<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1998
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)
---------------
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PENNSYLVANIA 6711 25-1255406
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ONE F.N.B. BOULEVARD JOHN D. WATERS
HERMITAGE, PENNSYLVANIA 16148 F.N.B. CORPORATION
(724) 981-6000 ONE F.N.B. BOULEVARD
(ADDRESS, INCLUDING ZIP CODE, AND HERMITAGE, PENNSYLVANIA 16148
TELEPHONE NUMBER, INCLUDING AREA CODE, (724) 981-6000
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE
AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
MARLON F. STARR, ESQ. ROD JONES, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP SHUTTS & BOWEN, LLP
1230 Peachtree Street, N.E. 20 N. Orange Avenue
Suite 3100 Suite 1000
Atlanta, Georgia 30309 Orlando, Florida 32801
(404) 815-3500 (407) 423-3200
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE
OF THE SECURITIES TO THE PUBLIC:
Upon the effective date of the merger of Seminole Bank
with and into a wholly-owned subsidiary of the Registrant.
CALCULATION OF REGISTRATION FEE
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====================================================================================================================
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
- --------------------------------------------------------------------------------------------------------------------
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Common Stock, $2.00 par value 832,118 shares (2) $9,452,003(3) $2,789
====================================================================================================================
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(1) Based on the estimated maximum number of shares of the Registrant's
common stock which may be issued in connection with the proposed merger
("Merger") of Seminole Bank ("Seminole") with and into Southwest
Interim Bank No. 4, N.A., a national bank to be chartered under the
laws of the United States and to become a wholly-owned subsidiary of
the Registrant ("Interim"). 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)(2) under the Securities Act of
1933, as amended, based on the book value as of March 31, 1998 of
the maximum number of securities (571,118 shares of common stock of
Seminole) to be received by the Registrant in exchange for the
securities registered hereby.
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: [ ]
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
SEMINOLE BANK
10899 Park Boulevard
Seminole, Florida 33772
__________________, 1998
Dear Shareholder:
On behalf of the Board of Directors, we cordially invite you to attend a
Special Meeting of Shareholders (the "Special Meeting") of Seminole Bank
("Seminole") to be held at the main office of Seminole, located at 10899 Park
Boulevard, Seminole, Florida, on Wednesday, May 13, 1998 at 5:30 p.m., local
time.
As described in the enclosed Proxy Statement-Prospectus, Seminole
shareholders will be asked to consider and vote upon a proposal to approve the
Agreement and Plan of Merger dated as of February 2, 1998 and amended as of
April 6, 1998 (the "Merger Agreement"), among F.N.B. Corporation ("FNB"),
Southwest Banks, Inc., a wholly-owned subsidiary of FNB ("Southwest") and
Seminole, providing for the merger (the "Merger") of Seminole with and into
Southwest Interim Bank No. 4, N.A., a national bank to be chartered under the
laws of the United States and to become a wholly-owned subsidiary of FNB
("Interim"). Interim will be the surviving entity in the Merger. Following
consummation of the Merger, FNB will transfer 100% of its ownership of Interim
to Southwest so that Interim will become a wholly-owned subsidiary of Southwest,
whereupon Interim will then be merged into First National Bank of Florida (f/k/a
Indian Rocks National Bank), a wholly-owned subsidiary of Southwest. Upon
consummation of the Merger, except as described in the Proxy
Statement-Prospectus, each issued and outstanding share of Seminole common
stock, par value $0.10 per share ("Seminole Common Stock") will be converted
into and exchanged for 1.457 shares of FNB common stock, par value $2.00 per
share ("FNB Common Stock"); provided, however, that Seminole may terminate the
Merger Agreement prior to such exchange if the average of the closing bid and
asked prices of FNB Common Stock for a specified period prior to the Closing is
less than $28.00, subject to adjustment as provided in the Merger Agreement.
Cash will be paid in lieu of fractional shares.
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 SEMINOLE BELIEVES THE MERGER IS IN THE BEST
INTERESTS OF SEMINOLE'S SHAREHOLDERS, HAS APPROVED UNANIMOUSLY THE MERGER
AGREEMENT, AND RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
YOUR VOTE IS IMPORTANT! Seminole's management team would greatly
appreciate your attendance at the Special Meeting. However, since the
affirmative vote of the holders of two-thirds of the outstanding shares of
Seminole Common Stock 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 ensure 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,
Robert G. Castles Jeffory H. Forbes
Chairman of the Board President and Chief Executive Officer
<PAGE> 3
SEMINOLE BANK
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 13, 1998
To the Shareholders of
Seminole Bank
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the
"Special Meeting") of Seminole Bank ("Seminole"), will be held at the main
office of Seminole located at 10899 Park Boulevard, Seminole, Florida, on
Wednesday, May 13, 1998, at 5:30 p.m., local time, for the following purposes:
(1) THE MERGER. To consider and vote upon a proposal to adopt
the Agreement and Plan of Merger, dated as of February 2, 1998 and
amended as of April 6, 1998 (the "Merger Agreement"), among F.N.B.
Corporation ("FNB"), Southwest Banks, Inc., a Florida corporation and a
wholly-owned subsidiary of FNB ("Southwest") and Seminole, pursuant to
which Seminole will be merged with and into Southwest Interim Bank No.
