, enter into one or
more agreements with one or more such candidates.
For additional information regarding FNB and the combined company that
would result from the Merger, see "THE MERGER" and "INFORMATION ABOUT FNB."
3
<PAGE> 11
WEST COAST. West Coast is a bank holding company registered under the
BHCA. It was organized under the laws of the State of Florida in 1987, and has
as its principal asset the shares of its subsidiary bank, First National Bank
of Southwest Florida. West Coast provides commercial banking services through a
network of five offices in Lee County, Florida. On September 30, 1996, West
Coast had total assets of approximately $155 million and total deposits of
approximately $138 million. West Coast's principal executive offices are
located at 2724 Del Prado Boulevard South, Cape Coral, Florida 33904, and its
telephone number is (941) 772-2220.
For additional information regarding West Coast, see "THE MERGER" and
"INFORMATION ABOUT WEST COAST."
SPECIAL MEETING AND VOTE REQUIRED TO APPROVE THE MERGER
The Special Meeting will be held in the lobby of the First National
Bank of Southwest Florida headquarters at 2724 Del Prado Boulevard South, Cape
Coral, Florida 33904, on Tuesday, April 15, 1997 at 5:00 p.m., local time, at
which time the shareholders of West Coast will be asked to approve the Merger
Agreement and the transactions contemplated thereby. Only the record holders of
West Coast Common Shares at the close of business on February 28, 1997 (the
"Record Date") are entitled to notice of and to vote at the Special Meeting. On
the Record Date, there were approximately 419 holders of record of West Coast
Common Shares and 1,553,419 West Coast Common Shares outstanding.
The affirmative vote of a majority of all the votes entitled to be
cast at the Special Meeting by holders of the issued and outstanding West Coast
Common Shares is required to approve the Merger Agreement and the transactions
contemplated thereby. As of the Record Date, directors and executive officers
of West Coast and their affiliates held approximately 227,272 shares, or 14.6%
of the West Coast Common Shares entitled to vote at the Special Meeting. The
banking subsidiary of West Coast, in a fiduciary capacity for third parties,
does not have sole or shared voting power as to any West Coast Common Shares.
Pursuant to the terms of the Merger Agreement, the members of the West
Coast Board will vote their shares in favor of the Merger Agreement and the
transactions contemplated thereby at the Special Meeting.
See "THE SPECIAL MEETING OF SHAREHOLDERS OF WEST COAST" and "THE
MERGER -- Interests of Certain Persons in the Merger."
Approval of the Merger Agreement by the shareholders of FNB is not
required.
THE MERGER
Subject to the terms and conditions of the Merger Agreement and at the
Effective Time, West Coast will merge with and into Southwest. Southwest will
be the surviving entity and will continue to be governed by the laws of the
State of Florida. At the Effective Time, each outstanding West Coast Common
Share (other than shares held by West Coast or FNB, or any of their
subsidiaries, in each case, other than in a fiduciary capacity or as a result
of debts previously contracted, which shares will be canceled and retired
without consideration being paid) will be converted into and exchanged for
0.794 of a share (subject to possible adjustment as provided below) of FNB
Common Stock, with cash to be paid in lieu of any resulting fractional shares
of FNB Common Stock and each share of FNB capital stock outstanding prior to
the Merger will continue to be outstanding after the Effective Time. The
Merger Agreement provides that
4
<PAGE> 12
the Exchange Ratio may be adjusted to prevent dilution in the event FNB changes
the number of shares of FNB Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, recapitalization,
reclassification or similar transaction. As of the Record Date, there were
1,553,419 West Coast Common Shares outstanding. West Coast has represented
that, as of the Effective Time, there will be no more than 1,721,906 West Coast
Shares issued and outstanding.
Because the Exchange Ratio is fixed and because the market price of
FNB Common Stock is subject to fluctuation, the value of the shares of FNB
Common Stock that holders of West Coast Common Shares will receive in the
Merger may increase or decrease prior to and following the Merger.
Immediately following the Effective Time and assuming that 1,721,906
West Coast Common Shares are outstanding immediately prior to the Effective
Time, the former shareholders of West Coast would own 1,367,193 shares, or
approximately 10.6%, of the then outstanding FNB Common Stock (assuming
12,856,401 shares of FNB Common Stock outstanding immediately prior to the
Effective Time). The number of shares of FNB Common Stock to be issued in the
Merger will be reduced if fewer than 1,721,906 West Coast Common Shares are
outstanding immediately prior to the Effective Time. To the extent that all
existing West Coast options and warrants are not exercised in full prior to the
Effective Time, the number of West Coast Common Shares outstanding will be less
than 1,721,906.
As of the Record Date, there were West Coast Options outstanding,
which are defined in the Merger Agreement to include options, warrants, and
stock appreciation rights, with respect to 168,487 West Coast Common Shares.
Except as described below, at the Effective Time, each West Coast Option,
whether or not vested or exercisable, will be assumed by FNB and will be
converted into an option, warrant, stock appreciation right, or other right to
purchase the number of shares of FNB Common Stock equal to the number of West
Coast Common Shares subject to such West Coast Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, at a per share exercise price
adjusted by dividing the per share exercise price under each such West Coast
Option by the Exchange Ratio and rounding down to the nearest cent, with cash
to be paid in lieu of any fractional shares upon exercise of each converted
option, warrant, stock appreciation right, or other right, upon the otherwise
same terms and conditions under the relevant West Coast Option as were
applicable immediately prior to the Effective Time. In addition,
notwithstanding the foregoing, each West Coast Option that is an "incentive
stock option" shall be adjusted in accordance with the Section 424 of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the "Code"), so as not to constitute a modification, extension or
renewal of the option within the meaning of Section 424(h) of the Code.
The Merger Agreement also permits West Coast to declare and pay
quarterly cash dividends to its shareholders in an amount equivalent to the
regular quarterly cash dividend paid by FNB on its common stock multiplied by
the Exchange Ratio.
The Merger is subject to the satisfaction or waiver of certain
conditions. Such conditions include, among others, approval of the Merger
Agreement by West Coast shareholders, the effectiveness under the Securities
Act of the Registration Statement for shares of FNB Common Stock to be issued
in the Merger, receipt of the opinion of Advest as to the fairness of the
transaction to West Coast shareholders, and approval of appropriate regulatory
agencies. The obligation of FNB to effect the Merger also is subject to, among
other things, the receipt, to the extent necessary to assure, in the reasonable
judgment of FNB, that the transactions contemplated hereby will qualify for
pooling-of- interests accounting treatment, of agreements from affiliates of
West Coast restricting their ability to sell or otherwise transfer their West
Coast Common Shares prior to consummation of the Merger or their shares of FNB
Common Stock received upon consummation of the Merger. See "THE MERGER --
Conditions Precedent to the Merger."
5
<PAGE> 13
West Coast has agreed to take all steps necessary to exempt the Merger
from any applicable Florida anti- takeover laws.
For additional information relating to the Merger, see "THE MERGER."
EFFECTIVE TIME OF THE MERGER
Unless otherwise agreed by FNB and West Coast, the Effective Time is
expected to occur on the date and at the time the Articles of Merger to be
filed with the Florida Department of State (the "Articles of Merger") are
accepted for filing by the Florida Department of State. The parties have agreed
to use their reasonable efforts to cause the Effective Time to occur on or
before the fifth business day but not prior to the second business day (as
designated by FNB) following the last to occur of (i) the effective date of the
last required consent of any state or federal regulatory authority having
authority over the Merger (including the expiration of all applicable waiting
periods following such consents or the delivery of appropriate notices) or (ii)
the date on which the shareholders of West Coast approve the Merger Agreement,
unless otherwise agreed upon by FNB and West Coast. If approved by the West
Coast shareholders and applicable regulatory authorities, the parties expect
that the Effective Time will occur on or before May 31, 1997, although there
can be no assurance as to whether or when the Merger will occur. See "THE
MERGER -- Effective Time of the Merger" and "-- Conditions Precedent to the
Merger."
RECOMMENDATION OF THE WEST COAST BOARD
THE WEST COAST BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY. THE WEST COAST BOARD BELIEVES THAT THE
MERGER IS IN THE BEST INTERESTS OF WEST COAST AND ITS SHAREHOLDERS AND
RECOMMENDS THAT THE SHAREHOLDERS OF WEST COAST VOTE "FOR" APPROVAL OF THE
MERGER AGREEMENT.
West Coast shareholders should note that certain members of management
and directors of West Coast have certain interests in and may derive certain
benefits as a result of the Merger. See "THE MERGER -- Interests of Certain
Persons in the Merger."
In the course of reaching its decision to approve the Merger Agreement
and the transactions contemplated thereby, the West Coast Board consulted with
its legal advisors regarding the legal terms of the Merger Agreement and with
its financial advisor, Advest, as to the fairness, from a financial point of
view, of the Exchange Ratio to the holders of West Coast Common Shares. For a
discussion of the factors considered by the West Coast Board in reaching its
conclusions, see "THE MERGER -- Background of and Reasons for the Merger."
OPINION OF WEST COAST'S FINANCIAL ADVISOR
Advest, which has served as financial advisor to West Coast, has
rendered its opinion to the West Coast Board that the Exchange Ratio as
provided in the Merger Agreement is fair to the shareholders of West Coast from
a financial point of view. A copy of such opinion, dated March 4, 1997, is
attached hereto as Appendix C and should be read in its entirety with respect
to assumptions made, matters considered and limitations of the review
undertaken by Advest in rendering such opinion. See "THE MERGER -- Opinion of
West Coast's Financial Advisor."
6
<PAGE> 14
CERTAIN DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS
The rights of FNB shareholders and other corporate matters relating to
FNB Common Stock are controlled by the FNB Articles of Incorporation (the "FNB
Charter"), the FNB Bylaws (the "FNB Bylaws") and the Pennsylvania Business
Corporation Law (the "PBCL"). The rights of West Coast shareholders and other
corporate matters relating to West Coast Common Shares are controlled by the
West Coast Articles of Incorporation (the "West Coast Charter"), the West Coast
Bylaws (the "West Coast Bylaws"), and the Florida Business Corporation Act (the
"FBCA"). Upon consummation of the Merger, shareholders of West Coast will
become shareholders of FNB whose rights will be governed by the FNB Charter,
the FNB Bylaws, and the provisions of the PBCL. See "DESCRIPTION OF FNB CAPITAL
STOCK AND WEST COAST CAPITAL STOCK" and "COMPARISON OF SHAREHOLDERS RIGHTS."
MODIFICATION, WAIVER AND TERMINATION
The Merger Agreement provides that it may be amended by a subsequent
writing signed by each party upon the approval of each of their respective
Board of Directors. However, no amendment that reduces or modifies in any
material respect the consideration to be received by the holders of West Coast
Common Shares in connection with the Merger may be made after the Special
Meeting without the further approval of such shareholders. The Merger Agreement
provides that each party may waive any of the conditions precedent to its
obligations to consummate the Merger, to the extent legally permitted.
The Merger Agreement may be terminated by mutual agreement of the
Board of Directors of FNB (the "FNB Board") and the West Coast Board. The
Merger Agreement may also be terminated by either the FNB Board or the West
Coast Board (i) in the event of breach of the Merger Agreement by the other
party that cannot or has not been cured within 30 days of notice of such
breach, (ii) if the required approval of the West Coast shareholders or any
applicable regulatory authority is not obtained, (iii) if the Merger is not
consummated by September 30, 1997, or (iv) if any of the conditions precedent
to the obligations of such party to consummate the Merger cannot be satisfied
or fulfilled by September 30, 1997.
In addition, the Merger Agreement may be terminated by the West Coast
Board, if at any time prior to the Effective Time, the fairness opinion of
Advest is withdrawn, or at its sole option, upon written notice to FNB at least
24 hours prior to closing, if the average of the high bid and low asked prices
of the FNB Common Stock in the over-the- counter market for the ten consecutive
trading day period ending on the fifth business day prior to the Effective Time
is less than $20.625.
See "THE MERGER -- Modification, Waiver and Termination."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Section
368(a) of the Code. Smith, Gambrell & Russell, LLP has delivered an opinion,
based upon certain customary assumptions and representations, to the effect
that, for federal income tax purposes, no gain or loss will be recognized by
the West Coast shareholders as a result of the Merger to the extent that they
receive FNB Common Stock solely in exchange for their West Coast Common Shares.
For a more complete description of the federal income tax consequences, see
"THE MERGER -- Certain Federal Income Tax Consequences."
7
<PAGE> 15
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of West Coast's management and of the West Coast Board
may be deemed to have interests in the Merger in addition to their interests,
if any, as shareholders of West Coast generally. These interests include, among
others, (i) certain employment and severance agreements with certain officers
of West Coast that FNB agreed either to assume or to replace with new
employment agreements; (ii) the election or appointment of all remaining
members of the West Coast Board to the board of directors of one of Southwest's
subsidiary banks for a period of one year; and (iii) agreements by FNB to
indemnify present and former directors, officers, employees and agents of West
Coast and its subsidiary from and after the Merger against certain liabilities
arising prior to the Merger to the fullest extent permitted under Florida law,
the West Coast Charter, and the West Coast Bylaws. Pursuant to the severance
agreements referred to above, three current West Coast executives may be
entitled to severance payments aggregating $506,000, payable in monthly
installments.
FNB, Southwest, and certain of their directors own West Coast Common
Shares.
See "THE MERGER -- Interests of Certain Persons in the Merger."
STOCK OPTION AGREEMENT
As a condition to FNB's entering into the Merger Agreement and to
increase the probability that the Merger will be consummated, West Coast
granted FNB an option (the "Stock Option") to purchase, under certain
circumstances and subject to certain adjustments, up to 340,010 West Coast
Common Shares (the "Stock Option Shares") at a price, subject to certain
adjustments, of $15.00 per share pursuant to the terms of the Stock Option
Agreement dated November 15, 1996 and amended as of February 28, 1997, by and
between FNB and West Coast (the "Stock Option Agreement"). The Stock Option, if
exercised, would equal (when combined with the West Coast Common Shares already
owned by FNB) 19.9% of the total number of West Coast Common Shares outstanding
as of its date of exercise. The Stock Option is exercisable only upon the
occurrence of certain events generally indicating a change of control of West
Coast not involving FNB occurring within 12 months of a termination of the
Merger Agreement, and the receipt of any required regulatory approvals, neither
of which has occurred as of the date hereof. Under certain circumstances, West
Coast may be required to repurchase the Stock Option or the Stock Option Shares
acquired pursuant to the exercise of the Stock Option. The purpose of the Stock
Option Agreement and the Stock Option is to increase the likelihood that the
Merger will occur by making it more difficult for another party to acquire West
Coast. The ability of FNB to exercise the Stock Option and to cause, subject to
certain adjustments, up to an additional 340,010 West Coast Common Shares to be
issued may be considered a deterrent to other potential acquisitions of control
of West Coast, as it is likely to increase the cost of an acquisition of all
the West Coast Common Shares which would then be outstanding. See "THE MERGER
- -- Stock Option Agreement."
DISSENTERS' RIGHTS
Under the provisions of Section 607.1302 of the FBCA, holders of West
Coast Common Shares are not entitled to dissenters' rights with respect to
payment for the value of their shares. See "THE MERGER -- Dissenters' Rights of
West Coast Shareholders."
8
<PAGE> 16
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles ("GAAP").
See "THE MERGER -- Accounting Treatment."
REGULATORY APPROVALS
The Merger is subject to the approval of the Federal Reserve Board.
The Merger may not be consummated until expiration of all applicable waiting
periods.
FNB and West Coast have filed all required applications for regulatory
review and approval or notice with the Federal Reserve Board in connection with
the Merger. There can be no assurance that such approvals will be obtained or
as to the date of any such approvals.
See "THE MERGER -- Conditions Precedent to the Merger" and "-- Bank
Regulatory Matters."
RESALES BY AFFILIATES
West Coast has agreed to use its reasonable efforts to obtain from
each of those individuals identified by it as an affiliate an appropriate
agreement that such individual will not transfer any shares of FNB Common Stock
received by it as a result of the Merger, except in compliance with the
applicable provisions of the Securities Act and as required by
pooling-of-interests accounting treatment. See "THE MERGER -- Restrictions on
Resales by Affiliates."
SHARE INFORMATION, MARKET PRICES, AND DIVIDENDS
The FNB Common Stock trades on the Nasdaq SmallCap Market under the
trading symbol "FBAN." As of February 25, 1997, there were 12,129,920 shares
of FNB Common Stock outstanding held by approximately 5,010 holders of record.
The West Coast Common Shares trade on the Nasdaq National Market under the
trading symbol "WBAN." As of the Record Date, there were 1,553,419 West Coast
Common Shares outstanding held by approximately 419 holders of record,
representing approximately 1,275 beneficial holders.
The following table sets forth the last sale price reported by the Dow
Jones for shares of FNB Common Stock and for the West Coast Common Shares on
November 14, 1996, the last trading day preceding public announcement of the
proposed Merger, and on February 28, 1997, the Record Date. The "West Coast
Equivalent" represents the last sales price of a share of FNB Common Stock on
such date multiplied by the Exchange Ratio.
<TABLE>
<CAPTION>
WEST COAST
MARKET PRICE PER SHARE AT: FNB WEST COAST EQUIVALENT(1)
------------------------- -------- ---------- -------------
<S> <C> <C> <C>
November 14, 1996 $ 23.50 $ 15.375 $ 18.659
February 28, 1997 $ 25.00 $ 19.375 $ 19.85
</TABLE>
- -------------------
(1) Based on the Exchange Ratio of 0.794.
For additional information regarding the market prices of the FNB
Common Stock and the West Coast Common Shares during the previous two years,
see "PRICE RANGE OF COMMON STOCK AND DIVIDENDS -- Market Prices."
9
<PAGE> 17
The Merger Agreement permits West Coast to declare and pay quarterly
cash dividends to its shareholders in an amount equivalent to the regular
quarterly cash dividend currently paid by FNB to its shareholders multiplied by
the Exchange Ratio.
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth (a) selected comparative per share data
for FNB and West Coast on an historical basis and with respect to FNB, on a
supplemental basis giving effect to the acquisition of Southwest, which has
been accounted for as a pooling-of-interests and (b) selected unaudited pro
forma comparative per share data assuming that FNB, Southwest, and West Coast
have been combined during the periods presented. The unaudited pro forma data
have been prepared giving effect to the mergers as poolings-of-interests. For a
description of the effect of pooling-of-interests accounting on the Merger and
the historical financial statements of FNB, see "THE MERGER -- Accounting
Treatment." The West Coast pro forma equivalent amounts are presented with
respect to each set of pro forma information.
The comparative per share data presented are based on and derived
from, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of FNB and West Coast and
the supplemental financial statements and related notes thereto of FNB,
incorporated by reference herein. The pro forma amounts are not necessarily
indicative of results of operations or combined financial position that would
have resulted had the Merger been consummated at the beginning of the period
indicated or which will be attained in the future.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------- -----------------
1995 1994 1993 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE
FNB COMMON STOCK
Historical (primary) . . . . . . . . . . . . . . $1.90 $1.41 $1.07 $1.40 $1.38
Historical (fully diluted) . . . . . . . . . . . 1.82 1.37 1.06 1.34 1.33
Supplemental (primary) . . . . . . . . . . . . 1.56 1.14 0.99 1.26 1.12
Supplemental (fully diluted) . . . . . . . . . 1.52 1.13 0.99 1.22 1.09
Pro forma combined (primary) . . . . . . . . . . 1.52 1.11 0.97 1.21 1.10
Pro forma combined (fully diluted) . . . . . . . 1.48 1.11 0.97 1.18 1.07
WEST COAST COMMON STOCK
Historical . . . . . . . . . . . . . . . . . . . 0.84 0.65 0.56 0.55 0.70
Pro forma equivalent (1)
Primary . . . . . . . . . . . . . . . . . . 1.21 0.88 0.77 0.96 0.87
Fully Diluted . . . . . . . . . . . . . . . 1.18 0.88 0.77 0.94 0.85
CASH DIVIDENDS DECLARED PER COMMON SHARE
FNB historical . . . . . . . . . . . . . . . . . . 0.35 0.25 0.24 0.47 0.23
FNB supplemental . . . . . . . . . . . . . . . . . 0.35 0.25 0.24 0.47 0.23
West Coast historical . . . . . . . . . . . . . . . 0.22 0.20 0.10 0.18 0.16
West Coast pro forma equivalent (2) . . . . . . . . 0.28 0.20 0.19 0.37 0.18
</TABLE>
10
<PAGE> 18
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE (PERIOD END)
FNB historical . . . . . . . . . . . . . . . . . . . . . $15.48 $14.67
FNB supplemental . . . . . . . . . . . . . . . . . . . . 14.38 13.50
FNB pro forma combined . . . . . . . . . . . . . . . . . 14.32 13.49
West Coast historical . . . . . . . . . . . . . . . . . 10.98 10.67
West Coast pro forma equivalent (1) . . . . . . . . . . 11.37 10.71
</TABLE>
_______________
(1) West Coast pro forma equivalent amounts are calculated by multiplying the
pro forma combined amounts for FNB by the Exchange Ratio of 0.794 of a
share of FNB Common Stock for each West Coast Common Share. The Exchange
Ratio is subject to adjustment in certain circumstances. See "THE MERGER
-- Modification, Waiver and Termination." The equivalent pro forma per
share information can be used for a comparison with the historical per
share data of West Coast.
(2) West Coast pro forma equivalent amounts are calculated by multiplying the
supplemental amounts for FNB by the Exchange Ratio of 0.794 of a share of
FNB Common Stock for each West Coast Common Share. The Exchange Ratio is
subject to adjustment in certain circumstances. See "THE MERGER --
Modification, Waiver and Termination." The equivalent pro forma per
share information can be used for a comparison with the historical per
share data of West Coast.
11
<PAGE> 19
SELECTED FINANCIAL DATA
The following tables present summary selected financial data for (i)
FNB, on supplemental basis giving effect to the acquisition of Southwest by
FNB, which has been accounted for as a pooling-of-interests and (ii) West
Coast, on an historical basis. For a description of the effect of
pooling-of-interests accounting on the Merger and the historical financial
statements of FNB, see "THE MERGER -- Accounting Treatment." The summary
selected financial data are based on and derived from, and should be read in
conjunction with, the supplemental consolidated financial statements and the
related notes thereto of FNB and the historical financial statements and the
related notes thereto of West Coast. The selected financial data for the nine
month periods ended September 30, 1996 and 1995 are derived from the unaudited
supplemental consolidated financial statements of FNB and the unaudited
consolidated financial statements of West Coast. The unaudited consolidated
financial statements include all adjustments, consisting of normal recurring
accruals, which the respective managements consider necessary for a fair
presentation of the consolidated financial condition and results of operations
for these periods. Operating results for the nine months ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
entire year ended December 31, 1996.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------------------------------- ----------------------
1995 1994 1993 1992 1991 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
F.N.B. CORPORATION:
Earnings (In thousands, except per
share data)
Interest income...................... $160,740 $140,294 $136,698 $134,857 $131,100 $127,052 $119,385
Interest expense..................... 69,812 56,534 59,998 66,726 76,699 53,679 51,884
Net interest income.................. 90,928 83,760 76,700 68,131 54,401 73,373 67,501
Provision for loan losses............ 6,487 9,055 9,738 15,443 5,608 4,966 4,810
Net income........................... 19,790 14,195 11,477 7,492 10,332 16,064 14,159
Earnings per common share
Primary......................... 1.56 1.14 0.99 0.68 1.03 1.26 1.14
Fully diluted................... 1.52 1.13 0.99 0.68 1.02 1.22 1.10
Cash dividends declared per
common share....................... 0.35 0.25 0.24 0.23 0.21 0.47 0.23
</TABLE>
<TABLE>
<CAPTION>
As of December 31, As of September 30,
---------------------------------------------------------- ----------------------
1995 1994 1993 1992 1991 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance sheet (period end in thousands)
Total assets....................... $2,091,417 $1,949,393 $1,867,785 $1,844,123 $1,465,747 $2,170,683 $2,042,008
Total loans and leases net of
unearned income and
allowance for loan losses........ 1,438,011 1,358,515 1,231,605 1,136,226 1,051,222 1,574,437 1,415,570
Total deposits..................... 1,766,940 1,626,650 1,616,109 1,611,984 1,257,422 1,778,922 1,712,300
Other borrowings................... 73,501 86,938 72,404 59,338 68,605 142,961 93,799
Long-term debt and obligations
under capital leases............. 49,755 55,517 31,297 32,823 18,520 33,956 40,656
Stockholders' equity............... 171,823 152,020 127,255 118,081 99,608 180,873 166,436
</TABLE>
12
<PAGE> 20
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
--------------------------------------------- ---------------
1995 1994 1993 1992 1991 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
West Coast Bancorp, Inc.:
Earnings (In thousands, except per
share data)
Interest income . . . . . . . . $11,772 $8,981 $7,553 $6,987 $6,375 $9,356 $8,660
Interest expense . . . . . . . . 4,942 3,361 2,860 3,072 3,401 3,890 3,609
Net interest income . . . . . . 6,830 5,620 4,693 3,915 2,974 5,466 5,054
Provision for loan losses . . . 443 122 125 353 562 551 244
Net income before
extraordinary items . . . . . 1,289 995 742 508 39 847 1,071
Earnings per common share
Primary . . . . . . . . . . 0.84 0.65 0.56 0.97 0.06 0.55 0.70
Fully diluted . . . . . . . 0.84 0.65 0.56 0.97 0.06 0.55 0.70
Cash dividends declared per
common share . . . . . . . . . 0.22 0.20 0.10 0.00 0.00 0.18 0.16
</TABLE>
<TABLE>
<CAPTION>
As of December 31, As of September 30,
--------------------------------------------- ------------------
1995 1994 1993 1992 1991 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance sheet (period end in
thousands)
Total assets . . . . . . . . . . $147,213 $138,423 $115,135 $91,520 $75,620 $154,819 $143,883
Total loans, net of unearned
discount . . . . . . . . . . . 98,082 85,198 73,391 59,478 44,946 106,377 96,833
Total deposits . . . . . . . . . 129,205 122,068 98,418 82,543 68,218 137,550 125,887
Other borrowings . . . . . . . . 1,029 1,097 1,231 375 40 0 1,058
Stockholders' equity . . . . . . 16,428 15,076 14,846 7,789 6,971 16,951 16,278
</TABLE>
13
<PAGE> 21
THE SPECIAL MEETING OF SHAREHOLDERS OF WEST COAST
GENERAL
This Proxy Statement-Prospectus is first being furnished to the
holders of West Coast Common Shares on or about March 7, 1997, and is
accompanied by the Notice of Special Meeting and a form of proxy that is
solicited by the West Coast Board for use at the Special Meeting of
Shareholders of West Coast to be held in the lobby of the First National Bank
of Southwest Florida headquarters at 2724 Del Prado Boulevard South, Cape
Coral, Florida 33904, on Tuesday, April 15, 1997, at 5:00 p.m., local time, and
at any adjournments or postponements thereof. The purpose of the Special
Meeting is to take action with respect to the approval of the Merger Agreement
and the transactions contemplated thereby.
VOTING AND REVOCATION OF PROXIES
A shareholder of West Coast may use the accompanying proxy if such
shareholder is unable to attend the Special Meeting in person or wishes to have
his or her shares voted by proxy even if such shareholder does attend the
meeting. A shareholder may revoke any proxy given pursuant to this solicitation
by delivering to the Corporate Secretary of West Coast, prior to or at the
Special Meeting, a written notice revoking the proxy or a duly executed proxy
relating to the same shares bearing a later date, or by attending the Special
Meeting and voting in person at the Special Meeting. Attendance of a
shareholder at the Special Meeting will not, in and of itself, constitute a
revocation of the proxy. All written notices of revocation and other
communications with respect to the revocation of West Coast proxies should be
addressed to West Coast Bancorp, Inc., 2724 Del Prado Boulevard South, Cape
Coral, Florida 33904 Attention: Corporate Secretary. For such notice of
revocation or later proxy to be valid, however, it must actually be received by
West Coast prior to the vote of the shareholders. All shares represented by
valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. If no
specification is made, the proxies will be voted FOR approval of the Merger
Agreement. The West Coast Board is unaware of any other matters that may be
presented for action at the Special Meeting. If other matters do properly come
before the Special Meeting, however, it is intended that shares represented by
proxies in the accompanying form will be voted or not voted by the persons
named in the proxies in their discretion.
SOLICITATION OF PROXIES
Solicitation of proxies may be made in person or by mail, telephone,
or facsimile, or other form of communication by directors, officers, and
employees of West Coast, who will not be specially compensated for such
solicitation. Nominees, fiduciaries, and other custodians will be requested to
forward solicitation materials to beneficial owners and to secure their voting
instructions, if necessary, and will be reimbursed for the expenses incurred in
sending proxy materials to beneficial owners.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement-Prospectus and, if given
or made, such information or representation should not be relied upon as having
been authorized by West Coast, FNB, or any other person. The delivery of this
Proxy Statement-Prospectus shall not, under any circumstances, create any
implication that there has been no change in the business or affairs of West
Coast or FNB since the date of the Proxy Statement-Prospectus.
All costs of solicitation of proxies from West Coast shareholders will
be borne by West Coast; provided, however, that FNB and West Coast have each
agreed to pay one-half of the printing costs of this Proxy Statement-
Prospectus and related materials.
14
<PAGE> 22
RECORD DATE AND VOTING RIGHTS
The West Coast Board has fixed the close of business on February 28,
1997 as the Record Date for the determination of shareholders of West Coast
entitled to receive notice of and to vote at the Special Meeting. At the close
of business on the Record Date, there were outstanding 1,553,419 West Coast
Common Shares held by approximately 419 holders of record, representing
approximately 1,275 beneficial holders. Each West Coast Common Share
outstanding on the Record Date is entitled to one vote as to (i) the approval
of the Merger Agreement and the transactions contemplated thereby and (ii) any
other proposal that may properly come before the Special Meeting.
As of the Record Date, the directors and executive officers of West
Coast and their affiliates held approximately an aggregate of 227,272 shares,
or 14.6%, of West Coast Common Shares. The banking subsidiary of West Coast, in
a fiduciary capacity for third parties, does not have sole or shared voting
power as to any West Coast Common Shares.
Under Florida law, the affirmative vote of a majority of the votes
entitled to be cast on the matter is required in order to approve a proposed
merger transaction, unless the articles of incorporation or the board of
directors require a greater number of votes. Neither the Articles of
Incorporation of West Coast nor its Board requires a greater number of votes.
Since approval of the Merger requires, in essence, the affirmative vote of a
majority of the issued and outstanding West Coast Common Shares as of the
Record Date, the failure to vote the shares in favor of the Merger for any
reason whatsoever - whether by withholding the vote, by abstaining, or by
causing a broker non-vote - will have the same effect as a vote cast opposing
the Merger.
A broker non-vote generally occurs when a broker who holds shares in
street name for a customer does not have the authority to vote on certain
non-routine matters because its customer has not provided any voting
instructions with respect to the matter.
BECAUSE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE
OF A MAJORITY OF ALL THE VOTES ENTITLED TO BE CAST AT THE SPECIAL MEETING BY
HOLDERS OF THE ISSUED AND OUTSTANDING WEST COAST COMMON SHARES, ABSTENTIONS AND
BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS NEGATIVE VOTES. ACCORDINGLY, THE
WEST COAST BOARD URGES ITS SHAREHOLDERS TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
In order to take action on any other matter submitted to shareholders
at a meeting where a quorum is present, the votes cast in favor of the action
must exceed the votes cast opposing the action, unless the articles of
incorporation or state law requires a greater number of votes. All abstentions
and broker non-votes will be counted as present for purposes of determining the
existence of a quorum; but since they are neither votes cast in favor of, nor
votes cast opposing, a proposed action, abstentions and broker non-votes
typically will have no impact on the outcome of the matter and will not be
counted as a vote cast on such matters.
RECOMMENDATION OF THE WEST COAST BOARD
THE WEST COAST BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF WEST COAST AND ITS SHAREHOLDERS, AND RECOMMENDS THAT THE
SHAREHOLDERS OF WEST COAST VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
15
<PAGE> 23
In the course of reaching its decision to approve the Merger Agreement
and the transactions contemplated thereby, the West Coast Board, among other
things, consulted with its legal advisors regarding the legal terms of the
Merger Agreement and with its financial advisor, Advest, as to the fairness,
from a financial point of view, of the Exchange Ratio to the holders of West
Coast Common Shares. For a discussion of the factors considered by the West
Coast Board in reaching its conclusion, see "THE MERGER -- Background of and
Reasons for the Merger."
West Coast shareholders should note that certain members of management
and directors of West Coast have certain interests in and may derive certain
benefits as a result of the Merger. See "THE MERGER -- Interests of Certain
Persons in the Merger."
Pursuant to the terms of the Merger Agreement, the members of the West
Coast Board will vote their shares in favor of the Merger Agreement and the
transactions contemplated thereby at the Special Meeting.
WEST COAST SHAREHOLDERS SHOULD NOT SEND
ANY STOCK CERTIFICATES WITH THEIR PROXY CARDS.
16
<PAGE> 24
THE MERGER
The following summary of certain terms and provisions of the Merger
Agreement and Stock Option Agreement is qualified in its entirety by reference
to the Merger Agreement and Stock Option Agreement, which are incorporated
herein by reference and, with the exception of certain exhibits thereto, are
included as Appendix A and Appendix B, respectively, to this Proxy
Statement-Prospectus. All shareholders are urged to read the Merger Agreement,
Stock Option Agreement, and the other Appendices hereto in their entirety.
DESCRIPTION OF THE MERGER
At the Effective Time, West Coast will be merged with and into
Southwest, which will be the surviving entity and a 100% controlled subsidiary
of FNB. The Southwest Charter and the Southwest Bylaws in effect at the
Effective Time will continue to govern Southwest until amended or repealed in
accordance with applicable law. The Merger is subject to the approval of the
Federal Reserve Board. See "-- Bank Regulatory Matters."
At the Effective Time, each West Coast Common Share outstanding
immediately prior to the Effective Time (other than shares held by West Coast,
FNB, or any of their subsidiaries, in each case, other than in a fiduciary
capacity or as a result of debts previously contracted) will be converted
automatically into the right to receive 0.794 of a share (subject to possible
adjustment as provided below) of FNB Common Stock. The Merger Agreement
provides that the Exchange Ratio may be adjusted to prevent dilution in the
event FNB changes the number of shares of FNB Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, recapitalization, reclassification, or similar transaction. At the
Effective Time, any West Coast Common Shares held by West Coast, FNB, or any of
their subsidiaries, in each case, other than in a fiduciary capacity or as a
result of debts previously contracted, will be canceled and retired without
consideration being paid. West Coast has represented that, as of the Effective
Time, there will be no more than 1,721,906 West Coast Common Shares issued and
outstanding. Following the Effective Time and assuming that 1,721,906 West
Coast Common Shares are outstanding at the Effective Time, the former
shareholders of West Coast would own 1,367,193 shares, or approximately 10.6%,
of the then outstanding FNB Common Stock (assuming 12,856,401 shares of FNB
Common Stock outstanding immediately prior to the Effective Time). The number
of shares of FNB Common Stock to be issued in the Merger will be reduced if
fewer than 1,721,906 West Coast Common Shares are outstanding immediately prior
to the Effective Time. To the extent that all existing West Coast Options are
not exercised in full prior to the Effective Time, the number of West Coast
Common Shares outstanding will be less than 1,721,906. As of the Record Date,
there were 1,553,419 West Coast Common Shares outstanding. However, if the
average of the high bid and low ask prices of FNB Common Stock during a
specified period of time prior to the Merger is less than $20.625, West Coast
will not be required to consummate the Merger, and, at its option, may
terminate the Merger Agreement. The Board of Directors of West Coast may,
consistent with its fiduciary duties under Florida law to act in the best
interests of its shareholders, determine not to exercise its option to
terminate and consummate the Merger without any additional shareholder action
or solicitation.
In addition, pursuant to the terms of the Merger Agreement, until the
Effective Time, West Coast is expressly authorized by FNB to declare and pay
quarterly cash dividends to its shareholders in an amount equivalent to the
regular quarterly cash dividend paid by FNB to its shareholders multiplied by
the Exchange Ratio.
No fractional shares of FNB Common Stock will be issued in the Merger.
Instead, each holder of West Coast Common Shares who would otherwise have been
entitled to receive a fraction of a share of FNB Common Stock (after taking
into account all certificates delivered by such holder) will receive, in lieu
17
<PAGE> 25
thereof, cash (without interest) in an amount equal to such fractional part of
a share of FNB Common Stock multiplied by the market value of one share of FNB
Common Stock at the Effective Time, which is defined in the Merger Agreement as
the average of the high bid and low asked prices of one share of FNB Common
Stock in the over-the-counter market as reported by the Nasdaq SmallCap Market
(or, if not reported thereby, by any other authoritative source selected by
FNB) on the last trading day preceding the Effective Time. No such holder will
be entitled to dividends, voting rights or any other rights as a shareholder in
respect of any fractional shares. See "-- Exchange of Certificates."
The shares of FNB capital stock outstanding immediately prior to the
Merger will continue to be outstanding after the Effective Time.
CONVERSION OF WEST COAST OPTIONS
West Coast Options to purchase an aggregate of 168,487 West Coast
Common Shares were outstanding as of the Record Date. To the extent that West
Coast Common Shares are issued pursuant to the exercise of West Coast Options
in accordance with their terms prior to the Effective Time, they will be
converted into FNB Common Stock in the same manner as other West Coast Common
Shares. At the Effective Time, each West Coast Option to purchase West Coast
Common Shares that has not expired and remains outstanding at the Effective
Time, whether or not vested or exercisable, shall be converted into and become
an option, warrant, stock appreciation right, or other right to purchase shares
of FNB Common Stock, and FNB shall assume each such West Coast 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 or the warrant
agreement pursuant to which it was granted and evidenced (collectively, the
"West Coast Stock Plans"), except that, from and after the Effective Time, (i)
FNB and its compensation committee shall be substituted for West Coast and its
compensation committee (including, if applicable, the entire West Coast Board)
administering such West Coast Stock Plan, (ii) each West Coast Option assumed
by FNB may be exercised solely for shares of FNB Common Stock (or cash in the
case of stock appreciation rights), (iii) the number of shares of FNB Common
Stock subject to such West Coast Option will be equal to the number of West
Coast Common Shares subject to such West Coast Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, with cash being paid in lieu
of any resulting fraction of a share of FNB Common Stock equal to the product
of such fraction and the difference between the market value of one share of
FNB Common Stock and the per share exercise price of such option, warrant or
other right to purchase shares of FNB Common Stock, and (iv) the per share
exercise price under each such West Coast Option will be adjusted by dividing
the per share exercise price under each such West Coast Option by the Exchange
Ratio and rounding down to the nearest cent. Notwithstanding the provisions of
clauses (iii) and (iv) of the preceding sentence, each West Coast Option which
is an incentive stock option shall be adjusted as required by Section 424 of
the Code, so as not to constitute a modification, extension, or renewal of the
option within the meaning of Section 424(h) of the Code. FNB has agreed to
take all necessary steps to effectuate the foregoing provisions.
As soon as practicable after the Effective Time, FNB will deliver to
the participants in each West Coast Stock Plan an appropriate notice setting
forth such participant's rights pursuant thereto and the grants pursuant to
such West Coast Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments described in the above paragraph after
giving effect to the Merger), and FNB will comply with the terms of each West
Coast Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such West Coast Stock Plan, that West Coast Options which
qualified as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options after the Effective Time. At or prior to the
Effective Time, FNB will take all corporate action necessary to reserve for
issuance sufficient shares of FNB Common Stock for delivery upon exercise of
West Coast Options assumed by it and to cause such shares to be registered with
the Securities and Exchange Commission.
18
<PAGE> 26
All restrictions or limitations on transfer with respect to West Coast
Common Shares awarded under the West Coast Stock Plans or any other plan,
program, or arrangement of West Coast or of any subsidiary of West Coast, to
the extent that such restrictions or limitations will not have already lapsed,
and except as otherwise expressly provided in such plan, program, or
arrangement, will remain in full force and effect with respect to shares of FNB
Common Stock into which such restricted stock is converted pursuant to the
Merger Agreement.
See "-- Interests of Certain Persons in the Merger."
EFFECTIVE TIME OF THE MERGER
The Effective Time will occur on the date and at the time the Articles
of Merger shall have been accepted for filing by the Florida Department of
State or such other later date and time as is agreed to by the parties as
specified in the Articles of Merger. Unless otherwise agreed by FNB and West
Coast, the parties have agreed to use their reasonable efforts to cause the
Effective Time to occur on or before the fifth business day (as designated by
FNB) but not prior to the second business day following the last to occur of
(i) the effective date of the last required consent of any state or federal
regulatory authority having authority over the Merger (including the expiration
of all applicable waiting periods following such consents or the delivery of
appropriate notices) or (ii) the date on which the shareholders of West Coast
approve the Merger Agreement. If approved by the West Coast shareholders and
the applicable regulatory authorities, the parties expect that the Effective
Time will occur on or before May 31, 1997, although there can be no assurance
as to whether or when the Merger will occur.
EXCHANGE OF CERTIFICATES
Before or as soon as practicable after the Effective Time, Chemical
Mellon Shareholder Services ("Chemical Mellon" or the "Exchange Agent") will
mail to each holder of record of West Coast Common Shares as of the Effective
Time a letter of transmittal and related forms (the "Letter of Transmittal")
for use in forwarding stock certificates previously representing West Coast
Common Shares for surrender and exchange for certificates representing FNB
Common Stock. Risk of loss and title to the certificates theretofore
representing West Coast Common Shares shall pass only upon proper delivery of
such certificates to the Exchange Agent.