4, N.A., a national bank to be chartered under the laws of the United
States and to become a wholly-owned subsidiary of FNB ("Interim"), and
in which each issued and outstanding share of Seminole Common Stock
will be converted into and exchanged for the right to receive 1.457
shares of FNB Common Stock; provided, however, that Seminole may
terminate the Merger Agreement prior to such exchange if the average of
the closing bid and asked prices of FNB Common Stock for a specified
period prior to the Closing is less than $28.00, subject to adjustment
as provided in the Merger Agreement.
(2) OTHER BUSINESS. To transact such other business as may
properly come before the Special Meeting or any adjournments or
postponements thereof.
NOTICE OF RIGHT TO DISSENT. If Proposal 1 above is approved and the
Merger is consummated, each holder of shares of Seminole Common Stock would have
the right to dissent from the approval of Proposal 1 and would be entitled to
the rights and remedies of dissenting shareholders provided in Title 12, Chapter
2, Section 215a of the United States Code ("12 U.S.C. ss. 215a"). The right of
any such shareholder to any dissenters' rights and remedies is contingent upon
the consummation of the Merger. In addition, the right of any such holder to
such rights and remedies is contingent upon strict compliance with the
provisions of 12 U.S.C. ss. 215a which require, among other things, that the
shareholder either give Seminole notice of such shareholder's intention to
dissent at or prior to the Special Meeting or that he vote his respective shares
against the Merger and that such shareholder thereafter perfect his dissenters'
rights by written notice to Seminole within 30 days of the date of consummation
of the Merger. FOR A SUMMARY OF THE REQUIREMENTS OF 12 U.S.C. ss. 215a, SEE "THE
MERGER -- DISSENTERS' RIGHTS OF SEMINOLE SHAREHOLDERS" IN THE ACCOMPANYING
PROXY-STATEMENT PROSPECTUS.
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 Seminole Common Stock at the close
of business on March 20, 1998 (the "Record Date") will be entitled to notice of,
and to vote at, the Special Meeting or any adjournments or postponements
thereof. Pursuant to the National Bank Act, the affirmative vote of the holders
of two-thirds of the shares of Seminole Common Stock outstanding and entitled to
vote at the Special Meeting 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 you 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 Seminole a written revocation bearing a later date,
or by attending and voting at the Special Meeting.
By Order of the Board of Directors
Claude D. McMullen, Secretary
Seminole, Florida
April __, 1998
-----------------------------------
WHETHER OR NOT YOU PLAN
TO ATTEND THIS MEETING,
PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD.
-----------------------------------
<PAGE> 4
PROXY STATEMENT PROSPECTUS
OF OF
SEMINOLE BANK F.N.B. CORPORATION
SPECIAL MEETING OF SHAREHOLDERS COMMON STOCK, $2.00 PAR VALUE
TO BE HELD ON
MAY 13, 1998
This Proxy Statement-Prospectus (this "Proxy Statement-Prospectus") is
being furnished to holders of common stock, par value $0.10 per share ("Seminole
Common Stock"), of Seminole Bank, a banking corporation organized under the laws
of the State of Florida ("Seminole"), in connection with the solicitation of
proxies by the Board of Directors of Seminole (the "Seminole Board") for use at
a special meeting of such holders to be held on Wednesday, May 13, 1998
commencing at 5:30 p.m., local time, and at any adjournment or postponement
thereof (the "Special Meeting"). At the Special Meeting, holders of Seminole
Common Stock will be asked to consider and vote upon a proposal to approve the
Agreement and Plan of Merger, dated as of February 2, 1998 and amended as of
April 6, 1998, 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 Seminole (the "Merger Agreement"), and the
transactions contemplated thereby, pursuant to which, among other things,
Seminole would be acquired by FNB by means of a merger of Seminole with and into
Southwest Interim Bank No. 4, N.A., a national bank to be chartered under the
laws of the United States and to become a wholly-owned subsidiary of FNB
("Interim"). Following consummation of the Merger, FNB will transfer 100% of its
ownership of Interim to Southwest so that Interim will become a wholly-owned
subsidiary of Southwest, whereupon Interim will then be merged into First
National Bank of Florida (f/k/a Indian Rocks National Bank), a wholly-owned
subsidiary of Southwest. 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 share of Seminole Common
Stock (other than shares held by Seminole, FNB or any FNB subsidiary, in each
case except for those shares held in a fiduciary capacity or as a result of
debts previously contracted, which shares will be canceled and retired without
consideration being paid, and other than shares held by Seminole shareholders
who perfect their dissenters' rights) will be converted into the right to
receive 1.457 shares of common stock, par value $2.00 per share, of FNB ("FNB
Common Stock"); provided, however, that Seminole may terminate the Merger
Agreement prior to such exchange if the average of the closing bid and asked
prices of FNB Common Stock for a specified period prior to the Closing is less
than $28.00, subject to adjustment as provided in the Merger Agreement. See "THE
MERGER --Modification, Waiver, Termination" and "THE MERGER -- Description of
the Merger." Each holder of shares of Seminole Common Stock 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."
Consummation of the Merger is subject to several conditions, including,
among others, the affirmative vote to approve the Merger Agreement by the
holders of two-thirds of the issued and outstanding shares of Seminole Common
Stock as of March 20, 1998 (the "Record Date") entitled to vote on the matter
and the approval of appropriate regulatory authorities. See "THE MERGER --
Conditions Precedent to the Merger."