WEST COAST SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
Upon surrender to the Exchange Agent of one or more certificates for
West Coast Common Shares, together with a properly completed Letter of
Transmittal, there will be issued and mailed to the holder thereof a
certificate or certificates representing the aggregate number of whole shares
of FNB Common Stock to which such holder is entitled pursuant to the Exchange
Ratio, together with all declared but unpaid dividends in respect of such
shares, and, where applicable, a check for the amount (without interest)
representing any fractional share. A certificate for shares of FNB Common
Stock, or any check representing cash in lieu of a fractional share or declared
but unpaid dividends, may be issued in a name other than the name in which the
surrendered certificate is registered only if (i) the certificate surrendered
is properly endorsed, accompanied by a guaranteed signature if required by the
Letter of Transmittal and otherwise in proper form for transfer, and (ii) the
person requesting the issuance of such certificate either pays to the Exchange
Agent any transfer or other taxes required by reason of the issuance of a
certificate for such shares in a name other than the registered holder of the
certificate surrendered or establishes to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. The Exchange Agent will
issue stock certificates evidencing FNB Common Stock in exchange for lost,
stolen, mutilated, or
19
<PAGE> 27
destroyed certificates of West Coast Common Shares only upon receipt of a lost
stock affidavit and a bond indemnifying FNB against any claim arising out of
the allegedly lost, stolen, mutilated, or destroyed certificate. In no event
will the Exchange Agent, FNB, or West Coast be liable to any persons for any
FNB Common Stock or dividends thereon or cash delivered in good faith to a
public official pursuant to any applicable abandoned property, escheat, or
similar law.
On and after the Effective Time and until surrender of certificates of
West Coast Common Shares to the Exchange Agent, each certificate that
represented outstanding West Coast Common Shares immediately prior to the
Effective Time will be deemed to evidence ownership of the number of whole
shares of FNB Common Stock into which such shares have been converted, and the
holders thereof shall be entitled to vote at any meeting of FNB shareholders.
Beginning 30 days after the Effective Time, no shareholder will, however,
receive dividends or other distributions on such FNB Common Stock until the
certificates representing West Coast Common Shares are surrendered. Upon
surrender of West Coast Common Shares certificates, West Coast shareholders
will be paid any dividends or other distributions on FNB Common Stock that are
payable to holders as of any dividend record date on or following the Effective
Time. No interest will be payable with respect to withheld dividends or other
distributions. However, voting rights on West Coast Common Shares continue for
ninety (90) days after the Effective Time regardless of whether certificates
representing West Coast Common Shares have been surrendered.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER.
In 1995, West Coast determined that the acquisition of another
financial institution would be the most cost effective method for increasing
its market share and implemented a strategy designed to achieve that objective.
West Coast identified several acquisition candidates and approached three
different institutions for the purpose of exploring a possible business
combination, but was unable to reach any agreements.
In late 1995, and again in early 1996, West Coast's management was
approached by two out-of-state financial institutions which expressed an
interest in expanding their presence in southwest Florida. Although neither of
these inquiries resulted in the commencement of negotiations, the Board of
Directors of West Coast concluded that in order to determine the most
appropriate strategic direction for West Coast and to explore the various
alternatives regarding how it should respond to the substantial consolidation
in the U.S. banking and financial service industry, especially in Florida, it
would need to undertake a thorough analysis of strategic alternatives available
to West Coast. Between April and June 1996, the Board of Directors of West
Coast held discussions with, and formally interviewed and received proposed
terms of engagement from, several investment banking and financial consulting
firms regarding the services necessary to undertake such a review and analysis.
At the conclusion of these interviews and the negotiation of the terms of
engagement, Advest, Inc., an investment banking firm specializing in bank
institutions ("Advest"), was retained in June 1996 to assist West Coast in that
analysis. Advest was asked to evaluate possible strategic alternatives
available to West Coast, including the possibility of remaining independent,
expansion by branching, participating in a merger transaction either as an
acquiror or as a seller, and strategies aimed primarily at increasing
short-term shareholder values, such as accelerated dividend distributions and
stock repurchase programs. Because of the substantial benefits it would enjoy
through a consolidation with another financial institution, and the lack of
feasible acquisition candidates, West Coast decided that its focus should be on
exploring its possible sale to a larger financial institution to maximize
shareholder value.
In order to explore the possible sale of West Coast, Advest contacted
a number of financial institutions that it believed might have an interest in
acquiring West Coast. FNB was one of the ten
20
<PAGE> 28
institutions which expressed an interest in West Coast. In July and August
1996, after receipt of confidentiality agreements, Advest furnished preliminary
information to those financial institutions expressing an interest in West
Coast and responded to various inquiries by them. Several institutions
indicated a willingness to bid on the purchase of West Coast.
On August 15, 1996, FNB submitted an indication of interest to acquire
West Coast for $28,520,000 in FNB Common Stock, or $17.55 per West Coast Common
Share on a fully diluted basis. The exchange ratio would be set at the time of
execution of the definitive agreement and was subject to FNB's due diligence
review of West Coast.
In the evening on August 15, 1996, the West Coast Board met to review
the status of Advest's inquiries and solicitations of interest in acquiring
West Coast. Each financial institution contacted and those expressing an
interest in West Coast were identified and all formal and informal indications
of interest received by or discussed with Advest were presented to the Board,
including that of FNB. During the meeting, Advest furnished the West Coast
Board with a present value analysis of West Coast's Common Shares based on
management's business plan and advised the Board of comparable premiums paid
for similar banking institutions in Florida and elsewhere during the past two
years. The Board of Directors then reviewed the range of indications of
interest received by Advest and evaluated, among other things, the range of
purchase prices, the alternative structures suggested, the form of
consideration to be paid, and the conditions and contingencies of the
proposals. After carefully reviewing the current status of Advest's
preliminary inquiries into the potential interest for an acquisition of West
Coast, the West Coast Board determined that, although none of the current
indications of interest were acceptable, it would permit selected financial
institutions to conduct a more detailed due diligence review of West Coast for
the purpose of seeking higher, acceptable offers.
The Board of Directors then established a special committee (the
"Committee") consisting of Thomas R. Cronin, William S. Hussey, Dr. Stephen R.
Zellner, and Michael P. Geml, to oversee this process, and to evaluate and make
recommendations with respect to any further proposals that might be received.
Between August 16 and August 26, 1996, West Coast made itself and its
senior management available for a more detailed due diligence review to the
extent necessary. On August 27, 1996, FNB made a revised offer to purchase
West Coast at a purchase price on the date of the offer equal to $17.76 per
share payable in FNB Common Stock (aggregate value of $28,920,000) at a fixed
exchange ratio of 0.74 shares of FNB Common Stock for each West Coast Common
Share. The offer was subject to West Coast's acceptance by August 30, 1996,
and additional due diligence.
The Committee met on August 30, 1996 by telephone conference with its
legal counsel and representatives of Advest in attendance. The Committee
evaluated, together with Advest, the terms of the revised offer, including the
fixed exchange ratio set as of the day of the offer rather than at the time of
a definitive merger agreement. Advest updated the Committee of the results of
the due diligence review conducted by FNB and then compared the offer with
similar transactions and the alternatives available to West Coast. Advest
indicated that it believed that the price may be too low for it to render a
fairness opinion and suggested further negotiation. At the conclusion of the
meeting, the Committee instructed Advest to advise FNB that although it would
present the offer to the full Board of Directors, it did not believe that the
price was adequate and would not be in a position to recommend acceptance
thereof. Advest was requested to seek a higher bid prior to the special
meeting of the Board of Directors to be held on September 5, 1996.
In response to the Committee's decision, FNB presented West Coast with
a further revised offer on August 30, 1996 to purchase West Coast at a price
equal to approximately $29,300,000 (on a fully diluted
21
<PAGE> 29
basis) on the day of the offer (or $18.00 per West Coast Common Share) payable
in FNB Common Stock at an exchange ratio to be set on the date of the
definitive merger agreement. This offer did not set a deadline for acceptance.
The West Coast Board of Directors held a special meeting on September
5, 1996 to review and consider FNB's offer. The Board of Directors evaluated,
among other things, the purchase price, the structure of the offer including
the timing to set the exchange ratio, the value of the form of consideration
offered (the FNB Common Stock), and the conditions to the offer, including the
request for additional due diligence review. During this meeting, Advest made
a presentation to the West Coast Board comparing the August 15 proposal to both
the August 27 and August 30 proposals, and with other comparable transactions.
Advest noted that the proposed purchase price was within the median with
respect to certain measures of values of comparable transactions and on the low
end with respect to other measures. Advest provided the Board with an update
of its present value analysis of West Coast Common Shares with respect to both
trading and acquisition values based on management's business plan, and also
advised the Board of the results of its continuing market check for additional
indications of interest. Advest stated that the proposed purchase price
appeared to be within a reasonable range, although it was on the lower end of
that range.
At the conclusion of Advest's presentation, the Board conducted a
lengthy analysis of FNB's offer and the alternatives available to West Coast.
The Board noted that the business plan evaluated by Advest did not provide for
any expansion or reflect the recent changes in the market area that resulted in
West Coast becoming the largest independent community bank remaining in Lee
County, Florida. The Board believed that the acquisition of other local
community banks provided West Coast with opportunities to significantly
increase its deposit and lending base, as well as an opportunity to acquire
several branch sites that would be available as a result of the anticipated
consolidation. In addition, since the commencement of negotiations with FNB,
an acquisition candidate had approached West Coast and had suggested entering
into preliminary negotiations regarding its acquisition by West Coast.
After thoroughly reviewing FNB's offer and evaluating alternatives now
available to West Coast, the Board of Directors determined that they were
unable to accept the proposal. The Board could not conclude that the
alternatives available to West Coast were not a superior course of action to
entering into a proposed business combination with FNB at the proposed price,
and without conducting a due diligence analysis of FNB, the Board of Directors
was unable to evaluate the potential future value of an investment in FNB
Common Stock. At the conclusion of the West Coast Board meeting, Advest
advised FNB that their offer had been rejected by West Coast's Board of
Directors as inadequate and that it was no longer for sale. Advest was then
instructed to evaluate several revised business plan scenarios with management
involving expansion by branching, a stock repurchase, and the acquisition of
one of three interested local institutions, and a combination thereof.
On September 16, 1996, at the request of FNB, Messrs. Cronin and Geml
and representatives of Advest met with representatives of FNB, including Peter
Mortensen, Chairman of the Board and President of FNB, John D. Waters, Vice
President and Chief Financial Officer of FNB, Gary Tice, President of
Southwest, and representatives of The Robinson- Humphrey Company, Inc., FNB's
financial consultants. At that meeting, information was presented about the
organization and structure of FNB, its future prospects, and how West Coast
would fit into those plans. No revised offer was presented at this meeting.
Between September 17 and 20, 1996, several additional informal
conversations were held between the parties, but no negotiations or further
offers were conducted or made.
On October 2, 1996, Messrs. Mortensen and Waters requested an
opportunity to meet with the Board of Directors of West Coast in order to
introduce and familiarize the West Coast Board with FNB,
22
<PAGE> 30
particularly about recent accomplishments and future potential, to present a
new offer for their consideration, and to address certain non-financial aspects
of a proposed business combination. West Coast agreed to meet with FNB
representatives at a special meeting of the Board of Directors to be held
November 7, 1996 for the purpose of reviewing Advest's analysis of the various
business plan scenarios being evaluated by it and to receive FNB's new offer.
On November 7, 1996, the Board of Directors met and received a
presentation from Advest which included a detailed analysis and valuation of
each business plan scenario being considered by West Coast. This presentation
also reviewed the market performance of West Coast's Common Shares, current and
future trading values, and various financial projections (prepared by both
Advest and management) associated with each alternative under various growth
assumptions. Messrs. Mortensen and Waters were then invited into the meeting
to address the Board and to propose an acquisition of West Coast by FNB at a
price of approximately $30,600,000 (or $18.75 per West Coast Common Share),
which also would permit West Coast to adopt a dividend equivalent to that of
FNB adjusted for the Exchange Ratio through the closing of a transaction, and
to describe the potential benefits that they believed the West Coast
shareholders would receive from the ownership of FNB Common Stock. The
proposed structure of the surviving banking institutions and the role of
management in the successor corporation also were described. The Board of
Directors of West Coast asked numerous questions concerning FNB's plans and
proposals, including market targets. After Messrs. Mortensen and Waters left
the meeting, Advest furnished a presentation evaluating the offer as compared
to prior offers, the business plan scenarios under consideration by West
Coast, and an analysis of FNB and its Common Stock growth potential as
evaluated against similar corporations. Advest indicated that it believed that
the consideration offered was fair from a financial point of view. After
further discussion, the Board of Directors unanimously agreed to accept the
offer subject to the negotiation of a definitive merger agreement.
On November 14, 1996, the West Coast Board met to review the materials
terms of the proposed definitive merger agreement. Advest made a presentation
to the Board reviewing its prior analysis and affirming its conclusion as to
the fairness of the consideration being offered. The directors asked numerous
questions to ascertain whether the proposed purchase price adequately reflected
the value of West Coast's assets and perceived growth potential and how the
current proposal compared with other recent transactions. The Board of
Directors also thoroughly reviewed and considered the conditions to the offer,
the form of consideration offered, and the possibility of obtaining a higher
purchase price from FNB or another third party. As a result of the foregoing,
the Board of Directors unanimously agreed to approve the Merger Agreement. On
November 15, 1996, the parties entered into the Merger Agreement.
WEST COAST REASONS FOR THE MERGER.
In evaluating and determining to approve the Merger Agreement, the
West Coast Board, with the assistance of Advest and outside legal counsel,
considered a variety of factors and based its opinion as to the fairness of the
transactions contemplated by the Merger Agreement primarily on the following
factors:
(i) The financial terms of the Merger, including the
value of the consideration offered, the premium to book value paid,
the prices paid in comparable transactions, relative earnings per
share and shareholders' equity of FNB and West Coast, and the ability
to pay a dividend equivalent to that of FNB adjusted for the Exchange
Ratio.
(ii) The future prospects of West Coast and possible
alternatives to the proposed Merger of West Coast, including the
prospects of continuing as an independent institution, the range of
values to the shareholders of such alternatives, and the timing and
likelihood of actually achieving those values. In particular, the
West Coast Board analyzed eight different scenarios for continuing as
an independent institution. These scenarios included the opening of
up to two
23
<PAGE> 31
additional branches, opening two branches and conducting a stock buy
back, and acquiring one of three local financial institutions while
opening two additional branches. Based on its analysis, the West
Coast Board concluded that the values to be received from a sale of
West Coast would be higher in the long-term and less susceptible to
the risks inherent in remaining independent.
(iii) The financial advice of Advest and the opinion of
Advest that the financial terms of the proposed Merger as provided in
the Merger Agreement were fair, from a financial point of view, to
West Coast's shareholders. The opinion of Advest is set forth in
Appendix C to this Proxy Statement-Prospectus.
(iv) Information with respect to the financial condition,
results of operations, business and prospects of West Coast and the
current industry, economic, and market conditions, as well as the
risks associated with achieving those prospects. As indicated above,
the West Coast Board determined that the current conditions for the
sale of the Company would achieve higher values than other
alternatives while eliminating the risk of the impact of a market
downturn on its alternative strategies.
(v) The non-financial terms and structure of the proposed
Merger, in particular, the fact that the Merger qualifies as a
tax-free reorganization to West Coast's shareholders.
(vi) The business and financial condition and earnings
prospects of FNB, the potential growth in FNB Common Stock, and the
competence, experience, and integrity of FNB and its management.
(vii) The social and economic effects of the Merger on West
Coast and its employees, depositors, loan and other customers,
creditors, and other constituencies of the communities in which West
Coast is located. The West Coast Board considered the terms of the
employee benefits to be received, the proposed structure and operation
of the resultant financial institutions as community banks following
the Merger, and the commitment to customer quality and service that
FNB would provide to West Coast's customers and depositors.
(viii) The likelihood of the proposed Merger being approved
by appropriate regulatory authorities.
Each of the above factors support, directly or indirectly, the
determination of the West Coast Board as to the fairness of the proposed
Merger. The West Coast Board did not quantify or attempt to assign relative
weights to the specific factors considered in reaching its determination;
however, the West Coast Board placed special emphasis on the consideration
payable in the proposed Merger and the receipt of a favorable fairness opinion
from its financial advisor. See "-- Opinion of West Coast's Financial
Advisor."
FNB REASONS FOR THE MERGER. The FNB Board recognized that the
proposed Merger with West Coast provides an opportunity to continue to employ
FNB's growing capital in southwest Florida, one of the fastest growing markets
in the United States. This is in contrast to the more mature market areas of
Pennsylvania, eastern Ohio, and southwestern New York where FNB had
traditionally operated, prior to its acquisition of Southwest. The proposed
Merger compliments FNB's acquisition of Southwest, and will provide for a
market share of approximately 20 percent in the Cape Coral, Florida market.
FNB anticipates consolidation of several overlapping branches and operating
synergies to result in combined cost savings, estimated to be approximately 17%
in 1997 and 25% thereafter, assuming that the Merger is consummated within a
reasonable period of time and economic conditions remain stable.
24
<PAGE> 32
OPINION OF WEST COAST'S FINANCIAL ADVISOR
GENERAL. West Coast retained Advest to act as its financial adviser
in connection with the Merger. Advest has rendered an opinion to the West Coast
Board that, based on the matters set forth therein, the consideration to be
received pursuant to the Merger is fair, from a financial point of view, to
West Coast's shareholders. The text of such opinion is set forth in Appendix C
to this Proxy Statement-Prospectus and should be read in its entirety by
shareholders of West Coast.
The consideration to be received by West Coast shareholders in the
Merger was determined by West Coast and FNB in their negotiations. No
limitations were imposed by the West Coast Board or West Coast management upon
Advest with respect to the investigations made or the procedures followed by
Advest in rendering its opinion.
In connection with rendering its opinion to the West Coast Board,
Advest performed a variety of financial analyses. However, the preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances, and, therefore, such an opinion is not readily
susceptible to summary description. Advest, in conducting its analysis and in
arriving at its opinion, has not conducted a physical inspection of any of the
properties or assets of West Coast, and has not made or obtained any
independent valuation or appraisals of any properties, assets or liabilities of
West Coast. Advest has assumed and relied upon the accuracy and completeness
of the financial and other information that was provided to it by West Coast or
that was publicly available. Its opinion is necessarily based on economic,
market and other conditions as in effect on, and the information made available
to it as of the date of, its analyses.
VALUATION METHODOLOGIES. By letter dated June 21, 1996, West Coast
engaged the services of Advest as its financial advisor in connection with an
evaluation of possible strategic alternatives available to West Coast,
including the possibility of remaining independent, expansion by branching,
participating in a merger transaction either as an acquiror or as a seller, and
strategies aimed primarily at increasing short-term shareholder values, such as
accelerated dividend distributions and stock repurchase programs. In the event
that West Coast should be involved in an acquisition or merger transaction, the
engagement letter requested that Advest render a fairness opinion regarding the
consideration to be received by the shareholders of West Coast, from a
financial point of view.
Advest is a nationally recognized investment banking firm and, as part
of its investment banking business, is regularly engaged in the valuation of
bank, bank holding company, and thrift institution securities in connection
with mergers, acquisitions, and other securities transactions. As the
financial advisor to West Coast, Advest was involved in every stage of the
discussions with various financial institutions that resulted in the proposals
by FNB, as well as the negotiations with FNB that resulted in the Merger
Agreement.
Advest has delivered a written opinion to the West Coast Board of
Directors dated as of November 15, 1996 and updated as of March 4, 1997 in
light of subsequent events to the effect that the Exchange Ratio is fair from a
financial point of view to the shareholders of West Coast. There were no
limitations imposed by West Coast on Advest in connection with its rendering of
the fairness opinion. Advest is a market maker in West Coast Common Shares,
but not in FNB Common Stock.
The full text of Advest's updated opinion, which sets forth
assumptions made and matters considered, is attached as Appendix C to this
Proxy Statement-Prospectus. West Coast shareholders are urged to read such
opinion in its entirety. Advest's opinion is directed only to the
consideration offered in the Merger and does not constitute a recommendation to
any West Coast shareholder as to how such shareholder should vote at the
Special Meeting. The summary information regarding Advest's updated
25
<PAGE> 33
opinion and the procedures followed in rendering such opinion set forth in this
Proxy Statement-Prospectus is qualified in its entirety by reference to the
full text of such opinion.
In arriving at its updated opinion, Advest conducted the following
tasks: (i) reviewed the Merger Agreement and the exhibits and schedules
thereto; (ii) reviewed the Annual Report on Form 10-KSB for West Coast for each
of the three fiscal years ended December 31, 1993, 1994 and 1995 and on Form
10-K for FNB for each of the three fiscal years ended December 31, 1993, 1994
and 1995, as well as unaudited financial information for the year ended
December 31, 1996 for each of West Coast and FNB and earnings press releases
for the year ended December 31, 1996; (iii) reviewed certain financial
information as filed with federal banking agencies for the three years ended
December 31, 1993, 1994 and 1995, as well as for the nine months ended
September 30, 1996 for each of West Coast and FNB, including comparative
financial and operating data on the banking industry and certain institutions
which Advest deemed to be comparable to both companies; (iv) reviewed the
historical market prices and trading activity for the common stock of each of
West Coast and FNB and compared them with certain publicly-traded companies
which Advest deemed to be comparable to each company; (v) reviewed this Proxy
Statement-Prospectus and the financial data contained herein; (vi) considered
the beneficial financial impact to the shareholders of West Coast of the
equivalent rate dividend permitted under the terms of the Merger Agreement;
(vii) reviewed certain bank mergers and acquisitions on a state, regional and
nationwide basis for institutions which Advest deemed to be comparable to West
Coast and compared the proposed consideration with the consideration paid in
such other mergers and acquisitions which Advest deemed relevant; (viii)
conducted limited discussions with members of senior management of each of West
Coast and FNB concerning the financial condition, business, and prospects of
each respective company; and (ix) reviewed such other financial studies and
analyses and performed such other investigations and took into account such
other matters as Advest deemed necessary.
In performing its review, Advest assumed and relied upon without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with
Advest. Advest did not make any independent evaluation or appraisal of
specific assets or liabilities, the collateral securing assets or liabilities
of West Coast or FNB or any of their subsidiaries, or the collectibility of any
such assets (relying, where relevant, on the analyses and estimates of West
Coast and FNB). With respect to the financial projections reviewed with
management, Advest assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
respective managements of the respective future financial performances of each
of West Coast and FNB. Advest also assumed that there has been no material
change in West Coast's and FNB's assets, financial condition, results of
operations, business, or prospects since the date of the last financial
statements made available.
In connection with rendering its updated opinion, Advest performed a
variety of financial analyses. The following is a summary of such analyses,
but does not purport to be a complete description of the Advest analyses. The
preparation of a fairness opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analyses or summary
description. Advest believes that its analyses must be considered as a whole
and that selecting portions of such analyses and the factors considered
therein, without considering all factors and analyses, could create an
incomplete view of the analyses and the processes underlying Advest's opinion.
In performing its analyses, Advest made numerous assumptions with
respect to industry performance, business and economic conditions and various
other matters, many of which cannot be predicted and are beyond the control of
West Coast, FNB, or Advest. The analyses performed by Advest and estimates
contained in its analyses are not necessarily indicative of actual future
results or actual values, which may be significantly more or less favorable
than suggested by such analyses and estimates. Additionally, analyses related
to and estimates of values of companies do not purport to be appraisals or
26
<PAGE> 34
necessarily reflect the prices at which companies or their securities may
actually be sold. No company or transaction utilized in Advest's analyses was
identical to West Coast or FNB or the Merger. Because such analyses and
estimates are inherently subject to uncertainty, Advest can give no assurances
that such estimates can be or will be realizable at such values.
STOCK TRADING HISTORY. Advest examined the history of trading prices
for both West Coast Common Shares and FNB Common Stock for the periods from
December 31, 1993 through March 4, 1997. Advest also examined the relationship
between movements of the market prices for West Coast Common Shares and FNB
Common Stock to movements in the Nasdaq National Stock Market bank stock index
during this same period. The analysis indicated that prior to the Merger
announcement, the West Coast Common Shares were trading at the lower end of the
price range from that which other Florida banking institutions of a similar
size were trading at the time.
Since its listing on the Nasdaq National Stock Market on April 21,
1993, but prior to December 31, 1994, West Coast Common Shares primarily traded
in the $9.50 to $12.75 range. During 1995, there was significant price
appreciation and the stock began trading in the $14.00 to $16.00 range. Since
April 30, 1996, the stock appreciated from $14.50 to a high of $17.75 on August
27, 1996. During the week prior to the announcement of the Merger, West Coast
Common Shares traded between $15.25 and $16.00.
CONTRIBUTION ANALYSIS. Advest prepared a contribution analysis
showing the percentage contributed by West Coast to the combined company on a
pro forma basis of assets, deposits, and fully diluted common equity at
September 30, 1996, and net income for the nine months ended September 30,
1996. Advest then compared these percentages to the West Coast shareholders'
pro forma ownership. This analysis showed that West Coast, as of September 30,
1996, would contribute 6.7% of pro forma consolidated assets, 7.2% of pro forma
consolidated deposits, 8.3% of pro forma consolidated equity, and 5.2% of pro
forma consolidated net income for the nine months ended September 30, 1996.
West Coast shareholders would hold 10.0% of the pro forma ownership of the
combined company.
COMPARABLE COMPANY ANALYSIS. In undertaking its analysis, Advest used
public and other available information to compare the financial operating
performance of West Coast with a peer group of seven commercial banks in
Florida with between $201 million to $1.7 billion in assets. The review
considered asset size, return on average assets and equity, efficiency ratio,
tangible equity to assets ratio, and the ratio of nonperforming assets to total
assets, among other information. Compared to West Coast, which had a return on
average assets of 0.70%, a return on average equity of 6.6%, and an efficiency
ratio of 71% based on twelve months ended September 30, 1996 operating results,
and tangible equity to assets ratio of 10.95% and nonperforming assets to total
assets of 3.14% at September 30, 1996, the peer group had a median return on
average assets of 0.73%, return on average equity of 6.93% and an efficiency
ratio of 66% based on twelve months ended September 30, 1996 operating results,
tangible equity to average assets ratio of 8.39% and a nonperforming assets to
total assets ratio of 1.18% at September 30, 1996. In its analysis, Advest
considered the fact that West Coast was smaller than many other publicly traded
Florida banks, its capitalization and level of nonperforming assets were
substantially higher than peer levels. Further, Advest compared the
performance of West Coast against the peer group to the consideration being
offered by FNB. After reviewing the foregoing, Advest concluded that the value
being offered by FNB would exceed the projected financial performance of West
Coast under a variety of business plans providing for West Coast expansion and
growth. As indicated above, this analysis is not necessarily indicative of
actual values or future results that could or may be achieved.
DISCOUNTED CASH FLOW ANALYSIS. Advest performed an analysis which
estimated the future cash flows of West Coast over three to five years under
various circumstances, assuming West Coast performed in accordance with
earnings forecasts of its management and certain variations thereof (including
variations with respect to the growth rate of assets, net interest spread,
noninterest income, noninterest expenses, and
27
<PAGE> 35
dividend payout ratio). To approximate the terminal value of West Coast Common
Shares at the end of the three to five year period, Advest applied price to
earnings multiples ranging from 11 to 13 times and applied multiples of book
value ranging from 130% to 150%. The terminal values were then discounted to
present value using a 15% discount rate which was chosen to reflect the
required rate of return of likely prospective buyers. This analysis indicated
a trading range of value per share of West Coast Common Shares of $11.73 to
$13.90 at the end of three years. As indicted above, this analysis is not
necessarily indicative of actual values or actual future results that could or
may be achieved.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. Advest reviewed certain
financial data related to 195 acquisitions of commercial banks nationwide, with
assets between $95 million and $250 million announced since January 1, 1995, of
which 88 were announced since January 1, 1996. Advest also reviewed 41 recent
Florida acquisitions including the following transactions which were the most
recent in the Florida region (identified by acquiror/acquiree): Huntington
Bancshares/Citi-Bancshares; Provident Bancorp/South Hillsborough Community
Bank; Colonial BancGroup/Fort Brooke Bancorp; and Colonial BancGroup/Jefferson
Bancorp.
Advest calculated average price to the target's earnings for the last
four quarters, to stated book value and tangible book value, price to assets,
and premium paid to core deposits. For nationwide transactions announced since
January 1, 1996, the calculations yielded, as of the date of announcement of
these transactions, the following average multiples: (i) median price offered
as a multiple of earnings of 16.8 times (19.6 times for Florida transactions)
compared with a multiple of 24.1 times associated with the FNB proposal; (ii)
median price offered as a percent of book value of 188% (205% for Florida
transactions) compared with 175% associated with the FNB proposal; (iii) median
price offered as a percent of tangible book value of 195% (205% for Florida
transactions), compared with 175% associated with the FNB proposal; (iv) price
to assets of 16.2% (17.2% for Florida transactions) compared to 19.9%
associated with the FNB proposal; and (v) median premium as a percent of core
deposits of 10.4% (11.7% for Florida transactions) compared to 11.4% associated
with the FNB proposal. In terms of price to earnings, price to assets and core
deposit premiums, the FNB proposal is in line with other Florida transactions
and well above the nationwide pricing. While the FNB proposal is below both
the nationwide and Florida medians for price to book and tangible book, Advest
noted and considered the fact that West Coast's equity to asset level at 10.95%
is well above the nationwide and Florida peer group median equity to asset
ratios of 8.39 and 8.21, respectively.
No company or transaction used as a comparison in the above analysis
is identical to West Coast, FNB, or the Merger. Accordingly, an analysis of
the results of the foregoing is not mathematical; rather it involved complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the
acquisition value of the companies to which they are being compared.
IMPACT ANALYSIS. Advest analyzed the changes in the amount of
fully-diluted earnings per share and book value represented by the issuance of
0.794 shares of FNB Common Stock for each share of West Coast Common Shares
assuming a $23.375 price per share of FNB. The analysis evaluated, among other
things, possible dilution or accretion in fully diluted earnings per share and
book value per share for FNB. The analysis was based upon (i) September 30,
1996 balance sheet data for West Coast; (ii) September 30, 1996 balance sheet
data for FNB; (iii) latest twelve months earnings for the period ended
September 30, 1996 for West Coast, and (iv) latest twelve months earnings for
the period ended September 30, 1996 for FNB.
At the time of this analysis, these pro forma analyses indicated that
the Merger would be approximately 3.5% dilutive to FNB's pro forma estimated
1997 fully diluted earnings per share, and approximately 2.5% dilutive to FNB's
estimated 1997 year-end book value per share.
28
<PAGE> 36
IMPACT PER SHARE ANALYSIS. Advest also analyzed the impact of the
Merger on West Coast shareholders based on the Exchange Ratio of 0.794 shares
of FNB Common Stock for one West Coast Common Share. That analysis, which was
based on certain assumptions made by Advest, found that, based on the proposed
Exchange Ratio, FNB's pro forma estimated 1997 equivalent earnings per share
would be $1.76 or 179% greater than estimated West Coast year-end 1997
earnings per share; that FNB's estimated 1997 year-end equivalent book value
per share would be $13.26 or 17.0% greater than estimated year-end 1997 West
Coast book value per share; and the FNB's equivalent quarterly dividend income
would be $0.127 per share or 112% greater than existing West Coast dividends
per share.
Advest's retainer agreement provides that West Coast will pay Advest a
transaction fee in connection with the Merger, a substantial portion of which
is contingent upon consummation of the Merger. Under the terms of the
agreement, West Coast agreed to pay Advest a fee equal to 0.85% of the
aggregate consideration paid to the West Coast shareholders and option holders
in the Merger, or approximately $275,000 (based on the number of shares of West
Coast Common Shares outstanding on the Record Date, assuming a market price of
$25.00 for FNB Common Stock and assuming no adjustment to the Merger
Consideration), net of $150,000 in fees already paid to Advest in relation to
the Merger (including $65,000 upon execution of the Merger Agreement and
$75,000 upon delivery of the initial written fairness opinion) so that the
total fees for Advest's engagement by West Coast, excluding reimbursement for
out-of-pocket expenses, shall not exceed 0.85% of the total consideration in
the Merger.
While the payment of all or a significant portion of fees related to
financial advisory services provided in connection with arm's-length merger and
other business combination transactions upon consummation of such transactions,
as is the case with the Merger, might be viewed as giving such financial
advisors a financial interest in the successful completion of such
transactions, such compensation arrangements are standard and customary for
transactions of the size and type of the Merger.
The summary set forth above does not purport to be a complete
description, but is a brief summary of the material analyses and procedures
performed by Advest in the course of arriving at its opinions.
CONDITIONS PRECEDENT TO THE MERGER
The Merger will occur only if the Merger Agreement is approved by the
requisite vote of the shareholders of West Coast. Consummation of the Merger is
subject to the satisfaction of certain other conditions, unless waived, to the
extent legally permitted. Such conditions include (i) the receipt of all
required governmental orders, permits, approvals, or qualifications (and the
expiration of all applicable waiting periods following the receipt of such
items or the delivery of appropriate notices), provided that such approvals
shall not have imposed any condition or restriction that, in the reasonable
judgment of the Board of Directors of either party, would so materially
adversely impact the economic or business benefits of the transactions
contemplated by the Merger Agreement that, had such condition or requirement
been known, such party would not, in its reasonable judgment, have entered into
the Merger Agreement; (ii) the receipt, with certain exceptions, of all
consents required for consummation of the Merger and the preventing of any
default under any contract of such party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a material adverse
effect on such party; (iii) the absence of any action by a court or
governmental or regulatory authority that restricts, prohibits or makes illegal
the transactions contemplated by the Merger Agreement; (iv) the effectiveness
of the Registration Statement under the Securities Act and the receipt of all
necessary approvals under state securities laws, the Securities Act or the
Exchange Act relating to the issuance or trading of the shares of FNB Common
Stock issuable pursuant to the Merger; (v) the receipt of a letter dated as of
the Effective Time from Ernst & Young LLP to the effect that the Merger
qualifies to be accounted for as a pooling-of- interests under GAAP; and (vi)
the receipt of the tax opinion referred to in "-- Certain Federal Income Tax
Consequences."
29
<PAGE> 37
In addition, unless waived, each party's obligation to effect the
Merger is subject to the accuracy of the other party's representations and
warranties at the Effective Time and the performance by the other party of its
obligations under the Merger Agreement and the receipt of certain closing
certificates from the other party. The obligation of FNB to effect the Merger
also is subject to the receipt, to the extent necessary to assure, in the
reasonable judgment of FNB, that the transactions contemplated by the Merger
Agreement will qualify for pooling-of- interests accounting treatment, and of
agreements from affiliates of West Coast restricting their ability to sell or
otherwise transfer their West Coast Common Shares prior to consummation of the
Merger or their shares of FNB Common Stock received upon consummation of the
Merger. The obligation of West Coast to effect the Merger is further subject
to (i) West Coast's receipt from Advest of a letter, dated not more than five
business days prior to the date of this Proxy Statement-Prospectus, stating
that in the opinion of Advest, the Exchange Ratio plus the payment of the
dividends to West Coast shareholders in accordance with Section 8.6 of the
Merger Agreement is fair, from a financial point of view, to the holders of
West Coast Common Shares; (ii) FNB having delivered the consideration to be
paid to holders of the West Coast Common Shares; (iii) the average of the high
bid and low asked prices (the "Average Market Price") of the FNB Common Stock
in the over-the-counter market for the ten consecutive trading days prior to
the fifth business day prior to the Effective Time (the "Determination Date")
being not less than $20.625; and (iv) West Coast's receipt of a written opinion
of Smith, Gambrell & Russell, LLP, dated as of the Effective Time, with respect
to such matters and in such form as shall be agreed upon between such firm and
West Coast. No assurances can be provided as to when or if all of the
conditions precedent to the Merger can or will be satisfied or waived by the
party permitted to do so.
Either West Coast or FNB may waive certain of the conditions imposed
with respect to its or their respective obligations to consummate the Merger,
except for requirements that the Merger be approved by West Coast's
shareholders and that all required regulatory approvals be received.
CONDUCT OF BUSINESS PRIOR TO THE MERGER
Under the terms of the Merger Agreement, West Coast has agreed, except
as otherwise contemplated by the Merger Agreement, to (i) operate its business
only in the usual, regular and ordinary course, (ii) use its reasonable efforts
to preserve intact its business organization and assets and maintain its rights
and franchises, (iii) use its reasonable efforts to maintain its current
employee relationships, and (iv) take no action which would materially
adversely affect the ability of any party to obtain any consent or approvals
required for the transactions contemplated by the Merger Agreement without
imposition of a condition or restriction which in the reasonable judgement of
the Board of Directors of either party would so materially adversely impact the
economic or business benefits of the transactions contemplated by the Merger
Agreement that, had such condition or requirement been known, such party would
not, in its reasonable judgement, have entered into the Merger Agreement.
In addition, West Coast has agreed that it will not, without the prior
written consent of FNB:
(a) amend the Articles of Incorporation, Bylaws, or other
governing instruments of West Coast or any West Coast subsidiary;
(b) make any new loan or other extension of credit to any
person (except those who receive a commitment for a loan or extension of credit
prior to the date of the Merger Agreement) in excess of $100,000 (except for
loans secured by an owner occupied real property first mortgage or single or
1-4 family residential loan properly margined or secured by liquid assets, each
of which is less than $500,000); provided, however, that FNB or its designate
is required to make every reasonable effort to respond to West Coast's request
for loan approval in a timely manner and, under normal circumstances, make a
decision within three business days;
30
<PAGE> 38
(c) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of West Coast or any of
its subsidiaries to West Coast or any of its subsidiaries) in excess of an
aggregate of $100,000 except in the ordinary course of the business consistent
with past practices, or impose, or suffer the imposition, with certain
exceptions, of a lien on any asset of West Coast or its subsidiaries (other
than in connection with deposits, repurchase agreements, bankers acceptances,
treasury tax and loan accounts established in the ordinary course of business,
the satisfaction of legal requirements in the exercise of trust powers, and
already existing liens);
(d) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of West Coast or any subsidiary, or declare or pay
any dividend or make any other distribution in respect of its capital stock
(except for (i) regular quarterly dividends paid in accordance with Section 8.6
of the Merger Agreement, (ii) dividends paid by any West Coast subsidiary, and
(iii) acquisition of West Coast Common Shares by any West Coast subsidiary in a
fiduciary or trust capacity in the ordinary course of business);
(e) except for the Merger Agreement, or pursuant to the
Stock Option Agreement or the exercise of the West Coast Options, issue, sell,
pledge, encumber, authorize the issuance of, enter into any contract to issue,
sell, pledge, encumber, or authorize the issuance of, or otherwise permit to
become outstanding, any additional shares of West Coast Common Shares or any
other capital stock of any West Coast subsidiary, or any stock appreciation
rights, or any option, warrant, conversion, or other right to acquire any such
stock, or any security convertible into any such stock;
(f) adjust, split, combine, or reclassify the capital
stock of West Coast or any subsidiary or issue or authorize the issuance of any
other securities in respect of or in substitution for West Coast Common Shares
or sell, lease, mortgage, or otherwise dispose of or otherwise encumber (i) any
shares of capital stock of any West Coast subsidiary (unless any such shares of
stock are sold or otherwise transferred to West Coast or another of its
subsidiaries) or (ii) any asset other than in the ordinary course of business
for reasonable and adequate consideration;
(g) except for purchases of United States Treasury
securities or United States government agency securities, which in either case
have maturities of five years or less, purchase any securities or make any
material investment, either by purchase of stock or securities, contributions
to capital, asset transfers, or purchase of any assets, in any person other
than a wholly-owned subsidiary or otherwise acquire direct or indirect control
over any person, other than in connection with (i) foreclosures in the ordinary
course of business, (ii) acquisitions of control by a depository institution
subsidiary in its fiduciary capacity, or (iii) the creation of new wholly-owned
subsidiaries organized to conduct or continue activities otherwise permitted by
the Merger Agreement;
(h) grant any increase in compensation or benefits to the
employees or officers of West Coast or its subsidiaries, except in accordance
with past practice or as required by law; pay any severance or termination pay
or any bonus other than pursuant to written policies or written contracts in
effect on the date of the Merger Agreement or as otherwise disclosed; enter
into or amend any severance agreements with officers of West Coast or its
subsidiaries; grant any material increase in fees or other compensation to
directors of West Coast or any of its subsidiaries except in accordance with
past practice; or voluntarily accelerate the vesting of any West Coast Options
or other employee benefits;
(i) except as otherwise disclosed in the Merger Agreement
and excluding employment agreements that may be entered into pursuant to the
terms of the Merger Agreement, enter into or amend any employment contract
(unless such amendment is required by law) that West Coast or one of its
31
<PAGE> 39
subsidiaries does not have the unconditional right to terminate without
liability (other than liability for services already rendered) at any time on
or after the Effective Time;
(j) except as otherwise disclosed in the Merger
Agreement, adopt any new employee benefit plan or make any material change in
or to any existing employee benefit plans other than such changes required by
law or to maintain the tax qualified status of any such plan;
(k) make any significant change in any tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in tax laws, regulatory accounting
requirements or GAAP;
(l) except as otherwise disclosed in the Merger
Agreement, commence any litigation other than in accordance with past practice
or settle any litigation for material money damages or restrictions upon the
operations of West Coast or any of its subsidiaries;
(m) except in the ordinary course of business, modify,
amend, or terminate any material contract, other than renewals without a
material adverse change of terms, or waive, release, compromise, or assign any
material rights or claims;
(n) except as otherwise disclosed in the Merger
Agreement, except for transactions in the ordinary course of business
consistent with past practice, make any investment in excess of $100,000 either
by purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other individual,
corporation or other entity other than a wholly-owned subsidiary of West Coast;
(o) sell, transfer, mortgage, encumber or otherwise
dispose of any of its properties or assets to any individual, corporation or
other entity other than a direct or indirect wholly-owned subsidiary, or
cancel, release or assign any indebtedness to any such person or any claims
held by any such person, except in the ordinary course of business consistent
with past practice or pursuant to contracts or agreements in force at the date
of the Merger Agreement; or
(p) agree to, or make any commitment to, take any of the
actions prohibited by the above paragraphs.
The Merger Agreement also provides that, except for the transactions
contemplated thereby, neither West Coast nor its affiliates or representatives
shall, directly or indirectly, solicit any tender offer or exchange offer or
any proposal for a merger, acquisition of all of the stock or assets of, or
other business combination involving West Coast or any of its subsidiaries or
any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets of, West Coast or any of its
subsidiaries ("Acquisition Proposal"). Additionally, except to the extent
necessary to comply with the fiduciary duties of the West Coast Board, as
advised by counsel, neither West Coast nor its affiliates or representatives
will provide any non-public information that it is not legally obligated to
furnish or negotiate with respect to any Acquisition Proposal, although West
Coast may communicate information about such Acquisition Proposal to its
shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations, as advised by counsel.