(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 April __, 1998.
<PAGE> 5
Until June 15, 1997, the FNB Common Stock traded on the SmallCap Market
Tier of the Nasdaq Stock Market (the "Nasdaq SmallCap Market") under the trading
symbol "FBAN." Since June 16, 1997, the FNB Common Stock has traded on the
Nasdaq Stock Market as a National Market Security (the "Nasdaq National Market")
under the same trading symbol. The last reported sale price of FNB Common Stock
as reported by the Nasdaq Stock Market on January 30, 1998, the last trading day
preceding public announcement of the proposed Merger, was $34.25 per share. The
last reported sale price of FNB Common Stock as reported by the Nasdaq Stock
Market on the Record Date was $38.50 per share. The Seminole Common Stock is not
traded on any exchange, and there is no established public trading market for
such shares. There is, however, limited and sporadic trading of Seminole Common
Stock in its local area. Based on the limited information available, Seminole's
management believes that since January 1, 1996, negotiated sales of Seminole
Common Stock among shareholders have been made at prices ranging from $14.50 to
$16.00 per share. In view of the extremely limited volume of transactions
involving Seminole Common Stock and the lack of reliable trading price data
available to management, there is no assurance that the stated prices paid for
Seminole Common Stock provide a reliable or relevant indication of the value of
Seminole Common Stock. See "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."
The Carson Medlin Company has rendered its opinion, dated February
2,1998 to the Seminole Board that the consideration provided in the Merger
Agreement is fair, from a financial point of view, to the holders of Seminole
Common Stock. See "THE MERGER -- Opinion of Seminole's Financial Advisor."
THE SEMINOLE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF SEMINOLE VOTE
TO APPROVE THE MERGER AGREEMENT. FAILURE TO VOTE IS EQUIVALENT TO VOTING AGAINST
THE MERGER AGREEMENT.
Seminole shareholders should note that certain members of management
and directors of Seminole have certain interests in and may derive certain
benefits as a result of the Merger that are in addition to any interests they
may have as shareholders of Seminole generally. 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
Seminole upon consummation of the Merger. FNB has supplied all information
contained in this Proxy Statement-Prospectus relating to FNB and its
subsidiaries, and Seminole has supplied all information contained in this Proxy
Statement-Prospectus relating to Seminole and its subsidiaries.
This Proxy Statement-Prospectus is included as part of a Registration
Statement on Form S-4 (together with any amendments and exhibits thereto, 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 832,118 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 Seminole on or about April __, 1998.
ii
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TABLE OF CONTENTS
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AVAILABLE INFORMATION.............................................................................................1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................1
SUMMARY .........................................................................................................3
General ................................................................................................3
The Companies............................................................................................3
FNB .......................................................................................3
Seminole .......................................................................................3
Special Meeting and Vote Required to Approve the Merger..................................................4
The Merger...............................................................................................4
Effective Time of the Merger.............................................................................5
Recommendation of the Seminole Board.....................................................................6
Opinion of Seminole's Financial Advisor..................................................................6
Certain Differences in the Rights of Shareholders........................................................6
Modification, Waiver and Termination.....................................................................6
Certain Federal Income Tax Consequences..................................................................7
Interests of Certain Persons in the Merger...............................................................7
Stock Option Agreement...................................................................................7
Dissenters' Rights.......................................................................................8
Accounting Treatment.....................................................................................8
Regulatory Approvals.....................................................................................8
Resales by Affiliates....................................................................................8
Share Information and Market Prices......................................................................9
Comparative Unaudited Per Share Data.....................................................................9
Selected Financial Data.................................................................................11
THE SPECIAL MEETING OF SHAREHOLDERS OF SEMINOLE..................................................................13
General ...............................................................................................13
Voting and Revocation of Proxies........................................................................13
Solicitation of Proxies.................................................................................13
Record Date and Voting Rights...........................................................................14
Recommendation of the Seminole Board....................................................................14
THE MERGER.......................................................................................................16
Description of the Merger...............................................................................16
Effective Time of the Merger............................................................................17
Exchange of Certificates................................................................................17
Background of and Reasons for the Merger................................................................18
Background of the Merger.......................................................................18
Seminole Reasons for the Merger................................................................19
FNB Reasons for the Merger.....................................................................20
Opinion of Seminole's Financial Advisor.................................................................20
Conditions Precedent to the Merger......................................................................26
Conduct of Business Prior to the Merger.................................................................27
Modification, Waiver and Termination....................................................................29
Expenses ...............................................................................................30
Certain Federal Income Tax Consequences.................................................................31
Interests of Certain Persons in the Merger..............................................................31
General ......................................................................................31
Indemnification................................................................................31
Other Matters Relating to Seminole Employee Benefit Plans......................................32
Stock Option Agreement..................................................................................32
Dissenters' Rights of Seminole Shareholders.............................................................36
Accounting Treatment....................................................................................38
Bank Regulatory Matters.................................................................................38
Federal Reserve Board and Office of the Comptroller of the Currency (the "OCC")................38
Status of Regulatory Approvals and Other Information...........................................39
Restrictions on Resales by Affiliates...................................................................39
Voluntary Dividend Reinvestment and Stock Purchase Plan.................................................40
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TABLE OF CONTENTS