In the Merger Agreement, FNB has agreed (i) to conduct its business
and the business of its subsidiaries in a manner designed, in its reasonable
judgment, to enhance the long-term value of the FNB Common Stock and its
business prospects and (ii) to take no action which would materially adversely
affect the ability of any party to obtain any consent or approvals required by
the Merger Agreement or to perform its covenants and agreements under the
Merger Agreement; provided that FNB or any of its subsidiaries
32
<PAGE> 40
may discontinue or dispose of any of its assets or business if FNB determines
that such action is desirable in the conduct of its business. FNB further
agreed that it will not, without the prior written consent of the Chief
Executive Officer of West Coast, which consent shall not be unreasonably
withheld, amend the FNB Charter or the FNB Bylaws in any manner adverse to the
holders of West Coast Common Shares.
MODIFICATION, WAIVER AND TERMINATION
The Merger Agreement provides that it may be amended by a subsequent
writing signed by each party upon the approval of each of their respective
Board of Directors. However, the provision relating to the consideration to be
received by the holders of West Coast Common Shares may not be amended after
the Special Meeting in a manner to reduce or modify in any material respect the
consideration to be received by the holders of the West Coast Common Shares
without the further approval of the holders of the issued and outstanding
shares of West Coast Common Shares entitled to vote thereon.
The Merger Agreement provides that each party may (i) waive any
default in the performance of any term of the Merger Agreement by the other
party, (ii) waive or extend the time for compliance of fulfillment by the other
party of any of its obligations under the Merger Agreement and (iii) waive any
of the conditions precedent to its obligations to consummate the Merger to the
extent legally permitted. Neither of the parties intends, however, to waive any
conditions of the Merger if such waiver would, in the judgment of the waiving
party, have a material adverse effect on its shareholders.
The Merger Agreement may be terminated by mutual agreement of the FNB
Board and the West Coast Board. The Merger Agreement may also be terminated by
either the FNB Board or the West Coast Board (i) in the event of inaccuracies
of any representation or warranty of the other party contained in the Merger
Agreement which cannot be or has not been cured within 30 days of written
notice of such inaccuracies and which inaccuracy would provide the terminating
party the ability to refuse to consummate the Merger under the applicable
standard set forth in the Merger Agreement; provided that such party is not
then in breach of any representation or warranty contained in the Merger
Agreement or in material breach of any covenant or other agreement contained in
the Merger Agreement; (ii) in the event of a material breach of any covenant or
agreement in the Merger Agreement by the other party that cannot or has not
been cured within 30 days of written notice of such breach; (iii) if the
required approval of the West Coast shareholders or any applicable regulatory
authority is not obtained; (iv) if the Merger is not consummated by September
30, 1997; provided that the failure to consummate the Merger by such date is
not caused by any breach of the Merger Agreement by the terminating party; or
(v) in the event that any of the conditions precedent to the obligations of
such party to consummate the Merger cannot be satisfied or fulfilled by
September 30, 1997; provided that the terminating party is not then in breach
of any representation or warranty contained in the Merger Agreement or in
material breach of any covenant or other agreement contained in the Merger
Agreement;
In addition, the Merger Agreement may be terminated by West Coast if
(i) upon written notice provided to FNB at least 24 hours prior to closing, the
Average Market Price of a share of FNB Common Stock is less than $20.625,
provided that the determination to terminate the Merger Agreement is made by a
majority vote of the members of the entire West Coast Board; (ii) at any time
prior to the Effective Time, the fairness opinion of Advest is withdrawn; or
(iii) prior to the Effective Time, a corporation, partnership, person or other
entity or group shall have made a bona fide Acquisition Proposal that the West
Coast Board determines in its good faith judgment and in the exercise of its
fiduciary duties, with respect to legal matters on the written opinion of legal
counsel and as to financial matters on the written opinion of an investment
banking firm of national reputation, is more favorable to the West Coast
shareholders and that the failure to terminate the Merger Agreement and accept
such alternative Acquisition Proposal would be inconsistent with the proper
exercise of such fiduciary duties (each a "Termination Event"). There can be
no assurance
33
<PAGE> 41
that the West Coast Board would exercise its right to terminate the Merger
Agreement if a Termination Event exists.
It is not possible to know whether a Termination Event will occur
until after the Determination Date or the Effective Time. The West Coast Board
has made no decision as to whether it would exercise its termination right in
such situation. The West Coast Board would, consistent with its fiduciary
duties, take into account all relevant facts and circumstances that exist at
such time, and would consult with its financial advisors and legal counsel.
Approval of the Merger Agreement by the shareholders of West Coast at
the Special Meeting will confer on the West Coast Board the power, consistent
with its fiduciary duties, to elect to consummate the Merger in the event of a
Termination Event without any further action by, or resolicitation of, the
shareholders of West Coast.
EXPENSES
In the Merger Agreement, each of the parties has agreed to pay its own
expenses and one-half of the printing costs of this Proxy Statement-Prospectus
and related materials; provided, however, that in the event of any termination
of the Merger Agreement following the occurrence of an Initial Triggering Event
(as defined in the Stock Option Agreement), FNB shall be entitled to a cash
payment from West Coast in an amount equal to $500,000 upon the occurrence of
any Subsequent Triggering Event (as defined in the Stock Option Agreement)
within 12 months following the date of such termination (or such longer period
as shall exist under the Stock Option Agreement until the occurrence of an
Exercise Termination Date (as defined in the Stock Option Agreement)). In the
event the Merger Agreement is terminated as a result of FNB's failure to
satisfy any of its representations, warranties or covenants set forth therein,
FNB shall reimburse West Coast for its reasonable out-of-pocket expenses
relating to the Merger in an amount not to exceed $250,000.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Smith, Gambrell & Russell, LLP has delivered to FNB and West Coast its
opinion that, based upon certain customary assumptions and representations,
under federal law as currently in effect, (a) the proposed Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code;
(b) no gain or loss will be recognized by the shareholders of West Coast on the
exchange of their West Coast Common Shares for FNB Common Stock pursuant to the
terms of the Merger to the extent of such exchange; (c) the federal income tax
basis of the FNB Common Stock for which West Coast Common Shares are exchanged
pursuant to the Merger will be the same as the basis of such West Coast Common
Shares exchanged therefor (including basis allocable to any fractional interest
in any share of FNB Common Stock); (d) the holding period of FNB Common Stock
for which West Coast Common Shares are exchanged will include the period that
such shares of West Coast Common Shares were held by the holder, provided that
such shares were capital assets of the holder; and (e) the receipt of cash in
lieu of fractional shares will be treated as if the fractional shares were
distributed as part of the exchange and then redeemed by FNB, and gain or loss
will be recognized in an amount equal to the difference between the cash
received and the basis of the fractional share of FNB Common Stock surrendered,
which gain or loss will be capital gain or loss if the West Coast Common Shares
was a capital asset in the hands of the shareholder.
THE FOREGOING IS A SUMMARY OF THE ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE PROPOSED MERGER UNDER THE CODE AND IS FOR GENERAL
INFORMATION ONLY. IT DOES NOT INCLUDE CONSEQUENCES OF STATE, LOCAL OR OTHER TAX
LAWS OR SPECIAL CONSEQUENCES TO PARTICULAR SHAREHOLDERS HAVING SPECIAL
SITUATIONS. SHAREHOLDERS OF WEST COAST SHOULD CONSULT THEIR OWN TAX ADVISORS
REGARDING SPECIFIC TAX CONSEQUENCES OF THE
34
<PAGE> 42
MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE AND
LOCAL TAX LAWS AND TAX CONSEQUENCES OF SUBSEQUENT SALES OF FNB COMMON STOCK.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of West Coast's management and of the West
Coast Board have interests in the Merger that are in addition to any interests
they may have as shareholders of West Coast generally. These interests include,
among others, provisions in the Merger Agreement relating to the management of
certain FNB subsidiaries after the Effective Time, election or appointment of
all members of the West Coast Board to the board of directors of one of
Southwest's subsidiary banks, certain proposed employment agreements and other
employee benefits and indemnification of West Coast directors and officers, as
hereinafter described. In addition, as hereinafter described, FNB, Southwest
and certain of their directors own West Coast Common Shares.
MANAGEMENT POST-MERGER; WEST COAST EMPLOYMENT AGREEMENTS. FNB has
agreed to cause all of the remaining West Coast directors to be elected to the
Board of Directors of either Cape Coral National Bank ("CCNB"), which is one of
Southwest's two banking subsidiaries, or First National Bank of Southwest
Florida ("First Southwest"), West Coast's banking subsidiary, for a one-year
term following consummation of the Merger.
After the Effective Time of the Merger, First Southwest will be merged
with and into CCNB under the name and charter of CCNB and the four branch
offices of First Southwest operating in Cape Coral, Florida will become
branches of CCNB. First Southwest's branch office operating in Fort Myers,
Florida will be reorganized, subject to regulatory approval, as a new banking
subsidiary of Southwest, operating under the name "First National Bank of
Southwest Florida." At such time, Thomas Cronin, the current Chairman of West
Coast, will be appointed to the same position at First Southwest. Nicholas J.
Panicaro and Andre Delmotte, each currently an Executive Vice President of
West Coast, will be appointed to the same positions of CCNB. FNB has offered
to provide Messrs. Panicaro and Delmotte new FNB employment contracts with such
terms and conditions as shall be negotiated between the parties, in exchange
for the cancellation by such officers of their existing West Coast employment
contracts and corresponding severance pay agreements. In the event any of such
officers elects not to enter into such proposed new FNB employment agreements,
FNB has agreed to honor the severance pay agreement of each such officer. The
same offer was provided to Michael P. Geml, the current President and Chief
Executive Officer of West Coast, but Mr. Geml has declined the new FNB
contract. As a result, Mr. Geml will resign upon consummation of the Merger
and will receive severance in accordance with his severance pay agreement. He
will, however, remain as a director of First Southwest.
FNB has proposed or will propose new employment contracts only to
Messrs. Geml (who has declined), Panicaro and Delmotte. The proposed salaries
under any such new employment contracts have not been determined, although they
are expected to be approximately equal to the current salaries of Messrs.
Panicaro and Delmotte ($89,500 and $80,000, respectively). These contracts
are expected to offer a term of employment of three years for Mr. Panicaro and
one year for Mr. Delmotte. Each contract is expected to contain a two-year
covenant-not-to-compete and provide for the provision of vacation and group
life and health insurance to the same extent as is provided to similarly
positioned employees of Southwest.
At present, only Mr. Geml has an employment agreement with West Coast.
That employment agreement, which originally was set to expire on December 31,
1996, has been extended through December 31, 1999 and provides for an annual
base salary of not less than $106,000. The Agreement also provides for the
payment of performance bonuses if its subsidiary banking institution achieves
certain targets with respect to projected yearly return on assets.
35
<PAGE> 43
If these individuals decline any proposed FNB employment agreement,
FNB will honor the existing severance pay agreements entered into between such
officers and First Southwest. Under these agreements, if the executive is
terminated under specified conditions during the three year period following a
"Change of Control," such employee will be entitled to receive payment equal to
two times (one time in the case of Mr. Delmotte) his annual regular
compensation (excluding bonuses) as in effect immediately prior to the Change
of Control. Such severance payments shall be paid in equal monthly
installments. The Merger will constitute a Change of Control and if each
officer elects to receive payments under their severance agreements rather than
enter into employment agreements with FNB, they would be entitled to the
following severance pay: Mr. Geml - $249,000, Mr. Panicaro - $179,000, and Mr.
Delmotte - $80,000.
INDEMNIFICATION. FNB has agreed that it will, following the Effective
Time, indemnify, defend, and hold harmless the current and former directors,
officers, employees, and agents of West Coast and its subsidiary against all
losses, expenses, claims, damages, or liabilities arising out of actions or
omissions occurring at or prior to the Effective Time to the fullest extent
then permitted under Florida law and by the West Coast Charter and West Coast
Bylaws as in effect on the date of the Merger Agreement, including provisions
relating to advances of expenses incurred in defense of any litigation.
WEST COAST OPTIONS. West Coast has granted incentive and
non-qualified stock options to certain West Coast officers under the West Coast
Employee Incentive Stock Option Plan (the "ISO Plan") and the Nonstatutory
Stock Option Plan ("Non-Qualified Plan"). Options granted under the ISO Plan
vest over seven years and options granted under the Non-Qualified Plan vest
over five years.
The following table sets forth, as of February 28, 1997, with respect
to West Coast executive officers (i) the number of shares covered by options
held by such persons, (ii) the number of shares covered by
currently-exercisable options held by such persons, (iii) the weighted average
exercise price of all such options held by such persons, and (iv) the aggregate
value (i.e., stock price less option exercise price, based on a stock price of
$19.375 per share of West Coast Common Shares) of all such options.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTIONS CURRENTLY EXERCISE PRICE AGGREGATE VALUE
NAME OPTIONS HELD EXERCISABLE PER OPTION OF OPTIONS
----------------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
Michael P. Geml 12,344 11,722 $ 9.86 $117,479
Nicholas J. Panicaro 3,392 2,916 10.74 29,290
Andre D. Delmotte 1,415 500 13.49 8,412
Executive Officer Group
(3 persons in all)..... 17,151 15,138 $10.33 $155,171
</TABLE>
In connection with West Coast's initial public offering in February
1989, each West Coast Common Share purchased by a director or organizer of West
Coast was accompanied by one nontransferable warrant to purchase one additional
West Coast Common Share at a price of $10.00 per share. A total of 127,000
warrants were issued with an expiration date of February 3, 1999. As a result
of the payment of a 10% stock dividend in 1992 and an amendment thereto, the
original warrants were cancelled and new warrants issued for the purchase of an
aggregate of 139,700 West Coast Common Shares at $9.09 per share, exercisable
through December 17, 2003.
The following table sets forth, as of February 28, 1997, (i) the
number of shares covered by warrants held by such persons, (ii) the exercise
price of all such warrants held by such persons, and (iii) the aggregate value
(i.e., stock price less warrant exercise price, based on a stock price of
$19.375 per share of West Coast Common Shares) of all such warrants.
36
<PAGE> 44
<TABLE>
<CAPTION>
WARRANTS EXERCISE PRICE AGGREGATE VALUE
HELD PER WARRANT OF WARRANTS
---- ----------- -----------
<S> <C> <C> <C>
AFFILIATES OF WEST COAST:
Thomas R. Cronin . . . . . . . . . . . . . . . . . . 44,110 $9.09 $ 453,671
Robert E. McCormack . . . . . . . . . . . . . . . . . 22,110 9.09 227,401
Stephen R. Zellner . . . . . . . . . . . . . . . . . 11,110 9.09 114,266
Michael P. Geml . . . . . . . . . . . . . . . . . . . 6,820 9.09 70,144
Robert C. Adamski . . . . . . . . . . . . . . . . . . 11,110 9.09 227,401
Joseph G. Howard . . . . . . . . . . . . . . . . . . 11,110 9.09 227,401
James B. McMenamy . . . . . . . . . . . . . . . . . . 11,110 9.09 227,401
H. Frank Simonds . . . . . . . . . . . . . . . . . . 11,110 9.09 227,401
Jeffrey C. Ledward . . . . . . . . . . . . . . . . . 11,110 9.09 227,401
AS A GROUP (9 persons in all) . . . . . . . . . . . . 139,700 $9.09 $1,436,815
</TABLE>
The Merger Agreement provides for FNB to assume all outstanding West
Coast Options whether or not vested or exercisable at the Effective Time in
accordance with the terms of the West Coast Stock Plans under which each of
them was issued or granted; provided that such West Coast Options shall
thereafter be exercisable, in accordance with their original terms, for an
adjusted number of shares of FNB Common Stock and at an adjusted per share
exercise price computed in accordance with the Exchange Ratio. See "--
Conversion of West Coast Options."
OTHER MATTERS RELATING TO WEST COAST EMPLOYEE BENEFIT PLANS. The
Merger Agreement also provides that, following the Effective Time, FNB will
provide generally to officers and employees of West Coast and its subsidiaries
employee benefits under employee benefit plans (other than stock option or
other plans involving the potential issuance of FNB Common Stock), on terms and
conditions which when taken as a whole are no less favorable than those
currently provided by West Coast or those currently provided by FNB or its
subsidiaries to their similarly situated officers and employees; provided that,
for a period of 12 months after the Effective Time, FNB will provide generally
to officers and employees of West Coast or its subsidiaries severance benefits
in accordance with the policies of West Coast which includes a payment to
terminated officers and employees of West Coast equal to one week's pay for
each year of service.
For purposes of participation and vesting (but not benefit accrual
under any employee benefit plans of FNB and its subsidiaries other than under
the West Coast Stock Plans) under such employee benefit plans, the service of
the employees of West Coast or any of its subsidiaries prior to the Effective
Time will be treated as service with FNB or any of its subsidiaries
participating in such employee benefit plans.
OWNERSHIP OF WEST COAST COMMON SHARES BY FNB AND SOUTHWEST. As of
November 15, 1996, FNB owned 35,000 West Coast Common Shares and Southwest
owned 10,700 West Coast Common Shares representing in aggregate approximately
3.0% of the outstanding West Coast Common Shares as of such date. Pursuant to
the Stock Option Agreement, under certain circumstances including a change of
control of West Coast not involving FNB, FNB has the right to acquire up to
340,010 additional West Coast Common Shares, subject to adjustment,
representing, in the aggregate, approximately 19.9% of the outstanding West
Coast Common Shares as of November 15, 1996, after giving effect to the
exercise of the Stock Option.
37
<PAGE> 45
STOCK OPTION AGREEMENT
As an inducement and a condition to FNB to enter into the Merger
Agreement, FNB and West Coast entered into the Stock Option Agreement whereby
West Coast granted FNB the irrevocable Stock Option entitling FNB to purchase,
subject to certain adjustments, up to 340,010 West Coast Common Shares, at an
exercise price, subject to certain adjustments, of $15.00 per share, payable in
cash under the circumstances described below.
The Stock Option Shares, if issued pursuant to the Stock Option
Agreement, would represent (when combined with the West Coast Common Shares
already owned by FNB) approximately 19.9% of the West Coast Common Shares
issued and outstanding.
The number of West Coast Common Shares subject to the Stock Option
will be increased to the extent that West Coast issues additional West Coast
Common Shares (otherwise than pursuant to an exercise of the Stock Option) such
that the number of West Coast Common Shares subject to the Stock Option (when
combined with the West Coast Common Shares already owned by FNB) continues to
equal 19.9% of the West Coast Common Shares then issued and outstanding, after
giving effect to the issuance of West Coast Common Shares pursuant to an
exercise of the Stock Option. In the event of any change in the West Coast
Common Shares by reasons of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares, or the like, the type and number of West Coast Common Shares subject to
the Stock Option, and the applicable exercise price per Stock Option Share,
will be appropriately adjusted and proper provision will be made so that, in
the event that any additional West Coast Common Shares are to be issued or
otherwise become outstanding as a result of any such change (other than
pursuant to an exercise of the Stock Option), the number of West Coast Common
Shares that remain subject to the Stock Option will be increased so that, after
such issuance and together with West Coast Common Shares previously issued
pursuant to the exercise of the Stock Option and the number of shares otherwise
beneficially owned by FNB (as adjusted on account of any of the foregoing
changes in the West Coast Common Shares), equals 19.9% of the number of West
Coast Shares then issued and outstanding.
FNB or any other holder or holders of the Stock Option (collectively,
the "Holder") may exercise the Stock Option, in whole or in part, by sending
written notice after the occurrence of an "Initial Triggering Event" and a
"Subsequent Triggering Event" (as such terms are defined herein) prior to
termination of the Stock Option. The term "Initial Triggering Event" is defined
as the occurrence of any of the following events:
(i) West Coast or any of its subsidiaries, without having
received FNB's prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined) with any person
other than FNB or any of its subsidiaries or the West Coast Board shall have
recommended that the stockholders of West Coast approve or accept any such
Acquisition Transaction. For purposes of the FNB Option Agreement, "Acquisition
Transaction" means (x) a merger or consolidation, or any similar transaction
involving West Coast or any significant subsidiary of West Coast, (y) a
purchase, lease, or other acquisition of all or substantially all of the assets
or deposits of West Coast or any significant subsidiary of West Coast, or (z) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 15% or more of the voting
power of West Coast;
(ii) Any person (other than the officers and directors of
West Coast) other than FNB, one of FNB's subsidiaries, or one of West Coast's
subsidiaries acting in a fiduciary capacity shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 15% or more of the
outstanding West Coast Common Shares (the term "beneficial ownership" for
purposes of the Stock Option Agreement having the meaning assigned thereto in
Section 13(d) of the Exchange Act, and the rules and
38
<PAGE> 46
regulations thereunder pursuant to which a person is the beneficial owner of
all shares that such person has direct or indirect voting power or investment
power over whether through any contract, arrangement, understanding,
relationship or otherwise);
(iii) The shareholders of West Coast shall not have
approved the transactions contemplated by the Merger Agreement at the Special
Meeting, or such Special Meeting shall not have been held or shall have been
cancelled prior to termination of the Merger Agreement, in either case, after
the West Coast Board shall have withdrawn or modified, or publicly announced
its intention to withdraw or modify, its recommendation that the stockholders
of West Coast approve the transactions contemplated by the Merger Agreement, or
after West Coast or any of its subsidiaries, without having received FNB's
prior written consent, shall have authorized, recommended, proposed, or
publicly announced its intention to authorize, recommend, or propose, to engage
in an Acquisition Transaction with any person other than FNB or one of its
subsidiaries;
(iv) Any person other than FNB or one of its subsidiaries
shall have made a bona fide proposal to West Coast or its stockholders to
engage in an Acquisition Transaction, which proposal has an economic value
equivalent to or in excess of that of FNB;
(v) West Coast shall have willfully and materially
breached any material covenant or obligation contained in the Merger Agreement
in anticipation of engaging in an Acquisition Transaction and such breach would
entitle FNB to terminate the Merger Agreement; or
(vi) Any person other than FNB or one of its subsidiaries,
other than in connection with a transaction to which FNB has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
The term "Subsequent Triggering Event" is defined as either (A) the
acquisition by any person of beneficial ownership of 25% or more of the then
outstanding West Coast Common Shares, or (B) the occurrence of the Initial
Triggering Event described in clause (i) above, except that the percentage
referred to in subclause (z) thereof shall be 25%.
After a Subsequent Triggering Event prior to the termination of the
Stock Option, FNB (on behalf of itself or any subsequent Holder) may demand
that the Stock Option and the related Option Shares be registered under the
Securities Act. Upon such demand, West Coast must effect such registration
promptly, subject to certain exceptions. FNB is entitled to two such
registrations. In addition, if at any time after the occurrence of a
Subsequent Triggering Event that occurs prior to an Exercise Termination Event,
West Coast proposes to register any of its equity securities under the
Securities Act, whether for sale for its own account or for the account of any
other person, on a form and in a manner which would permit registration of the
Option Shares for sale to the public under the Securities Act, West Coast must
give written notice to FNB of its intention to do so, describing such
securities and specifying the form and manner and the other relevant facts
involved in such proposed registration, and upon the written request of FNB,
West Coast is required, subject to certain exceptions, to use its best efforts
to effect the registration under the Securities Act of all Common Stock which
West Coast has been requested to register by FNB. West Coast is obligated to
effect only one such "piggy-back" registration.
The Stock Option terminates at or upon the following, each of which
constitutes an "Exercise Termination Event": (i) the Effective Time of the
Merger, (ii) termination of the Merger Agreement in accordance with the terms
thereof prior to the occurrence of an Initial Triggering Event (other than
termination due to (A) the failure of FNB to satisfy a condition to closing,
(B) failure to obtain the requisite approval of West Coast shareholders
following a favorable recommendation by the West Coast Board, or
39
<PAGE> 47
(C) the withdrawal by Advest of its fairness opinion), (iii) 12 months (subject
to extension to obtain regulatory approvals (for so long as the Holder is using
commercially reasonable efforts to obtain such regulatory approvals), to allow
statutory waiting periods to expire, and to avoid liability under Section 16(b)
of the Exchange Act which provides for the disgorgement to the issuer of any
profit realized by an insider as a result of a purchase and sale or sale and
purchase of certain equity securities occurring within a six-month period)
after termination of the Merger Agreement following the occurrence of an
Initial Triggering Event or (iv) such other date as to which the Holder and
West Coast agree.
Under applicable law, FNB may not acquire 5% or more of the issued and
outstanding shares of West Coast Common Shares without the prior approval of
the Federal Reserve Board. In considering whether to approve the acquisition by
FNB of shares pursuant to the exercise of the Stock Option, the Federal Reserve
Board will generally apply the same standards as in considering whether to
approve the Merger. See "-- Bank Regulatory Matters -- Federal Reserve Board."
Certain other regulatory approvals may also be required before such an
acquisition could be completed. FNB anticipates submitting an application
seeking Federal Reserve Board approval of its acquisition of up to 19.9% of the
outstanding West Coast Common Shares pursuant to a potential exercise of the
Stock Option.
Upon the occurrence of a Repurchase Event (as defined herein) that
occurs prior to an Exercise Termination Event (i) at the request of the Holder
delivered prior to the Exercise Termination Event (subject to extension to
obtain regulatory approvals (for so long as the Holder is using commercially
reasonable efforts to obtain such regulatory approvals), to allow statutory
waiting periods to expire, and to avoid liability under Section 16(b) of the
Exchange Act), West Coast shall repurchase the Stock Option from the Holder at
a price ("Option Repurchase Price") equal to the amount by which (x) the
Market/Offer Price (as defined herein) exceeds (y) the Stock Option exercise
price, multiplied by the number of shares for which the Stock Option may then
be exercised; and (ii) at the request of the owner of Option Shares from time
to time (the "Owner") delivered prior to the occurrence of an Exercise
Termination Event, West Coast shall repurchase such number of Stock Option
Shares from the Owner as the Owner designates at a price per share (the "Option
Share Repurchase Price") equal to the Market/Offer Price multiplied by the
number of Option Shares so designated. "Market/Offer Price" means the highest
of (A) the price per share of West Coast Common Shares at which a tender offer
or exchange offer therefor has been made, (B) the price per share of West Coast
Common Shares to be paid by any third party pursuant to an agreement with West
Coast, (C) the highest closing price for shares of West Coast Common Shares
within the three-month period immediately preceding the date the Holder gives
notice of the required repurchase of the Stock Option or the Owner gives notice
of the required repurchase of Stock Option Shares, as the case may be, or (D)
in the event of the sale of all or a substantial portion of West Coast's
assets, the sum of the net price paid in such sale for such assets or deposits
and the current market value of the remaining net assets of West Coast divided
by the number of West Coast Common Shares then outstanding. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be. "Repurchase Event" means (i) the
consummation of certain mergers, consolidations or similar transactions
involving West Coast or any purchase, transfer or other acquisition of all or a
substantial portion of the assets or deposits of West Coast or a significant
subsidiary of West Coast by any person other than FNB or one of its
subsidiaries, (such transactions being more fully described in clauses (i),
(ii) and (iii) of the paragraph immediately following this paragraph) or (ii)
the acquisition by any person of beneficial ownership of 50% or more of the
then outstanding West Coast Common Shares.
In the event that prior to an Exercise Termination Event, West Coast
enters into an agreement (i) to consolidate with or merge into any person other
than FNB or one of its subsidiaries and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person other than FNB or one of its subsidiaries to merge into West Coast with
West Coast as the continuing or surviving corporation, but in connection
therewith the then outstanding West Coast Common Shares are changed into
40
<PAGE> 48
or exchanged for securities of any other person or cash or any other property,
or the then outstanding West Coast Common Shares after such merger represent
less than 50% of the outstanding shares and share equivalents of the merged
company, or (iii) to sell or transfer all or substantially all of its or a
significant subsidiary's assets or deposits to any person other than FNB or one
of its subsidiaries, then such agreement shall provide that the Stock Option be
converted into or exchanged for an option (a "Substitute Option") to purchase
shares of common stock of, at the Holder's option, either (x) the continuing or
surviving corporation of a merger or consolidation or the transferee of all or
substantially all of West Coast's assets or deposits, or (y) the person
controlling such continuing or surviving corporation or transferee. The number
of shares subject to the Substitute Option and the exercise price per share
will be determined in accordance with a formula in the Stock Option Agreement.
To the extent possible, the Substitute Option will contain terms and conditions
that are the same as those in the Stock Option.
The issuer of the Substitute Option will be required to repurchase the
Substitute Option at the request of the holder thereof and to repurchase any
shares of such issuer's common stock ("Substitute Common Stock") issued upon
exercise of a Substitute Option ("Substitute Shares") at the request of the
owner thereof. The repurchase price for a Substitute Option will equal the
amount by which (A) the Highest Closing Price (as defined herein) exceeds (B)
the exercise price of the Substitute Option, multiplied by the number of shares
of Substitute Common Stock for which the Substitute Option may then be
exercised. The repurchase price for the Substitute Shares shall equal the
Highest Closing Price multiplied by the number of Substitute Shares to be
repurchased. As used herein, "Highest Closing Price" means the highest closing
price for shares of Substitute Common Stock within the three-month period
immediately preceding the date the holder gives notice of the required
repurchase of the Substitute Option or the owner gives notice of the required
repurchase of Substitute Shares, as the case may be.
Neither West Coast nor FNB may assign any of its respective rights and
obligations under the Stock Option Agreement or the Stock Option to any other
person without the other party's express written consent, except that if a
Subsequent Triggering Event occurs prior to termination of the Stock Option,
FNB, subject to the express provisions of the Stock Option Agreement, may
assign in whole or in part its rights and obligations thereunder; provided,
however, that until 30 days after the Federal Reserve Board approves an
application by FNB to acquire the Stock Option Shares, FNB may not assign its
rights under the Stock Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of West Coast, (iii) an
assignment to a single party (such as a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on FNB's behalf,
or (iv) any other manner approved by the Federal Reserve Board.
No shares shall be issued pursuant to the exercise of the Stock Option
if (i) at the time of the Initial Triggering Event and at the time of exercise,
FNB is in material breach under the Merger Agreement, or (ii) a preliminary or
permanent injunction has been issued by a court of proper jurisdiction
enjoining such exercise.
The rights and obligations of West Coast and FNB under the Stock
Option Agreement are subject to receipt of any required regulatory approvals,
and both parties have agreed to use their best efforts in connection therewith.
These include, but are not limited to, applying to the Federal Reserve Board
for approval to acquire the Stock Option Shares.
The purpose of the Stock Option Agreement and the Stock Option is to
increase the likelihood that the Merger will occur by making it more difficult
for another party to acquire West Coast. The ability of FNB to exercise the
Stock Option and to cause, subject to certain adjustments, up to an additional
340,010 West Coast Common Shares to be issued may be considered a deterrent to
other potential acquisitions of control of West Coast, as it is likely to
increase the cost of an acquisition of all the West Coast Common Shares which
would then be outstanding.
41
<PAGE> 49
DISSENTERS' RIGHTS OF WEST COAST SHAREHOLDERS
Under the provisions of Section 607.1302 of the FBCA, holders of West
Coast Common Shares are not entitled to dissenters' rights with respect to
payment for the value of their West Coast Common Shares.
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a
pooling-of-interests under GAAP. West Coast and FNB have agreed to use their
reasonable efforts to cause the Merger, and to take no action that would cause
the Merger not, to qualify for pooling-of-interests treatment.
Under the pooling-of-interests method of accounting, the historical
basis of the assets and liabilities of FNB (including the historical assets and
liabilities of Southwest) and West Coast will be combined at the Effective Time
of the Merger and carried forward at their previously recorded amounts, and the
shareholders' equity accounts of West Coast and FNB will be combined on FNB's
consolidated balance sheet and no goodwill or other intangible assets will be
created.
BANK REGULATORY MATTERS
FEDERAL RESERVE BOARD. The Merger is subject to prior approval by the
Federal Reserve Board under the BHCA. The BHCA requires the Federal Reserve
Board, when approving a transaction such as the Merger, to take into
consideration the financial and managerial resources (including the competence,
experience and integrity of the officers, directors and principal shareholders)
and future prospects of the existing and proposed institutions and the
convenience and needs of the communities to be served. In considering financial
resources and future prospects, the Federal Reserve Board will, among other
things, evaluate the adequacy of the capital levels of the parties to a
proposed transaction.
The BHCA prohibits the Federal Reserve Board from approving a merger
if it would result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or if its effect in any section of the country
would be substantially to lessen competition or to tend to create a monopoly,
or if it would in any other manner result in a restraint of trade, unless the
Federal Reserve Board finds that the anti-competitive effects of a merger are
clearly outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. In addition, under the Community Reinvestment Act of 1977, as amended
(the "CRA"), the Federal Reserve Board must take into account the record of
performance of the existing institutions in meeting the credit needs of the
entire community, including low- and moderate-income neighborhoods, served by
such institutions. Three of FNB's five banking subsidiaries have an outstanding
CRA rating with the appropriate federal regulator. The other two of FNB's
banking subsidiaries have a satisfactory rating with the appropriate federal
regulator. West Coast's banking subsidiary has a satisfactory CRA rating with
the appropriate federal regulator.
Applicable federal law provides for the publication of notice and
public comment on applications filed with the Federal Reserve Board and
authorizes such agency to permit interested parties to intervene in the
proceedings. If an interested party is permitted to intervene, such
intervention could delay the regulatory approvals required for consummation of
the Merger.
The Merger generally may not be consummated until between 15 and 30
days following the date of applicable federal regulatory approval, during which
time the United States Department of Justice may challenge the Merger on
antitrust grounds. The commencement of an antitrust action would stay the
effectiveness of the regulatory agency's approval unless a court specifically
ordered otherwise. FNB and West Coast believe that the Merger does not raise
substantial antitrust or other significant regulatory
42
<PAGE> 50
concerns and that any divestitures that may be required in order to consummate
the Merger will not be material to the financial condition or results of
operations of FNB or West Coast prior to the Effective Time, or FNB after the
Effective Time.
FNB's right to exercise the Stock Option under the Stock Option
Agreement is also subject to the prior approval of the Federal Reserve Board,
because the exercise of the Stock Option under the Stock Option Agreement would
result in FNB owning more than 5% of the outstanding West Coast Common Shares.
In considering whether to approve FNB's right to exercise the Stock Option, the
Federal Reserve Board would generally apply the same statutory criteria it
would apply to its consideration of approval of the Merger.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. FNB and West
Coast will file all applications and notices and have taken (or will take)
other appropriate action with respect to any requisite approvals or other
action of any governmental authority. FNB anticipates submitting an application
seeking Federal Reserve Board approval of the Merger and of its acquisition of
up to 19.9% of the outstanding West Coast Common Shares pursuant to a potential
exercise of the Stock Option.
The Merger Agreement provides that the obligation of each of FNB and
West Coast to consummate the Merger is conditioned upon the receipt of all
requisite regulatory approvals, including the approvals of the Federal Reserve
Board. There can be no assurance that any governmental agency will approve or
take any other required action with respect to the Merger, and, if approvals
are received or action is taken, there can be no assurance as to the date of
such approvals or action, that such approvals or action will not be conditioned
upon matters that would cause the parties to abandon the Merger, or that no
action will be brought challenging such approvals or action, including a
challenge by the United States Department of Justice or, if such a challenge is
made, the result thereof.
FNB and West Coast are not aware of any governmental approvals or
actions that may be required for consummation of the Merger other than as
described above. Should any other approval or action be required, FNB and West
Coast currently contemplate that such approval or action would be sought.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. THERE CAN BE NO ASSURANCES THAT SUCH REGULATORY APPROVALS WILL BE
OBTAINED OR AS TO THE DATES OF ANY SUCH APPROVALS. THERE CAN ALSO BE NO
ASSURANCE THAT SUCH APPROVALS WILL NOT CONTAIN A CONDITION OR REQUIREMENT WHICH
CAUSES SUCH APPROVALS TO FAIL TO SATISFY THE CONDITIONS SET FORTH IN THE MERGER
AGREEMENT. SEE "-- CONDITIONS PRECEDENT TO THE MERGER." THERE CAN LIKEWISE BE
NO ASSURANCE THAT THE UNITED STATES DEPARTMENT OF JUSTICE WILL NOT CHALLENGE
THE MERGER, OR, IF SUCH A CHALLENGE IS MADE, AS TO THE RESULT THEREOF.
See "-- Effective Time of the Merger," "-- Conditions Precedent to the
Merger" and "-- Modification, Waiver and Termination."
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of FNB Common Stock to be issued to shareholders of West
Coast in the Merger have been registered under the Securities Act. Such shares
may be traded freely and without restriction by those shareholders not deemed
to be "affiliates" of West Coast or FNB as that term is defined under the
Securities Act. Any subsequent transfer of such shares, however, by any person
who is an affiliate of West Coast at the time the Merger is submitted for vote
or consent of the shareholders of West Coast will, under existing
43
<PAGE> 51
law, require either (a) the further registration under the Securities Act of
the shares of FNB Common Stock to be transferred, (b) compliance with Rule 145
promulgated under the Securities Act (permitting limited sales under certain
circumstances), or (c) the availability of another exemption from registration.
An "affiliate" of West Coast, as defined by the rules promulgated pursuant to
the Securities Act, is a person who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
West Coast. In addition, under requirements for pooling-of-interests method of
accounting, the shares of FNB Common Stock issued to affiliates are not
transferable until such time as financial results covering at least 30 days of
combined operations of FNB and West Coast have been published. The foregoing
restrictions are expected to apply to the directors, executive officers, and
the beneficial holders of 10% or more of the West Coast Common Shares (and to
certain relatives or the spouse of any such person and any trusts, estates,
corporations, or other entities in which any such person has a 10% or greater
beneficial or equity interest). Stop transfer instructions will be given by FNB
to the transfer agent with respect to the FNB Common Stock to be received by
persons subject to the restrictions described above. West Coast has agreed
that, not later than 30 days prior to the Effective Time, it will use its best
efforts to obtain from each of those persons identified by West Coast as
affiliates appropriate agreements that each such individual will not make any
further sales of shares of FNB Common Stock received upon consummation of the
Merger except in compliance with the restrictions described in this paragraph.
VOLUNTARY DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
FNB has a voluntary dividend reinvestment and stock purchase plan that
provides, for those shareholders which elect to participate, that dividends on
FNB Common Stock or FNB Preferred Stock (as defined herein) will be used to
purchase either original issue common shares or shares of FNB Common Stock in
the open market at the market value of FNB Common Stock on a quarterly basis.
The plan also permits participants to invest in additional shares of FNB Common
Stock through voluntary cash payments, within certain dollar limitations, at
the then-current market price of such stock at the time of purchase on any of
12 monthly investment dates each year. It is anticipated that FNB will continue
its voluntary dividend reinvestment and stock purchase plan and that
shareholders of West Coast who receive shares of FNB Common Stock in the Merger
will have the right to participate therein.
44
<PAGE> 52
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
MARKET PRICES
FNB Common Stock is listed on the Nasdaq SmallCap Market under the
trading symbol "FBAN." As of February 28, 1997, FNB Common Stock was held of
record by approximately 5,010 persons. The following table sets forth the high
ask and low bid prices of the FNB Common Stock as reported by the Dow Jones for
the periods indicated.
West Coast Common Shares are traded on the Nasdaq National Market
under the trading symbol "WBAN." The following table sets forth the high and
low prices for West Coast Common Shares as reported by the Dow Jones for the
indicated periods. As of the Record Date, West Coast Common Shares were held of
record by approximately 419 persons, representing approximately 1,275
beneficial holders.
<TABLE>
<CAPTION>
FNB WEST COAST
SALES PRICES SALES PRICES
------------ ------------
HIGH ASK LOW BID HIGH LOW
-------- ------- ---- ---
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
First Quarter . . . . . . . . . . 12 61/64 8 7/16 -- --
Second Quarter . . . . . . . . . . 14 25/64 11 33/64 11 1/2 9 1/4
Third Quarter . . . . . . . . . . 14 1/32 11 21/32 11 3/4 9
Fourth Quarter . . . . . . . . . . 14 1/32 12 5/16 12 1/4 10 1/4
YEAR ENDED DECEMBER 31, 1994:
First Quarter . . . . . . . . . . 13 53/64 11 15/64 13 11 3/4
Second Quarter . . . . . . . . . . 14 31/32 11 29/64 12 3/4 11
Third Quarter . . . . . . . . . . 16 21/64 13 53/64 12 1/2 11 1/2
Fourth Quarter . . . . . . . . . . 15 3/16 13 3/8 12 1/2 11
YEAR ENDED DECEMBER 31, 1995:
First Quarter . . . . . . . . . . 15 27/64 13 3/8 13 1/4 11
Second Quarter . . . . . . . . . . 18 3/32 14 33/64 15 12 1/4
Third Quarter . . . . . . . . . . 20 15/64 17 9/64 15 3/4 13 1/4
Fourth Quarter . . . . . . . . . . 20 23/32 18 13/16 16 1/2 14 3/4
YEAR ENDING DECEMBER 31, 1996:
First Quarter . . . . . . . . . . 22 5/8 19 3/64 15 1/2 14 1/4
Second Quarter . . . . . . . . . 23 7/8 23 16 3/4 14 1/2
Third Quarter . . . . . . . . . . 25 1/4 23 1/4 17 3/4 15 3/4
Fourth Quarter . . . . . . . . . . 24 1/8 22 3/4 17 1/4 15 1/4
</TABLE>
45
<PAGE> 53
DIVIDENDS
The following table sets forth the cash dividends declared per share
of FNB Common Stock and West Coast Common Shares, respectively, for the periods
indicated. The ability of either FNB or West Coast to pay dividends to its
shareholders is subject to certain restrictions. See "INFORMATION ABOUT FNB"
and "INFORMATION ABOUT WEST COAST."
<TABLE>
<CAPTION>
FNB WEST COAST
DIVIDENDS DIVIDENDS
--------- ---------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
First Quarter . . . . . . . . . . . . . . . . . . . . .06 0
Second Quarter . . . . . . . . . . . . . . . . . . . . .06 0
Third Quarter . . . . . . . . . . . . . . . . . . . . .06 .05
Fourth Quarter . . . . . . . . . . . . . . . . . . . . .06 .05
YEAR ENDED DECEMBER 31, 1994:
First Quarter . . . . . . . . . . . . . . . . . . . . .06 .05
Second Quarter . . . . . . . . . . . . . . . . . . . . .06 .05
Third Quarter . . . . . . . . . . . . . . . . . . . . .06 .05
Fourth Quarter . . . . . . . . . . . . . . . . . . . . .07 .05
YEAR ENDED DECEMBER 31, 1995:
First Quarter . . . . . . . . . . . . . . . . . . . . .06 .05
Second Quarter . . . . . . . . . . . . . . . . . . . . .07 .05
Third Quarter . . . . . . . . . . . . . . . . . . . . .10 .06
Fourth Quarter . . . . . . . . . . . . . . . . . . . . .12 .06
YEAR ENDING DECEMBER 31, 1996:
First Quarter . . . . . . . . . . . . . . . . . . . . .15 .06
Second Quarter . . . . . . . . . . . . . . . . . . . . .16 .06
Third Quarter . . . . . . . . . . . . . . . . . . . . .16 .06
Fourth Quarter . . . . . . . . . . . . . . . . . . . .16 .13
</TABLE>
INFORMATION ABOUT FNB
FNB is a financial services holding company headquartered in
Hermitage, Pennsylvania. It provides a broad range of financial services to its
customers through its bank and consumer finance subsidiaries in Pennsylvania,
eastern Ohio, and southwestern New York. The FNB main office is located at
Hermitage Square, Hermitage, Pennsylvania 16148 and its telephone number is
(412) 981-6000.
FNB was formed in 1974 as the holding company of its then sole
subsidiary, First National, formerly First National Bank of Mercer County.
Since its formation, FNB has acquired and currently operates four other bank
subsidiaries and one consumer finance company in Pennsylvania, eastern Ohio,
and southwestern New York. On January 21, 1997, FNB acquired 100% of the
outstanding common shares of Southwest, a Florida corporation and registered
bank holding company under the BHCA. Through its two subsidiary banks,
Southwest provides commercial banking services through a network of seven
offices in southwestern Florida, including Collier and Lee Counties. On
September 30, 1996, Southwest had total assets of $425 million. As of
September 30, 1996, FNB's bank, thrift and consumer finance subsidiaries, all
of which are wholly-owned by FNB, had $1.7 billion in assets, $1.4 billion in
deposits and 94 offices, before giving effect to the acquisition of Southwest,
which was accounted for as a pooling-of-interests.
FNB, through its subsidiaries, provides a full range of financial
services, principally to consumers and small- to medium-sized businesses in its
market areas. FNB's business strategy has been to focus primarily on providing
quality, community-based financial services adapted to the needs of each of the
markets it serves. FNB has emphasized its community orientation by preserving
the names and local boards
46
<PAGE> 54
of directors of its subsidiaries, by allowing its subsidiaries autonomy in
decision-making and thus enabling them to respond to customer requests more
quickly, and by concentrating on transactions within its market areas. However,
while FNB has sought to preserve the identities and autonomy of its
subsidiaries, it has established centralized credit analysis, loan review,
investment, audit, and data processing functions. The centralization of these
processes has enabled FNB to maintain consistent quality of these functions and
to achieve certain economies of scale.
FNB's lending philosophy is to minimize credit losses by following
uniform credit approval standards (which include independent analysis of
realizable collateral value), diversifying its loan portfolio, maintaining a
relatively modest average loan size, and conducting ongoing review and
management of the loan portfolio. FNB is an active residential mortgage lender,
and its commercial loans are generally to established local businesses. FNB
does not have a significant amount of construction loans, and has no highly
leveraged transaction loans or loans to foreign countries.
No material portion of the deposits of FNB's bank subsidiaries has
been obtained from a single or small group of customers, and the loss of any
customer's deposits or a small group of customers' deposits would not have a
material adverse effect on the business of FNB.
FNB has three other operating subsidiaries, Penn-Ohio Life Insurance
Company ("Penn-Ohio"), Mortgage Service Corporation, and F.N.B. Building
Corporation. Penn-Ohio underwrites, as a reinsurer, credit life and accident
and health insurance sold by FNB's subsidiaries. These activities are
incidental to FNB banking business. Mortgage Service Corporation services
mortgage loans for unaffiliated financial institutions. F.N.B. Building
Corporation owns real estate that is leased to certain of its affiliates.
As of September 30, 1996, FNB and its subsidiaries had 921 full-time
equivalent employees.
As part of its operations, FNB regularly evaluates the potential
acquisition of, and holds discussions with, various financial institutions and
other businesses of a type eligible for bank holding company investment. In
addition, FNB regularly analyzes the values of, and submits bids for, the
acquisition of customer-based funds and other liabilities and assets of such
financial institutions and other businesses. As a general rule, FNB publicly
announces such material acquisitions when a definitive agreement has been
reached.
For further information about FNB, reference is made to the FNB Annual
Report on Form 10-K for the year ended December 31, 1995, the Quarterly Reports
on Form 10-Q for the quarters ended March 31, June 30 and September 30, 1996
and the Current Reports on Form 8-K filed on February 9, 1996, May 15, 1996,
June 28, 1996, August 13, 1996, November 13, 1996, November 25, 1996, January
24, 1997 and March 5, 1997, all of which are incorporated herein by reference.
Shareholders of West Coast desiring copies of such documents may contact FNB at
its address or telephone number indicated under "INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE."
INFORMATION ABOUT WEST COAST
West Coast, a Florida corporation organized on December 11, 1987, is a
bank holding company registered under the BHCA, whose sole subsidiary and
principal asset is First Southwest, a national banking association (the
"Bank"). West Coast owns all of the outstanding capital stock of the Bank.
Through its ownership of the Bank, West Coast is engaged in a general
commercial banking business and its primary source of earnings is derived from
income generated by the Bank. West Coast currently engages in no
47
<PAGE> 55
substantial business activities other than activities related to its ownership
of the Bank. As of September 30, 1996, West Coast, on a consolidated basis,
had total assets of $154.8 million, net portfolio loans of $106.4 million,
total deposits of $138 million, and shareholders' equity of $17 million.
Unless the context otherwise requires, references herein to West Coast include
West Coast and the Bank on a consolidated basis.
The business of the Bank consists primarily of attracting deposits
from the general public in the areas served by its banking offices and applying
those funds, together with funds derived from other sources, to the origination
of loans for various types of collateralized and uncollateralized consumer
loans, and loans for the purchase, construction, financing and refinancing of
commercial and residential real estate in Cape Coral, Fort Myers and
surrounding communities in Lee County, Florida. The revenues of the Bank are
primarily derived from interest on, and fees received in connection with, real
estate and other loans, and from income received from investment securities and
the sale of Small Business Administration ("SBA") loans and SBA loan servicing
rights. The principal sources of funds for the Bank's lending activities are
in deposits, amortization and prepayment of loans, and sales of loans. The
principal expenses of the Bank are the interest paid on deposits and operating
and general administrative expenses.
Management of West Coast believes that the Bank's principal markets
are: (i) the affluent and expanding residential market within its primary
market areas; (ii) the established and expanding commercial market within its
primary market areas; and (iii) the real estate mortgage market within its
primary market areas and their environs. Management of West Coast also
believes that the most profitable banking relationships are characterized by
high deposit balances, low frequency of transactions, and low distribution
requirements. Specifically, the Bank has targeted businesses with annual gross
revenues of up to $10 million, and all households within the primary market
areas. Given the projected growth of these segments and their respective
profiles, the Company believes the targeting of these segments as the
foundation of the Bank's customer base will increase opportunities to establish
profitable banking operations in the primary market area.
In an effort to attract a broader base of customer relationship and
diversify its banking operations, the Bank has expanded on its initial lending
philosophy which focused on smaller commercial customers to include larger
borrowers and credit accommodations. Initially the Bank concentrated on the
smaller commercial customer and meeting their generally smaller lending needs
because, as a local community bank, that segment offered the greatest
concentration of business. As the Bank and its loan portfolio has grown in
both volume and maturity, management has begun funding larger credit
accommodations which meet the same quality underwriting standards that have
been used by the Bank for approving of the smaller loan requests.
The primary source of income generated by the Bank is from the
interest earned from both the loan and investment portfolios. The Bank
maintains diversification when considering investments and the granting of loan
requests. Emphasis is placed on the borrower's ability to generate cash flow
to support its debt obligations and other cash related expenses. Current
lending activities presently include commercial and consumer loans. Commercial
loans are originated for commercial construction, acquisition, or remodeling.
Consumer loans include those for the purchase of automobiles, boats, home
improvements and investments. Substantially all of the properties
collateralizing the Bank's mortgage portfolio are located in the Bank's primary
market area.
For further information concerning West Coast, reference is made to
the West Coast Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996, a copy of which is being delivered to the West Coast shareholders
with this Proxy Statement-Prospectus and is incorporated herein by reference.
See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
48
<PAGE> 56
DESCRIPTION OF FNB CAPITAL STOCK AND WEST COAST CAPITAL STOCK
FNB COMMON STOCK
GENERAL. FNB is authorized to issue 100,000,000 shares of FNB Common
Stock, of which 9,176,002 shares were outstanding as of September 30, 1996.
FNB Common Stock is traded on the Nasdaq SmallCap Market under the trading
symbol "FBAN." Chemical Mellon acts as the transfer agent and the registrar
for FNB Common Stock.
As of September 30, 1996, approximately 2,668,231 shares of FNB Common
Stock were reserved for issuance under various employee benefit plans and the
voluntary dividend reinvestment plan of FNB. After taking into account the
shares reserved as described above, the number of authorized shares of FNB
Common Stock available for other corporate purposes as of September 30, 1996
was approximately 88,155,767. Since that date, 1,371,163 additional shares
have been reserved for issuance in connection with the Merger.
VOTING AND OTHER RIGHTS. The holders of FNB Common Stock are entitled
to one vote per share, and, in general, a majority of votes cast with respect
to a matter is sufficient to authorize action upon routine matters. Directors
are elected by a plurality of the votes cast, and each shareholder entitled to
vote in such election is entitled to vote each share of stock for as many
persons as there are directors to be elected. In elections for directors,
shareholders do not have the right to cumulate their votes. The FNB Series A
Preferred Stock (as defined herein) votes as a class with the FNB Common Stock.
See "-- FNB Preferred Stock"; "COMPARISON OF SHAREHOLDER RIGHTS -- Amendment of
Articles of Incorporation and Bylaws" and "-- Vote Required for Extraordinary
Corporate Transaction."
In the event of liquidation, holders of FNB Common Stock would be
entitled to receive pro rata any assets legally available for distribution to
shareholders with respect to shares held by them, subject to any prior rights
of any FNB Preferred Stock (as defined and described below) then outstanding.
FNB Common Stock does not have any preemptive rights, redemption
privileges, sinking fund privileges or conversion rights. All the outstanding
shares of FNB Common Stock are, and upon issuance the shares of FNB Common
Stock to be issued to shareholders of West Coast will be, validly issued, fully
paid and nonassessable.
DISTRIBUTIONS. The holders of FNB Common Stock are entitled to
receive such dividends or distributions as the FNB Board may declare out of
funds legally available for such payments. The payment of distributions by FNB
is subject to the restrictions of Pennsylvania law applicable to the
declaration of distributions by a business corporation. A corporation generally
may not authorize and make distributions if, after giving effect thereto, it
would be unable to meet its debts as they become due in the usual course of
business or if the corporation's total assets would be less than the sum of its
total liabilities plus the amount that would be needed, if it were to be
dissolved at the time of distribution, to satisfy claims upon dissolution of
shareholders who have preferential rights superior to the rights of the holders
of its common stock. In addition, the payment of distributions to shareholders
is subject to any prior rights of outstanding FNB Preferred Stock. Share
dividends, if any are declared, may be paid from authorized but unissued
shares.
The ability of FNB to pay distributions is affected by the ability of
its subsidiaries to pay dividends. The ability of FNB's subsidiaries, as well
as of FNB, to pay dividends in the future is influenced by bank regulatory
requirements and capital guidelines.
49
<PAGE> 57
FNB PREFERRED STOCK
GENERAL. FNB has authorized 20,000,000 shares of preferred stock,
$10.00 par value (the "FNB Preferred Stock"). The FNB Board has the authority
to issue FNB Preferred Stock in one or more series and to fix the dividend
rights, dividend rate, liquidation preference, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions), and
the number of shares constituting any such series, without any further action
by the shareholders unless such action is required by applicable rules or
regulations or by the terms of other outstanding series of FNB Preferred Stock.
Any shares of FNB Preferred Stock which may be issued may rank prior to shares
of FNB Common Stock as to payment of dividends and upon liquidation. FNB had
23,588 shares of FNB Series A Preferred Stock (the "FNB Series A Preferred
Stock") issued and outstanding as of September 30, 1996 and 374,780 shares of
FNB Series B 7 1/2% Cumulative Convertible Preferred Stock (the "FNB Series B
Preferred Stock") issued and outstanding as of September 30, 1996.
THE FOLLOWING SUMMARY OF THE FNB SERIES A PREFERRED STOCK AND FNB
SERIES B PREFERRED STOCK IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DESCRIPTION THEREOF CONTAINED IN THE FNB CHARTER ATTACHED AS EXHIBIT 3.1 TO THE
CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1992,
WHICH IS INCORPORATED HEREIN BY REFERENCE.
FNB SERIES A PREFERRED STOCK. The FNB Series A Preferred Stock was
created for the purpose of acquiring Reeves Bank. Holders of the FNB Series A
Preferred are entitled to 5.1 votes for each share held (as adjusted for the
FNB Stock Dividend). The holders of the FNB Series A Preferred Stock do not
have cumulative voting rights in the election of directors. Dividends on the
FNB Series A Preferred Stock are cumulative from the date of issue and are
payable at a rate of $.42 per share each quarter. The FNB Series A Preferred is
convertible at the option of the holder into shares of the FNB Common Stock
having a market value of $25.00 at time of conversion. FNB has the right to
require the conversion of the balance of all outstanding shares at the
conversion rate at any time after 50% of the 49,512 shares issued are no longer
outstanding. Through September 30, 1996, 1,250 shares of the FNB Series A
Preferred were converted to 1,336 shares of FNB Common Stock. At September 30,
1995, 24,732 shares of FNB Common Stock were reserved by FNB for the conversion
of the remaining 23,588 outstanding shares.
FNB SERIES B PREFERRED STOCK. The FNB Series B Preferred Stock was
issued during 1992 for the purpose of raising capital for the acquisition of 13
banking branches in the Erie, Pennsylvania area. Holders of the FNB Series B
Preferred Stock have no voting rights. Dividends on the FNB Series B Preferred
Stock are cumulative from the date of issue and are payable at a rate of
$.46875 per share each quarter. The FNB Series B Preferred Stock has a stated
value of $25.00 per share and is convertible at the option of the holder at any
time into shares of FNB Common Stock at a price of $12.83 per share. FNB has
the right to redeem the FNB Series B Preferred Stock for cash on or after May
15, 1996, as set forth in the prospectus dated May 8, 1992. Through September
30, 1996, 52,020 shares of FNB Series B Preferred Stock were converted to
104,045 shares of FNB Common Stock. At September 30, 1996, 766,538 shares of
FNB Common Stock were reserved by FNB for the conversion of the remaining
374,780 outstanding shares of FNB Series B Preferred Stock.
WEST COAST COMMON SHARES
GENERAL. West Coast is authorized to issue 7,500,000 West Coast
Common Shares, of which 1,553,419 shares were issued and outstanding as of the
Record Date. West Coast Common Shares trade on the Nasdaq National Market
under the trading symbol "WBAN." Wachovia Bank of North Carolina, N.A. acts
as the transfer agent and the registrar for the West Coast Common Shares.
50
<PAGE> 58
WEST COAST PREFERRED STOCK
West Coast is authorized to issue 2,500,000 shares of preferred stock,
$1.00 par value ("West Coast Preferred Stock"), none of which are issued and
outstanding. The West Coast Board has the authority to issue West Coast
Preferred Stock in one or more series and to fix the dividend rights, dividend
rate, liquidation preference, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), redemption price or
prices, and the number of shares constituting any such series, without any
further action by the shareholders unless such action is required by applicable
rules or regulations or by the terms of other outstanding series of West Coast
Preferred Stock. Any shares of West Coast Preferred Stock which may be issued
may rank prior to shares of West Coast Common Shares as to payment of dividends
and upon liquidation.
COMPARISON OF SHAREHOLDER RIGHTS
At the Effective Time, the shareholders of West Coast, a Florida
corporation, will become shareholders of FNB, a Pennsylvania corporation, and
Pennsylvania law will govern shareholder rights after the Merger. Differences
between the FBCA and the PBCL and between the West Coast Charter and the West
Coast Bylaws and the FNB Charter and the FNB Bylaws will result in various
changes in the rights of shareholders of West Coast.
The following is a summary of all material differences between the
rights of FNB shareholders under Pennsylvania law, the FNB Charter and the FNB
Bylaws, as compared with those of West Coast shareholders under Florida law,
the West Coast Charter and the West Coast Bylaws. This summary does not purport
to be a complete description of the provisions discussed and is qualified in
its entirety by the PBCL, the FBCA, the West Coast Charter, the West Coast
Bylaws, the FNB Charter and the FNB Bylaws, to which West Coast shareholders
are referred.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under the PBCL, an FNB director may be removed without cause by the
FNB shareholders entitled to elect the director or by the class of directors in
which such director had been chosen. The FNB Charter contains a provision that
requires the affirmative vote of at least 75% of the outstanding shares of FNB
Common Stock entitled to vote to remove the entire FNB Board, a class of
directors, or any member of the FNB Board during his term without cause.
Under the FBCA, a West Coast director may be removed by the West Coast
shareholders with or without cause; provided that, if a director is elected by
a voting group, only the shareholders of that voting group may participate in
the vote to remove him. The West Coast Charter provides that a director may be
removed without cause at a special meeting of shareholders called for that
purpose by the holders of 66 2/3% of the outstanding West Coast Common Shares.
The PBCL and the FNB Bylaws provide that vacancies on the FNB Board,
including vacancies resulting from an increase in the number of directors, may
be filled by a majority vote of the remaining directors, though less than a
quorum, or by a sole remaining director, and each person so selected shall
serve until the next selection of the class for which such director has been
chosen, and until a successor has been selected and qualified.
The FBCA and the West Coast Bylaws provide that vacancies on the West
Coast Board, including vacancies resulting from an increase in the number of
directors and resulting from removal from office, may be filled by a majority
vote of the remaining directors, though less than a quorum, or by the
shareholders at any meeting held during the existence of such vacancy. A
director elected to fill a vacancy shall have the
51
<PAGE> 59
same remaining term as that of his or her predecessor in office. If the number
of directors is increased, the additional director(s) will hold office until
the next succeeding annual meeting of shareholders.
QUORUM OF SHAREHOLDERS
The PBCL and the FNB Bylaws provide that a quorum for a meeting of
shareholders of FNB consists of the presence of shareholders, in person or
represented by proxy, entitled to cast at least a majority of the votes that
all shareholders are entitled to cast on a particular matter to be acted upon
at the meeting.
The FBCA and the West Coast Bylaws provide that the holders of a
majority of the stock issued, outstanding and entitled to vote thereon, present
in person or represented by proxy, shall constitute a quorum at all meetings of
the shareholders of West Coast. The FBCA further provides that in no event
shall a quorum consist of less than one-third of the shares entitled to vote.
ADJOURNMENT AND NOTICE OF SHAREHOLDER MEETINGS
The FNB Bylaws provide that, if a quorum is not present or represented
at a shareholder meeting, the shareholders entitled to vote may adjourn the
meeting without notice other than an announcement at the meeting. The West
Coast Bylaws also provide that whenever a meeting is adjourned to another time
or place, it shall not be necessary to give any notice of the adjourned meeting
as long as notice of the time and place of the next meeting is made at the
adjourned meeting. Both the FNB and West Coast Bylaws further provide that the
determination of shareholders of record entitled to notice of or to vote at any
meeting of shareholders will apply to any adjournment thereof.
Under the PBCL and the FNB Bylaws, notice of shareholder meetings must
be given at least ten days prior to any meeting called to consider a
fundamental corporate change or at least five days prior to the meeting in any
other case. Under the FBCA and the West Coast Bylaws, notice of shareholder
meetings must be provided to each shareholder of record entitled to vote at
such meeting not less than ten nor more than 60 days prior to the meeting.
CALL OF SPECIAL SHAREHOLDER MEETINGS
The FNB Bylaws provide that special meetings of the shareholders may
be called only by the Chairman of the Board, the President or the Secretary of
FNB pursuant to a resolution or at the written direction of at least 75% of the
members of the FNB Board. The West Coast Bylaws provide that special meetings
of the shareholders may be called by the President, the Secretary or any
officer instructed by any of the foregoing, or by the holders of 10% of the
West Coast Common Shares entitled to vote at the meeting of shareholders.
SHAREHOLDER CONSENT IN LIEU OF MEETING
The PBCL permits any action which may be taken at a meeting of the
shareholders may be taken without a meeting, if, prior or subsequent to the
action, a consent thereto of all the shareholders who would be entitled to vote
at a meeting for such purpose is filed with the Secretary of FNB.
The FBCA and the West Coast Bylaws provide that any action required to
be taken at any annual or special meeting of shareholders, or any action which
may be taken at any annual or special meeting of such shareholders, may be
taken without a meeting, without prior notice, and without a vote if a consent
in writing, setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
52
<PAGE> 60
which all shares entitled to vote thereon were present and voted. Under
Florida law and the West Coast Bylaws, within ten days after obtaining such
authorization by written consent, notice must be given to those shareholders
who have not consented in writing. The notice must summarize the material
features of the authorized action, and, if the action voted on was a merger,
consolidation, or sale or exchange of assets for which dissenters' rights are
provided under Florida law, the notice shall contain a clear statement of the
right of shareholders dissenting therefrom to be paid the fair value of their
shares upon compliance with further provisions of Florida law regarding the
rights of dissenting shareholders.
DISSENTERS' RIGHTS
Under the PBCL, shareholders may perfect dissenters' rights with
regard to corporate actions involving certain mergers; consolidations; sale,
lease or exchange of substantially all the assets of the corporation (under
limited circumstances); or elimination of cumulative voting.
Under the FBCA, dissenters' appraisal rights are available in
connection with corporate actions involving certain mergers, share exchanges,
consolidations, sales or other dispositions of all or substantially all of the
property of the corporation (other than in the ordinary course of business),
the approval of certain control-share acquisitions, and amendments of the
articles of incorporation where such amendment would adversely affect the
shareholder by: (i) altering or abolishing any preemptive rights attached to
such shareholder's shares; (ii) altering or abolishing the voting rights
pertaining to such shareholder's shares, except as such rights may be affected
by the voting rights of new shares then being authorized of any existing or new
class or series of shares; (iii) effecting an exchange, cancellation, or
reclassification of any of such shareholder's shares, when such amendment would
alter or abolish the shareholder's voting rights or alter his or her percentage
of equity in the corporation, or effecting a reduction or cancellation of
accrued dividends or other arrearages; (iv) reducing the stated redemption
price of any of the shareholder's redeemable shares, altering or abolishing any
provision relating to any sinking fund for the redemption or purchase of any of
his or her shares, or making any of the shareholder's shares subject to
redemption when they are not otherwise redeemable; (v) making non-cumulative,
in whole or in part, dividends on any of his or her preferred shares which had
theretofore been cumulative; (vi) reducing the dividend preference of any of
his or her preferred shares; or (vii) reducing any stated preferential amount
payable on the shareholder's preferred shares upon voluntary or involuntary
liquidation.
Under the corporate laws of Florida and Pennsylvania, dissenters'
rights generally are denied in the case of a merger or share exchange or a
proposed sale or exchange of property when a corporation's shares are listed on
a national securities exchange or the Nasdaq National Market or held of record
by at least 2,000 persons.
DERIVATIVE ACTIONS
Derivative actions to enforce a secondary right against any present or
former officer or director of the corporation because the corporation refuses
to enforce rights that may properly be asserted by it may be brought under the
PBCL by a shareholder, even if the shareholder was not a shareholder at the
time of the alleged wrongdoing, if there is a strong prima facie case in favor
of the claim asserted and if the court determines in its discretion that
serious injustice will result without such action.
Under the FBCA, a derivative action may be brought only by a person
who was a shareholder of the corporation at the time of the alleged wrongdoing
unless the person became a shareholder through transfer by operation of law
from one who was a shareholder at that time.
53
<PAGE> 61
DIVIDENDS AND DISTRIBUTIONS
Subject to any restrictions in a corporation's charter, the PBCL and
the FBCA generally provide that a corporation may make distributions to its
shareholders unless after giving effect thereto (1) the corporation would not
be able to pay its debts as they become due in the usual course of business, or
(2) the corporation's total assets would be less than the sum of its total
liabilities plus the amount that would be needed upon the dissolution of the
corporation to satisfy the preferential rights of shareholders having superior
preferential rights to those shareholders receiving the distribution. The FNB
Charter does not contain any restrictions on the payment of dividends or the
making of distributions to shareholders.
DIRECTOR QUALIFICATIONS AND NUMBER
The articles of incorporation or bylaws of a Pennsylvania corporation
specify the number of directors. If not otherwise fixed, a Pennsylvania
corporation shall have three directors. The PBCL and the FNB Bylaws provide
that the directors need not be state residents or shareholders of the
corporation to qualify to serve.
The FNB Bylaws also provide that the FNB Board shall consist of such
number of directors as may be determined by the FNB Board, which number shall
be not less than five nor more than 25. By resolution, the FNB Board has set
the present size of the FNB Board at 22 directors. The FNB Bylaws further
provide that the FNB Board shall be divided into four classes, with each
director having a four-year term.
The board of directors of a Florida corporation must consist of one or
more individuals, the precise number to be specified or fixed in accordance
with the articles of incorporation or bylaws. Under the FBCA, directors must be
at least 18 years of age but need not be shareholders of the corporation or
residents of Florida to qualify to serve on the board. The West Coast Bylaws
provide that the West Coast Board shall consist of not less than five nor more
than 25 persons, the exact number of directors to be determined from time to
time by resolution of the West Coast Board. By resolution, the West Coast Board
has set the present size at 12 directors. The West Coast shareholders are
entitled to elect all of the members of the West Coast Board. The West Coast
Bylaws further provide that the West Coast Board members shall hold office for
one year or until the next annual meeting of shareholders.
After the Merger, all members of the West Coast Board will be elected
members of the board of directors of one of Southwest's subsidiary banks for a
term of one year.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The PBCL permits a corporation to indemnify its directors and officers
against expenses, judgments, fines and amounts paid in settlement incurred by
them in connection with any pending, threatened or completed action or
proceeding, and permits such indemnification against expenses incurred in
connection with any pending, threatened or completed derivative action, if the
director or officer has acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. Furthermore, Pennsylvania law
provides that expenses incurred in defending any action or proceeding may be
paid by the corporation in advance of the final disposition upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately determined that the director or officer is not entitled to be
indemnified by the corporation.
In Pennsylvania, the statutory provisions for indemnification and
advancement of expenses are non-exclusive with respect to any other rights,
such as contractual rights (or under a bylaw or vote of shareholders or
disinterested directors), to which a person seeking indemnification or
advancement of
54
<PAGE> 62
expenses may be entitled. Such contractual or other rights may, for example,
provide for indemnification against judgments, fines and amounts paid in
settlement incurred by the indemnified person in connection with derivative
actions. The PBCL permits such derivative action indemnification in any case
except where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
The PBCL permits a corporation to purchase and maintain insurance on
behalf of any director or officer of the corporation against any liability
asserted against the director or officer and incurred in such capacity, whether
or not the corporation would have the power to indemnify the director or
officer against such liability. FNB has directors' and officers' liability
insurance underwritten by Reliance Insurance Company.
The FNB Charter provides that its directors, officers and any other
person designated by the FNB Board are entitled to be indemnified to the
fullest extent now permitted by law.
The FBCA and the West Coast Bylaws permit a corporation to indemnify a
director and officer who was or is a party to any threatened, pending or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative or investigative, whether formal or informal (other than an
action by or any right of the corporation) by reason of the fact that he or she
is or was a director or officer or is now serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding.
These indemnification rights apply if the director or officer acted in good
faith and in a manner in which he or she reasonably believed to be in or not
opposed to the best interest of the corporation and, with respect to criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In addition, under the FBCA and the West Coast Bylaws, West Coast may
indemnify and hold harmless an officer or director who is a party in an action
by or in the right of the corporation against expenses (including attorneys'
fees) and amounts paid in settlement not exceeding estimated expenses of
litigating the action to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including any
appeal thereof. Such indemnification shall be authorized if the director or
officer has acted in good faith and in a manner in which he or she reasonably
believed to be in or not opposed to the best interest of the corporation,
except indemnification is not authorized where there is an adjudication of
liability, unless the court in which such proceeding was brought, or any other
court of competent jurisdiction, shall determine, in view of all the
circumstances, that such person is fairly and reasonably entitled to indemnity
for such expenses which such court shall deem proper.
Both Florida law and the West Coast Bylaws provide that
indemnification of the costs and expenses of defending any action is required
to be made to any officer or director who is successful (on the merits or
otherwise) in defending an action of the type referred to in the immediately
preceding paragraph. Except with regard to the costs and expenses of
successfully defending an action as may be ordered by a court, indemnification
as described in the previous paragraph is only required to be made to a
director or officer if a determination is made that indemnification is proper
under the circumstances. Such determination shall be made: (i) by West Coast's
Board by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding; (ii) by a majority vote of a
committee duly designated by the West Coast Board consisting of two or more
directors not at the time parties to the action, suit or proceeding; (iii) by
independent legal counsel selected by specified groupings of the West Coast
Board; or (iv) by the West Coast shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such action, suit or
proceeding, or, if no such quorum is obtainable, by a majority vote of
shareholders who were not parties to such action, suit or proceeding. The
reasonableness of the expenses to be indemnified is determined in the same
manner as the determination of whether the indemnification is permissible.
Florida law and the West Coast Bylaws further provide that expenses incurred in
defending any action or
55
<PAGE> 63
proceeding may be paid by the corporation in advance of the final disposition
upon receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined that the director or officer is
not entitled to be indemnified by the corporation.
Under Florida law and the West Coast Bylaws, the provisions for
indemnification and advancement of expenses are not exclusive. Accordingly, a
corporation may make any other or further indemnification or advancement of
expenses of any of its officers or directors under any bylaw, agreement, vote
of shareholders or disinterested directors, or otherwise, both as to action in
his or her official capacity and as to action in another capacity while holding
such office. Under the FBCA, indemnification or advancement of expenses,
however, shall not be made to or on behalf of any officer or director if a
judgment or other final adjudication establishes that his or her actions or
omissions were material to the cause of action so adjudicated and constitute:
(i) a violation of the criminal law, unless the officer or director had
reasonable cause to believe that his or her conduct was lawful or had no
reasonable cause to believe that his or her conduct was unlawful; (ii) a
transaction from which the officer or director derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which the
liability provisions of the FBCA Section 607.0834 (relating to unlawful
distributions) are applicable; or (iv) willful misconduct or a conscious
disregard for the best interest of the corporation in a proceeding by or in the
right of the corporation to procure a judgment in its favor or in a proceeding
by or in the right of a shareholder.
Florida law and the West Coast Bylaws permit a corporation to purchase
and maintain insurance on behalf of any director or officer of the corporation
against any liability asserted against the director or officer and incurred in
such capacity, whether or not the corporation would have the power to indemnify
the director or officer against such liability.
Pursuant to West Coast's Bylaws, if West Coast pays any expenses or
other amounts by way of indemnification, otherwise than by court order or
action by the shareholders or by an insurance carrier pursuant to insurance
maintained by West Coast, West Coast shall report the indemnification or
advance in writing to the shareholders with or before the notice of the next
shareholders meeting, unless such meeting is held within three months from the
date of such payment, and, in any event, within fifteen months from the date of
payment The report shall include a statement specifying the persons paid, the
amount paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
DIRECTOR LIABILITY
The bylaws of a Pennsylvania corporation may include a provision
limiting the personal liability of directors for monetary damages for actions
taken as a director, except to the extent that the director has breached or
failed to perform his or her duties to the corporation and the breach or
failure to perform constitutes self-dealing, willful misconduct, or
recklessness. The FNB Bylaws contain such a provision limiting the liability of
its directors to the fullest extent permitted by law.
Under Florida law, a director is not liable for monetary damages for
any statement, vote, decision, or failure to act, regarding corporate
management or policy, unless the director breached or failed to perform his
duties as a director and the director's breach of, or failure to perform, those
duties constitutes a violation of criminal law, self dealing, willful
misconduct, or recklessness.
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
The PBCL requires the affirmative vote of the holders entitled to cast
at least a majority of the votes actually cast on an amendment to the articles
of incorporation, provided that shareholder approval is not required for
certain non-material amendments, such as a change in the corporate name, a
provision for perpetual existence, or, if the corporation has only one class of
shares outstanding, a change in the number
56
<PAGE> 64
and par value of the authorized shares to effect a stock split. The FNB Charter
provides that the FNB Charter may be amended by FNB as provided by the PBCL and
all rights conferred upon the shareholders therein are granted subject to such
reservation. Under the PBCL, the power to adopt, amend or repeal bylaws may be
vested by the bylaws in the directors, with certain statutory exceptions for
certain actions and subject to the power of shareholders to change such action.
The PBCL provides that, unless the articles of incorporation otherwise provide,
the board of directors does not have the authority to adopt or change a bylaw
on any subject that is committed expressly to the shareholders by statute. The
FNB Charter and the FNB Bylaws provide that the FNB Bylaws may be amended by
the affirmative vote of at least 75% of the FNB Board or by the affirmative
vote of the holders of at least 75% of the outstanding FNB Common Stock
entitled to vote thereon.
The FBCA generally requires the affirmative vote of the holders of at
least a majority of the votes actually cast on an amendment to the articles of
incorporation; provided, however, a majority of the votes entitled to be cast
on the amendment is required with respect to an amendment that would create
dissenters' rights. Under Florida law, shareholder approval is not required for
certain non-material amendments. The West Coast Charter provides that the West
Coast Charter may only be amended by the affirmative vote or consent of the
holders of at least 50% of the shares of each class of stock of the corporation
entitled to vote on the matter; provided, however, that the affirmative vote or
consent of the holders of 66 2/3 of the outstanding West Coast Common Shares is
required to amend provisions relating to the nomination procedures for
directors, relating to certain covered transactions and relating to certain
business combinations.
Under Florida law, a corporation's bylaws may be amended or repealed
by the board of directors or shareholders; provided, however, that the board
may not amend or repeal the corporation's bylaws if the articles of
incorporation reserve such power to the shareholders, or the shareholders, in
amending or appealing the bylaws, expressly provide that the board of directors
may not amend or repeal the bylaws or a particular bylaw provision. The West
Coast Bylaws provide that the West Coast Bylaws may be altered or amended and
new bylaws adopted by the shareholders or by the West Coast Board. With
respect to the classification of staggered terms for directors, however, such
provisions shall only be authorized by West Coast shareholders. Further,
Bylaws adopted by the West Coast Board may be repealed or amended and new
Bylaws may be adopted by West Coast shareholders. West Coast shareholders may
also prescribe in any Bylaw made by them that such Bylaw not be altered,
amended or repealed by the West Coast Board.
VOTE REQUIRED FOR EXTRAORDINARY CORPORATE TRANSACTIONS
Under the PBCL, generally, a merger, consolidation, share exchange,
dissolution or sale of substantially all of a corporation's assets other than
in the ordinary course of business must be approved by the affirmative vote of
a majority of the votes cast by all shareholders entitled to vote thereon.
Except as otherwise provided by the bylaws of a corporation, the shareholders
of a corporation do not have to approve a board of directors-approved plan of
merger if, among other situations, (i) the surviving or new corporation is a
domestic business corporation with articles of incorporation that are identical
to the articles of incorporation of the constituent corporation (except for
changes permitted by a board of directors without shareholder approval under
the PBCL), (ii) each share of the constituent corporation outstanding
immediately prior to the effective date of the merger is to continue to be or
to be converted into an identical share of the surviving or new corporation
after the effective date of the merger, and (iii) the shareholders of the
constituent corporation are to hold in the aggregate shares of the surviving or
new corporation to be outstanding immediately after effectiveness of the plan
of merger entitled to cast at least a majority of the votes entitled to be cast
generally for the election of directors.
The FNB Charter requires the affirmative vote of at least 75% of the
outstanding shares of FNB Common Stock entitled to vote to approve a merger,
consolidation, or sale, lease, exchange or other
57
<PAGE> 65
disposition, in a single transaction or series of related transactions, of all
or substantially all or a substantial part of the properties or assets of FNB,
unless the FNB Board has approved and recommended the transaction prior to the
consummation thereof.
Except as otherwise provided by law, or by the West Coast Charter or
the West Coast Bylaws with respect to the approval of an extraordinary
corporate transaction with Interested Persons (as defined herein), 66 2/3% of
the outstanding West Coast Common Shares is required to vote in favor of such
action. See "-- Interested Shareholder Transactions."
INTERESTED SHAREHOLDER TRANSACTIONS
The PBCL provides that, if a shareholder of a corporation is a party
to a sale of assets transaction, share exchange, merger or consolidation
involving the corporation or a subsidiary, or if a shareholder is to be treated
differently in a corporate dissolution from other shareholders of the same
class, then approval must be obtained of the shareholders entitled to cast at
least a majority of the votes which all shareholders other than the interested
shareholder are entitled to cast with respect to the transaction, without
counting the votes of the interested shareholder. Such additional shareholder
approval is not required if the consideration to be received by the other
shareholders in such transaction for shares of any class is not less than the
highest amount paid by the interested shareholder in acquiring shares of the
same class, or if the proposed transaction is approved by a majority of the
board of directors other than certain directors ("disqualified directors")
affiliated or associated with, or nominated by, the interested shareholder. The
PBCL provides that a director who has held office for at least 24 months prior
to the date of vote on the proposed transaction is not a disqualified director.
Further, the PBCL prohibits certain business combinations between the
corporation and an interested shareholder except under specified circumstances.
An "interested shareholder" in this instance is one who, directly or
indirectly, is the beneficial owner of shares entitling that person to cast at
least 20% of the votes that all shareholders would be entitled to cast in an
election of directors of the corporation or is an affiliate or associate of
such corporation and at any time within the five-year period immediately prior
to the date in question was the beneficial owner, directly or indirectly, of
shares entitling that person to cast at least 20% of the votes that all
shareholders would be entitled to cast in an election of directors of the
corporation. A "business combination" includes a merger, consolidation, share
exchange or division of the corporation or any subsidiary of the corporation
with the interested shareholder or with, involving or resulting in any other
corporation which is, or, after the merger, consolidation, share exchange or
division would be, an affiliate or associate of the interested shareholder. A
"business combination" also includes a sale or other disposition to the
interested shareholder or any affiliate or associate of the interested
shareholder of assets of the corporation or any subsidiary (i) having an
aggregate market value equal to 10% or more of the aggregate market value of
the corporation's consolidated assets, (ii) having an aggregate market value
equal to 10% or more of the aggregate market value of all the outstanding
shares of such corporation, or (iii) representing 10% or more of the
consolidated earning power or net income of such corporation. A "business
combination" also includes certain transactions with an interested shareholder
involving the issuance of shares of a corporation or its subsidiary having an
aggregate market value equal to 5% or more of the aggregate market value of all
outstanding shares under certain circumstances, the adoption of a plan for the
liquidation or dissolution of the corporation pursuant to certain agreements
with an interested shareholder and certain reclassifications and loans
involving the interested shareholder. The prohibition against such business
combinations does not apply under specified circumstances and if the
corporation has opted out of this provision. FNB has not opted out of this
statutory provision.
The FBCA contains a number of provisions which require supermajority
approval for certain affiliate transactions.
58
<PAGE> 66
The West Coast Charter contains provisions requiring supermajority
shareholder approval to effect certain extraordinary corporate transactions
which are not approved by the Board of Directors. The West Coast Charter
requires the affirmative vote or consent of the holders of at least 66 2/3% of
the West Coast Common Shares entitled to vote on the matter to approve any
merger, consolidation, disposition of all or a substantial part of the assets
of the corporation or a subsidiary of the corporation, exchange of securities
requiring shareholder approval or liquidation of the corporation ("Covered
Transaction"), if any person who together with his affiliates and associates
beneficially owns 5% or more of any voting stock of the corporation (an
"Interested Person") is a party to the transaction; provided that 66 2/3% of
the entire West Coast Board has not approved the transaction. In addition, the
West Coast Charter requires the separate approval of the West Coast
shareholders as may be required under the FBCA. Under the FBCA, any merger,
consolidation, disposition of all or a substantial part of the assets of the
corporation or a subsidiary of the corporation, or exchange of securities
requiring shareholder approval (a "Business Combination"), if an Interested
Person is a party to such transaction, shall be approved by the affirmative
vote of the holders of two-thirds of the voting shares other than the shares
beneficially owned by the Interested Person; provided, that such approval is
not required if (a) the Interested Shareholder Transaction has been approved by
a majority of the disinterested directors; (b) the corporation has not had more
than 300 shareholders of record at any time during the three years preceding
the announcement date; (c) the Interested Person has been the beneficial owner
of at least 80% of the corporation's outstanding voting shares for at least
five years preceding the announcement date; (d) the Interested Person is the
beneficial owner of at least 90% of the outstanding voting shares of the
corporation, exclusive of shares acquired directly from the corporation in a
transaction not approved by a majority of the disinterested directors; (e) the
corporation is an investment company registered under the Investment Company
Act of 1940; or (f) the consideration to be received by holders of the stock of
the corporation meets certain minimum levels determined by a formula under
Section 607.0901(4)(f) of the FBCA (generally, the highest price paid by the
Interested Person for any shares which she or he has acquired).
FIDUCIARY DUTY
Under the PBCL a director may, in considering the best interests of a
corporation, consider (i) the effects of any action on shareholders, employees,
suppliers, customers and creditors of the corporation, and upon communities in
which offices or other facilities of the corporation are located, (ii) the
short-term and long-term interests of the corporation, including the
possibility that the best interests of the corporation may be served by the
continued independence of the corporation, (iii) the resources, intent and
conduct of any person seeking to acquire control of the corporation, and (iv)
all other pertinent factors.