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS........................................................................41
Market Prices...........................................................................................41
Dividends...............................................................................................42
INFORMATION ABOUT FNB............................................................................................42
INFORMATION ABOUT SEMINOLE BANK..................................................................................44
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION...........................................................49
DESCRIPTION OF FNB CAPITAL STOCK AND SEMINOLE CAPITAL STOCK......................................................62
FNB Common Stock........................................................................................62
General ......................................................................................62
Voting and Other Rights........................................................................63
Distributions..................................................................................63
FNB Preferred Stock.....................................................................................63
General ......................................................................................63
FNB Series A Preferred Stock...................................................................64
FNB Series B Preferred Stock...................................................................64
Seminole Common Stock...................................................................................64
General ......................................................................................64
COMPARISON OF SHAREHOLDER RIGHTS.................................................................................64
Removal of Directors; Filling Vacancies on the Board of Directors.......................................64
Quorum of Shareholders..................................................................................65
Adjournment and Notice of Shareholder Meetings..........................................................65
Call of Special Shareholder Meetings....................................................................65
Shareholder Consent in Lieu of Meeting..................................................................66
Dissenters' Rights......................................................................................66
Derivative Actions......................................................................................67
Dividends and Distributions.............................................................................67
Director Qualifications and Number......................................................................67
Indemnification of Officers and Directors...............................................................68
Director Liability......................................................................................69
Amendment of Articles of Incorporation and Bylaws.......................................................70
Vote Required for Extraordinary Corporate Transactions..................................................70
Interested Shareholder Transactions.....................................................................71
Fiduciary Duty..........................................................................................72
Provisions with Possible Anti-Takeover Effects..........................................................72
LEGAL OPINIONS...................................................................................................74
EXPERTS ........................................................................................................74
OTHER MATTERS....................................................................................................75
INDEX TO
SEMINOLE BANK
FINANCIAL STATEMENTS...................................................................................F-1
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ii
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TABLE OF CONTENTS
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APPENDIX A -- Agreement and Plan of Merger.......................................................................A-1
APPENDIX B -- Opinion of The Carson Medlin Company...............................................................B-1
APPENDIX C -- Stock Option Agreement.............................................................................C-1
APPENDIX D -- Title 12, Chapter 2, Section 215a of the United States Code........................................D-1
</TABLE>
iii
<PAGE> 9
AVAILABLE INFORMATION
FNB has filed with the Securities and Exchange Commission (the
"Commission") the Registration Statement under the Securities Act of 1933 (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 is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files 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 also may 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. FNB Common Stock trades on the Nasdaq
Stock Market and, as a result, reports, proxy statements and other information
concerning FNB 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, 1997; (b) 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; and (c)
the FNB Current Reports on Form 8-K filed February 13, 1998 and April 3, 1998.
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.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (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, ONE F.N.B.
BOULEVARD, HERMITAGE, PENNSYLVANIA 16148, TELEPHONE (724) 981-6000. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 8,
1998. 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.
---------------
<PAGE> 10
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 SEMINOLE.
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 THE SECURITIES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF SEMINOLE 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 SEMINOLE DEEMED TO
BE "AFFILIATES" OF SEMINOLE 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> 11
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 FNB's filings with the Commission.
GENERAL
This Proxy Statement-Prospectus, Notice of Special Meeting of Seminole
shareholders to be held on Wednesday, May 13, 1998, and form of proxy solicited
in connection therewith are first being mailed to Seminole shareholders on or
about April __, 1998. At the Special Meeting, the holders of Seminole Common
Stock 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 and is incorporated herein by reference.
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. As of January 31, 1998, FNB's subsidiaries' had a network of 108
offices in Pennsylvania, southwestern Florida, eastern Ohio and southwestern New
York. On January 21, 1997, FNB acquired Southwest, a Florida corporation and
registered bank holding company under the BHCA, with banking subsidiaries
located in Naples and Cape Coral, Florida. On April 18, 1997, FNB acquired West
Coast Bancorp, Inc. ("WCBI"), a Florida corporation and registered bank holding
company under the BHCA located in Cape Coral, Florida. On October 17, 1997, FNB
acquired Indian Rocks State Bank (which was subsequently converted to a national
bank and which changed its name to First National Bank of Florida) ("FNBFL"), a
Florida state bank located in Largo, Florida with assets of approximately $80
million. On November 20, 1997, FNB acquired Mercantile Bank of Southwest
Florida, a Florida state bank located in Naples, Florida with assets of
approximately $120 million. On January 20, 1998, FNB acquired West Coast Bank
("West Coast"), a Florida state bank located in Sarasota, Florida with assets of
approximately $100 million. After considering the West Coast acquisition, on a
consolidated basis, FNB had total consolidated assets of approximately $2.8
billion and total deposits of approximately $2.3 billion. The principal
executive offices of FNB are located at One F.N.B. Boulevard, Hermitage,
Pennsylvania 16148, and its telephone number is (724) 981-6000. All references
herein to FNB refer to F.N.B. 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."
SEMINOLE. Seminole is a state banking corporation organized under the
laws of the State of Florida. Seminole was initially organized under the laws of
the United States as a federal savings bank and commenced business in July 1985
as Seminole Federal Savings Bank. In April 1991, Seminole was
3
<PAGE> 12
converted to a state chartered bank. Seminole provides commercial banking
services through 4 offices located in Pinellas County, Florida. On December 31,
1997, Seminole had total assets of approximately $94 million and total deposits
of approximately $83 million. Seminole's principal executive offices are located
at 10899 Park Boulevard, Seminole, Florida 33772, and its telephone number is
(813) 398-5511.