The FNB Charter provides that the FNB Board, in evaluating a proposal
for an extraordinary corporate transaction, shall consider all relevant
factors, including the economic effect, both immediate and long-term, upon the
FNB shareholders, including shareholders, if any, who will not participate in
the transaction; the social and economic effect on the employees, depositors
and customers of, and others dealing with, FNB and its subsidiaries and on the
communities in which FNB and its subsidiaries operate or are located; whether
the proposal is acceptable based on the historical and current operating
results or financial condition of FNB; whether a more favorable price could be
obtained for FNB's securities in the future; the reputation and business
practices of the offeror and its management and affiliates as they would affect
the employees, depositors and customers of FNB and its subsidiaries; and the
future value of FNB's stock; and any antitrust or other legal and regulatory
issues that are raised by the proposal. The FNB Charter further provides that,
if the FNB Board determines that such a proposal should be rejected, it may
take any lawful action to accomplish its purposes.
Under Florida law, a director is required to discharge his or her
duties in good faith, with the care an ordinarily prudent person in the like
position would exercise under similar circumstances and in a manner reasonably
believed to be in the best interest of the corporation. In discharging his or
her duties, a
59
<PAGE> 67
director is entitled to rely on: (i) information, opinions, reports, or
statements, including financial statements and other financial data, if
presented or prepared by officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented; (ii) legal counsel, public accountants or other persons as to
matters the director reasonably believes are within the person's professional
or expert competence; or (iii) a committee of the board of which the director
is not a member if the director reasonably believes the committee merits
confidence. In addition, in discharging his or her duties, a director may
consider such factors as the director deems relevant, including the long-term
prospectus and interest of the corporation and its shareholders, and the
social, economic, legal, or other effects of any action on the employees,
suppliers, customers of the corporation or its subsidiaries, the communities
and society in which the corporation or its subsidiaries operate, and the
economy of the state and the nation.
PROVISIONS WITH POSSIBLE ANTI-TAKEOVER EFFECTS
FNB is subject to various statutory "anti-takeover" provisions of the
PBCL, including Subchapters 25E, 25F, 25G and 25H of the PBCL. Subchapter 25E
of the PBCL (relating to control transactions) provides that, if any person or
group acquires 20% or more of the voting power of a covered corporation, the
remaining shareholders may demand from such person or group the fair value of
their shares, including a proportionate amount of any control premium.
Subchapter 25F of the PBCL (relating to business combinations) delays for five
years and imposes conditions upon business combinations between an interested
shareholder and the corporation. As described above, the term "business
combination" is defined broadly to include various transactions utilizing a
corporation's assets for purchase price amortization or refinancing purposes,
and an "interested shareholder" is defined generally as the beneficial owner of
at least 20% of a corporation's voting shares. See "-- Interested Shareholder
Transactions". Subchapter 25G of the PBCL (relating to control-share
acquisitions) prevents a person who has acquired 20% or more of the voting
power of a covered corporation from voting such shares unless the disinterested
shareholders approve such voting rights. Failure to obtain such approval
exposes the owner to the risk of a forced sale of stock to the issuer. If
shareholder approval is obtained, the corporation is also subject to
Subchapters 25I and 25J of the PBCL. Subchapter 25I of the PBCL provides for a
minimum severance payment to certain employees terminated within two years of
the approval. Subchapter 25J of the PBCL prohibits the abrogation of certain
labor contracts prior to their stated date of expiration. Subchapter 25H of the
PBCL (relating to disgorgement) applies in the event that (1) any person or
group publicly discloses that the person or group may acquire control of the
corporation or (2) a person or group acquires (or publicly discloses an offer
or intent to acquire) 20% or more of the voting power of the corporation and,
in either case, sells shares within 18 months thereafter. Any profits from
sales of equity securities of the corporation by the person or group during the
18-month period belong to the corporation if the securities that were sold were
acquired during the 18-month period or within 24 months prior thereto.
Subchapters 25E, 25F, 25G and 25H of the PBCL contain a wide variety of
transactional and status exemptions, exclusions and safe harbors.
In addition, the PBCL permits an amendment of the corporation's
charter or other corporation action, if approved by shareholders generally, to
provide mandatory special treatment for specified groups of nonconsenting
shareholders of the same class by providing, for example, that shares of common
stock held only by designated shareholders of record, and no other shares of
common stock, shall be cashed out at a price determined by the corporation,
subject to applicable dissenters' rights. The PBCL also provides that directors
may, in discharging their duties, consider the interests of a number of
different constituencies, including shareholders, employees, suppliers,
customers, creditors and the communities in which the corporation is located.
Directors are not required to consider the interests of shareholders to a
greater degree than other constituencies' interests. The PBCL expressly
provides that directors do not violate their fiduciary duties solely by relying
on poison pills or the anti-takeover provisions of the PBCL.
60
<PAGE> 68
The business combination provisions of the PBCL may have the effect of
deterring merger proposals, tender offers or other attempts to effect changes
in control of FNB that are not negotiated with and approved by the FNB Board.
FNB is not aware of any effort or intent to gain control of FNB or any effort
to organize a proxy contest or to accumulate FNB's shares.
Additionally, the following provisions of the FNB Charter and the FNB
Bylaws may be considered to have anti- takeover implications: (1) the ability
of the FNB Board to fill the vacancies (but only until the next selection of
the class of directors for which such director has been chosen) resulting from
an increase in the number of directors; (2) the ability of the FNB Board to
issue substantial amounts of FNB Common Stock without the need for shareholder
approval, which FNB Common Stock, among other things and in certain
circumstances, may be used to dilute the stock ownership of holders of FNB
Common Stock seeking to obtain control of FNB; (3) the ability of the FNB Board
to establish the rights of, and to issue, substantial amounts of FNB Preferred
Stock without the need for shareholder approval which FNB Preferred Stock,
among other things, may be used to create voting impediments with respect to
changes in control of FNB or, to dilute the stock ownership of holders of FNB
Common Stock seeking to obtain control of FNB; (4) the supermajority voting
requirements for certain extraordinary corporate transactions; and (5) the
broad range of factors that the FNB Board may consider in evaluating such a
proposal, and the broad range of actions it may take to reject such a proposal,
if it so decides.
Section 607.0902 of the FBCA restricts the voting rights of certain
shares of a corporation's stock when those shares are acquired by a party who,
by such acquisition, would control at least one-fifth of all voting rights of
the corporation's issued and outstanding stock. The statute provides that the
acquired shares (the "control shares") will, upon such acquisition, cease to
have any voting rights. The acquiring party may, however, petition the
corporation to have voting rights re-assigned to the control shares by way of
an "acquiring person's statement" submitted to the corporation in compliance
with the requirements of the statute. Upon receipt of such request, the
corporation must submit, for shareholder approval, the acquiring person's
request to have voting rights re-assigned to the control shares. Voting rights
may be reassigned to the control shares by a resolution of a majority of the
corporation's shareholders for each class and series of stock. If such a
resolution is approved, and the voting rights re-assigned to the control shares
represent a majority of all voting rights of the corporation's outstanding
voting stock, then, unless the corporation's articles of incorporation or
bylaws provide otherwise, all shareholders of the corporation shall be able to
exercise dissenter's rights in accordance with Florida law.
A corporation may, by amendment to its articles of incorporation or
bylaws, provide that, if the party acquiring the control shares does not submit
an acquiring person's statement in accordance with the statute, the corporation
may redeem the control shares at any time during the period ending 60 days
after the acquisition of control shares. If the acquiring party files an
acquiring person's statement, the control shares are not subject to redemption
by the corporation unless the shareholders, acting on the acquiring party's
request, deny full voting rights to the control shares.
The statute does not alter the voting rights of any stock of the
corporation acquired in any of the following manners: (i) pursuant to the laws
of intestate succession or pursuant to a gift or testamentary transfer; (ii)
pursuant to the satisfaction of a pledge or other security interest created in
good faith and not for the purpose of circumventing the statute; (iii) pursuant
to either a merger or share exchange if the corporation is a party to the
agreement or plan of merger or share exchange; (iv) pursuant to any savings,
employee stock ownership or other benefit plan of the corporation; or (v)
pursuant to an acquisition of shares specifically approved by the board of
directors of the corporation.
In addition, there are various provisions in the West Coast Charter
and the West Coast Bylaws that may serve as anti-takeover protections
including: (i) the ability of the West Coast Board to fill vacancies (but only
until the next selection of the class of directors for which such director has
been chosen) resulting
61
<PAGE> 69
from an increase in the number of directors; (ii) the supermajority voting
requirements for certain corporate transactions with interested persons; and
(iii) the broad range of factors that the West Coast Board may consider in
evaluating an unsolicited offer including a tender offer proposal. In addition,
the West Coast Charter authorizes the West Coast Board, without further
shareholder action, to issue from time to time, up to 2,500,000 shares of West
Coast Preferred Stock. The West Coast Board is empowered to divide any and all
of the shares of the West Coast Preferred Stock into series and to fix and
determine the relative rights and preferences of the shares of any series so
established.
Neither FNB nor West Coast currently has a shareholders' rights plan.
Shareholders' rights plans, in a variety of forms, are common to many
corporations incorporated in the United States and serve to afford a
corporation's board of directors the opportunity to withstand an unsolicited
takeover attempt while providing the board sufficient time to evaluate the
offer and its adequacy and to consider alternative measures or transactions
that may be appropriate in responding to the offer. Both the PBCL and FBCA
permit shareholders' rights plans in general and permit the adoption of
shareholders' rights plans by a board of directors without shareholder
approval.
LEGAL OPINIONS
The legality of the shares of FNB Common Stock to be issued to the
holders of West Coast Common Shares pursuant to its Merger will be passed upon
by Cohen & Grigsby, P.C., Pittsburgh, Pennsylvania. Cohen & Grigsby, P.C. has
from time to time acted as counsel in advising FNB and its affiliates with
respect to certain matters and in connection with various transactions. Cohen &
Grigsby, P.C. did not act as counsel to FNB or its affiliates with respect to
the Merger or any transaction in connection therewith.
The Merger Agreement provides as a condition to each party's
obligation to consummate the Merger that FNB and West Coast receive the opinion
of Smith, Gambrell & Russell, LLP, Atlanta, Georgia, special counsel to FNB,
substantially to the effect that the Merger will constitute a "reorganization"
under Section 368(a) of the Code.
EXPERTS
The consolidated financial statements of FNB incorporated by reference
in FNB's Annual Report on Form 10-K for the year ended December 31, 1995, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon, incorporated therein and incorporated herein by reference. As
to 1993, their report is based in part on the reports of S.R. Snodgrass, A.C.
independent auditors. The supplemental consolidated financial statements of
FNB, which give effect to the Southwest acquisition, appearing in FNB's Current
Report on Form 8-K dated March 5, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon, included therein
and incorporated herein by reference. As to 1995, 1994, and 1993, their report
is based in part on the reports of Hill, Barth & King, Inc., independent
auditors. Such financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of such firms as experts in
accounting and auditing.
The consolidated financial statements of West Coast incorporated in
this Proxy Statement-Prospectus by reference to the West Coast Annual Report on
Form 10-KSB for the year ended December 31, 1996 are incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
62
<PAGE> 70
SHAREHOLDER PROPOSALS
The 1997 Annual Meeting of West Coast shareholders is tentatively
scheduled to be held in April 1997, subject to the earlier consummation of the
Merger. In the event that the 1997 Annual Meeting of West Coast shareholders is
held, proposals of shareholders intended to be presented at that meeting must
have been received by December 9, 1996 for inclusion in West Coast's proxy
statement and form of proxy relating to such meeting. The submission of such
proposals by shareholders and the consideration of such proposals by West Coast
for inclusion in next year's proxy statement and form of proxy are subject to
the applicable rules and regulations of the Commission.
OTHER MATTERS
As of the date of this Proxy Statement-Prospectus, the West Coast
Board knows of no matters that will be presented for consideration at the
Special Meeting other than as described in this Proxy Statement-Prospectus.
However, if any other matters shall properly come before the Special Meeting or
any adjournments or postponements thereof and be voted upon, the enclosed
proxies shall be deemed to confer discretionary authority on the individuals
named as proxies therein to vote the shares represented by such proxies as to
any such matters. The persons named as proxies intend to vote or not to vote in
accordance with the recommendation of the management of West Coast.
63
<PAGE> 71
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
F.N.B. CORPORATION,
SOUTHWEST BANKS, INC.
AND
WEST COAST BANCORP, INC.
DATED AS OF NOVEMBER 15, 1996
<PAGE> 72
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PREAMBLE ..........................................................................1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER.......................................1
1.1 Merger................................................................1
1.2 Time and Place of Closing.............................................2
1.3 Effective Time........................................................2
1.4 Execution of Stock Option Agreement...................................2
ARTICLE 2 - TERMS OF MERGER........................................................2
2.1 Articles of Incorporation.............................................2
2.2 Bylaws................................................................2
2.3 Directors.............................................................2
ARTICLE 3 - MANNER OF CONVERTING SHARES............................................2
3.1 Conversion of Shares..................................................2
3.2 Anti-Dilution Provisions..............................................3
3.3 Shares Held by West Coast or FNB......................................3
3.4 Fractional Shares.....................................................3
3.5 Conversion of Stock Options, Warrants, and Other Rights...............3
ARTICLE 4 - EXCHANGE OF SHARES.....................................................4
4.1 Exchange Procedures...................................................4
4.2 Rights of Former West Coast Shareholders..............................5
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF WEST COAST...........................6
5.1 Organization, Standing, and Power.....................................6
5.2 Authority; No Breach by Agreement.....................................6
5.3 Capital Stock.........................................................7
5.4 West Coast Subsidiaries...............................................7
5.5 SEC Filings; Financial Statements.....................................8
5.6 Absence of Certain Changes or Events..................................8
5.7 Tax Matters...........................................................9
5.8 Assets...............................................................10
5.9 Environmental Matters................................................10
5.10 Compliance With Laws................................................11
5.11 Labor Relations.....................................................11
5.12 Employee Benefit Plans..............................................11
5.13 Material Contracts..................................................12
5.14 Legal Proceedings...................................................13
5.15 Reports.............................................................13
5.16 Statements True and Correct.........................................13
5.17 Accounting, Tax and Regulatory Matters..............................14
5.18 State Takeover Laws.................................................14
5.19 Articles of Incorporation Provisions................................14
5.20 Derivatives Contracts...............................................14
</TABLE>
A-i
<PAGE> 73
<TABLE>
<S> <C>
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF FNB AND SOUTHWEST...................14
6.1 Organization, Standing, and Power....................................14
6.2 Authority; No Breach By Agreement....................................15
6.3 Capital Stock........................................................15
6.4 FNB Subsidiaries.....................................................16
6.5 SEC Filings; Financial Statements....................................16
6.6 Absence of Certain Changes or Events.................................17
6.7 Tax Matters..........................................................17
6.8 Compliance With Laws.................................................17
6.9 Assets..............................................................18
6.10 Legal Proceedings...................................................18
6.11 Reports.............................................................19
6.12 Statements True and Correct.........................................19
6.13 Accounting, Tax and Regulatory Matters..............................19
6.14 Environmental Matters...............................................19
6.15 Derivatives Contracts...............................................20
6.16 Outstanding West Coast Shares.......................................20
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION..............................20
7.1 Affirmative Covenants of West Coast..................................20
7.2 Negative Covenants of West Coast.....................................20
7.3 Covenants of FNB.....................................................23
7.4 Adverse Changes In Condition.........................................23
7.5 Reports..............................................................23
ARTICLE 8 - ADDITIONAL AGREEMENTS.................................................24
8.1 Registration Statement; Proxy Statement; Shareholder Approval........24
8.2 Applications.........................................................24
8.3 Filings With State Offices...........................................24
8.4 Agreement As To Efforts To Consummate................................24
8.5 Access to Information; Confidentiality..............................25
8.6 Divided Equivalency.................................................25
8.7 Current Information.................................................25
8.8 Other Actions.......................................................26
8.9 Press Releases.......................................................26
8.10 Certain Actions.....................................................26
8.11 Accounting and Tax Treatment........................................26
8.12 Takeover Laws.......................................................26
8.13 Articles of Incorporation Provisions................................26
8.14 Agreement of Affiliates.............................................27
8.15 Employee Benefits...................................................27
8.16 Employment Contracts of Certain Officers of West Coast..............27
8.17 Indemnification.....................................................28
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.....................28
9.1 Conditions to Obligations of Each Party..............................28
9.2 Conditions to Obligations of FNB.....................................29
9.3 Conditions to Obligations of West Coast..............................30
</TABLE>
A-ii
<PAGE> 74
<TABLE>
<S> <C>
ARTICLE 10 - TERMINATION..........................................................31
10.1 Termination.........................................................31
10.2 Effect of Termination...............................................33
10.3 Non-Survival of Representations and Covenants.......................33
ARTICLE 11 - MISCELLANEOUS........................................................33
11.1 Definitions.........................................................33
11.2 Expenses............................................................40
11.3 Brokers and Finders.................................................40
11.4 Entire Agreement....................................................41
11.5 Amendments..........................................................41
11.6 Obligations of FNB..................................................41
11.7 Waivers.............................................................41
11.8 Assignment..........................................................42
11.9 Notices.............................................................42
11.10 Governing Law......................................................43
11.11 Counterparts.......................................................43
11.12 Captions...........................................................43
11.13 Enforcement of Agreement...........................................43
11.14 Severability.......................................................43
</TABLE>
A-iii
<PAGE> 75
LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
1. FORM OF STOCK OPTION AGREEMENT. (SECTION 1.4).
2. FORM OF AGREEMENT OF AFFILIATES OF WEST COAST. (SECTION 8.14).
A-iv
<PAGE> 76
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of November 15, 1996, by and among F.N.B. CORPORATION ("FNB"), a
Pennsylvania corporation having its principal office located in Hermitage,
Pennsylvania; SOUTHWEST BANKS, INC. ("Southwest"), a Florida corporation having
its principal office located in Naples, Florida, which will be a wholly owned
subsidiary of FNB on or about January 19, 1997 pursuant to the terms of that
certain Agreement and Plan of Merger dated February 2, 1996 among Southwest, FNB
and Southwest Affiliation Corporation, a wholly owned subsidiary of FNB (the
"FNB/Southwest Merger"); and WEST COAST BANCORP, INC. ("West Coast"), a Florida
corporation having its principal office located in Cape Coral, Florida.
PREAMBLE
The Boards of Directors of West Coast and FNB are of the opinion that
the acquisition described herein is in the best interests of the parties and
their respective shareholders. This Agreement provides for the acquisition of
West Coast by FNB pursuant to the merger of West Coast with and into Southwest
(the "Merger"). In the event that the FNB/Southwest Merger has not been
consummated prior to the effective time of the Merger, FNB will substitute
another of its wholly owned subsidiaries as a party to this Agreement in place
of Southwest. At the effective time of such Merger, the outstanding shares of
the capital stock of West Coast shall be converted into the right to receive
shares of the common stock of FNB (except as provided herein). As a result,
shareholders of West Coast shall become shareholders of FNB. The transactions
described in this Agreement are subject to the approvals of the shareholders of
West Coast, the Board of Governors of the Federal Reserve System, the Florida
Department of Banking and Finance, and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the Merger (as hereinafter defined) for federal income tax
purposes shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code, and for accounting purposes shall qualify
for treatment as a pooling of interests.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to FNB's willingness to enter into this Agreement, West
Coast and FNB are entering into a stock option agreement (the "Stock Option
Agreement"), in substantially the form of Exhibit 1, pursuant to which West
Coast is granting to FNB an option to purchase shares of West Coast Common
Shares.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, West Coast shall be merged with and into Southwest in
accordance with the provisions of the Florida Business Corporation Act (the
"FBCA"). The separate corporate existence of West Coast shall thereupon cease,
and Southwest shall be the Surviving Corporation resulting from the Merger and
shall continue to be governed by the Laws of the State of Florida. The Merger
shall have the effects specified in the FBCA. The Merger
A-1
<PAGE> 77
shall be consummated pursuant to the terms of this Agreement, which has been
approved and adopted by the respective Boards of Directors of West Coast, FNB
and Southwest.
1.2 Time and Place of Closing. The Parties shall use their reasonable
efforts to cause the closing of the transactions contemplated by this Agreement
to take place at 9:00 A.M. on or before the fifth business day (as designated by
FNB) but not prior to the second business day following the Effective Time, or
at such other time as the Parties, acting through their chief executive officers
or chief financial officers, may mutually agree. The place of closing shall be
at such location as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time the Florida
Articles of Merger containing the provisions required by, and executed in
accordance with the FBCA, shall have been accepted for filing by the Secretary
of State of the State of Florida or at such later date and time as is agreed
upon by the Parties as specified in the Florida Articles of Merger (the
"Effective Time"). Subject to the terms and conditions hereof, unless otherwise
mutually agreed upon in writing by each Party, the Effective Time shall occur on
the last to occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger if such
action is required, and (ii) the date on which the shareholders of West Coast
approve this Agreement to the extent such approval is required by applicable
Law.
1.4 Execution of Stock Option Agreement. Concurrently with the
execution of this Agreement and as a condition thereto, West Coast is executing
and delivering to FNB the Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. Pursuant to the Merger, the Articles of
Incorporation of Southwest in effect at the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation until otherwise amended or
repealed.
2.2 Bylaws. Pursuant to the Merger, the Bylaws of Southwest in effect
at the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 Directors. Upon the Effective Time, the directors of West Coast
shall be elected as directors for a term of one year of a subsidiary bank of FNB
having its headquarters in Lee County, Florida and FNB shall cause directors
fees to be paid to such individuals for such term in an amount at least equal to
the higher of the amount currently paid to the directors of the Southwest
Subsidiaries or the amount currently paid to the West Coast directors.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of FNB, Southwest or West Coast, or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
A-2
<PAGE> 78
(a) Each of the Surviving Corporation common shares issued and
outstanding immediately prior to the Effective Time shall remain
outstanding and issued entirely to FNB.
(b) Each share of FNB Capital Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each of the West Coast Common Shares (excluding shares to
be canceled pursuant to Section 3.3 of the Agreement) issued and
outstanding at the Effective Time shall cease to be outstanding and
shall be converted into the right to receive and exchanged for .794
shares of FNB Common Stock (the "Exchange Ratio").
3.2 Anti-Dilution Provisions. In the event FNB changes the number of
shares of FNB Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, recapitalization, reclassification or
similar transaction with respect to such stock and the record date therefor (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
3.3 Shares Held by West Coast or FNB. Each of the West Coast Common
Shares held by West Coast or by any FNB Company, in each case other than those
West Coast Common Shares held in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.4 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of West Coast Common Shares exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of FNB Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of FNB Common Stock multiplied
by the "market value" of one share of FNB Common Stock at the Effective Time.
The market value of one share of FNB Common Stock at the Effective Time shall be
the average of the high bid and low asked prices of such common stock in the
over-the-counter market, as reported by Nasdaq (or, if not reported thereby, any
other authoritative source selected by FNB) on the last trading day preceding
the Effective Time. No such holder will be entitled to dividends, voting rights,
or any other rights as a shareholder in respect of any fractional shares.
3.5 Conversion of Stock Options, Warrants, and Other Rights.
(a) At the Effective Time, each award, option, warrant, or other right
to purchase or acquire West Cost Common Shares pursuant to stock awards, stock
options, warrant agreements, or stock appreciation rights ("West Coast Options")
granted by West Coast under the West Coast Stock Plans or otherwise (including,
without limitation, those warrants issued to certain officers and directors of
West Coast), which are outstanding at the Effective Time and as were previously
listed and described in Section 3.5 of the West Coast Disclosure Memorandum,
whether or not vested or exercisable, shall be converted into and become rights
with respect to FNB Common Stock, and FNB shall assume each West Coast Option,
in accordance with the terms of the West Coast Stock Plan and stock option
agreement or warrant agreement by which it is evidenced, except that from and
after the Effective Time, (i) FNB and its Compensation Committee shall be
substituted for West Coast and the committee of West Coast's Board of Directors
(including, if applicable, the entire Board of Directors of West Coast)
administering such West Coast Stock Plan, (ii) each West Coast Option assumed by
FNB may be exercised solely for shares of FNB Common Stock (or cash in the case
of
A-3
<PAGE> 79
stock appreciation rights), (iii) the number of shares of FNB Common Stock
subject to such West Coast Option shall be equal to the number of shares of West
Coast Common Shares subject to such West Coast Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iv) the per share exercise
price (or similar threshold price, in the case of stock awards) under each such
West Coast Option shall be adjusted by dividing the per share exercise (or
threshold) price under each such West Coast Option by the Exchange Ratio and
rounding up to the nearest cent. Notwithstanding the provisions of clause (iii)
of the preceding sentence, FNB shall not be obligated to issue any fraction of a
share of FNB Common Stock upon exercise of West Coast Options and any fraction
of a share of FNB Common Stock that otherwise would be subject to a converted
West Coast Option shall represent the right to receive a cash payment equal to
the product of such fraction and the difference between the "market value" as
defined in Section 3.4 of one share of FNB Common Stock and the per share
exercise price of such right. In addition, notwithstanding the provisions of
clauses (iii) and (iv) of the first sentence of this Section 3.5(a), each West
Coast Option which is an "incentive stock option" shall be adjusted as required
by Section 424 of the Internal Revenue Code, and the regulations promulgated
thereunder, so as not to constitute a modification, extension, or renewal of the
option, within the meaning of Section 424(h) of the Internal Revenue Code. FNB
agrees to take all necessary steps to effectuate the foregoing provisions of
this Section 3.5.
(b) As soon as practicable after the Effective Time, FNB shall deliver
to the participants in each West Coast Stock Plan an appropriate notice setting
forth such participant's rights pursuant thereto and the grants pursuant to such
West Coast Stock Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 3.5(a) of this Agreement after
giving effect to the Merger), and FNB shall comply with the terms of each West
Coast Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such West Coast Stock Plan, the West Coast Options which
qualified as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options after the Effective Time. At or prior to the
Effective Time, FNB shall take all corporate action necessary to reserve for
issuance sufficient shares of FNB Common Stock for delivery upon exercise of
West Coast Options assumed by FNB in accordance with this Section 3.5. As soon
as practicable after the Effective Time, FNB shall file a registration statement
on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of FNB Common Stock subject to
such options and shall use its reasonable efforts to maintain the effectiveness
of such registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding. With respect to those individuals who subsequent to the Merger will
be subject to the reporting requirements under Section 16(a) of the Exchange
Act, where applicable, FNB shall administer the West Coast Stock Plan assumed
pursuant to this Section 3.5 in a manner that complies with Rule 16b-3
promulgated under the Exchange Act to the extent the West Coast Stock Plan
complied with such rule prior to the Merger.
(c) All restrictions or limitations on transfer with respect to West
Coast Common Shares awarded under the West Coast Stock Plans, to the extent that
such restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program, or arrangement, shall remain
in full force and effect with respect to shares of FNB Common Stock into which
such restricted stock is converted pursuant to Section 3.1 of this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. At the Effective Time, FNB shall deposit, or
shall cause to be deposited, with the Exchange Agent selected by FNB (the
"Exchange Agent") certificates evidencing shares of FNB
A-4
<PAGE> 80
Common Stock and cash in such amounts necessary to provide all consideration
required to be exchanged by FNB for West Coast Common Shares pursuant to the
terms of this Agreement. Promptly after the Effective Time, FNB shall cause the
Exchange Agent to mail to the former shareholders of West Coast appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
West Coast Common Shares shall pass, only upon proper delivery of such
certificates to the Exchange Agent). After the Effective Time, each holder of
shares of West Coast Common Shares (other than shares to be canceled pursuant to
Section 3.3 of this Agreement) issued and outstanding at the Effective Time
shall surrender the certificate or certificates representing such shares to the
Exchange Agent and shall upon surrender thereof promptly receive in exchange
therefor the consideration provided in Section 3.1 of this Agreement, together
with all declared but undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2 of this Agreement. To
the extent required by Section 3.4 of this Agreement, each holder of West Coast
Common Shares issued and outstanding at the Effective Time also shall receive,
upon surrender of the certificate or certificates representing such shares, cash
in lieu of any fractional share of FNB Common Shares to which such holder may be
otherwise entitled (without interest). FNB shall not be obligated to deliver the
consideration to which any former holder of West Coast Common Shares is entitled
as a result of the Merger until such holder surrenders such holder's certificate
or certificates representing the West Coast Common Shares for exchange as
provided in this Section 4.1. The certificate or certificates of West Coast
Common Shares so surrendered shall be duly endorsed as the Exchange Agent may
require. Any other provision of this Agreement notwithstanding, neither FNB nor
the Exchange Agent shall be liable to a holder of West Coast Common Shares for
any amounts paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property Law.
4.2 Rights of Former West Coast Shareholders. At the Effective Time,
the stock transfer books of West Coast shall be closed as to holders of West
Coast Common Shares immediately prior to the Effective Time and no transfer of
West Coast Common Shares by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore representing West
Coast Common Shares (other than shares to be canceled pursuant to Section 3.3 of
this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Sections 3.1
and 3.4 of this Agreement in exchange therefor, subject, however, to FNB's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which have been declared or made by West Coast
in respect of such West Coast Common Shares in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. Until 90 days after the
Effective Time, former shareholders of record of West Coast shall be entitled to
vote at any meeting of FNB stockholders the number of shares of FNB Common Stock
into which their respective West Coast Common Shares are converted, regardless
of whether such holders have exchanged their certificates representing West
Coast Common Shares for certificates representing FNB Common Stock in accordance
with the provisions of this Agreement. Whenever a dividend or other distribution
is declared by FNB on the FNB Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, but beginning
30 days after the Effective Time no dividend or other distribution payable to
the holders of record of FNB Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate representing
shares of West Coast Common Shares issued and outstanding at the Effective Time
until such holder surrenders such certificate for exchange as provided in
Section 4.1 of this Agreement. However, upon surrender of such West Coast Common
Shares certificate, both the FNB Common Stock certificate (together with all
such undelivered dividends or other distributions without interest) and any
undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate. Any
A-5
<PAGE> 81
portion of the consideration (including the proceeds of any investments thereof)
which had been made available to the Exchange Agent pursuant to Section 4.1 of
this Agreement that remain unclaimed by the shareholders of West Coast for six
months after the Effective Time shall be paid to FNB. Any shareholders of West
Coast who have not theretofore complied with this Article 4 shall thereafter
look only to FNB for payment of their shares of FNB Common Stock, cash in lieu
of fractional shares, and unpaid dividends and distributions on the FNB Common
Stock deliverable in respect of each West Coast Common Share such shareholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF WEST COAST
West Coast hereby represents and warrants to FNB as follows:
5.1 Organization, Standing, and Power. West Coast is a corporation duly
organized, validly existing, and in active status under the laws of the State of
Florida, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its material Assets. West Coast is
duly qualified or licensed to transact business as a foreign corporation and is
in good standing in each jurisdiction where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the West Coast and its Subsidiaries taken as a whole.
5.2 Authority; No Breach by Agreement.
(a) West Coast has the corporate power and authority necessary to
execute and deliver this Agreement, and, subject to the approval and adoption of
this Agreement by the shareholders of West Coast, to perform its obligations
under this Agreement and consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement by West Coast and the
consummation by West Coast of the transactions contemplated herein, including
the Merger, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of West Coast, subject to the approval of
this Agreement by its shareholders as contemplated by Section 8.1 hereof.
Subject to such requisite shareholder approval (and assuming due authorization,
execution, and delivery by FNB and Surviving Corporation), this Agreement
represents a legal, valid, and binding obligation of West Coast, enforceable
against West Coast in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought). The affirmative vote
of the holders of a majority of the outstanding West Coast Common Shares is the
only shareholder vote necessary to approve this Agreement and the transactions
contemplated hereby. The West Coast Board of Directors has received from Advest,
Inc. a letter dated as of the date of this Agreement to the effect that, in the
opinion of such firm, the Exchange Ratio is fair, from a financial point of
view, to the holders of West Coast Common Shares.
(b) Except as disclosed in Section 5.2(b) of the West Coast Disclosure
Memorandum, neither the execution and delivery of this Agreement by West Coast,
nor the consummation by West Coast of the transactions contemplated hereby, nor
compliance by West Coast with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of West Coast's Articles of
Incorporation or Bylaws,
A-6
<PAGE> 82
or, (ii) constitute or result in a default under, or result in the creation of
any Lien on any material Asset of any West Coast Company under, or require any
consent pursuant to, any Contract or Permit of any West Coast Company, where
such default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
West Coast and its Subsidiaries taken as a whole, or, (iii) subject to receipt
of the requisite Consents referred to in Sections 9.1(a), (b) and (c) of this
Agreement, violate any Order or, to its knowledge, any law applicable to any
West Coast Company or any of their respective material Assets which will have a
Material Adverse Effect on West Coast and its Subsidiaries taken as a whole.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the Nasdaq, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Small Business Administration,
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, and other than
Consents, filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on West Coast and its Subsidiaries, taken as a whole; no notice to,
filing with, or Consent of, any public body or authority is necessary for the
consummation by West Coast of the Merger and the other transactions contemplated
in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of West Coast consists of (i)
7,500,000 West Coast Common Shares, of which 1,544,466 shares are issued and
outstanding as of the date of this Agreement and not more than 1,718,691 shares
will be issued and outstanding at the Effective Time, and (ii) 2,500,000
preferred shares, par value $1.00 per share, none of which is issued and
outstanding. All of the issued and outstanding West Coast Common Shares are duly
and validly issued and outstanding and are fully paid and nonassessable under
the FBCA. None of the outstanding West Coast Common Shares has been issued in
violation of any preemptive rights. West Coast has reserved 239,700 West Coast
Common Shares for issuance under the West Coast Stock Plans, pursuant to which
options and warrants to purchase not more than 174,225 West Coast Common Shares
are outstanding.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
provided pursuant to the Stock Option Agreement, there are no shares of capital
stock or other equity securities of West Coast outstanding and no outstanding
Rights relating to the capital stock of West Coast.
5.4 West Coast Subsidiaries. Except as disclosed in Section 5.4 of the
West Coast Disclosure Memorandum, the list of Subsidiaries of West Coast filed
by West Coast with its most recent West Coast SEC Report on Form 10-KSB is a
true and complete list of all of the West Coast Subsidiaries as of the date of
this Agreement. Except as disclosed in Section 5.4 of the West Coast Disclosure
Memorandum, West Coast or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each West Coast Subsidiary. No equity
securities of any West Coast Subsidiary are or may become required to be issued
(other than to another West Coast Company) by reason of any Rights, and there
are no Contracts by which any West Coast Subsidiary is bound to issue (other
than to another West Coast Company) additional shares of its capital stock or
Rights or by which any West Coast Company is or may be bound to transfer any
shares of the capital stock of any West Coast Subsidiary (other than to another
West Coast Company). There are no Contracts relating to the rights of any West
Coast Company to vote or to dispose of any shares of the capital stock of any
West Coast Subsidiary. All of the shares of capital stock of each West Coast
Subsidiary held by a West Coast Company are fully paid and nonassessable under
the applicable corporation Law of the jurisdiction in
A-7
<PAGE> 83
which such Subsidiary is incorporated or organized (except, in the case of
Subsidiaries that are national banks, for the assessment contemplated by 12
U.S.C. ss. 55), and are owned by the West Coast Company free and clear of any
Lien. Each West Coast Subsidiary is either a bank or a corporation, and is duly
organized, validly existing, and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has the
corporate power and authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each West Coast Subsidiary
is duly qualified or licensed to transact business as a foreign corporation and
is in good standing in each jurisdiction where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on West Coast and its Subsidiaries taken as a whole.
Each West Coast Subsidiary that is a depository institution is an "insured
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and the deposits in which are insured by the Bank
Insurance Fund.
5.5 SEC Filings; Financial Statements.
(a) West Coast has filed or will file and has made or will make
available to FNB all forms, reports, and documents required to be filed by West
Coast with the SEC since January 1, 1993 (collectively, the "West Coast SEC
Reports"). The West Coast SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the 1933 Act and the 1934
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such West Coast SEC Reports or
necessary in order to make the statements in such West Coast SEC Reports, in
light of the circumstances under which they were made, not misleading (except
any statement or omission therein which has been corrected or otherwise
disclosed or updated in a subsequent West Coast SEC Report). Except for West
Coast Subsidiaries that are registered as a broker, dealer or investment
advisor, none of West Coast's Subsidiaries is required to file any forms,
reports, or other documents with the SEC. West Coast has made available to FNB a
copy of the balance sheets and the related consolidated statements of income,
consolidated statement of changes in shareholders' equity (including related
notes and schedules) of its subsidiary banks as of and for the three year period
ended December 31, 1995 and consolidated statements or earnings releases for
West Coast and its consolidated subsidiaries as of and for the three year period
ended December 31, 1995 and subsequent interim periods that have been prepared
by or for West Coast as of the date of this Agreement.
(b) Each of the West Coast Financial Statements (including, in each
case, any related notes) contained in any West Coast SEC Report on Form 10-QSB
or Form 10-KSB, including any West Coast SEC Report on Form 10-QSB or Form
10-KSB filed after the date of this Agreement until the Effective Time, are or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated therein or in the
notes to such financial statements, or, in the case of unaudited statements, as
permitted by Form 10-QSB of the SEC), and present or will present fairly the
consolidated financial position of West Coast and its Subsidiaries at the
respective dates and the consolidated results of its operations and cash flows
at and for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount, and except for the
absence of certain footnote information in the unaudited statements.
5.6 Absence of Certain Changes or Events. Except as disclosed in
Section 5.6 of the West Coast Disclosure Memorandum and except as set forth in
West Coast SEC Reports filed prior to the date of this
A-8
<PAGE> 84
Agreement, since June 30, 1996, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on West Coast and its Subsidiaries
taken as a whole, and (ii) the West Coast Companies have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and agreements of West
Coast provided in Article 7 of this Agreement.
5.7 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
West Coast Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
September 30, 1996, except to the extent that all such failures to file, taken
together, are not reasonably likely to have a Material Adverse Effect on West
Coast, and to the Knowledge of West Coast, all Tax Returns filed are complete
and accurate in all material respects. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Material Adverse Effect on West
Coast and its Subsidiaries taken as a whole, except as reserved against in the
West Coast Financial Statements delivered prior to the date of this Agreement or
as disclosed in Section 5.7 of the West Coast Disclosure Memorandum. All Taxes
and other liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid, accrued or provided for as disclosed in
Section 5.7 of the West Coast Disclosure Memorandum.
(b) Except as disclosed in Section 5.7 of the West Coast Disclosure
Memorandum, none of the West Coast Companies has executed an extension or waiver
of any statute of limitations on the assessment or collection of any material
Tax due that is currently in effect.
(c) Except as disclosed in Section 5.7 of the West Coast Disclosure
Memorandum, adequate provision for any Taxes due or to become due for any of the
West Coast Companies for the period or periods through and including the date of
the respective West Coast Financial Statements has been made and is reflected on
such West Coast Financial Statements.
(d) Deferred Taxes of the West Coast Companies and related valuation
allowance have been adequately provided for in the West Coast Financial
Statements in accordance with GAAP.
(e) To the knowledge of West Coast, each of the West Coast Companies is
in compliance with, and its records contain all information and documents
(including properly completed Internal Revenue Service Forms W-9) necessary to
comply with, all applicable information reporting and Tax withholding
requirements under federal, state, and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code, except for such instances of noncompliance and
such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on West Coast and its Subsidiaries taken as
a whole.
(f) There are no Liens with respect to Taxes upon any of the assets of
the West Coast Companies except for loans on the Subsidiaries' books generated
in the normal course of business.
(g) No West Coast Company has filed any consent under Section 341(f) of
the Internal Revenue Code concerning collapsible corporation.
A-9
<PAGE> 85
(h) All material elections with respect to Taxes affecting the West
Coast Companies as of the date of this Agreement have been or will be timely
made as set forth in Section 5.7 of the West Coast Disclosure Memorandum. After
the date hereof, other than as set forth in Section 5.7 of the West Coast
Disclosure Memorandum, no election with respect to Taxes will be made without
the prior written consent of FNB, which consent will not be unreasonably
withheld.
5.8 Assets. Except as disclosed in Section 5.8 of the West Coast
Disclosure Memorandum, the West Coast Companies have good and marketable title,
free and clear of all Liens (except for those Liens which are not likely to have
a Material Adverse Effect on West Coast or its Subsidiaries taken as a whole),
to all of their respective material Assets, reflected in West Coast Financial
Statements as being owned by West Coast as of the date hereof. All material
tangible properties used in the businesses of the West Coast Companies are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with West Coast's past practices. All
Assets which are material to West Coast's business on a consolidated basis, held
under leases or subleases by any of the West Coast Companies, are held under
valid Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. The West Coast Companies currently
maintain insurance in amounts, scope, and coverage as disclosed in Section 5.8
of the West Coast Disclosure Memorandum. None of the West Coast Companies has
received written notice from any insurance carrier that (i) such insurance will
be canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. Except as disclosed in Section 5.8 of the West Coast Disclosure
Memorandum, to the Knowledge of West Coast there are presently no occurrences
giving rise to a claim under such policies of insurance and no notices have been
given by any West Coast Company under such policies.
5.9 Environmental Matters.
(a) To the Knowledge of West Coast, except as disclosed in Section 5.9
of the West Coast Disclosure Memorandum, each West Coast Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, a Material Adverse Effect on West Coast and its
Subsidiaries taken as a whole.
(b) Except as disclosed in Section 5.9 of the West Coast Disclosure
Memorandum, to the Knowledge of West Coast, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other forum in
which any West Coast Company or any of its Loan Properties or Participation
Facilities has been or, with respect to threatened Litigation, may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving any of its Loan Properties or
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on West Coast and its Subsidiaries taken as a whole.
(c) To the Knowledge of West Coast, except as disclosed in Section 5.9
of the West Coast Disclosure Memorandum, there is no reasonable basis for any
Litigation of a type described above in Section 5.9(b), except such as is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on West Coast and its Subsidiaries taken as a whole.
A-10
<PAGE> 86
(d) To the Knowledge of West Coast, except as disclosed in Section 5.9
of the West Coast Disclosure Memorandum, during the period of (i) West Coast's
or any of its Subsidiaries' ownership or operation of any of their respective
properties, (ii) West Coast's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (iii) West Coast's or any of its
Subsidiaries' holding a security interest in a Loan Property, to the Knowledge
of West Coast there have been no releases of Hazardous Material in, on, under,
or affecting any Participation Facility or Loan Property of a West Coast
Company, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on West Coast and its Subsidiaries
taken as a whole.
5.10 Compliance With Laws. West Coast is duly registered as a bank
holding company under the BHC Act. Each West Coast Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on West Coast and its Subsidiaries taken as a whole.
None of the West Coast Companies is presently in default under any such Permit,
other than defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on West Coast and its Subsidiaries
taken as a whole. Except as disclosed in Section 5.10 of the West Coast
Disclosure Memorandum, none of the West Coast Companies:
(a) to the Knowledge of West Coast is in violation of any Laws
or Orders, applicable to its business or employees conducting its
business, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
West Coast and its Subsidiaries taken as a whole; and
(b) has received any written notification or communication
from any agency or department of federal, state, or local government or
any Regulatory Authority or the staff thereof (i) asserting that any
West Coast Company is not in substantial compliance with any of the
Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
West Coast and its Subsidiaries taken as a whole, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to
have, a Material Adverse Effect on West Coast and its Subsidiaries
taken as a whole, or (iii) requiring any West Coast Company to enter
into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business, or in any manner relates to its
capital adequacy, its credit or reserve policies, its management, or
the payment of dividends.
5.11 Labor Relations. No West Coast Company is the subject of any
Litigation asserting that it or any other West Coast Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other West Coast Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any West Coast Company,
pending or to the Knowledge of West Coast threatened, nor is there any activity
involving any West Coast Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.12 Employee Benefit Plans.
(a) West Coast has disclosed in Section 5.12 of the West Coast
Disclosure Memorandum, and has delivered or made available to FNB prior to the
execution of this Agreement copies or summaries in each
A-11
<PAGE> 87
case of, all material pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, including "employee benefit plans" (as that term is defined in Section
3(3) of ERISA), currently adopted, maintained by, sponsored in whole or in part
by, or contributed to by West Coast or any of its Subsidiaries for the benefit
of employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "West Coast Benefit Plans"). Any of the West
Coast 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 "West Coast ERISA
Plan." No West Coast Benefit Plan is or has been a multi-employer plan within
the meaning of Section 3(37) of ERISA.
(b) Except as disclosed in the West Coast Disclosure Memorandum, all
West Coast Benefit Plans are in compliance in all material respects with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws, the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on West Coast and
its Subsidiaries on a consolidated basis.
(c) Except as disclosed in the West Coast Disclosure Memorandum, no
West Coast ERISA Plan which is a "defined benefit pension plan" (as defined in
Section 4140 of the Internal Revenue Code) 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 terminated in
accordance with all applicable legal requirements.
(d) Except as disclosed in the West Coast Disclosure Memorandum or
otherwise provided by this Agreement, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any director or
any employee of West Coast or any of its Subsidiaries from West Coast or any of
its Subsidiaries under any West Coast Benefit Plan or otherwise, (ii) increase
any benefits otherwise payable under any West Coast Benefit Plan or (iii) result
in any acceleration of the time of payment or vesting of any such benefits,
where such payment, increase, or acceleration is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on West Coast and
its Subsidiaries on a consolidated basis.
5.13 Material Contracts. Except as disclosed in Section 5.13 of the
West Coast Disclosure Memorandum, none of the West Coast Companies is a party to
or subject to the following: (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $100,000, (ii) any Contract relating to
the borrowing of money by any West Coast Company or the guarantee by any West
Coast Company of any such obligation exceeding $100,000 (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Home Loan Bank advances of depository
institution Subsidiaries, trade payables, and Contracts relating to borrowings
or guarantees made in the ordinary course of business), and (iii) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-KSB filed by West Coast with the SEC as of the date of this
Agreement that has not been filed as an exhibit in an West Coast SEC Report, or
in another SEC Document (together with all Contracts referred to in Sections 5.8
and 5.12(a) of this Agreement, the "West Coast Contracts"). With respect to each
West Coast Contract and except as disclosed in Section 5.13 of the West Coast
Disclosure Memorandum: (i) each West
A-12
<PAGE> 88
Coast Contract is in full force and effect; (ii) no West Coast Company is in
default thereunder, other than defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on West Coast; (iii)
no West Coast Company has repudiated or waived any material provision of any
such West Coast Contract; and (iv) no other party to any such Contract is, to
the Knowledge of West Coast, in default in any material respect, other than
defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on West Coast and its Subsidiaries taken as
a whole, or has repudiated or waived any material provision thereunder. Except
for Federal Home Loan Bank advances, all of the indebtedness of any West Coast
Company for money borrowed is prepayable at any time by such West Coast Company
without penalty or premium.
5.14 Legal Proceedings. Except as disclosed in Section 5.14 of the West
Coast Disclosure Memorandum, there is no Litigation instituted or pending, or,
to the Knowledge of West Coast, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any West Coast Company, or
against any Asset, employee benefit plan, interest, or right of any of them,
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on West Coast, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any West Coast Company, that are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on West Coast. Section 5.14 of the West
Coast Disclosure Memorandum includes a summary report of all Litigation as of
the date of this Agreement to which any West Coast Company is a party and which
names a West Coast Company as a defendant or cross-defendant and where the
estimated maximum exposure is $25,000 or more.
5.15 Reports. Since January 1, 1996, each West Coast Company has timely
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file, which failure to file
or amend is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on West Coast and its Subsidiaries taken as a whole,
with any Regulatory Authorities. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws
enforced or promulgated by the SEC. As of its respective date, no such report or
document contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading which is reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on West Coast and its Subsidiaries taken as a whole.
5.16 Statements True and Correct. None of the information supplied or
to be supplied by any West Coast Company or any Affiliate thereof for inclusion
in the Registration Statement to be filed by FNB with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any West Coast Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to West Coast's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by a West Coast
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of West Coast, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the 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
A-13
<PAGE> 89
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any West Coast Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.17 Accounting, Tax and Regulatory Matters. To the Knowledge of West
Coast, neither West Coast nor any Affiliate thereof has taken or agreed to take
any action which would, or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying for pooling-of-interests accounting treatment or as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
5.18 State Takeover Laws. Each West Coast Company has taken all
necessary action to exempt the transactions contemplated by this Agreement from
the provisions of Sections 607.0901 through 607.0903, inclusive, of the FBCA
(collectively, "Takeover Laws").
5.19 Articles of Incorporation Provisions. Each West Coast Company has
taken all action so that the entering into this Agreement and the consummation
of the Merger and the other transactions contemplated by this Agreement do not
and will not result in any super-majority voting requirement or the grant of any
rights to any Person under the Articles of Incorporation, Bylaws, or other
governing instruments of any West Coast Company or restrict or impair the
ability of FNB or any of its Subsidiaries to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of any West Coast Company that
may be directly or indirectly acquired or controlled by it.
5.20 Derivatives Contracts. Except as disclosed in Section 5.20 of the
West Coast Disclosure Memorandum, neither West Coast nor any of its Subsidiaries
is a party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor, or collar financial contract, or any
other interest rate or foreign currency protection contract not included on its
balance sheet which is a financial derivative contract (including various
combinations thereof) (each a "Derivatives Contract"), except for those
Derivatives Contracts set forth in Section 5.20 of the West Coast Disclosure
Memorandum.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FNB AND SOUTHWEST
FNB and Southwest hereby represent and warrant to West Coast as
follows:
6.1 Organization, Standing, and Power.
(a) FNB is a corporation duly organized, validly existing, and in good
standing under the Laws of the Commonwealth of Pennsylvania, and has the
corporate power and authority to carry on its business as now conducted and to
own, lease, and operate its material Assets. FNB is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on FNB.
A-14
<PAGE> 90
(b) Southwest is a corporation duly organized, validly existing, and in
active status under the Laws of the State of Florida, and has the corporate
power and authority to carry on its business as now conducted and to own, lease,
and operate its material Assets. Southwest is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Southwest.
6.2 Authority; No Breach By Agreement.
(a) Each of FNB and Southwest has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of FNB and
Southwest. This Agreement represents a legal, valid, and binding obligation of
FNB and Southwest, enforceable against FNB and Southwest in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by FNB or
Southwest, nor the consummation by FNB or Southwest of the transactions
contemplated hereby, nor compliance by FNB or Southwest with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of FNB's Articles of Incorporation or Bylaws, or (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result in the creation of
any Lien on any Asset of any FNB Company or Southwest under, any Contract or
Permit of any FNB Company or Southwest, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FNB or Southwest, or, (iii) subject
to receipt of the requisite Consents referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to any FNB Company or Southwest
or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
Nasdaq, and other than Consents required from Regulatory Authorities, and other
than notices to or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation with respect to any employee benefit plans, or
under the HSR Act, and other than Consents, filings, or notifications which, if
not obtained or made, are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FNB and Southwest, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by FNB and Southwest of the Merger and the other transactions
contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of FNB consists of
100,000,000 shares of FNB Common Stock, of which 9,233,377 shares were issued
and outstanding as of the date of this Agreement and (ii) 20,000,000 shares of
FNB Preferred Stock, of which 398,368 shares were issued and outstanding as of
September 30, 1996. All of the issued and outstanding shares of FNB Capital
Stock are, and all of the FNB Common Stock to be issued in exchange for West
Coast Common Shares upon consummation of the Merger will be authorized and
reserved for issuance prior to the Effective Time and, when issued in accordance
with the terms of this Agreement, will be, duly and validly issued and
outstanding and fully paid and nonassessable
A-15
<PAGE> 91
under the PBCL. None of the outstanding shares of FNB Capital Stock has been,
and none of the shares of FNB Common Stock to be issued in exchange for shares
of West Coast Common Shares upon consummation of the Merger will be, issued in
violation of any preemptive rights of the current or past shareholders of FNB.
6.4 FNB Subsidiaries. Except as disclosed in Section 6.4 of the FNB
Disclosure Memorandum, the list of Subsidiaries of FNB filed by FNB with its
most recent FNB Report on Form 10-K is a true and complete list of all of the
FNB Subsidiaries as of the date of this Agreement. Except as disclosed in
Section 6.4 of the FNB Disclosure Memorandum, FNB or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock of each FNB
Subsidiary. No equity securities of any FNB Subsidiary are or may become
required to be issued (other than to another FNB Company) by reason of any
Rights, and there are no Contracts by which any FNB Subsidiary is bound to issue
(other than to another FNB Company) additional shares of its capital stock or
Rights or by which any FNB Company is or may be bound to transfer any shares of
the capital stock of any FNB Subsidiary (other than to another FNB Company).
There are no Contracts relating to the rights of any FNB Company to vote or to
dispose of any shares of the capital stock of any FNB Subsidiary. All of the
shares of capital stock of each FNB Subsidiary held by a FNB Company are fully
paid and nonassessable under the applicable corporation Law of the jurisdiction
in which such Subsidiary is incorporated or organized (except, in the case of
Subsidiaries that are national banks, for the assessment contemplated by 12
U.S.C. Section 55), and are owned by the FNB Company free and clear of any Lien.
Each FNB Subsidiary is either a bank or a corporation, and is duly organized,
validly existing, and (as to corporations) in good standing under the Laws of
the jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate its Assets and
to carry on its business as now conducted. Each FNB Subsidiary is duly qualified
or licensed to transact business as a foreign corporation and is in good
standing in each jurisdiction where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB and its Subsidiaries taken as a whole. Each FNB Subsidiary that is
a depository institution is an "insured institution" as defined in the Federal
Deposit Insurance Act and applicable regulations thereunder, and the deposits in
which are insured by the Bank Insurance Fund or the Savings Association
Insurance Fund.
6.5 SEC Filings; Financial Statements.
(a) FNB has filed and made available to West Coast all forms, reports,
and documents required to be filed by FNB with the SEC since January 1, 1993,
(collectively, the "FNB SEC Reports"). The FNB SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
1933 Act and the 1934 Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such FNB
SEC Reports or necessary in order to make the statements in such FNB SEC
Reports, in light of the circumstances under which they were made, not
misleading. Except for FNB Subsidiaries that are registered as brokers, dealers,
investment advisers, or associated persons thereof, none of the FNB Subsidiaries
is required to file any forms, reports or other documents with the SEC.
(b) Each of the FNB Financial Statements (including, in each case, any
related notes) contained in the FNB SEC Reports, including any FNB SEC Reports
filed after the date of this Agreement until the Effective Time, complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements
A-16
<PAGE> 92
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC),
and fairly presented the consolidated financial position of FNB and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
6.6 Absence of Certain Changes or Events. Since June 30, 1996, except
as disclosed in the FNB Financial Statements delivered prior to the date of this
Agreement, (i) there have been no events, changes or occurrences which have had,
or are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB, and (ii) the FNB Companies have not taken any action, or
failed to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and agreements of FNB
provided in Articles 7 or 8 of this Agreement.
6.7 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
FNB Companies have been timely filed or requests for extensions have been timely
filed, granted, and have not expired for periods ended on or before December 31,
1995, and on or before the date of the most recent fiscal year end immediately
preceding the Effective Time, except to the extent that all such failures to
file, taken together, are not reasonably likely to have a Material Adverse
Effect on FNB, and all Tax Returns filed are complete and accurate in all
material respects. All Taxes shown on filed Tax Returns have been paid. There is
no audit examination, deficiency, or refund Litigation with respect to any Taxes
that is reasonably likely to result in a determination that would have,
individually or in the aggregate, a Material Adverse Effect on FNB, except as
reserved against in the FNB Financial Statements delivered prior to the date of
this Agreement. All Taxes and other liabilities due with respect to completed
and settled examinations or concluded Litigation have been paid.
(b) Adequate provision for any Taxes due or to become due for any of
the FNB Companies for the period or periods through and including the date of
the respective FNB Financial Statements has been made and is reflected on such
FNB Financial Statements.
(c) Deferred Taxes of the FNB Companies have been adequately provided
for in the FNB Financial Statements.
(d) To the Knowledge of FNB, each of the FNB Companies is in compliance
with, and its records contain all information and documents (including properly
completed Internal Revenue Service Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under federal,
state, and local Tax Laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Internal
Revenue Code, except for such instances of noncompliance and such omissions as
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FNB.
6.8 Compliance With Laws. FNB is duly registered as a bank holding
company under the BHC Act. Each FNB Company has in effect all Permits necessary
for it to own, lease, or operate its material Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB. None of the FNB Companies is presently in Default under or in
violation of any such Permit, other than Defaults which are not
A-17
<PAGE> 93
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FNB. No FNB Company:
(a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FNB; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any FNB
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FNB, (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB, or
(iii) requiring any FNB Company to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any board
resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management or the payment
of dividends.
6.9 Assets. Except as disclosed in Section 6.9 of the FNB Disclosure
Memorandum, the FNB Companies have good and marketable title, free and clear of
all Liens (except for those Liens which are not likely to have a Material
Adverse Effect on FNB or its Subsidiaries taken as a whole), to all of their
respective material Assets, reflected in FNB Financial Statements as being owned
by FNB as of the date hereof. All material tangible properties used in the
businesses of the FNB Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
FNB's past practices. All Assets which are material to FNB's business on a
consolidated basis, held under leases or subleases by any of the FNB Companies,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. The FNB Companies currently maintain
insurance in amounts, scope, and coverage as disclosed in Section 6.9 of the FNB
Disclosure Memorandum. None of the FNB Companies has received written notice
from any insurance carrier that (i) such insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. Except as
disclosed in Section 6.9 of the FNB Disclosure Memorandum, to the Knowledge of
FNB there are presently no occurrences giving rise to a claim under such
policies of insurance and no notices have been given by any FNB Company under
such policies.
6.10 Legal Proceedings. Except as disclosed in Section 6.10 of the FNB
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
Knowledge of FNB, threatened (or unasserted but considered probable of assertion
and which if asserted would have at least a reasonable probability of an
unfavorable outcome) against any FNB Company, or against any Asset, interest, or
right of any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FNB, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any FNB Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB.
A-18
<PAGE> 94
6.11 Reports. Since January 1, 1996, or the date of organization if
later, each FNB Company has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB). As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
6.12 Statements True and Correct. None of the information supplied or
to be supplied by any FNB Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by FNB with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any FNB Company or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to West Coast's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by any FNB Company or
any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of West Coast, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the 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 Shareholders' Meeting. All
documents that any FNB Company or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
6.13 Accounting, Tax and Regulatory Matters. No FNB Company or any
Affiliate thereof has taken or agreed to take any action or has any Knowledge of
any fact or circumstance that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying as a
reorganization within the meaning of Section 368(a)(2)(D) of the Internal
Revenue Code, or (ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) of this Agreement or result
in the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
6.14 Environmental Matters.
(a) To the Knowledge of FNB, except as disclosed in Section 6.14 of the
FNB Disclosure Memorandum, each FNB Company, its Participation Facilities, and
its Loan Properties are, and have been, in compliance with all Environmental
Laws, except for violations which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB.
(b) Except as disclosed in Section 6.14 of the FNB Disclosure
Memorandum, there is no Litigation pending, or, to the Knowledge of FNB,
threatened before any court, governmental agency, or authority or other forum in
which any FNB Company or any of its Loan Properties or Participation Facilities
(or any FNB Company in respect of any such Loan Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into
A-19
<PAGE> 95
the environment of any Hazardous Material, whether or not occurring at, on,
under, or involving any of its Loan Properties or Participation Facilities,
except for such Litigation pending or threatened that is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FNB.
(c) To the Knowledge of FNB, except as disclosed in Section 6.14 of the
FNB Disclosure Memorandum, there is no reasonable basis for any Litigation of a
type described above in Section 6.14(b), except such as is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FNB.
(d) To the Knowledge of FNB, except as disclosed in Section 6.14 of the
FNB Disclosure Memorandum, during the period of (i) FNB's or any of its
Subsidiaries' ownership or operation of any of their respective properties, (ii)
FNB's or any of its Subsidiaries' participation in the management of any
Participation Facility, or (iii) FNB's or any of its Subsidiaries' holding a
security interest in a Loan Property, to the Knowledge of FNB there have been no
releases of Hazardous Material in, on, under, or affecting any Participation
Facility or Loan Property of a FNB Company, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
FNB.
6.15 Derivatives Contracts. Neither FNB nor any of its Subsidiaries is
a party to or has agreed to enter into a Derivatives Contract, except for those
Derivatives Contracts set forth in Section 6.15 of the FNB Disclosure
Memorandum.
6.16 Outstanding West Coast Shares. As of the date of this Agreement,
FNB beneficially owns for its own account (not including those held in a
fiduciary or trust capacity for, or on behalf of, unaffiliated third parties)
35,000 West Coast Common Shares. During the term of this Agreement, no FNB
Company shall purchase or otherwise acquire beneficial ownership of any
additional West Coast Common Shares except pursuant to the terms of this
Agreement.
6.17 Material Contracts. All material Contracts to which FNB is a party
and which are required to be filed as exhibits to FNB SEC Reports have been so
filed.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of West Coast. Unless the prior written
consent of FNB shall have been obtained, and except as otherwise expressly
contemplated herein, West Coast shall and shall cause each of its Subsidiaries
to (i) operate its business only in the usual, regular, and ordinary course,
(ii) use its reasonable best efforts to preserve intact its business
organization and Assets and maintain its rights and franchises, (iii) use its
reasonable efforts to maintain its current employee relationships, and (iv) take
no action which would adversely affect the ability of any Party to obtain any
Consents of Regulatory Authorities required for the transactions contemplated
hereby without imposition of a condition or restriction of the type referred to
in the last sentence of Section 9.1(b) of this Agreement.
7.2 Negative Covenants of West Coast. Except as described in Section
7.2 of the West Coast Disclosure Memorandum, from the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
West Coast covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following without the prior written
A-20
<PAGE> 96
consent of the chief executive officer, president, chief financial officer, or
any executive vice president of FNB:
(a) amend the Articles of Incorporation, Bylaws, or other
governing instruments of any West Coast Company or, except as expressly
contemplated by this Agreement; or
(b) make any new loan or other extension of credit to any
Person (except those who receive a commitment for a loan or extension
of credit prior to the date of this Agreement) in excess of $100,000
(except for loans secured by a owner occupied real property first
mortgage or single or 1-4 family residential loan properly margined or
secured by liquid assets each of which is less than $500,000);
provided, however, that FNB or its designate shall make every
reasonable effort to respond to West Coast's request for loan approval
in a timely manner and, under normal circumstances, make a decision
within three business days; or
(c) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a West Coast Company to
another West Coast Company) in excess of an aggregate of $100,000 (for
the West Coast Companies on a consolidated basis) except in the
ordinary course of the business of West Coast Subsidiaries consistent
with past practices (it being understood and agreed that the incurrence
of indebtedness in the ordinary course of business shall include,
without limitation, creation of deposit liabilities (except brokered
deposits), purchases of federal funds, sales of certificates of
deposit, advances from the Federal Reserve Bank or Federal Home Loan
Bank, and entry into repurchase agreements fully secured by U.S.
government or agency securities), or impose, or suffer the imposition,
on any Asset of any West Coast Company of any Lien or permit any such
Lien to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of
legal requirements in the exercise of trust powers, and Liens in effect
as of the date hereof that are disclosed in the West Coast Disclosure
Memorandum); or
(d) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of any West Coast
Company, or declare or pay any dividend or make any other distribution
in respect of West Coast's capital stock (except for (i) regular
quarterly dividends paid in accordance with Section 8.6 of this
Agreement, (ii) dividends paid by any West Coast Subsidiary, and (iii)
acquisition of West Coast Common Shares by any West Coast Subsidiary in
a fiduciary or trust capacity in the ordinary course of business; or
(e) except for this Agreement, or pursuant to the Stock Option
Agreement or pursuant to the exercise of stock options outstanding as
of the date hereof and pursuant to the terms thereof in existence on
the date hereof, or as disclosed in Section 7.2(e) of the West Coast
Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber,
or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of West Coast Common Shares or any
other capital stock of any West Coast Company, or any stock
appreciation rights, or any option, warrant, conversion, or other right
to acquire any such stock, or any security convertible into any such
stock; or
(f) adjust, split, combine, or reclassify any capital stock of
any West Coast Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of West Coast
Common Shares, or sell, lease, mortgage, or otherwise dispose of or
otherwise encumber (i)
A-21
<PAGE> 97
any shares of capital stock of any West Coast Subsidiary (unless any
such shares of stock are sold or otherwise transferred to another West
Coast Company) or (ii) any Asset other than in the ordinary course of
business for reasonable and adequate consideration; or
(g) except for purchases of United States Treasury securities
or United States Government agency securities, which in either case
have maturities of five years or less, purchase any securities or make
any material investment, either by purchase of stock or securities,
contributions to capital, Asset transfers, or purchase of any Assets,
in any Person other than a wholly owned West Coast Subsidiary, or
otherwise acquire direct or indirect control over any Person, other
than in connection with (i) foreclosures in the ordinary course of
business, (ii) acquisitions of control by a depository institution
Subsidiary in its fiduciary capacity, or (iii) the creation of new
wholly owned Subsidiaries organized to conduct or continue activities
otherwise permitted by this Agreement; or
(h) grant any increase in compensation or benefits to the
employees or officers of any West Coast Company, except in accordance
with past practice disclosed in Section 7.2(h) of the West Coast
Disclosure Memorandum or as required by Law; pay any severance or
termination pay or any bonus other than pursuant to written policies or
written contracts in effect on the date of this Agreement or as
otherwise disclosed in Section 7.2(h) of the West Coast Disclosure
Memorandum; enter into or amend any severance agreements with officers
of any West Coast Company; grant any material increase in fees or other
increases in compensation or other benefits to directors of any West
Coast Company except in accordance with past practice disclosed in
Section 7.2(h) of the West Coast Disclosure Memorandum; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits; or
(i) except as described in Section 7.2(i) of the West Coast
Disclosure Memorandum and except for Employment Agreements that may be
entered into pursuant to Section 8.16 of this Agreement, enter into or
amend any employment Contract between any West Coast Company and any
Person (unless such amendment is required by Law) that the West Coast
Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any
time on or after the Effective Time; or
(j) except as disclosed in Section 7.2(j) of the West Coast
Disclosure Memorandum, adopt any new employee benefit plan of any West
Coast Company or make any material change in or to any existing
employee benefit plans of any West Coast Company other than any such
change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan; or
(k) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(l) except as disclosed in Section 7.2(l) of the West Coast
Disclosure Memorandum, commence any Litigation other than in accordance
with past practice or settle any Litigation involving any liability of
any West Coast Company for material money damages or restrictions upon
the operations of any West Coast Company; or
A-22
<PAGE> 98
(m) except in the ordinary course of business, modify, amend,
or terminate any material Contract other than renewals without a
material adverse change of terms, or waive, release, compromise, or
assign any material rights or claims; or
(n) except for transactions in the ordinary course of business
consistent with past practice, make any investment in excess of
$100,000 either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of
any other individual, corporation or other entity, other than a wholly
owned Subsidiary thereof, except as disclosed in Section 7.2 of the
West Coast Disclosure Memorandum; or
(o) sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties or assets to any individual, corporation or other
entity other than a direct or indirect wholly owned Subsidiary, or
cancel, release or assign any indebtedness to any such Person or any
claims held by any such Person, except in the ordinary course of
business consistent with past practice or pursuant to contracts or
agreements in force at the date of this Agreement; or
(p) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.2.
7.3 Covenants of FNB. From the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement, FNB covenants and
agrees that it shall (i) continue to conduct its business and the business of
its Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the FNB Common Stock and the business prospects of the FNB
Companies, and (ii) take no action which would (a) materially adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentence of Section 9.1(b) of this Agreement, or (b)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent any FNB Company from discontinuing or disposing of any of its Assets or
business if such action is, in the judgment of FNB, desirable in the conduct of
the business of FNB and its Subsidiaries. FNB further covenants and agrees that
it will not, without the prior written consent of the Chief Executive Officer of
West Coast, which consent shall not be unreasonably withheld, amend the Articles
of Incorporation or Bylaws of FNB, in each case in any manner adverse to the
holders of West Coast Common Shares.
7.4 Adverse Changes In Condition. Except as disclosed in Section 7.4 of
the West Coast Disclosure Schedule, each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 Reports. Each Party and their respective Subsidiaries shall file
all reports required to be filed by each of them with Regulatory Authorities
between the date of this Agreement and the Effective Time and shall deliver to
the other Party copies of all such reports promptly after the same are filed. If
financial statements are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material and except for the absence of certain footnote information in the
unaudited
A-23
<PAGE> 99
financial statements). As of their respective dates, such reports filed with the
SEC will comply in all material respects with the Securities Laws and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. As
soon as practicable after execution of this Agreement (in no event, later than
January 31, 1997), FNB shall file the Registration Statement with the SEC, and
shall use its reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and take any action required to be taken under the
applicable state blue sky or securities Laws in connection with the issuance of
the shares of FNB Common Stock upon consummation of the Merger. West Coast shall
promptly furnish all information concerning it and the holders of its capital
stock as FNB may reasonably request in connection with such action. West Coast
shall call a Shareholders' Meeting, to be held on a date that is determined by
the Parties to be a mutually desirable date, which date shall be as soon as
practicable after the Registration Statement is declared effective by the SEC,
for the purpose of voting upon approval of this Agreement and such other related
matters as it deems appropriate. In connection with the Shareholders' Meeting,
(i) West Coast shall prepare and file with the SEC a Proxy Statement relating to
the Merger and mail such Proxy Statement to its shareholders, (ii) the Parties
shall promptly furnish to each other all information concerning them that they
may reasonably request in connection with such Proxy Statement, (iii) the Board
of Directors of West Coast shall recommend (subject to compliance with their
fiduciary duties under applicable law as advised by counsel) to its shareholders
the approval of this Agreement, (iv) shall vote all West Coast Common Shares
beneficially owned in favor of the approval of this Agreement, and (v) the Board
of Directors and officers of West Coast shall (subject to compliance with their
fiduciary duties as advised by counsel) use their reasonable best efforts to
obtain such shareholders' approval.
8.2 Applications. FNB shall promptly prepare and file, and West Coast
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement and
thereafter use its reasonable best efforts to cause the Merger to be consummated
as expeditiously as possible.
8.3 Filings With State Offices. Upon the terms and subject to the
conditions of this Agreement, FNB shall execute and file the Florida Articles of
Merger with the Secretary of State of the State of Florida in connection with
the Closing.
8.4 Agreement As To Efforts To Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including the use of their respective reasonable best efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing
A-24
<PAGE> 100
herein shall preclude either Party from exercising its rights under this
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Permits and Consents of all third
parties and Regulatory Authorities necessary or desirable for the consummation
of the transactions contemplated by this Agreement.
8.5 Access to Information; Confidentiality. From the date hereof to the
Effective Time, upon reasonable notice and subject to applicable Laws, FNB and
West Coast shall afford each other, and each other's accountants, counsel, and
other representatives, during normal working hours for the period of time prior
to the Effective Time, reasonable access to all of its and its Subsidiaries'
properties, books, contracts, commitments, and records and, during such period,
each shall furnish promptly to the other party (i) a copy of each report,
schedule, and other document filed or received by it or any of its Subsidiaries
during such period pursuant to the requirements of the Securities Laws, (ii) a
copy of all filings made with any Regulatory Authorities or other governmental
entities in connection with the transactions contemplated by this Agreement and
all written communications received from such Regulatory Authorities and
governmental entities related thereto, and (iii) all other information
concerning its or its Subsidiaries' business, properties and personnel as such
other party may reasonably request, including reports of condition filed with
Regulatory Authorities. In this regard, without limiting the generality of the
foregoing, each of the parties hereto shall notify the other parties hereto
promptly upon the receipt by it of any comments from the SEC, or its staff, and
of any requests by the SEC for amendments or supplements to the Registration
Statement or the Proxy Statement or for additional information and will supply
the other parties hereto with copies of all correspondence between it and its
representatives, on the one hand, and the SEC or the members of its staff or any
other government official, on the other hand, with respect to the Registration
Statement or the Proxy Statement. Each party hereto shall, and shall cause its
advisors and representatives to (x) conduct its investigation in such a manner
which will not unreasonably interfere with the normal operations, customers or
employee relations of the other and shall be in accordance with procedures
established by the parties having the due regard for the foregoing, and (y)
refrain from using for any purposes other than as set forth in this Agreement,
and shall treat as confidential, all information obtained by each hereunder or
in connection herewith and not otherwise known to them prior to the Effective
Time. Except as otherwise agreed to in writing by West Coast, unless and until
the Florida Articles of Merger are filed with the Secretary of State of the
State of Florida, FNB, and their Subsidiaries and Affiliates will be bound by,
and all information received with respect to West Coast pursuant to this Section
8.5 shall be subject to, the terms of that certain confidentiality agreement
entered into with West Coast, dated July 15, 1996 (the "Confidentiality
Agreement").
8.6 Divided Equivalency. After the date of this Agreement and until the
Effective Time, West Coast may declare and pay quarterly cash dividends to its
shareholders in an amount equal to the regular quarterly cash dividend paid by
FNB on its Common Stock multiplied by the Exchange Ratio. After the date of this
Agreement, and prior to the Effective Time, West Coast shall make all applicable
payments due to participants under the West Coast Stock Plan and (the employment
agreements of West Coast, and all other applicable benefit plans, including all
payments due on or affected by a change in control of West Coast under the terms
of such plans).
8.7 Current Information. During the period from the date of this
Agreement until the Effective Time or the termination of this Agreement, each of
West Coast and FNB shall, and shall cause its representatives to, confer on a
regular and frequent basis with representatives of the other. Each of West Coast
and FNB shall promptly notify the other of (i) any material change in its
business or operations, (ii) any material complaints, investigations or hearings
(or communications indicating that the same may be contemplated) of any
Regulatory Authority, (iii) the institution or the threats of material
litigation involving such party, or (iv) the
A-25
<PAGE> 101
occurrence, or nonoccurrence, of any event or condition the occurrence, or
nonoccurrence, of which would reasonably be expected to cause any of such
party's representations or warranties set forth herein that are qualified as to
materiality to become untrue or inaccurate in any respect as of the Effective
Time, and in each case shall keep the other fully informed with respect thereto.
8.8 Other Actions. No Party shall, or shall permit any of its
Subsidiaries to, take any action, except in every case as may be required by
applicable Law, that would or is intended to result in (i) any of its
representations and warranties set forth in this Agreement that are qualified as
to materiality being or becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any material manner
having a Material Adverse Effect, (iii) any of the conditions set forth in this
Agreement not being satisfied or in a violation of any provision of this
Agreement, or (iv) adversely affecting the ability of any of them to obtain any
of the Consents or Permits from the Regulatory Authorities (unless such action
is required by sound banking practice).
8.9 Press Releases. Prior to the Effective Time, West Coast and FNB
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.9
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.10 Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, from the date of this Agreement until the
Effective Time or termination pursuant to Article 10 hereof, no West Coast
Company nor any Affiliate thereof nor any Representatives thereof retained by
any West Coast Company shall directly or indirectly solicit any Acquisition
Proposal by any Person. Except to the extent necessary to comply with the
fiduciary duties of West Coast's Board of Directors as determined after
consultation with counsel, no West Coast Company or any Affiliate or
representative thereof shall furnish any nonpublic information that it is not
legally obligated to furnish or negotiate with respect to, any Acquisition
Proposal, but West Coast may communicate information about such an Acquisition
Proposal to its shareholders if and to the extent that it is required to do so
in order to comply with its legal obligations as advised by counsel. West Coast
shall promptly notify FNB orally and in writing in the event that it receives
any inquiry or proposal relating to any such transaction. West Coast shall (i)
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) direct and use its reasonable efforts to cause
of all its Representatives not to engage in any of the foregoing.
8.11 Accounting and Tax Treatment. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify for treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code for federal
income tax purposes. FNB and West Coast undertake and agree to use their
reasonable efforts to cause the Merger, and to take no action that would cause
the Merger not to qualify for pooling-of-interests accounting treatment.
8.12 Takeover Laws. Each West Coast Company shall take all necessary
steps to exempt the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Laws.
8.13 Articles of Incorporation Provisions. Each West Coast Company
shall take all necessary action to ensure that the entering into of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in any super-majority voting
requirements or the
A-26
<PAGE> 102
grant of any rights to any Person under the Articles of Incorporation, Bylaws,
or other governing instruments of any West Coast Company or restrict or impair
the ability of FNB or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a shareholder with respect to, shares of any West Coast Company
that may be directly or indirectly acquired or controlled by it.
8.14 Agreement of Affiliates. West Coast has disclosed in Section 8.14
of the West Coast Disclosure Memorandum all Persons whom it reasonably believes
are "affiliates" of West Coast for purposes of Rule 145 under the 1933 Act. West
Coast shall use its reasonable efforts to cause each such Person to deliver to
FNB not later than 30 days prior to the Effective Time, a written agreement,
substantially in the form of Exhibit 2 hereto, providing that such Person will
not sell, pledge, transfer, or otherwise dispose of the shares of West Coast
Common Shares held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of FNB Common Stock to be received by such Person upon consummation of
the Merger except in compliance with applicable provisions of the 1933 Act and
the rules and regulations thereunder and until such time as financial results
covering at least 30 days of combined operations of FNB and West Coast have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies. Shares of FNB Common Stock issued to such
affiliates of West Coast in exchange for shares of West Coast Common Shares
shall not be transferable until such time as financial results covering at least
30 days of combined operations of FNB and West Coast have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section 8.11 (and FNB shall be entitled to place
restrictive legends upon certificates for shares of FNB Common Stock issued to
affiliates of West Coast pursuant to this Agreement to enforce the provisions of
this Section 8.11). FNB shall not be required to maintain the effectiveness of
the Registration Statement under the 1933 Act for the purposes of resale of FNB
Common Stock by such affiliates.
8.15 Employee Benefits. Following the Effective Time, FNB shall provide
generally to officers and employees of the West Coast Companies, employee
benefits under employee benefit plans (other than stock option or other plans
involving the potential issuance of FNB Common Stock), on terms and conditions
which when taken as a whole are no less favorable than those currently provided
by West Coast or those currently provided by the FNB Companies to their
similarly situated officers and employees; provided, that, for a period of 12
months after the Effective Time, FNB shall provide generally to officers and
employees of West Coast Companies severance benefits in accordance with the
policies of Southwest which include a payment to terminated officers and
employees of West Coast equal to one week's pay for each year of service. For
purposes of participation and vesting (but not benefit accrual under any
employee benefit plans of FNB and its subsidiaries other than the West Coast
Benefit Plans) under such employee benefit plans, the service of the employees
of the West Coast Companies prior to the Effective Time shall be treated as
service with a FNB Company participating in such employee benefit plans.
8.16 Employment Contracts of Certain Officers of West Coast. FNB shall
provide Messrs. Geml, Panicaro and Delmotte new FNB employment contracts with
such terms and conditions as shall be negotiated between the parties, in
exchange for the cancellation by such officers of their existing West Coast
employment contracts and corresponding severance pay agreements. In the event
any of such officers elect not to enter into such proposed new FNB employment
agreements, FNB shall honor the severance pay agreement in the existing West
Coast employment agreement of such officer.
A-27
<PAGE> 103
8.17 Indemnification.
(a) FNB shall, and shall cause the Surviving Corporation (and its
successors and assigns) to, indemnify, defend, and hold harmless each person who
is now, or has at anytime prior to the date hereof, or who becomes prior to the
Effective Time, an officer, director, employee, or agent of West Coast or its
Subsidiaries (each, an "Indemnified Party"), after the Effective Time against
any and all costs or expenses (including reasonable attorneys' fees), judgments,
fines, penalties, losses, claims, damages, liabilities, and amounts paid in
settlement in connection with any claim, action, suit, proceeding, or
investigation, whether civil, criminal, administrative, or investigative,
arising out of or pertaining to any action or omission occurring on or prior to
the Effective Time (including, without limitation, the transactions contemplated
by this Agreement) to the fullest extent then permitted under Florida law and by
the Articles of Incorporation and Bylaws of West Coast as in effect on the date
hereof, including provisions relating to advances of expenses incurred in the
defense of any action or suit. Without limiting the foregoing, in any case in
which approval by the Surviving Corporation is required to effectuate any
indemnification, FNB shall cause the Surviving Corporation to direct, at the
election of the Indemnified Party, that the determination of any such approval
shall be made by independent counsel selected by the Indemnified Party. FNB
shall, and shall cause the Surviving Corporation, to apply such rights of
indemnification in good faith and to the fullest extent permitted by applicable
law.
(b) If FNB or the Surviving Corporation or any of their successors or
assigns shall consolidate with or merge into any other Person and shall not be
the continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in each
case, proper provision shall be made so that the successors and assigns of FNB
shall assume the obligations set forth in this Section 8.17.
(c) The provisions of this Section 8.17 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party, his or her heirs
and representatives, and shall survive the consummation of the Merger and be
binding on all successors and assigns of FNB and the Surviving Corporation.
8.18 Listing of Shares on Nasdaq. FNB undertakes, prior to the
Effective Time, to cause the shares of FNB Common Stock to be issued pursuant to
the Merger to be listed on the Nasdaq Small Cap Market, or such other exchange
or Nasdaq market on which the FNB Common Stock trades at the Effective Time.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.7 of
this Agreement:
(a) Shareholder Approval. The shareholders of West Coast shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent
required by Law and the rules and regulations of Nasdaq.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
A-28
<PAGE> 104
made and shall be in full force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital
or the disposition of Assets) which in the reasonable judgment of the
Board of Directors of either Party would so materially adversely impact
the economic or business benefits of the transactions contemplated by
this Agreement that, had such condition or requirement been known, such
Party would not, in its reasonable judgment, have entered into this
Agreement.
(c) Consents and Approvals. Other than the filing of the
Florida Articles of Merger, each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement or listed in Section
9.1(c) of the West Coast Disclosure Memorandum) or for the preventing
of any default under any Contract of such Party which, if not obtained
or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions
contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall
have been declared effective under the 1933 Act, and no stop orders
suspending the effectiveness of the Registration Statement shall have
been issued, and no action, suit, proceeding, or investigation by the
SEC to suspend the effectiveness thereof shall have been initiated and
be continuing, and all necessary approvals under state securities Laws
or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of FNB Common Stock issuable pursuant to the Merger shall have
been received.
(f) Pooling of Interests. Ernst & Young, LLP, FNB's
independent public accountants, shall have issued a letter dated as of
the Effective Time to West Coast and FNB, respectively, to the effect
that the Merger shall be accounted for as a pooling-of-interests under
GAAP.
(g) Tax Matters. Each Party shall have received a written
opinion or opinions from Smith, Gambrell and Russell, LLP in a form
reasonably satisfactory to such Parties (the "Tax Opinion"), to the
effect that (i) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code and (ii) the
exchange in the Merger of West Coast Common Shares for FNB Common Stock
will not give rise to gain or loss to the shareholders of West Coast
with respect to such exchange (except to the extent of any cash
received). In rendering such Tax Opinion, such counsel shall be
entitled to rely upon representations of officers of West Coast and FNB
reasonably satisfactory in form and substance to such counsel.
9.2 Conditions to Obligations of FNB. The obligations of FNB to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by FNB pursuant to Section 11.7(a) of this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
West Coast set forth in this Agreement shall be assessed as of the date
of this Agreement and as of the Effective Time with the same effect as
though all such
A-29
<PAGE> 105
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined
to a specified date shall speak only as of such date). The
representations and warranties of West Coast set forth in Section 5.3
of this Agreement shall be true and correct (except for inaccuracies
which are de minimus in amount). The representations and warranties of
West Coast set forth in Sections 5.17, 5.18, 5.19, and 5.20 of this
Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of
West Coast set forth in this Agreement (including the representations
and warranties set forth in Sections 5.3, 5.17, 5.18, 5.19, and 5.20)
such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on West Coast;
provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include
such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of West Coast to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(c) Certificates. West Coast shall have delivered to FNB (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Section
9.2(a) and 9.2(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by West Coast's Board of
Directors and shareholders evidencing the taking of all corporate
action necessary to authorize the execution, delivery, and performance
of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as FNB and its
counsel shall request.