For additional information regarding Seminole, see "THE MERGER" and
"INFORMATION ABOUT SEMINOLE."
SPECIAL MEETING AND VOTE REQUIRED TO APPROVE THE MERGER
The Special Meeting will be held at the main office of Seminole located
at 10899 Park Boulevard, Seminole, Florida, on Wednesday, May 13, 1998 at 5:30
p.m., local time, at which time the shareholders of Seminole will be asked to
approve the Merger Agreement and the transactions contemplated thereby. Only the
record holders of Seminole Common Stock at the close of business on March 20,
1998 (the "Record Date") are entitled to notice of and to vote at the Special
Meeting. On the Record Date, there were 375 holders of record of Seminole Common
Stock and 559,118 shares of Seminole Common Stock outstanding.
Pursuant to the National Bank Act, approval of the Merger Agreement
will require the affirmative vote of two-thirds of the issued and outstanding
shares of Seminole Common Stock entitled to vote at the Special Meeting. As of
the Record Date, directors and executive officers of Seminole and their
affiliates held approximately 279,454 shares, or 49.98% of the Seminole Common
Stock entitled to vote at the Special Meeting.
Pursuant to the terms of the Merger Agreement, the members of the
Seminole 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 SEMINOLE" 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, at the
Effective Time, Seminole will merge with and into Interim, a national bank to be
chartered under the laws of the United States and to become a wholly-owned
subsidiary of FNB. Interim will be the surviving entity in the Merger and,
following consummation of the Merger, FNB will transfer 100% of its ownership of
Interim to Southwest so that Interim will become a wholly-owned subsidiary of
Southwest. Thereafter, Interim will be merged with and into FNBFL, a
wholly-owned subsidiary of Southwest. At the Effective Time, each outstanding
share of Seminole Common Stock (other than shares held by Seminole, FNB or any
FNB subsidiary, in each case except for those shares held in a fiduciary
capacity or as a result of debts previously contracted, which shares will be
canceled and retired without consideration being paid, and other than shares
held by Seminole shareholders who perfect their dissenters' rights) will be
converted into and exchanged for the right to receive 1.457 shares of FNB Common
Stock (the "Exchange Ratio"); provided, however, that Seminole may terminate the
Merger Agreement prior to such exchange if the average of the closing bid and
asked prices of FNB Common Stock for a specified period prior to the Closing is
less than $28.00, subject to adjustment as provided in the Merger Agreement.
Cash will be paid in lieu of fractional shares. Each share of FNB capital stock
outstanding prior to the Merger will continue to be outstanding after the
Effective Time. Further, the Merger Agreement also 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. As of the Record Date, there were 559,118 shares of
Seminole Common Stock outstanding and Seminole has represented that, as of the
Effective Time, there will be no more than 559,118 shares of Seminole Common
Stock issued and outstanding.
4
<PAGE> 13
Immediately following the Effective Time, assuming that 559,118 shares
of Seminole Common Stock are outstanding immediately prior to the Effective
Time, the former shareholders of Seminole would own 814,634 shares, or
approximately 5.1%, of the then outstanding FNB Common Stock (assuming
15,589,200 shares of FNB Common Stock outstanding immediately prior to the
Effective Time).
As of the Record Date, there were Seminole Options outstanding, which
are defined in the Merger Agreement to include options, warrants or other rights
to purchase or acquire Seminole Common Stock, with respect to 12,000 shares of
Seminole Common Stock. Such options were granted on May 15, 1996 under the
Seminole Management Stock Option Plan adopted April 17, 1996. Except as
described below, at the Effective Time, each Seminole Option, whether or not
vested or exercisable, will be assumed by FNB and will be converted into an
option, warrant or other right to purchase the number of shares of FNB Common
Stock equal to the number of shares of Seminole Common Stock subject to such
Seminole 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 Seminole 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 or other
right, in an amount 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. In addition,
notwithstanding the foregoing, each Seminole Option that is an "Incentive Stock
Option" shall be adjusted in accordance with Section 424 of the Internal Revenue
Code of 1986, as amended, and the regulations promulgated thereunder ("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 is subject to the satisfaction or waiver of certain
conditions. Such conditions include, among others, approval of the Merger
Agreement by Seminole shareholders, the effectiveness under the Securities Act
of the Registration Statement for shares of FNB Common Stock to be issued in the
Merger, the listing on the Nasdaq Stock Market of the shares of FNB Common Stock
to be issued to the holders of Seminole Common Stock, receipt of the opinion of
The Carson Medlin Company ("Carson Medlin") as to the fairness of the
transaction to Seminole 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
Seminole restricting their ability to sell or otherwise transfer their shares of
Seminole Common Stock 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."
For additional information relating to the Merger, see "THE MERGER."
EFFECTIVE TIME OF THE MERGER
Unless otherwise agreed by FNB and Seminole, the Effective Time is
expected to occur on the date and at the time the certification of the Merger is
received from the Comptroller of the Currency. This certification is expected to
be received or to become effective on the date of Closing, which the parties
have agreed to use their reasonable best efforts to cause to take place on, but
not prior to, the fifth business day following the effective date of the last
required consent of any state or federal regulatory authority having authority
over and approving or exempting the Merger (including the expiration of any
applicable waiting periods following such consents or the delivery of
appropriate notices). If approved by the Seminole shareholders and applicable
regulatory authorities, the parties expect that the Effective Time will occur on
or before May __, 1998, 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."