(d) Affiliates Agreements. FNB shall have received from each
affiliate of West Coast the affiliates letter referred to in Section
8.14 of this Agreement, to the extent necessary to assure in the
reasonable judgment of FNB that the transactions contemplated hereby
will qualify for pooling-of-interests accounting treatment.
9.3 Conditions to Obligations of West Coast. The obligations of West
Coast to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by West Coast pursuant to Section 11.7(b) of
this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
FNB set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties of FNB set forth in Section
6.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimus in amount). The representations and
warranties of FNB set forth in Section 6.11 of this Agreement shall be
true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of FNB set forth in
this Agreement (including the representations and warranties set forth
in Sections 6.3 and 6.11) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on FNB; provided that, for purposes of this sentence only, those
representations and warranties
A-30
<PAGE> 106
which are qualified by references to "material" or "Material Adverse
Effect" shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of FNB to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. FNB shall have delivered to West Coast (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Section
9.3(a) and 9.3(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by FNB's Board of
Directors evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement,
and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Southwest and its counsel shall request.
(d) Fairness Opinion. West Coast shall have received from
Advest, Inc. a letter, dated not more than five business days prior to
the date of the Proxy Statement, to the effect that, in the opinion of
such firm, the Exchange Ratio plus the payment of the dividends to West
Coast Shareholders pursuant to Section 8.6 hereof is fair, from a
financial point of view, to the holders of West Coast Common Shares.
(e) Payment of Consideration. FNB shall have delivered to
Exchange Agent the consideration to be paid to holders of the West
Coast Common Shares pursuant to Sections 3.1 and 3.4 of this Agreement.
(f) Price Condition. The Average Market Price of a share of
FNB Common Stock shall not be less than $20.625.
(g) Opinion of Counsel. West Coast shall have received a
written opinion of Smith, Gambrell & Russell, LLP counsel to FNB, dated
as of the Effective Time, with respect to such matters and in such form
as shall be agreed upon between such firm and West Coast.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of West Coast, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual written consent of the Board of Directors of FNB
and the Board of Directors of West Coast; or
(b) By the Board of Directors of either FNB or West Coast
(provided that the terminating Party is not then in breach of any
representation or warranty contained in this Agreement under the
applicable standard set forth in Section 9.2(a) of this Agreement in
the case of West Coast and Section 9.3(a) in the case of FNB or in
material breach of any covenant or other agreement contained
A-31
<PAGE> 107
in this Agreement) in the event of an inaccuracy of any representation
or warranty of the other Party contained in this Agreement which cannot
be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such inaccuracy and which inaccuracy
would provide the terminating Party the ability to refuse to consummate
the Merger under the applicable standard set forth in Section 9.2(a) of
this Agreement in the case of West Coast and Section 9.3(a) of this
Agreement in the case of FNB; or
(c) By the Board of Directors of either FNB or West Coast in
the event of a material breach by the other Party of any covenant,
agreement or obligation contained in this Agreement which breach cannot
be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach; or
(d) By the Board of Directors of either FNB or West Coast in
the event (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated
hereby shall have been denied by final nonappealable action of such
authority or if any action taken by such authority is not appealed
within the time limit for appeal, or (ii) the shareholders of West
Coast fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the FBCA at the
Shareholders' Meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(e) By the Board of Directors of either FNB or West Coast in
the event that the Merger shall not have been consummated by September
30, 1997, if the failure to consummate the transactions contemplated
hereby on or before such date is not caused by any breach of this
Agreement by the Party electing to terminate pursuant to this Section
10.1(e); or
(f) By FNB in the event dissenters' rights are claimed,
pursuant to the applicable provisions of the FBCA, by persons owning in
the aggregate more than 10% of the issued and outstanding West Coast
Common Shares; or
(g) By West Coast, if its Board of Directors determines by a
vote of a majority of the members of its entire Board of Directors,
upon written notice to FNB at least 24 hours prior to the closing, if
the Average Market Price of FNB Common Shares shall be less than
$20.625; or
(h) By the Board of Directors of either FNB or West Coast
(provided that the terminating Party is not then in breach of any
representation or warranty contained in this Agreement under the
applicable standard set forth in Section 9.2(a) of this Agreement in
the case of West Coast and Section 9.3(a) in the case of FNB or in
material breach of any covenant or other agreement contained in this
Agreement) in the event that any of the conditions precedent to the
obligations of such Party to consummate the Merger cannot be satisfied
or fulfilled by the date specified in Section 10.1(e) of this
Agreement; or
(i) By West Coast, if at any time prior to the Effective Time,
the fairness opinion of Advest, Inc. is withdrawn; or
(j) By West Coast if prior to the Effective Time, a
corporation, partnership, person or other entity or group shall have
made a bona fide Acquisition Proposal that the West Coast Board
determines in its good faith judgment and in the exercise of its
fiduciary duties, with respect to legal matters on the written opinion
of legal counsel and as to financial matters on the written opinion of
A-32
<PAGE> 108
an investment banking firm of national reputation, is more favorable to
the West Coast stockholders and that the failure to terminate this
Agreement and accept such alternative Acquisition Proposal would be
inconsistent with the proper exercise of such fiduciary duties.
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and 11.1 and Section 8.5 of this Agreement shall survive
any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination; provided, further, that in the event of any termination of this
Agreement following the occurrence of an Initial Triggering Event (as defined in
the Stock Option Agreement) (other than termination due to (A) the failure of
FNB to satisfy a condition to closing, (B) failure to obtain the requisite
approval of West Coast shareholders following a favorable recommendation by the
West Coast Board, or (C) the withdrawal by the West Coast financial advisor of
its fairness opinion), FNB shall be entitled to a cash payment from West Coast
in an amount equal to $500,000 upon the occurrence of any Subsequent Triggering
Event (as defined in the Stock Option Agreement) within twelve months following
the date of such termination (or such longer period as shall exist under the
Stock Option Agreement until the occurrence of an Exercise Termination Date (as
defined in the Stock Option Agreement)). In the event this Agreement is
terminated as a result of FNB's failure to satisfy any of its representations,
warranties or covenants set forth herein, FNB shall reimburse West Coast for its
reasonable out-of-pocket expenses relating to the Merger in an amount not to
exceed $250,000, which amount shall not be deemed an exclusive remedy or
liquidated damages.
10.3 Non-Survival of Representations and Covenants. The respective
representations and warranties of the Parties shall not survive the Effective
Time. All agreements of the Parties to this Agreement which by their terms are
to be performed following the Effective Time shall survive the Effective Time
until performed in accordance with their terms.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or any
proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of, such Party or
any of its Subsidiaries (other than the transactions contemplated or
permitted by this Agreement).
A-33
<PAGE> 109
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character,
and description, whether real, personal, or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.
"Average Market Price" shall mean the average of the high bid
and low asked prices of such common stock in the over-the-counter
market for the ten consecutive trading days prior to the Determination
Date, as reported by Nasdaq (or, if not reported thereby, any other
authoritative source selected by FNB).
"BHC Act" shall mean the Federal Bank Holding Company Act of
1956, as amended.
"Confidentiality Agreements" shall mean those certain
Confidentiality Agreement referenced to in Section 8.5.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person.
"Contract" shall mean any written agreement, commitment,
contract, note, bond, mortgage, indenture, instrument, lease,
obligation, license, plan, of any kind or character, or other document
to which any Person is a party or that is binding on any Person or its
capital stock or Assets.
"Default" shall mean (i) any breach or violation of or default
under any Contract, or (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, or (iii) any
occurrence of any event that with or without the passage of time or the
giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate,
increase, or impose any liability under, any Contract, Order, where, in
any such event, such default is reasonably likely to have a Material
Adverse Effect on a Party.
"Derivatives Contract" shall have the meaning set forth in
Section 5.20 hereof.
"Determination Date" shall mean the fifth business day prior
to the Effective Time.
"Effective Time" shall have the meaning set forth in Section
1.3 hereof.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata)
and which are administered, interpreted, or enforced by the United
States Environmental Protection Agency and state and local agencies
with jurisdiction over, and including
A-34
<PAGE> 110
common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq., and
other Laws relating to emissions, discharges, releases, or threatened
releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section
5.12(c) hereof.
"Exchange Agent" shall have the meaning set forth in Section
4.1 hereof.
"Exchange Ratio" shall have the meaning set forth in Section
3.1(c) hereof.
"Exhibits" 1 and 2 shall mean the Exhibits so marked, copies
of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto.
"FBCA" shall mean the Florida Business Corporation Act.
"FNB" shall have the meaning set forth in the first paragraph
hereof.
"FNB Capital Stock" shall mean, collectively, the FNB Common
Stock, the FNB Preferred Stock, and any other class or series of
capital stock of FNB.
"FNB Common Stock" shall mean the $2 par value common stock of
FNB.
"FNB Companies" shall mean, collectively, FNB and all FNB
Subsidiaries.
"FNB Disclosure Memorandum" shall mean the written information
entitled "FNB Corporation Disclosure Memorandum" delivered prior to the
date of this Agreement to Southwest describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made.
"FNB Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any)
of FNB as of June 30, 1996, and as of December 31, 1995 and 1994, and
the related statements of income, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) for the six
months ended June 30, 1996, and for each of the three years ended
December 31, 1995, 1994, and 1993, as filed by FNB in SEC Documents,
and (ii) the consolidated statements of condition of FNB (including
related notes and schedules, if any) and related statements of income,
changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to June 30, 1995.
"FNB Preferred Stock" shall mean the $10 par value preferred
stock of FNB.
A-35
<PAGE> 111
"FNB SEC Reports" shall have the meaning set forth in Section
6.4(a) hereof.
"FNB Subsidiaries" shall mean the Subsidiaries of FNB, which
shall include any corporation, bank, savings association, or other
organization acquired as a Subsidiary of FNB in the future and owned by
FNB at the Effective Time.
"Florida Articles of Merger" shall mean the Articles of Merger
to be executed by the Parties and filed with the Secretary of State of
the State of Florida relating to the Merger as contemplated by Section
1.3 of this Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States consistently applied during the periods involved
applicable to banks or bank holding companies, as the case may be.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HSR Act" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" shall have the meaning set forth in
Section 8.13 hereof.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean the personal knowledge of the chairman, president, chief financial
officer, chief accounting officer, chief credit officer, general
counsel, any assistant or deputy general counsel, or any senior or
executive vice president of such Person and the knowledge of any such
persons obtained or which would have been obtained from a reasonable
investigation.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, liabilities, or business, including those
promulgated, interpreted, or enforced by any Regulatory Authority.
"Lien" with respect to any Asset shall mean any conditional
sale agreement, default of title, easement, encroachment, encumbrance,
hypothecation, infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention, or other security
arrangement, or any adverse right or interest, charge, or claim of any
nature whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable,(ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits, and (iii) other Liens incurred in the
ordinary course of the banking business.
A-36
<PAGE> 112
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice by any Person alleging
potential liability.
"Loan Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or its Subsidiary holds a security or other interest
(including an interest in a fiduciary capacity) where required by the
context, includes the owner or operator of such property, but only with
respect to such property.
"Material Adverse Effect" on a Party shall mean an event,
change, or occurrence which, individually or together with any other
event, change, or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of such Party
and its Subsidiaries, taken as a whole, or (ii) the ability of such
Party to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement,
provided that "Material Adverse Effect" shall not be deemed to include
the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting principles
generally applicable to banks and their holding companies, (c) actions
and omissions of a Party (or any of its Subsidiaries) taken with the
prior informed consent of the other Party in contemplation of the
transactions contemplated hereby, (d) circumstances affecting regional
bank holding companies generally, and (e) the Merger and compliance
with the provisions of this Agreement on the operating performance of
the Parties.
"Merger" shall have the meaning set forth in Section 1.1
hereof.
"Nasdaq" shall mean the Nasdaq Stock Market.
"Order" shall mean any decree, injunction, judgment, order,
decision or award, ruling, or writ of any federal, state, local, or
foreign or other court, arbitrator, mediator, tribunal, administrative
agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
in the management and, where required by the context, said term means
the owner or operator of such facility or property, but only with
respect to such facility or property.
"Party" shall mean either West Coast or FNB, and "Parties"
shall mean both West Coast and FNB.
"PBCL" shall mean the Pennsylvania Business Corporation Law.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person.
"Person" shall mean a natural person or any legal, commercial,
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
A-37
<PAGE> 113
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by West
Coast to solicit the approval of its shareholders of the transactions
contemplated by this Agreement, which shall include the prospectus of
FNB relating to the issuance of the FNB Common Stock to holders of West
Coast Common Shares.
"Registration Statement" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
FNB under the 1933 Act with respect to the shares of FNB Common Stock
to be issued to the shareholders of West Coast in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of
the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
the SEC, NASD, NASDAQ, and all state regulatory agencies having
jurisdiction over the Parties and their respective Subsidiaries.
"Rights" shall mean all calls, commitments, options, rights to
subscribe to, scrip, understandings, warrants, or other binding
obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital
stock of a Person or by which a Person is or any contracts,
commitments, or other arrangements may be bound to issue additional
shares of its capital stock, or options, warrants, rights to purchase
or acquire any additional shares of the capital stock.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and
the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Shareholders' Meeting" shall mean the meeting of the
shareholders of West Coast to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.
"Southwest" shall have the meaning set forth in the first
paragraph hereof.
"Stock Option Agreement" shall have the meaning set forth in
the Preamble hereof.
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding
A-38
<PAGE> 114
equity securities is owned directly or indirectly by its parent;
provided, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned
or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean Southwest as the surviving
corporation resulting from the Merger or in the event the FNB/Southwest
Merger has not be consummated prior to the Effective Time, such other
wholly-owned Subsidiary of FNB substituted in place of Southwest as a
Party to this Agreement.
"Takeover Laws" shall have the meaning set forth in Section
5.18 hereof.
"Tax" or "Taxes" shall mean all federal, state, local, and
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
local, foreign government or subdivision or agency thereof, including
any interest, penalties or additions thereto.
"Tax Opinion" shall have the meaning set forth in Section
9.1(g) hereof.
"Taxable Period" shall mean any period prescribed by any
governmental authority, including the United States or any state,
local, foreign government or subdivision or agency thereof for which a
Tax Return is required to be filed or Tax is required to be paid.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an
affiliated or combined or unitary group that includes a Party or its
Subsidiaries.
"West Coast" shall have the meaning set forth in the first
paragraph hereof.
"West Coast Benefits Plans" shall have the meaning set forth
in Section 5.12(a) hereof.
"West Coast Common Shares" shall mean the $1.00 par value
common shares of West Coast.
"West Coast Companies" shall mean, collectively, West Coast
and all West Coast Subsidiaries.
"West Coast Contract" shall have the meaning set forth in
Section 5.13.
"West Coast Disclosure Memorandum" shall mean the written
information entitled "West Coast Corporation Disclosure Memorandum"
delivered prior to the date of this Agreement to FNB describing in
reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto.
A-39
<PAGE> 115
"West Coast ERISA Plan" shall have the meaning set forth in
Section 5.12(a) hereof.
"West Coast Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of West Coast as of June 30, 1996, and as of December 31, 1995 and
1994, and the related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
for the six months ended June 30, 1996, and for each of the three
fiscal years ended December 31, 1995, 1994, and 1993, as filed by West
Coast in SEC Documents, and (ii) the consolidated balance sheets of
West Coast (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to June 30,
1996.
"West Coast Options" shall have the meaning set forth in
Section 3.5(a) hereof.
"West Coast Pension Plan" shall have the meaning set forth in
Section 5.12(a) hereof.
"West Coast SEC Reports" shall have the meaning set forth in
Section 5.5(a) hereof.
"West Coast Stock Plans" shall mean the existing stock option
and other stock-based compensation plans and warrant instruments of
West Coast set forth in Section 3.5 of the West Coast Disclosure
Memorandum.
"West Coast Subsidiaries" shall mean the Subsidiaries of West
Coast, which shall include the West Coast Subsidiaries described in
Section 5.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of West
Coast in the future and owned by West Coast at the Effective Time.
(b) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of FNB and
West Coast shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration, and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants, and
counsel, except that each of FNB and West Coast shall bear and pay one-half of
the printing costs incurred in connection with the printing of the Registration
Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
11.3 Brokers and Finders. Except for Advest, Inc. as to West Coast and
except for The Robinson-Humphrey Company, Inc. as to FNB, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder in connection with
this
A-40
<PAGE> 116
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by West Coast or FNB, each of West
Coast and FNB, as the case may be, agrees to indemnify and hold the other Party
harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein,
this Agreement constitutes the entire agreement between the Parties with respect
to the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral (except for the
Confidentiality Agreements). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, other than as provided in Sections 8.13 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of West Coast Common Shares, there shall be
made no amendment that reduces or modifies in any material respect the
consideration to be received by holders of West Coast Common Shares without the
further approval of such shareholders.
11.6 Obligations of FNB. Whenever this Agreement requires FNB
(including the Surviving Corporation) to take any action, such requirement shall
be deemed to include an undertaking by FNB to cause the FNB Subsidiaries to take
such action.
11.7 Waivers.
(a) Prior to or at the Effective Time, FNB, acting through its Board of
Directors, chief executive officer, president or other authorized officer, shall
have the right to waive any default in the performance of any term of this
Agreement by West Coast, to waive or extend the time for the compliance or
fulfillment by West Coast of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of FNB under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of FNB.
(b) Prior to or at the Effective Time, West Coast, acting through its
Board of Directors, chief executive officer, president or other authorized
officer, shall have the right to waive any default in the performance of any
term of this Agreement by FNB, to waive or extend the time for the compliance or
fulfillment by FNB of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of West Coast
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of West Coast.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
A-41
<PAGE> 117
11.8 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.9 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
West Coast: 2724 Del Prado Boulevard South
Cape Coral, Florida 33904
Telecopy Number: 941-772-2096
Attention: Michael P. Geml, President
Copy to Counsel: Carlton, Fields, Ward, Emanuel, Smith &
Cutler, P.A.
One Harbour Place
777 S. Harbour Island Boulevard
Tampa, Florida 33602-5799
Telecopy Number: 813-229-4133
Attention: Richard A. Denmon
FNB: Hermitage Square
Hermitage, PA 16148
Telecopy Number: 412-983-3515
Attention: Peter Mortensen
Chairman of the Board and
President
copy to: John Waters, Vice President and
Chief Financial Officer
Southwest: 2911 Tamiami Trail North
Naples, Florida 33940
Telecopy Number: 941-435-7658
Attention: Gary L. Tice, Chairman of the
Board, President and Chief Executive Officer
Copy to Counsel: Smith, Gambrell & Russell, LLP
3343 Peachtree Road, NE
Suite 1800
Atlanta, Georgia 30326
Telecopy Number: 404-264-2652
Attention: Robert C. Schwartz
A-42
<PAGE> 118
11.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the Commonwealth of Pennsylvania, without regard
to any applicable conflicts of Laws, except to the extent that the Laws of the
State of Florida relate to the consummation of the Merger.
11.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.12 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.13 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
------------------------------------------
Name: Peter Mortensen
Title: Chairman of the Board and President
SOUTHWEST BANKS, INC.
By: /s/ Gary L. Tice
------------------------------------------
Name: Gary L. Tice
Title: Chairman of the Board, President,
and Chief Executive Officer
WEST COAST BANCORP, INC.
By: /s/ Michael P. Geml
------------------------------------------
Name: Michael P. Geml
Title: President
A-43
<PAGE> 119
FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "First
Amendment") is made and entered into as of February 28, 1997, by and among
F.N.B. CORPORATION ("FNB"), a Pennsylvania corporation, SOUTHWEST BANKS, INC.
("Southwest"), a Florida corporation and wholly owned subsidiary of FNB, and
WEST COAST BANCORP, INC. ("West Coast"), a Florida corporation.
PREAMBLE
The parties hereto entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated as of November 15, 1996 whereby FNB, Southwest and
West Coast agreed to the merger of West Coast with and into Southwest. The
parties now desire to amend the Merger Agreement on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the above and the mutual covenants
and agreements set forth herein, the parties agree as follows:
1. Representations and Warranties of West Coast - Capital Stock.
Section 5.3(a) of the Merger Agreement is hereby amended by deleting Section
5.3(a) in its entirety and by insertion, in lieu thereof, of the following:
"(a) The authorized capital stock of West Coast consists of
(i) 7,500,000 West Coast Common Shares, of which 1,544,466 shares are
issued and outstanding as of the date of this Agreement and not more
than 1,721,906 shares will be issued and outstanding at the Effective
Time, and (ii) 2,500,000 preferred shares, par value $1.00 per share,
none of which is issued and outstanding. All of the issued and
outstanding West Coast Common Shares are duly and validly issued and
outstanding and are fully paid and nonassessable under the FBCA. None
of the outstanding West Coast Common Shares has been issued in
violation of any preemptive rights. West Coast has reserved 239,700
West Coast Common Shares for issuance under the West Coast Stock Plans,
pursuant to which options and warrants to purchase not more than
177,440 West Coast Common Shares are outstanding."
2. Defined Terms. All terms which are capitalized herein, but which are
not defined herein, shall have the meanings ascribed to them in the Merger
Agreement.
3. Inconsistent Provisions. All provisions of the Merger Agreement
which have not been amended by this First Amendment shall remain in full force
and effect. Notwithstanding the foregoing to the contrary, to the extent that
there is any inconsistency between the provisions of the Merger Agreement and
the provisions of this First Amendment, the provisions of this First Amendment
shall control and be binding.
A-44
<PAGE> 120
IN WITNESS WHEREOF, each of the parties has caused this First Amendment
to be executed on its behalf as of the date first written above.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
------------------------------------------
Peter Mortensen
Chairman of the Board and President
SOUTHWEST BANKS, INC.
By: /s/ Gary L. Tice
------------------------------------------
Gary L. Tice
Chairman of the Board, President and
Chief Executive Officer
WEST COAST BANCORP, INC.
By: /s/ Michael P. Geml
------------------------------------------
Michael P. Geml
President
A-45
<PAGE> 121
APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated November 15, 1996, between F.N.B.
Corporation, a Pennsylvania corporation ("FNB") and West Coast Bancorp, Inc., a
Florida corporation ("West Coast").
W I T N E S S E T H :
WHEREAS, FNB and West Coast have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto prior to this Agreement; and
WHEREAS, as a condition and inducement to FNB's pursuit of the
transactions contemplated by the Merger Agreement and in consideration therefor,
West Coast has agreed to grant FNB the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) West Coast hereby grants to FNB an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to 426,991 authorized but
unissued fully paid and nonassessable Common Shares, $1.00 par value, of West
Coast ("Common Shares"), at a price per Share equal to $15.00 (as adjusted as
set forth herein, the "Option Price"); provided, that in no event shall the
number of Shares for which this Option is exercisable, when combined with the
West Coast Common Shares beneficially owned at such time by FNB, exceed 19.9% of
the issued and outstanding Common Shares. The number of Common Shares that may
be received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional Common Shares are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of Common Shares subject to the Option
shall be increased so that, after such issuance, it equals 19.9% of the number
of Common Shares then issued and outstanding including Common Shares
beneficially by FNB, but without giving effect to any Shares subject or issued
pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize West Coast or FNB to breach any
provision of the Merger Agreement.
2. (a) Subject to compliance with applicable laws and regulations, the
Holder (as hereinafter defined) may exercise the Option, notwithstanding the
provisions of the Confidentiality Agreements (as defined in the Merger
Agreement) in whole or part, if, but only if, both an Initial Triggering Event
(as hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time (as defined in the Merger Agreement)
of the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event (other than termination due to (A) the failure of FNB
to satisfy a condition to closing, (B) failure to obtain the requisite approval
of West Coast shareholders following a favorable recommendation by the West
Coast Board, or (C) the withdrawal by the West Coast financial advisor of its
fairness opinion); (iii) the passage of 12 months (or such longer period as
provided in Section 10) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event; or (iv) such
other date as to which the Holder and West Coast agree. The term "Holder" shall
mean the holder or holders of the Option. The rights set forth in Sections 7 and
9 shall terminate when the right to exercise the Option terminates (other than
as a result of a complete exercise of the Option) as set forth herein.
B-1
<PAGE> 122
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) West Coast or any of its Subsidiaries (as hereinafter
defined) (each a "West Coast Subsidiary"), without having received
FNB's prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined) with any
person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934 (the "1934 Act"), and the rules and
regulations thereunder) other than FNB or any of its Subsidiaries (each
a "FNB Subsidiary") or the Board of Directors of West Coast shall have
recommended that the shareholders of West Coast approve or accept any
Acquisition Transaction other than as contemplated by the Merger
Agreement or this Agreement. For purposes of this Agreement, (a)
"Acquisition Transaction" shall mean (x) a merger or consolidation, or
any similar transaction, involving West Coast or any Significant
Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC")) of West Coast, (y)
a purchase, lease or other acquisition of all or substantially all of
the assets or deposits of West Coast or any Significant Subsidiary of
West Coast, or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 15% or more of the voting power of West Coast or any
Significant Subsidiary of West Coast, and (b) "Subsidiary" shall have
the meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person (excluding the officers and directors of
West Coast) other than FNB, any FNB Subsidiary or any West Coast
Subsidiary acting in a fiduciary capacity shall have acquired
beneficial ownership or the right to acquire beneficial ownership of
15% or more of the outstanding Common Shares (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iii) The shareholders of the West Coast shall not have
approved the transactions contemplated by the Merger Agreement at the
meeting held for that purpose or any adjustment thereof, or such
meeting shall not have been held or shall have been canceled prior to
termination of the Merger Agreement, in either case, after West Coast's
Board of Directors shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify or interest in
withdrawing or modifying) its recommendation that the shareholders of
West Coast approve the transactions contemplated by the Merger
Agreement, or West Coast or any West Coast Subsidiary, without having
received FNB's prior written consent, shall have authorized,
recommended, proposed (or publicly announced its intention to
authorize, recommend or propose or interest in authorizing,
recommending or proposing) an agreement to engage in an Acquisition
Transaction, with any person other than FNB or a FNB Subsidiary;
(iv) Any person other than FNB or any FNB Subsidiary shall
have made a bona fide proposal to West Coast or its shareholders to
engage in an Acquisition Transaction, which proposal has an economic
value equivalent to or in excess of that of FNB.
(v) West Coast shall have willfully and materially breached
any material covenant or obligation contained in the Merger Agreement
in anticipation of engaging in an Acquisition Transaction, and such
breach would entitle FNB to terminate the Merger Agreement; or
(vi) Any person other than FNB or any FNB Subsidiary, other
than in connection with a transaction to which FNB has given its prior
written consent, shall have filed an application or notice with the
Federal Reserve Board or other federal or state bank regulatory
authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
B-2
<PAGE> 123
(i) The acquisition by any person of beneficial ownership of
25% or more of the then outstanding Common Shares; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) shall be 25%.
(d) West Coast shall notify FNB promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by West
Coast shall not be a condition to the right of the Holder to exercise the
Option.
(e) No shares shall be issued pursuant to the exercise of this Option
if (i) at the time of the Initial Triggering Event and at the time of exercise,
FNB is in material breach under the Merger Agreement, or (ii) a preliminary or
permanent injunction has been issued by a court of proper jurisdiction.
(f) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to West Coast a written notice prior to an Exercise
Termination Event (the date of which being herein referred to as the "Notice
Date") specifying (i) the total number of shares it will purchase pursuant to
such exercise and (ii) a place and date not earlier than three business days nor
later than 10 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if prior notification to or
approval of the Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall promptly file the required
notice or application for approval, shall promptly notify the West Coast of such
filing, and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(g) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to West Coast the aggregate purchase price for the Common
Shares purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by West Coast, provided that
failure or refusal of West Coast to designate such a bank account shall not
preclude the Holder from exercising the Option.
(h) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, West Coast
shall deliver to the Holder a certificate or certificates representing the
number of Common Shares purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable thereunder. In addition, the
Holder shall provide to West Coast a letter agreeing that Holder will not offer
to sell or dispose of such shares in violation of applicable law or this
Agreement
(i) Certificates for Common Shares delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and West Coast and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of West Coast and will be provided to the
holder hereof without charge upon receipt by West Coast of a written
request therefor."
It is understood and agreed that: (1) the reference to the resale restrictions
of the Securities Act of 1933 (the "1933 Act") in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
Holder shall have delivered to West Coast a copy of a letter from the staff of
the SEC, or an opinion of counsel, in form and substance satisfactory to West
Coast, to the effect that such legend is not required for purposes of the 1933
Act; (ii) the reference to the provisions of this Agreement in the above legend
shall be
B-3
<PAGE> 124
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the proceeding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(j) Upon the giving by the Holder to West Coast of the written notice
of exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available funds
the Holder shall be deemed to be the holder of record of the Common Shares
issuable upon such exercise, notwithstanding that the stock transfer books of
West Coast shall then be closed or that certificates representing such Common
Shares shall not then be actually delivered to the Holder. West Coast shall pay
all expenses, and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. West Coast agrees: (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares of
Common Shares so that the Option may be exercised without additional
authorization of Common Shares after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Shares;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
West Coast; (iii) promptly to take all action as may from time to time be
required (including (x) complying with all premerger notification, reporting and
waiting period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and West Coast duly and effectively to issue Common
Shares pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution as set forth in Section 5
hereof.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of West Coast, for other Agreements
providing for Options of different denominations entitling the holder thereof to
purchase, on the same terms and subject to the same conditions as are set forth
herein, in the aggregate the same number of Common Shares purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by West Coast of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Agreement, if mutilated, West Coast
will execute and deliver a new Agreement of like tenor and date.
5. The number of Common Shares purchasable upon the exercise of the
Option shall be subject to adjustment from time to time as provided in this
Section 5.
(a) In the event of any change in Common Shares by reason of
stock dividends, splitups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type
and number of Common Shares purchasable upon exercise hereof shall be
appropriately adjusted and proper provision shall be made so that, in
the event that any additional Common Shares are to be issued or
otherwise become outstanding as a result of any such change (other than
pursuant to an exercise of the Option), the number of Common Shares
that remain subject to the Option shall be increased so that, after
such issuance and together with Common Shares previously issued
pursuant
B-4
<PAGE> 125
to the exercise of the Option (together with the number of Shares
previously issued under this Option and the number of Shares otherwise
beneficially owned by FNB) (as adjusted on account of any of the
foregoing changes in the Common Shares), it equals 19.9% of the number
of Common Shares then issued and outstanding.
(b) Whenever the number of Common Shares purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option
Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of Common Shares
purchasable prior to the adjustment and the denominator of which shall
be equal to the number of Common Shares purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, West Coast shall, at the request of FNB
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10) (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the Common Shares
issued pursuant hereto), promptly prepare, file and keep current a registration
statement under the 1933 Act covering any shares issued and issuable pursuant to
this Option and shall use its best efforts to cause such registration statement
to become effective and remain current in order to permit the sale or other
disposition of any Common Shares issued upon total or partial exercise of this
Option ("Option Shares") in accordance with any plan of disposition requested by
FNB. West Coast will use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 120 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. FNB shall have the right to demand two such
registrations. The first demand registration effected under this Section 6 shall
be at West Coast's expense except for underwriting commissions and the fees and
expenses of FNB's counsel attributable to the registration of the Common Shares.
The second demand registration shall be at FNB's expense. In addition, if at any
time after the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, West Coast proposes to register any of its equity
securities under the 1933 Act, whether for sale for its own account or for the
account of any other person, on a form and in a manner which would permit
registration of the Common Shares issued pursuant hereto for sale to the public
under the 1933 Act, it will each such time give prompt written notice to FNB of
its intention to do so, describing such securities and specifying the form and
manner and the other relevant facts involved in such proposed registration, and
upon the written request of FNB delivered to the Company within 10 business days
after the giving of any such notice (which request shall specify the Common
Shares intended to be disposed of and the intended method or methods of
disposition thereof), West Coast will use its best efforts to effect the
registration under the 1933 Act of all Common Shares which West Coast has been
so requested to register by FNB, to the extent requisite to permit the
disposition of the Common Shares in accordance with the intended methods thereof
as specified by FNB. West Coast shall be obligated to effect only one such
piggy-back registration pursuant to this Section 6. FNB shall pay such
incremental expenses incurred by West Coast in connection with registering the
Common Shares requested to be registered by FNB pursuant to its piggy-back
registration rights under this Section 6, which expenses are in addition to the
expenses that West Coast would have otherwise incurred in registering equity
securities under the 1933 Act. The foregoing notwithstanding, if, at the time of
any request by FNB for registration of Option Shares as provided above, West
Coast has initiated discussions with investment bankers concerning, or is in
registration with respect to an underwritten public offering of Common Shares,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Option Shares would interfere with the successful
marketing of the Common Shares offered by West Coast, the number of Option
Shares otherwise to be covered in the registration statement contemplated hereby
may be reduced; provided, however, that after any such required reduction the
number of Option Shares to be included in such offering for the account of the
Holder shall constitute at least 25% of the total number of shares to be sold by
the Holder and West Coast in the aggregate; and provided further, however, that
if such reduction occurs, then the West Coast shall file a registration
statement for the balance as promptly as practical thereafter as to which no
reduction pursuant to this Section 6 shall be permitted or occur and the Holder
shall thereafter be entitled to one additional registration. Each such Holder
shall provide all information reasonably requested by West Coast for inclusion
B-5
<PAGE> 126
in any registration statement to be filed hereunder. If requested by any such
Holder in connection with such registration, West Coast shall become a party to
any underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for West Coast. In any such registration, West Coast and FNB shall
agree to indemnify each other on customary terms with regard to any information
provided by such party. Upon receiving any request under this Section 6 from any
Holder, West Coast agrees to send a copy thereof to any other person known to
West Coast to be entitled to registration rights under this Section 6, in each
case by promptly mailing the same, postage prepaid, to the address of record of
the persons entitled to receive such copies.
7. (a) Upon the occurrence of a Repurchase Event (as hereinafter
defined) that occurs prior to an Exercise Termination Event, (i) at the request
of the Holder, delivered prior to an Exercise Termination Event (or such later
period as provided in Section 10), West Coast shall repurchase the Option from
the Holder at a price (the "Option Repurchase Price") equal to the amount by
which (A) the Market/Offer Price (as defined below) exceeds (B) the Option
Price, multiplied by the number of shares for which this Option may then be
exercised and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered prior to the occurrence of an Exercise Termination
Event (or such later period as provided in Section 10), West Coast shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Repurchase Event" shall occur if (i) any person other than FNB or any of
its Subsidiaries shall have acquired beneficial ownership, or the right to
acquire beneficial ownership, or any "group" (as such term is defined under the
1934 Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of 50% or more of the then-outstanding Common
Shares, or (ii) any of the transactions described in Section 8(a)(i), 8(a)(ii),
or 8(a)(iii) shall be consummated. The term "Market/Offer Price" shall mean the
highest of (i) the price per share of Common Shares at which a tender or
exchange offer therefor has been made, (ii) the price per share of Common Shares
to be paid by any third party pursuant to an agreement with West Coast, (iii)
the highest closing price for Common Shares within the three-month period
immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or
substantially all of West Coast's assets or deposits, the sum of the net price
paid in such sale for such assets or deposits, the sum of the net price paid in
such sale for such assets or deposits and the current market value of the
remaining net assets of West Coast as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be,
divided by the number of Common Shares of West Coast outstanding at the time of
such sale. In determining the Market/Offer Price, the value of consideration
other than cash shall be determined by a nationally recognized investment
banking firm selected by the Holder or Owner, as the case may be.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require West Coast to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to West Coast, at
its principal office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or notices stating that
the Holder or the Owner, as the case may be, elects to require West Coast to
repurchase this Option and/or the Option Shares in accordance with the
provisions of this Section 7. As promptly as practicable, and in any event
within ten business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, West Coast shall deliver or cause to be delivered to the Holder the
Option Repurchase Price and/or to the Owner the Option Share Repurchase Price
therefor or the portion thereof that West Coast is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that West Coast is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, West Coast shall immediately so notify
the Holder and/or the Owner and thereafter deliver or cause to be delivered,
from time to time, to the Holder and/or the Owner, as appropriate, the portion
of the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within ten
business
B-6
<PAGE> 127
days after the date on which West Coast is no longer so prohibited; provided,
however, that if West Coast at any time after delivery of a notice of repurchase
pursuant to paragraph (b) of this Section 7 is prohibited under applicable law
or regulation, or as a consequence of administrative policy, from delivery to
the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and West Coast hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares whether in whole or to the extent
of the prohibition, whereupon, in the latter case, West Coast shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that West Coast is
not prohibited from delivering, and (ii) deliver, as appropriate, either (A) to
the Holder, a new Agreement evidencing the right of the Holder to purchase that
number of Common Shares obtained by multiplying the number of Common Shares for
which the surrendered Agreement was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
8. (a) In the event that, prior to an Exercise Termination Event, West
Coast shall enter into an agreement (i) to consolidate with or merge into any
person, other than FNB or a FNB Subsidiary, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than FNB or a FNB Subsidiary, to merge into West Coast and West
Coast shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding Common Shares shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property or the then outstanding Common Shares shall after such merger represent
less than 50% of the outstanding shares and share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or substantially all of its
or any Significant Subsidiary's assets or deposits to any person, other than FNB
or a FNB Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with West Coast (if
other than West Coast), (ii) West Coast in a merger in which West Coast
is the continuing or surviving person, and (iii) the transferee of all
or substantially all of West Coast's assets or deposits (or the assets
or deposits of a Significant Subsidiary of West Coast).
(ii) "Substitute Common Shares" shall mean the common shares
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of
the Substitute Common Share for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than
the closing price of the substitute Common Shares on the day preceding
such consolidation, merger or sale; provided that if West Coast is the
issuer of the Substitute Option, the Average Price shall be computed
with respect to common shares issued by the person merging into West
Coast or by any company which controls or is controlled by such person,
as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an
B-7
<PAGE> 128
agreement with the then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
Substitute Common Shares as is equal to the Assigned Value multiplied by the
number of Common Shares for which the Option is then exercisable, divided by the
Average Price. The exercise price of the Substitute Option per Substitute Common
Share shall then be equal to the Option Price multiplied by a fraction, the
numerator of which shall be the number of Common Shares for which the Option is
then exercisable and the denominator of which shall be the number of Substitute
Common Shares for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for a number of shares which together with
shares of the Acquiring Corporation then beneficially owned by FNB, constitutes
more than 19.9% of the shares of Substitute Common Shares outstanding prior to
exercise of the Substitute Option.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option West Coast") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of Substitute Common Shares for which the Substitute Option may then
be exercised, and at the request of the owner (the "Substitute Share Owner") of
shares of Substitute Common Shares (the "Substitute Shares"), the Substitute
Option West Coast shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Shares within the three-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
West Coast to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option West Coast, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option West Coast to repurchase
the Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within ten business days after the surrender of the Substitute Option and/or
certificates representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option West Coast shall deliver or
cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
West Coast is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option West Coast is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Substitute Option and/or the Substitute Shares in
part or in full, the Substitute Option West Coast shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within ten business days after the date on which the
Substitute Option West Coast is no longer so prohibited; provided, however, that
if the Substitute Option West Coast is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
delivering to the substitute Option Holder and/or the Substitute Share Owner, as
B-8
<PAGE> 129
appropriate, the Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, in full (and the Substitute Option West Coast
shall use its best efforts to receive all required regulatory and legal
approvals as promptly as practicable in order to accomplish such repurchase),
the Substitute Option Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole or
to the extent of the prohibition, whereupon, in the latter case, the Substitute
Option West Coast shall promptly (i) deliver to the Substitute Option Holder or
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option West Coast is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that number of
the Substitute Common Shares obtained by multiplying the number of Substitute
Common Shares for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing.
10. The periods for exercise of certain rights under Sections 2, 6, 7,
9 and 12 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder is using
commercially reasonable efforts to obtain such regulatory approvals), and for
the expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason or
such exercise.
11. West Coast hereby represents and warrants to FNB as follows:
(a) West Coast has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of West Coast and no other corporate proceedings on the part
of West Coast are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by West Coast.
(b) West Coast has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of Common
Shares equal to the maximum number of Common Shares at any time and from time to
time issuable hereunder, and all such shares, upon issuance pursuant thereto,
will be duly authorized, validly issued, fully paid, nonassessable.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, FNB, subject to the express provisions hereof, may assign in
whole or in part its rights and obligations hereunder following such Subsequent
Triggering Event; provided, however that until the date 30 days following the
date on which the Federal Reserve Board has approved applications by FNB to
acquire the Common Shares subject to the Option, FNB may not assign its rights
under the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in excess
of 2% of the voting shares of issuer, (iii) an assignment to a single party
(i.e., a broker or investment banker) for the purpose of conducting a widely
disbursed public distribution on FNB's behalf, or (iv) any other manner approved
by the Federal Reserve Board.
13. Each of FNB and West Coast will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation applying to the Federal Reserve
Board under the Bank Holding Company Act for approval to acquire the shares
issuable hereunder, but FNB shall not be
B-9
<PAGE> 130
obligated to apply to state banking authorities for approval to acquire the
Common Shares issuable hereunder until such time, if ever, as it deems
appropriate to do so.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or West Coast is not permitted to
repurchase pursuant to Section 7, the full number of Common Shares provided in
Section 1(a) hereof (as adjusted pursuant to Section 5 hereof), it is the
express intention of West Coast to allow the Holder to acquire or to require
West Coast to repurchase such lesser number of shares as may be permissible,
without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
21. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
B-10
<PAGE> 131
IN WITNESS WHEREOF, each of the parties had caused this Agreement to be
executed on its behalf by their officers thereunto duly authorized, all as the
date first above written.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
-----------------------------------------
Name: Peter Mortensen
Title: Chairman of the Board and President
WEST COAST BANCORP, INC.
By: /s/ Michael P. Geml
-----------------------------------------
Name: Michael P. Geml
Title: President
B-11
<PAGE> 132
FIRST AMENDMENT
TO
STOCK OPTION AGREEMENT
THIS FIRST AMENDMENT TO STOCK OPTION AGREEMENT (the "Amendment") is
made and entered into as of February 28, 1997, by and between F.N.B. CORPORATION
("FNB"), a Pennsylvania corporation and WEST COAST BANCORP, INC. ("West Coast"),
a Florida corporation.
PREAMBLE
The parties hereto entered into a Stock Option Agreement (the
"Agreement") dated as of November 15, 1996, pursuant to which West Coast granted
to FNB an irrevocable option to purchase West Coast Common Shares upon the
occurrence of certain events described in the Agreement. The parties now desire
to amend the Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above and the mutual covenants
and agreements set forth herein, the parties agree as follows:
1. Amendment. Section 1 of the Agreement is hereby amended by deleting
Section 1 in its entirety and by insertion, in lieu thereof, of the following:
"(a) West Coast hereby grants to FNB an irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 340,010
authorized but unissued fully paid and nonassessable Common Shares,
$1.00 par value, of West Coast ("Common Shares"), at a price per Share
equal to $15.00 (as adjusted as set forth herein, the "Option Price");
provided, that in no event shall the number of Shares for which this
Option is exercisable, when combined with the West Coast Common Shares
beneficially owned at such time by FNB, exceed 19.9% of the issued and
outstanding Common Shares. The number of Common Shares that may be
received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional Common Shares are issued
or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement), the number of Common Shares subject
to the Option shall be increased so that, after such issuance, it
equals 19.9% of the number of Common Shares then issued and outstanding
including Common Shares beneficially owned by FNB. Nothing contained in
this Section 1(b) or elsewhere in this Agreement shall be deemed to
authorize West Coast or FNB to breach any provision of the Merger
Agreement."
2. Defined Terms. All terms which are capitalized herein, but which are
not defined herein, shall have the meanings ascribed to them in the Agreement.
B-12
<PAGE> 133
3. Inconsistent Provisions. All provisions of the Agreement which have
not been amended by this First Amendment shall remain in full force and effect.
Notwithstanding the foregoing to the contrary, to the extent that there is any
inconsistency between the provisions of the Agreement and the provisions of this
First Amendment, the provisions of this First Amendment shall control and be
binding.
IN WITNESS WHEREOF, each of the parties has caused this First Amendment
to be executed on its behalf as of the date first written above.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
-----------------------------------------
Peter Mortensen
Chairman of the Board and President
WEST COAST BANCORP, INC.
By: /s/ Michael P. Geml
-----------------------------------------
Michael P. Geml
President
B-13
<PAGE> 134
APPENDIX C
ADVEST
ADVEST, INC.
A SUBSIDIARY OF THE ADVEST GROUP, INC. CORPORATE FINANCE
- -------------------------------------------------------------------------------
Serving Investors Since 1898 One Rockefeller Plaza
21St Floor
New York, NY 10020
(212) 584-4204
March 4, 1997
Board of Directors
West Coast Bancorp, Inc.
2724 Del Prado Boulevard
Cape Coral, Florida 33904
Members of the Board:
West Coast Bancorp, Inc. ("West Coast"), F.N.B. Corporation ("FNB")
and Southwest Banks, Inc. ("Southwest"), a wholly-owned subsidiary of FNB have
entered into an Agreement and Plan of Merger dated as of November 15, 1996 (the
"Agreement"), pursuant to which West Coast will be merged with and into
Southwest (the "Merger").
The Agreement provides that each outstanding share of West Coast, par
value $1.00, will be converted into .794 shares of FNB Common Stock (the
"Exchange Ratio"), subject to adjustments under certain circumstances. In
addition, West Coast has the right to declare, set aside and pay cash dividends
per share on West Coast common stock equivalent in amount to the cash dividends
per share declared by FNB multiplied by the Exchange Ratio up until the
Effective Time. The terms and conditions of the proposed transaction are
described in more detail in the Agreement.
In connection with executing the Agreement, West Coast entered into a
Stock Option Agreement (the "Option Agreement") dated November 15, 1996,
pursuant to which West Coast granted FNB an option to acquire up to 19.9% of
West Coast common stock then issued and outstanding including shares
beneficially owned by FNB, at a price of $15.00 per share, exercisable upon the
occurrence of certain events specified in the Option Agreement. The Agreement
also provides for the payment of a $500,000 fee to FNB upon the occurrence of
certain events specified in the Agreement in the event that the Merger is not
consummated. The Agreement is expected to be considered by the shareholders of
West Coast at a shareholders' meeting and consummated shortly after the receipt
of shareholder and state and federal regulatory approvals.
C-1
<PAGE> 135
ADVEST
Board of Directors
March 4, 1997
Page 2
You have asked us whether, in our opinion, the Exchange Ratio is fair,
from a financial point of view, to the shareholders of West Coast.
In arriving at the opinion set forth below, we have among other
things: reviewed the Agreement and the exhibits and schedules thereto; reviewed
the Annual Reports on Form 10-KSB for West Coast and Form 10-K for FNB for each
of the three fiscal years ended December 31, 1995, as well as unaudited
financial information for the year ended December 31, 1996, for each of West
Coast and FNB and earnings press releases for year ended December 31, 1996;
reviewed certain financial information as filed with federal banking agencies
for the three years ended December 31, 1995, as well as for the nine months
ended September 30, 1996, for each of West Coast and FNB, including comparative
financial and operating data on the banking industry and certain institutions
which we deemed to be comparable to each of the companies; reviewed the
historical market prices and trading activity for the common stock of each of
West Coast and FNB and compared them with certain publicly-traded companies
which we deemed to be comparable to each company; reviewed certain bank mergers
and acquisitions on a state, regional and nationwide basis for institutions
which we deemed to be comparable to West Coast and compared the proposed
consideration with the consideration paid in such other mergers and
acquisitions which we deemed relevant; conducted limited discussions with
members of senior management of each of West Coast and FNB concerning the
financial condition, business, and prospects of each respective company; and
reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as we deemed necessary.
In preparing this opinion we have assumed and relied upon the accuracy
and completeness of all financial and other information reviewed by us for
purposes of this opinion, and we have not independently verified such
information nor have we undertaken an independent evaluation of the assets or
liabilities of West Coast or FNB. Advest has been retained by the Board of
Directors of West Coast to act as financial advisor to West Coast with respect
to the Merger and will receive a fee for its services including a fee for this
opinion. This opinion is necessarily based upon circumstances and conditions as
they exist and can be evaluated by us as of the date of this letter. Our
opinion is directed to the Board of Directors of West Coast and does not
constitute a recommendation of any kind to any shareholder of West Coast as to
how such shareholder should vote at the shareholders' meeting to be held in
connection with the Merger. We have assumed for purposes of this opinion that
there has been no material change in the financial condition of either West
Coast or FNB from that existing on December 31, 1996.
C-2
<PAGE> 136
ADVEST
Board of Directors
March 4, 1997
Page 3
In reliance upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Exchange Ratio is fair, from a financial point of
view, to the shareholders of West Coast.
Very truly yours,
Advest, Inc.
By: /s/ Thomas G. Rudkin
---------------------------
Thomas G. Rudkin
Managing Director
TGR:mv
C-3
<PAGE> 137
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Numbered Paragraph 6.b of the FNB Charter provides as follows:
Directors and Officers of the Corporation shall be indemnified as of
right to the fullest extent now or hereafter permitted by law in connection
with any actual or threatened action, suit or proceedings, civil, criminal,
administrative, investigative or other (whether brought by or in the right of
the Corporation or otherwise), arising out of their service to the Corporation
or to another organization at the request of the Corporation, or because of
their positions with the Corporation. Persons who are not Directors or Officers
of the Corporation may be similarly indemnified in respect of such service to
the extent authorized at any time by the Board of Directors of the Corporation.
The Corporation may purchase and maintain insurance to protect itself and any
such Director, Officer or other person against any liability, cost or expense
asserted against or incurred by him in respect of such service, whether or not
the Corporation would have the power to indemnify him against such liability by
law or under the provisions of this para graph. The provisions of this
paragraph shall be applicable to persons who have ceased to be Directors or
Officers, and shall inure to the benefit of the heirs, executors and
administrators of persons entitled to indemnity hereunder.
Article IX of the FNB Bylaws provides that FNB shall indemnify each
director and officer of FNB and of its controlled subsidiaries made or
threatened to be made a party to any civil, criminal, administrative action,
suit or proceeding (whether brought by or in the name of FNB or otherwise)
arising out of such director's or officer's service to FNB or to another
organization at FNB's request against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such director and officer in connection with such action, suit or
proceeding. Indemnification shall not be made with respect to actions, suits or
proceedings where the act or omission giving rise to the claim for
indemnification has been determined to have constituted willful misconduct or
recklessness or where prohibited by law. In addition, expenses incurred by each
director and officer in defending any such action, suit or proceeding shall be
paid by FNB in advance of the final disposition of such action, suit or
proceeding if an undertaking (in form and scope satisfactory to FNB) shall have
been furnished to FNB to repay amounts so advanced if and to the extent it
shall ultimately be determined that such officer or director is not entitled to
indemnification and certain other conditions shall have been satisfied. FNB may
purchase and maintain insurance, create a fund of any nature, grant a security
interest or otherwise secure or insure in any manner its indemnification
obligations.
Section 1741 of the PBCL provides that a corporation shall (subject to
the provisions described in the second succeeding paragraph) have the power to
indemnify any person who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that such person is or was
a representative of the corporation, or is or was serving at the request of the
corporation as a representative of another domestic or foreign corporation for
profit or not-for-profit, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such persons in
connection with the action or proceeding if such person acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action or proceeding by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent shall not of itself create a
presumption that such person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had reasonable cause
to believe that his conduct was unlawful.
II-1
<PAGE> 138
Under Section 1744 of the PBCL, any such indemnification (unless
ordered by a court) shall be made by the corporation only as authorized in a
specific case upon a determination that indemnification of the representative
is proper in the circumstances because such person has met the applicable
standard of conduct. Such determination shall be made:
(1) By the board of directors by a majority vote of a
quorum consisting of directors who were not parties to the action or
proceeding; or
(2) If such quorum is not obtainable or, even if
obtainable, a majority vote of a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion; or
(3) By the shareholders.
Notwithstanding the above, Section 1743 provides that to the extent
that a representative of the corporation has been successful on the merits or
otherwise in defense of any action or proceeding referred to above, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by such person in connection therewith.
Under Section 1745 of the PBCL, expenses (including attorneys' fees)
incurred in defending any action or proceeding may be paid by the corporation
in advance of the final disposition of the action or proceeding upon receipt of
an undertaking by or on behalf of the representative to repay such amount if it
is ultimately determined that such person is not entitled to be indemnified by
the corporation.
Section 1746 of the PBCL further provides that the indemnification
provided by Sections 1741, 1742 and 1743 and the advancement of expenses
provided by Section 1745 shall not be deemed exclusive of any other rights to
which a person seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of shareholders, disinterested
directors or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding that office. A corporation may
create a fund of any nature, which may, but need not be, under the control of a
trustee, or otherwise secure or insure in any manner its indemnification
obligations, whether arising under or pursuant to Section 1746 or otherwise.
Indemnification pursuant to Section 1746 shall not be made in any case where
the act or failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or recklessness.
Indemnification pursuant to Section 1746 under any bylaw, agreement,
vote of shareholders, or directors or otherwise may be granted for any action
taken or any failure to take any action and may be made whether or not the
corporation would have the power to indemnify the person under any other
provision of law except as provided in such Section 1746 and whether or not the
indemnified liability arises or arose from any threatened, pending or completed
action by or in the right of the corporation. Section 1746 declares such
indemnification to be consistent with the public policy of Pennsylvania.
THE FOREGOING IS ONLY A GENERAL SUMMARY OF CERTAIN ASPECTS OF
PENNSYLVANIA LAW DEALING WITH INDEMNIFICATION OF DIRECTORS AND OFFICERS AND
DOES NOT PURPORT TO BE COMPLETE. IT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO THE RELEVANT STATUTES WHICH CONTAIN DETAILED SPECIFIC PROVISIONS REGARDING
THE CIRCUMSTANCES UNDER WHICH AND THE PERSON FOR WHOSE BENEFIT INDEMNIFICATION
SHALL OR MAY BE MADE AND ACCORDINGLY ARE INCORPORATED HEREIN BY REFERENCE AS
EXHIBIT 99.3 OF THIS REGISTRATION STATEMENT.
II-2
<PAGE> 139
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed with or incorporated by reference in
this Registration Statement:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- --------------------------------------------------------------
2 .1 Agreement and Plan of Merger, by and among F.N.B. Corporation
("FNB"), Southwest Banks, Inc. ("Southwest") and West Coast
Bancorp, Inc. ("West Coast"), dated November 15, 1996
(included as Appendix A to the Proxy Statement-Prospectus).
2 .1.1 Amendment No. 1 to Agreement and Plan of Merger, dated as of
February 28, 1997 (included as Appendix A to the Proxy
Statement-Prospectus).
5 .1 Opinion of Cohen & Grigsby, P.C.
8 .1 Opinion of Smith, Gambrell & Russell, LLP
10.1 Stock Option Agreement by and between FNB and West Coast,
dated November 15, 1996 (included as Appendix B to the Proxy
Statement-Prospectus).
10.1.1 Amendment No. 1 to Stock Option Agreement, dated as of
February 28, 1997 (included as Appendix B to the Proxy
Statement - Prospectus).
23.1 Consent of Ernst & Young LLP
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of S.R. Snodgrass, A.C.
23.4 Consent of Cohen & Grigsby, P.C. (included in Exhibit 5.1).
23.5 Consent of Smith, Gambrell & Russell, LLP (included in Exhibit
8.1).
23.6 Consent of Advest, Inc.
23.7 Consent of Hill, Barth & King, Inc.
24.1 Powers of Attorney
99.1 Form of Proxy for Special Meeting of Shareholders of West
Coast.
99.2 Opinion of Advest, Inc. (included as Appendix C to the Proxy
Statement-Prospectus).
99.3 Provisions of Pennsylvania law regarding indemnification of
directors and officers.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement.
II-3
<PAGE> 140
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change in such information in the
Registration Statement:
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report, to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act;
and, where interim financial information required to be presented by Article 3
of Regulation S-X is not set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or
II-4
<PAGE> 141
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(f) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-5
<PAGE> 142
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HERMITAGE,
COMMONWEALTH OF PENNSYLVANIA, ON FEBRUARY 25, 1997.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
-----------------------------------
Peter Mortensen
Chairman and President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Peter Mortensen Chairman, President and Director February 25, 1997
----------------------------- (Principal Executive Officer)
Peter Mortensen
* Executive Vice President and February 25, 1997
----------------------------- Director
Stephen J. Gurgovits
* Vice President and Director February 25, 1997
-----------------------------
Samuel K. Sollenberger
/s/ John D. Waters Vice President and Chief Financial February 25, 1997
----------------------------- Officer (Principal Financial
John D. Waters and Accounting Officer)
* Director February 25, 1997
-----------------------------
W. Richard Blackwood
Director
-----------------------------
William B. Campbell
* Director January 2, 1997
-----------------------------
Charles T. Cricks
* Director February 25, 1997
-----------------------------
Henry M. Ekker, Esq.
* Director February 25, 1997
-----------------------------
Thomas C. Elliott
* Director February 25, 1997
-----------------------------
Thomas W. Hodge
* Director February 25, 1997
-----------------------------
George E. Lowe, D.D.S.
Director
-----------------------------
James S. Lindsay
</TABLE>
<PAGE> 143
<TABLE>
<S> <C> <C>
* Director January 2, 1997
-----------------------------
Paul P. Lynch
Director
-----------------------------
Edward J. Mace
* Director February 25, 1997
-----------------------------
Robert S. Moss
Director
-----------------------------
Richard C. Myers
* Director February 25, 1997
-----------------------------
John R. Perkins
* Director January 2, 1997
-----------------------------
William A. Quinn
* Director February 25, 1997
-----------------------------
George A. Seeds
* Director February 25, 1997
-----------------------------
William J. Strimbu
Director
-----------------------------
Gary L. Tice
* Director February 25, 1997
-----------------------------
Archie O. Wallace
* Director January 3, 1997
-----------------------------
Joseph M. Walton
* Director February 25, 1997
-----------------------------
James T. Weller
* Director February 25, 1997
-----------------------------
Eric J. Werner, Esq.
* Director January 2, 1997
-----------------------------
Donna C. Winner
*By: /s/ John D. Waters
------------------------------------
John D. Waters, as Attorney-in-Fact
</TABLE>
<PAGE> 144
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- --------------------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger, by and among F.N.B. Corporation ("FNB"), Southwest Banks, Inc.
("Southwest") and West Coast Bancorp, Inc. ("West Coast"), dated November 15, 1996 (included as
Appendix A to the Proxy Statement-Prospectus).
2.1.1 Amendment No. 1 to Agreement and Plan of Merger dated as of February 28, 1997 (included as Appendix A
to the Proxy Statement-Prospectus).
5.1 Opinion of Cohen & Grigsby, P.C.
8.1 Opinion of Smith, Gambrell & Russell, LLP
10.1 Stock Option Agreement by and between FNB and West Coast, dated November 15, 1996 (included as Appendix
B to the Proxy Statement-Prospectus).
10.1.1 Amendment No. 1 to Stock Option Agreement, dated as of February 28, 1997 (included as Appendix B to the
Proxy Statement - Prospectus).
23.1 Consent of Ernst & Young LLP
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of S.R. Snodgrass, A.C.
23.4 Consent of Cohen & Grigsby, P.C. (included in Exhibit 5.1).
23.5 Consent of Smith, Gambrell & Russell, LLP (included in Exhibit 8.1).
23.6 Consent of Advest, Inc.
23.7 Consent of Hill, Barth & King, Inc.
24.1 Powers of Attorney
99.1 Form of Proxy for Special Meeting of Shareholders of West Coast.
99.2 Opinion of Advest, Inc. (included as Appendix C to the Proxy Statement-Prospectus).
99.3 Provisions of Pennsylvania law regarding indemnification of directors and officers.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[COHEN & GRIGSBY, P.C. LETTERHEAD]
February 28, 1997
Board of Directors of
F.N.B. Corporation
Hermitage Square
Hermitage, PA 16148
Gentlemen:
We have been asked as to render this opinion in connection with the
filing by F.N.B. Corporation, a Pennsylvania corporation (the "Company"), of a
Registration Statement on Form S-4 (the "Registration Statement") with the
Securities and Exchange Commission to register shares of the Company's common
stock, par value $2.00 per share (the "Common Stock"), to be issued to the
shareholders of West Coast Bancorp, Inc., a Florida corporation ("West Coast"),
upon consummation of the merger of West Coast with and into Southwest Banks,
Inc., a Florida corporation ("Southwest") (the "Merger") in accordance with the
terms of the Agreement and Plan of Merger (the "Agreement") dated as of
November 15, 1996 among the Company, Southwest and West Coast.
We have not represented the Company in connection with the
negotiation, execution or delivery of the Agreement or the Merger. In rendering
this Opinion, we have made no investigation or inquiry other than review of the
Agreement, the draft Registration Statement and the resolutions adopted by the
Executive Committee of the Board of Directors of the Company on September 23,
1996 with respect to the Merger, the Agreement and the transactions related
thereto.
In our opinion the shares of Common Stock to be issued to the
shareholders of West Coast upon consummation of the Merger, when issued in
accordance with the terms of the Agreement, will be validly issued, fully-paid
and non-assessable shares of Common Stock of the Company.
We hereby consent to the reference to us in the Prospectus/Proxy
Statement of the Company and West Coast constituting part of the Registration
<PAGE> 2
COHEN & GRIGSBY, P.C.
Boards of Directors of
F.N.B. Corporation
February 28, 1997
Page 2
Statement and to the inclusion of this letter as an exhibit to the Registration
Statement.
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991) as supplemented or modified by Part I, together with the
Forward and Glossary of the Pennsylvania Third Party Legal Opinion Supplement
(the "Pennsylvania Supplement") of the PBA Section of Corporation, Banking and
Business Law (1992). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord and the
Pennsylvania Supplement, and this Opinion Letter should be read in conjunction
therewith. Unless otherwise indicated, capitalized terms used in this Opinion
that are defined in the Accord or the Pennsylvania Supplement will have the
same meanings in this Opinion as the meanings set forth in the Accord or the
Pennsylvania Supplement, respectively (and, to the extent of a conflict between
the same, priority shall be given to the Accord and the Pennsylvania Supplement
in that order).
This Opinion Letter may be relied upon by you only in connection with
the transactions contemplated by the Agreement and may not be used or relied
upon by you or any other person for any purpose whatsoever, except to the
extent authorized in the Accord, without in each instance our prior written
consent.
Very truly yours,
/s/ Cohen & Grigsby, P.C.
-------------------------
COHEN & GRIGSBY, P.C.
DL:JWE
<PAGE> 1
EXHIBIT 8.1
[SMITH, GAMBRELL & RUSSELL, LLP LETTERHEAD]
March 4, 1997
F.N.B. Corporation
Hermitage Square
Hermitage, Pennsylvania 16148
West Coast Bancorp, Inc.
2724 Del Prado Boulevard South
Cape Coral, Florida 33904
Re: Agreement and Plan of Merger under which West Coast Bancorp,
Inc. will merge with and into Southwest Banks, Inc., a
wholly-owned subsidiary of F.N.B. Corporation
Ladies/Gentlemen:
We have acted as special counsel to F.N.B. Corporation ("FNB") in
connection with the proposed merger (the "Merger") of West Coast Bancorp, Inc.
("West Coast"), with and into Southwest Banks, Inc. ("Southwest"), a
wholly-owned subsidiary of FNB, pursuant to the terms of and as described in
that certain Agreement and Plan of Merger (the "Merger Agreement") dated as of
November 15, 1996 and as amended on February 28, 1997, by and among FNB,
Southwest and West Coast, described in the FNB Registration Statement on Form
S-4, to be filed with the Securities and Exchange Commission on or about March
4, 1997 (the "Registration Statement"). At your request, in connection with
the filing by FNB of the Registration Statement and the Proxy
Statement-Prospectus of West Coast and FNB as amended through the date hereof
(the "Proxy Statement-Prospectus") included as part of the Registration
Statement, we are rendering our opinion concerning certain federal income tax
consequences of the Merger. Unless otherwise indicated, all capitalized terms
used in this opinion have the same meaning as used in the Proxy
Statement-Prospectus.
For purposes of rendering our opinion herein, we have conducted an
examination of the Internal Revenue Code of 1986, as amended (the "Code"), and
such other applicable laws, regulations, rulings, decisions, documents and
records as we have deemed necessary. With respect to factual matters, we have
relied upon the Merger Agreement, including, without limitation, the
representations of FNB, Southwest and West Coast set forth therein, and upon
certain statements
<PAGE> 2
March 4, 1997
Page 2
and representations made to us in certificates by officers of FNB and West
Coast, in each case without independent verification thereof. With the consent
of FNB and West Coast, we have relied on the accuracy and completeness of the
statements and representations contained in such certificates and have assumed
that such certificates will be complete and accurate as of the Effective Time.
We have also relied on the accuracy and completeness of the Proxy Statement-
Prospectus. In addition, for purposes of this opinion, we have assumed that at
least fifty percent of the outstanding West Coast Common Shares will be
exchanged for FNB Common Stock in the Merger, and that the West Coast Common
Shares constitute capital assets in the hands of each holder thereof.
Based on the foregoing, and subject to the qualifications set forth
below, we are of the opinion that under the Code:
(1) The Merger will constitute a reorganization under Code Sections
368(a)(1)(A) and 368(a)(2)(D), and FNB, Southwest and West Coast will each be
a party to the reorganization within the meaning of Code Section 368(b).
(2) Holders of West Coast Common Shares who exchange such shares
solely for shares of FNB Common Stock will not recognize gain or loss on the
exchange.
(3) The federal income tax basis of shares of FNB Common Stock
received in exchange for West Coast Common Shares will be equal to the holder's
basis of the West Coast Common Shares surrendered in exchange therefor, and the
holding period of such FNB Common Stock will include the holding period of the
West Coast Common Shares surrendered in exchange therefor.
(4) The receipt of cash in lieu of fractional shares will be
treated as if the fractional shares were distributed as part of the exchange
and then redeemed by FNB, and capital gain or loss will be recognized in an
amount equal to the difference between the cash received and the basis of the
fractional share of FNB Common Stock surrendered.
The opinions expressed herein are based upon our interpretation of
existing legal authorities, and no assurance can be given that such
interpretations would be followed if the exchange of shares contemplated by the
Merger became the subject of administrative or judicial proceedings.
Statements of opinion herein are opinions only and should not be interpreted as
guarantees of the current status of the law, nor should they be accepted as a
guarantee that a court of law or administrative agency will concur in such
statement.
No opinion is expressed with respect to any of the following:
(i) The appropriate method to determine the fair market value of
any stock or other consideration received in any sale or exchange;
(ii) The state, local or foreign tax consequences of any aspect of
the Merger; or
<PAGE> 3
March 4, 1997
Page 3
(iii) The federal income tax consequences of any aspect of the
Merger to holders of West Coast Common Shares who are subject to special tax
treatment for federal income tax purposes, including among others, life
insurance companies, tax exempt entities and foreign taxpayers, or to holders
of West Coast Options which are exchanged for or converted into options or
warrants to acquire FNB Common Stock.
We expressly consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
references to this opinion in the Proxy Statement-Prospectus. In giving this
opinion, we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ David W. Santi
-------------------------------------
David W. Santi
DWS:jeh
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of F.N.B. Corporation
for the registration of 1,367,193 shares of its common stock and to the
incorporation by reference therein of our report dated February 5, 1996, with
respect to the consolidated financial statements of F.N.B. Corporation
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1995 and our report dated February 28, 1997 with respect to the
supplemental consolidated financial statements of F.N.B. Corporation included
in its Current Report on Form 8-K dated March 5, 1997, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 3, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-4 (File
No. 021564) of our report dated January 19, 1996, on our audits of the
consolidated financial statements of West Coast Bancorp, Inc. and Subsidiary.
We also consent to the reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Fort Myers, Florida
March 4, 1997
<PAGE> 1
EXHIBIT 23.3
[SNODGRASS
CERTIFIED PUBLIC ACCOUNTANTS LOGO]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
F.N.B. Corporation on Form S-4 of our reports dated January 14, 1994 (relating
to the consolidated financial statements of Dollar Savings Association and
Subsidiary and the financial statements of Reeves Bank for the year ended
December 31, 1993, not presented separately herein) appearing in and
incorporated by reference to the Annual Report on Form 10-K of F.N.B.
Corporation for the year ended December 31, 1995.
We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this registration statement.
S.R. Snodgrass, A.C.
Wexford, PA
March 3, 1997
S.R. Snodgrass, A.C.
101 Bradford Road Wexford, PA 15090-6909 Phone: 412-934-0345 Facsimile:
412-934-0345
<PAGE> 1
EXHIBIT 23.6
[ADVEST LETTERHEAD]
CONSENT OF ADVEST, INC.
We hereby consent to the filing of our opinion to West Coast Bancorp, Inc. as
an exhibit to the Proxy Statement-Prospectus included in the Registration
Statement on Form S-4 of F.N.B. Corporation and to the reference to us and to
our opinion in the Proxy Statement-Prospectus that forms part of the
Registration Statement. In giving this opinion we do not concede that we are
within any category of persons whose consent is required in the Registration
Statement.
ADVEST, INC.
/s/ Thomas G. Rudkin
-----------------------------
Thomas G. Rudkin
Managing Director
Financial Institutions Group
New York, New York
March 5, 1997
<PAGE> 1
EXHIBIT 23.7
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of F.N.B.
Corporation on Form S-4 of our report dated January 19, 1996, except for Note
1, as to which the date is February 2, 1996, relating to the financial
statements for Southwest Banks, Inc. which have been incorporated into the
Audited Supplemental Consolidated Financial Statements for the years ended
December 31, 1995, 1994 and 1993 which are included in the Form 8-K current
report filed March 5, 1997 which is incorporated by reference in this
Registration Statement.
We also consent to the reference to us under headings "Selected Financial
Data" and "Experts" in such Registration Statement.
Hill, Barth & King, Inc.
Certified Public Accountants
HILL, BARTH & KING, INC.
Naples, Florida
March 3, 1997
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOWN ALL PERSONS BY THESE PRESENTS, that each of F.N.B. Corporation,
and the several undersigned Officers and Directors thereof whose signatures
appear below, hereby makes, constitutes and appoints John D. Waters, its, his
and her true and lawful attorney with power to act without any other and with
full power of substitution, to execute, deliver and file in its, his and her
name and on its, his and her behalf, and in each of the undersigned Officer's
or Director's capacity or capacities as shown below, (a) a Registration
Statement of F.N.B. Corporation on Form S-4 (or other appropriate form) with
respect to the registration under the Securities Act of 1933, as amended, of up
to 1,371,163 shares of common stock, par value $2.00 per share, of F.N.B.
Corporation, to be issued in exchange for shares of common stock of West Coast
Bancorp, Inc., upon consummation of the proposed merger of Southwest Banks,
Inc., a wholly-owned bank holding company subsidiary of F.N.B. Corporation,
with and into West Coast Bancorp, Inc., and any and all documents in support
thereof or supplements thereto and any and all amendments, including any and
all post-effective amendments, to the foregoing (hereinafter call the
Registration Statement"), and (b) such registration statements, petitions,
applications, consents to service of process or other instruments, any and all
documents in support thereof or supplemental thereto, and any and all documents
in support thereof or supplemental thereto, and any and all amendments or
supplements to the foregoing, as may be necessary or advisable to qualify or
register the securities covered by said Registration Statement under such
securities laws, regulations or requirements as may be applicable; and each of
F.N.B. Corporation and said Officers and Directors hereby grants to said
attorney full power and authority to do and perform each and every act and
thing whatsoever as said attorney may deem necessary or advisable to carry out
fully the intent of this power of attorney to the same extent and with the
same effects as F.N.B. Corporation might or could do, and as each of said
Officers and Directors might or could do personally in his or her capacity or
capacities as aforesaid, and each of F.N.B. Corporation and said Officers and
Directors hereby ratifies and confirms all acts and things which said attorney
might do or cause to be done by virtue of this power of attorney and its, his
or her
<PAGE> 2
signature as the same may be signed by said attorney, or any of them, to any or
all of the following (and/or any and all amendments and supplements to any or
all thereof): such Registration Statement under the Securities Act of 1933, as
amended, and all such registration statements, petitions, applications,
consents to service of process and other instruments, and any and all documents
in support thereof or supplemental thereto, under such securities laws,
regulations and requirements as may be applicable.
IN WITNESS WHEREOF, F.N.B. Corporation has caused this power of
attorney to be signed on its behalf, and each of the undersigned Officers and
Directors in the capacity or capacities noted has hereunto set his or her hand
as of the date indicated below.
F.N.B. CORPORATION
(Registrant)
By: /s/ Peter Mortensen
--------------------------------------
Peter Mortensen
Chairman and President
Dated: February 25, 1997
------------------------------
<TABLE>
<S> <C> <C>
/s/ Peter Mortensen Chairman, President Date: February 25, 1997
- ---------------------------------- (Principal Executive Officer) -----------------------------
Peter Mortensen
/s/ Stephen J. Gurgovits Executive Vice President and Date: February 25, 1997
- ---------------------------------- Director -----------------------------
Stephen J. Gurgovits
/s/ Samuel K. Sollenberger Vice President and Director Date: February 25, 1997
- ---------------------------------- -----------------------------
Samuel K. Sollenberger
/s/ William J. Rundorff Executive Vice President Date: February 25, 1997
- ---------------------------------- -----------------------------
William J. Rundorff
/s/ John W. Rose Executive Vice President Date: February 25, 1997
- ---------------------------------- -----------------------------
John W. Rose
</TABLE>
Page 2 of 4
<PAGE> 3
<TABLE>
<S> <C> <C>
/s/ John D. Waters Vice President and Chief Finance Date: February 25, 1997
- ---------------------------------- Officer (Principal Financial and -----------------------------
John D. Waters Accounting Officer)
/s/ W. Richard Blackwood Director Date: February 25, 1997
- ---------------------------------- -----------------------------
W. Richard Blackwood
Director Date:
- ---------------------------------- -----------------------------
William B. Campbell
/s/ Charles T. Cricks Director Date: January2, 1997
- ---------------------------------- -----------------------------
Charles T. Cricks
/s/ Henry W. Ekker Director Date: February 25, 1997
- ---------------------------------- -----------------------------
Henry W. Ekker, Esq.
/s/ Thomas C. Elliott Director Date: February 25, 1997
- ---------------------------------- -----------------------------
Thomas C. Elliott
/s/ Thomas W. Hodge Director Date: February 25, 1997
- ---------------------------------- -----------------------------
Thomas W. Hodge
/s/ George E. Lowe, D.D.S. Director Date: February 25, 1997
- ---------------------------------- -----------------------------
George E. Lowe, D.D.S.
/s/ Paul P. Lynch Director Date: January 2, 1997
- ---------------------------------- -----------------------------
Paul P. Lynch
Director Date:
- ---------------------------------- -----------------------------
James B. Miller
/s/ Robert S. Moss Director Date: February 25, 1997
- ---------------------------------- -----------------------------
Robert S. Moss
/s/ John R. Perkins Director Date: February 25, 1997
- ---------------------------------- -----------------------------
John R. Perkins
/s/ William A. Quinn Director Date: January 2, 1997
- ---------------------------------- -----------------------------
William A. Quinn
/s/ George A. Seeds Director Date: February 25, 1997
- ---------------------------------- -----------------------------
George A. Seeds
</TABLE>
Page 3 of 4
<PAGE> 4
<TABLE>
<S> <C> <C>
/s/ William J. Strimbu Director Date: February 25, 1997
- ---------------------------------- -----------------------------
William J. Strimbu
/s/ Archie O. Wallace Director Date: February 25, 1997
- ---------------------------------- -----------------------------
Archie O. Wallace
/s/ Joseph M. Walton Director Date: January 3, 1997
- ---------------------------------- -----------------------------
Joseph M. Walton
/s/ James T. Weller Director Date: February 25, 1997
- ---------------------------------- -----------------------------
James T. Weller
/s/ Eric J. Werner Director Date: February 25, 1997
- ---------------------------------- -----------------------------
Eric J. Werner, Esq.
/s/ Donna C. Winner Director Date: January 2, 1997
- ---------------------------------- -----------------------------
Donna C. Winner
</TABLE>
Page 4 of 4
<PAGE> 1
EXHIBIT 99.1
WEST COAST BANCORP, INC.
Special Meeting of Shareholders, April 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Shares of West Coast Bancorp, Inc.
("West Coast"), a corporation organized under the laws of the state of Florida,
does hereby appoint Thomas R. Cronin, Sr. and Michael P. Geml, and each of
them, as due and lawful attorneys-in-fact (each of whom shall have full power
of substitution), to represent and vote as designated below all of the West
Coast Common Shares that the undersigned held of record at 5:00 p.m., Eastern
Standard Time, on February 28, 1997, at the Special Meeting of Shareholders of
West Coast, to be held in the lobby of the First National Bank of Southwest
Florida headquarters at 2724 Del Prado Boulevard South, Cape Coral, Florida
33904, on April 15, 1997 at 5:00 p.m. or any adjournment thereof, on the
following matters, and on such other business as may properly come before the
meeting:
(1) APPROVAL OF ACQUISITION PROPOSAL
Proposal to approve and adopt the Agreement and Plan of Merger dated
November 15, 1996, as amended on February 28, 1997, among F.N.B.
Corporation, Southwest Banks, Inc. and West Coast as described in the
accompanying Proxy Statement-Prospectus dated March 7, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) In their discretion, on such other business as may properly come
before the meeting.
(Please Sign and Date on Reverse Side)
<PAGE> 2
(Continued from other side)
PLEASE SIGN AND RETURN PROMPTLY.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
APPROVAL OF THE ACQUISITION PROPOSAL.
PLEASE ENTER THE NUMBER OF WEST COAST COMMON SHARES YOU OWN: ________________
(Please sign, date, and return this proxy form exactly as your name or names
appear below whether or not you plan to attend the meeting).
<TABLE>
<S> <C>
[ ] I plan to attend the Special Meeting.
[ ] I do not plan to attend the Special Meeting.
Date: , 1997
---------------------------------------
Signature(s):
--------------------------------------
---------------------------------------------------
---------------------------------------------------
Title or Authority (if applicable)
PLEASE SIGN YOUR NAME HERE EXACTLY AS IT APPEARS
HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN, CORPORATE OFFICER OR OTHER
SIMILAR CAPACITY, SO INDICATE. IF THE OWNER IS A
CORPORATION, AN AUTHORIZED OFFICER SHOULD SIGN FOR
THE CORPORATION AND STATE HIS TITLE. THIS PROXY
SHALL BE DEEMED VALID FOR ALL SHARES HELD IN ALL
CAPACITIES THAT THEY ARE HLD BY THE SIGNATORY.
</TABLE>
<PAGE> 1
EXHIBIT 99.3
PENNSYLVANIA BUSINESS CORPORATION LAW
SUBCHAPTER D. INDEMNIFICATION
1741 THIRD-PARTY ACTIONS. -- Unless otherwise restricted in its
bylaws, a business corporation shall have power to indemnify any person who was
or is a party or threatened to be made a party to any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a representative of the corporation, or is
or was serving at the request of the corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit, partnership,
joint venture, trust or other enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action or proceeding if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action or proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the person did not act in good
faith and in a manner that he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any criminal
proceeding, had reasonable cause to believe that his conduct was unlawful.
1742 DERIVATIVE AND CORPORATE ACTIONS. -- Unless otherwise
restricted in its bylaws, a business corporation shall have power to indemnify
any person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he is or was a
representative of the corporation or is or was serving at the request of the
corporation as a representative of another domestic or foreign corporation for
profit or not-for-profit, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of the
action if he acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation. Indemnification
shall not be made under this section in respect of any claim, issue or matter
as to which the person has been adjudged to be liable to the corporation unless
and only to the extent that the court of common pleas of the judicial district
embracing the county in which the registered office of the corporation is
located or the court in which the action was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for the expenses that the court of common pleas or other court deems
proper.
1743 MANDATORY INDEMNIFICATION. -- To the extent that a
representative of a business corporation has been successful on the merits or
otherwise in defense of any action or proceeding referred to in Section 1741
(relating to third-party actions) or 1742 (relating to derivative and corporate
actions) or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney fees) actually and reasonably
incurred by him in connection therewith.
<PAGE> 2
1744 PROCEDURE FOR EFFECTING INDEMNIFICATION. -- Unless ordered by a
court, any indemnification under Section 1741 (relating to third-party actions)
or 1742 (relating to derivative and corporate actions) shall be made by the
business corporation only as authorized in the specific case upon a
determination that indemnification of the representative is proper in the
circumstances because he has met the applicable standard of conduct set for in
those sections. The determination shall be made:
(1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to the action or proceeding;
(2) if such a quorum is not obtainable or if obtainable and a
majority vote of a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or
(3) by the shareholders.
1745 ADVANCING EXPENSES. -- Expenses (including attorneys' fees)
incurred in defending any action or proceeding referred to in this subchapter
may be paid by a business corporation in advance of the final disposition of
the action or proceeding upon receipt of an undertaking by or on behalf of the
representative to repay the amount if it is ultimately determined that he is
not entitled to be indemnified by the corporation as authorized in this
subchapter or otherwise.
1746 SUPPLEMENTARY COVERAGE. -- (a) General rule. -- The
indemnification and advancement of expenses provided by, or granted pursuant
to, the other sections of this subchapter shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding that office.
Section 1728 (relating to interested directors or officers; quorum) and, in the
case of a registered corporation, section 2538 (relating to approval of
transactions with interested shareholders) shall be applicable to any bylaw,
contract or transaction authorized by the directors under this section. A
corporation may create a fund of any nature, which may, but need not be, under
the control of a trustee, or otherwise secure or insure in any manner its
indemnification obligations, whether arising under or pursuant to this section
or otherwise.
(b) When indemnification is not to be made. -- Indemnification
pursuant to subsection (a) shall not be made in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness. The articles may
not provide for indemnification in the case of willful misconduct or
recklessness.
(c) Grounds. -- Indemnification pursuant to subsection (a) under
any bylaw, agreement, vote of shareholders or directors or otherwise may be
granted for any action taken and may be made whether or not the corporation
would have the power to indemnify the person under any other provision of law
except as provided in this section and whether or not the indemnified liability
arises or arose from any threatened, pending or completed action by or in the
right of the corporation. Such indemnification is declared to be consistent
with the public policy of this Commonwealth.
2
<PAGE> 3
1747 POWER TO PURCHASE INSURANCE. -- Unless otherwise restricted in
its bylaws, a business corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a representative of the
corporation or is or was serving at the request of the corporation as a
representative of another domestic or foreign corporation for profit or
not-for-profit, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against that liability under the provisions of this
subchapter. Such insurance is declared to be consistent with the public policy
of this Commonwealth.
1748 APPLICATION TO SURVIVING OR NEW CORPORATIONS. -- For the
purposes of this subchapter, references to "the corporation" include all
constituent corporations absorbed in a consolidation, merger or division, as
well as the surviving or new corporations surviving or resulting therefrom, so
that any person who is or was a representative of the constituent, surviving or
new corporation, or is or was serving at the request of the constituent,
surviving or new corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the provisions of this
subchapter with respect to the surviving or new corporation as he would if he
had served the surviving or new corporation in the same capacity.
1749 APPLICATION TO EMPLOYEE BENEFIT PLANS. -- For purposes of this
subchapter:
(1) References to "other enterprises" shall include employee
benefit plans and references to "serving at the request of the corporation"
shall include any service as a representative of the business corporation that
imposes duties on, or involves services by, the representative with respect to
an employee benefit plan, its participants or beneficiaries.
(2) Excise taxes assessed on a person with respect to an employee
benefit plan pursuant to applicable law shall be deemed "fines."
(3) Action with respect to an employee benefit plan taken or
omitted in good faith by a representative of the corporation in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of the plan shall be deemed to be action in a manner that is not opposed to the
best interests of the corporation.
1750 DURATION AND EXTENT OF COVERAGE. -- The indemnification and
advancement of expenses provided by, or granted pursuant to, this subchapter
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a representative of the corporation and shall inure
to the benefit of the heirs and personal representative of that person.
3