5
<PAGE> 14
RECOMMENDATION OF THE SEMINOLE BOARD
THE SEMINOLE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY. THE SEMINOLE BOARD BELIEVES THAT THE
MERGER IS IN THE BEST INTERESTS OF SEMINOLE AND ITS SHAREHOLDERS AND RECOMMENDS
THAT THE SHAREHOLDERS OF SEMINOLE VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
Seminole shareholders should note that certain members of management
and directors of Seminole have certain interests in and may derive certain
benefits as a result of the Merger in addition to their interests as
shareholders of Seminole generally. 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 Seminole Board consulted with its
legal advisors regarding the legal terms of the Merger Agreement and with its
financial advisor, Carson Medlin, as to the fairness, from a financial point of
view, of the consideration to be received in the Merger by holders of Seminole
Common Stock. For a discussion of the factors considered by the Seminole Board
in reaching its conclusions, see "THE MERGER -- Background of and Reasons for
the Merger."
OPINION OF SEMINOLE'S FINANCIAL ADVISOR
Carson Medlin, in its capacity as financial advisor to Seminole, has
rendered an opinion to the Seminole Board that the consideration provided in the
Merger Agreement is fair, from a financial point of view, to the shareholders of
Seminole. A copy of such opinion, dated February 2, 1998, is attached hereto as
Appendix B and should be read in its entirety with respect to the assumptions
made, matters considered and limitations of the review undertaken by Carson
Medlin in rendering such opinion. See "THE MERGER --Opinion of Seminole's
Financial Advisor."
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 Seminole shareholders and other
corporate matters relating to Seminole Common Stock are controlled by the
Seminole Articles of Incorporation (the "Seminole Charter"), the Seminole Bylaws
(the "Seminole Bylaws"), the Florida Financial Institutions Codes (the "FFIC")
and the Florida Business Corporation Act (the "FBCA"). The dissenters' rights of
the Seminole shareholders incident to the Merger are governed by Title 12,
Chapter 2, Section 215a of the United States Code ("12 U.S.C. ss. 215a"), a copy
of which is attached hereto as Appendix D. Upon consummation of the Merger,
shareholders of Seminole 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 SEMINOLE CAPITAL STOCK," "COMPARISON OF
SHAREHOLDER RIGHTS" and "THE MERGER -- Dissenters' Rights of Seminole
Shareholders."
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
Boards of Directors. However, no amendment that reduces or modifies in any
material respect the consideration to be received by the holders of Seminole
Common Stock 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 Seminole Board. The Merger
Agreement may also be terminated by either the
6
<PAGE> 15
FNB Board or the Seminole 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
written notice of such breach, (ii) if the required approval of the Seminole
shareholders or any applicable regulatory authority is not obtained, (iii) if
the Merger is not consummated by September 30, 1998, or (iv) in the event that
any conditions precedent to the obligations of the terminating party cannot be
fulfilled by September 30, 1998 and such party is not in breach of any
representation or warranty in the Merger Agreement at the time of such
termination.
In addition, the Merger Agreement may be terminated by the Seminole
Board (i) if prior to the Effective Time an entity or group shall have made a
bonafide Acquisition Proposal, as defined therein, that the Seminole Board
determines in good faith is more favorable to the Seminole shareholders, or (ii)
by delivery of written notice to FNB at least 24 hours prior to the Closing if
the average of the closing bid and asked prices for the FNB Common Stock for a
specified period prior to the Closing is less than $28.00, subject to adjustment
as provided in the Merger Agreement. The FNB Board also may terminate the Merger
Agreement in the event dissenters' rights are exercised by persons owning in the
aggregate more than 10% of the issued and outstanding Seminole Common Stock.
See "THE MERGER -- Modification, Waiver and Termination" and "THE
MERGER --Description of the Merger."
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
Seminole shareholders as a result of the Merger to the extent that they receive
FNB Common Stock solely in exchange for their Seminole Common Stock. For a more
complete description of the federal income tax consequences, see "THE MERGER --
Certain Federal Income Tax Consequences."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Seminole's management and of the Seminole Board may
be deemed to have interests in the Merger in addition to their interests, if
any, as shareholders of Seminole generally. These interests include, among
others, agreements by FNB to indemnify present and former directors, officers,
employees and agents of Seminole from and after the Effective Time of the Merger
against certain liabilities arising prior to the Effective Time to the full
extent permitted under Florida law, the Seminole Charter, and the Seminole
Bylaws.
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, Seminole granted
FNB an option (the "Stock Option") to purchase, under certain circumstances and
subject to certain adjustments, up to 138,906 shares of Seminole Common Stock
(the "Option Shares") at a price, subject to certain adjustments, of $36.00 per
share pursuant to the terms of a Stock Option Agreement dated February 2, 1998
by and between FNB and Seminole (the "Stock Option Agreement"). The Stock
Option, if exercised, would equal an amount not to exceed, when combined with
the Seminole Common Stock owned by FNB at the time of its exercise, 19.9% of the
total number of shares of Seminole Common Stock outstanding as of its date of
exercise after giving effect to the exercise of the Stock Option. The Stock
Option is exercisable only upon the occurrence of certain events generally
indicating a change of control of Seminole not involving FNB which occur 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, Seminole may be required to repurchase the
Stock Option or the 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
7
<PAGE> 16
the Merger will occur by making it more difficult for another party to acquire
Seminole. The ability of FNB to exercise the Stock Option and to cause, subject
to certain adjustments, up to an additional 138,906 shares of Seminole Common
Stock to be issued may be considered a deterrent to other potential acquisitions
of control of Seminole, as it is likely to increase the cost of an acquisition
of all the Seminole Common Stock which would then be outstanding. See "THE
MERGER -- Stock Option Agreement."
DISSENTERS' RIGHTS
Each holder of Seminole Common Stock who dissents from the Merger is
entitled to the rights and remedies of dissenting shareholders as set forth in
12 U.S.C. ss. 215a subject to the compliance with the procedures set forth
therein. Among other things, a dissenting shareholder is entitled to receive an
amount of cash equal to the "fair value" of such holder's shares as ascertained
by an independent appraisal committee or, in certain circumstances, by an
independent appraiser selected by the Comptroller of the Currency. A summary of
12 U.S.C. ss. 215a is included under "THE MERGER -- Dissenters' Rights of
Seminole Shareholders" and a copy of 12 U.S.C. ss. 215a is attached hereto as
Appendix D. To perfect dissenters' rights, a shareholder must strictly comply
with the procedures set forth in 12 U.S.C. ss. 215a which require among other
things, that the shareholder either give Seminole notice in writing at or prior
to the vote of the shareholders at the Special Meeting that he dissents from the
Merger Agreement or that he vote against the Merger at the Special Meeting.
Dissenting shareholders who have given notice of their intention to dissent or
who have voted against the Merger at the Special Meeting shall be entitled to
receive the value of the shares held by them upon written request made to FNB at
any time before 30 days after the date of consummation of the Merger,
accompanied by the surrender of their stock certificates. Any Seminole
shareholder who returns a signed proxy but fails to provide instructions as to
the manner in which such holder's shares are to be voted will be deemed to have
voted in favor of the Merger Agreement and thus will not be entitled to assert
dissenters' rights. Shareholders should note that FNB has the right to terminate
the Merger Agreement in the event dissenters' rights are claimed pursuant to 12
U.S.C. ss. 215a with respect to 10% or more of the issued and outstanding shares
of Seminole Common Stock. See "THE MERGER -- Dissenters' Rights of Seminole
Shareholders."
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles ("GAAP"). In
the event the aggregate number of fractional shares and shares with respect to
which dissenters' rights have been perfected exceeds 10% of the total number of
shares of FNB Common Stock issued in the Merger to former holders of Seminole
Common Stock, pooling-of-interests treatment will not be permitted. See "THE
MERGER -- Accounting Treatment."
REGULATORY APPROVALS
The Merger is subject to the approval of the Federal Reserve Board and
the Comptroller of the Currency. The Merger may not be consummated until
expiration of all applicable waiting periods.
FNB and Seminole have filed all required applications for regulatory
review and approval or notice with the Federal Reserve Board and the Comptroller
of the Currency 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
Seminole 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
8
<PAGE> 17
of the Securities Act and as permitted under pooling-of-interests accounting
treatment. See "THE MERGER -- Restrictions on Resales by Affiliates."
SHARE INFORMATION AND MARKET PRICES
Until June 15, 1997, the FNB Common Stock traded on the Nasdaq SmallCap
Market under the trading symbol "FBAN." Since June 16, 1997, the FNB Common
Stock has traded on the Nasdaq National Market under the same trading symbol. As
of March 20, 1998, there were 15,211,077 shares of FNB Common Stock outstanding
held by approximately 5,650 holders of record. As of the Record Date, there were
559,118 shares of Seminole Common Stock outstanding held by 375 holders of
record.
The last sale price reported by the Nasdaq Stock Market for shares of
FNB Common Stock was $34.25 on January 30, 1998, the last trading day preceding
public announcement of the proposed Merger, and was $38.50 on the Record Date.
There currently is no market for the Seminole Common Stock. The Seminole
equivalent per share price as of January 30,1998 was $49.90 and as of the Record
Date was $56.09. The Seminole equivalent per share price represents the last
sale price of a share of FNB Common Stock on such date multiplied by the
Exchange Ratio. Shareholders are advised to obtain current market quotations for
FNB Common Stock. No assurance can be given as to the market price of FNB Common
Stock after the Effective Time. For additional information regarding the market
prices of the FNB Common Stock and the Seminole Common Stock during the previous
two years, see "PRICE RANGE OF COMMON STOCK AND DIVIDENDS -- Market Prices."
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth (a) selected comparative per share data
for FNB and Seminole on an historical basis and with respect to FNB, on a
supplemental basis for FNB giving effect to the acquisition of West Coast, which
has been accounted for as a pooling of interests and (b) selected unaudited pro
forma comparative per share data assuming that FNB and Seminole have been
combined during the periods presented. Historical per share data for FNB have
been restated giving effect to the acquisition of West Coast, which was
accounted for as a pooling-of-interests. The unaudited pro forma data have been
prepared giving effect to the merger as a 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 Seminole 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 supplemental consolidated financial
statements and the related notes thereto of FNB included in FNB's Current Report
on Form 8-K dated April 3, 1998 which has been incorporated by reference
herein, and of Seminole, which are included herein. The pro forma amounts are
not necessarily indicative of the 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.
9
<PAGE> 18
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995 1994
----- ----- ----- -----
<S> <C> <C> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS PER COMMON SHARE
FNB
HISTORICAL (BASIC)................................... $1.68 $1.36 $1.45 $1.06
HISTORICAL (DILUTED)................................. 1.60 1.32 1.41 1.05
SUPPLEMENTAL (BASIC)................................. 1.67 1.38 1.47 1.08
SUPPLEMENTAL (DILUTED)............................... 1.59 1.34 1.42 1.06
PRO FORMA COMBINED (BASIC)........................... 1.66 1.34 1.43 1.07
PRO FORMA COMBINED (DILUTED)......................... 1.58 1.30 1.39 1.05
SEMINOLE
HISTORICAL........................................... $2.05 $.88 $1.23 $1.13
PRO FORMA EQUIVALENT (1)
BASIC........................................... 2.42 1.95 2.08 1.56
DILUTED......................................... 2.30 1.89 2.03 1.53
CASH DIVIDENDS DECLARED PER COMMON SHARE
FNB .................................................... $ .63 $ .60 $ .33 $ .24
SEMINOLE HISTORICAL..................................... -- -- -- --
SEMINOLE PRO FORMA EQUIVALENT (2)....................... .92 .87 .48 .35
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------
1997 1996
------ ------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE (PERIOD END)
FNB HISTORICAL........................................................ $15.27 $13.70
FNB SUPPLEMENTAL ..................................................... 15.26 13.70
FNB PRO FORMA COMBINED................................................ 15.05 13.45
SEMINOLE HISTORICAL................................................... 15.96 13.89
SEMINOLE PRO FORMA EQUIVALENT (1)..................................... 21.93 19.60
</TABLE>
- ---------------
(1) SEMINOLE PRO FORMA EQUIVALENT AMOUNTS ARE CALCULATED BY MULTIPLYING THE
PRO FORMA COMBINED AMOUNTS FOR FNB BY THE EXCHANGE RATIO.
(2) SEMINOLE PRO FORMA EQUIVALENT AMOUNTS ARE CALCULATED BY MULTIPLYING THE
SUPPLEMENTAL AMOUNTS FOR FNB BY THE EXCHANGE RATIO. THE EQUIVALENT PRO
FORMA PER SHARE INFORMATION CAN BE USED FOR A COMPARISON WITH THE
HISTORICAL PER SHARE DATA OF SEMINOLE.
10
<PAGE> 19
SELECTED FINANCIAL DATA
The following tables present summary selected financial data for (i)
FNB, on a supplemental basis giving effect to the acquisition of West Coast by
FNB, which has been accounted for as a pooling-of-interests and (ii) Seminole 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 notes thereto of FNB and
the historical financial statements and the related notes thereto of Seminole.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
F.N.B. Corporation:
Earnings (In thousands, except per
share data)
Interest income ................ $202,609 $189,803 $178,614 $153,983 $147,959
Interest expense ............... 87,501 80,046 77,127 61,444 64,325
Net interest income ............ 115,108 109,757 101,487 92,539 83,634
Provision for loan losses ...... 10,916 9,876 7,235 9,241 9,986
Income before income taxes and
extraordinary items ......... 36,788 31,546 32,992 24,185 20,077
Income before extraordinary items 25,212 20,997 22,122 16,095 12,905
Extraordinary income, net of tax 8,809 -- -- -- --
Net income ..................... 34,021 20,997 22,122 16,095 12,905
Earnings per common share before
extraordinary items
Basic ..................... 1.67 1.38 1.47 1.08 0.94
Diluted ................... 1.59 1.34 1.42 1.06 0.93
Cash dividends declared per
common share:
FNB ....................... 0.63 0.60 0.33 0.24 0.23
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance sheet (period end in thousands)
Total assets ..................... $2,756,837 $2,502,580 $2,321,779 $2,153,380 $2,042,344
Total loans net of
unearned income and
allowance for loan losses ...... 1,942,575 1,765,927 1,582,815 1,486,701 1,250,036
Total deposits ................... 2,283,965 2,085,852 1,970,196 1,805,849 1,765,599
Long-term debt and obligations
under capital leases ........... 67,246 58,179 50,784 56,614 32,528
Stockholders' equity .............. 239,513 207,194 194,848 172,418 146,989
</TABLE>
11
<PAGE> 20
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
SEMINOLE:
Earnings (In thousands, except per
share data)
Interest income ................ $6,285 $5,847 $5,324 $4,706 $4,685
Interest expense ............... 2,514 2,542 2,451 2,041 2,006
Net interest income ............ 3,771 3,305 2,873 2,665 2,680
Provision for loan losses ...... 87 65 46 78 106
Net income ..................... 1,146 491 691 631 852
Earnings per common share, basic
and diluted .................. 2.05 .88 1.23 1.13 1.53
Cash dividends declared per
common share ................. -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance sheet (period end in
thousands)
Total assets ....................... $93,650 $76,898 $76,416 $72,168 $74,938
Total loans, net of unearned
income and allowance for loan loss 52,752 50,222 50,063 49,681 49,234
Total deposits ..................... 82,863 67,989 68,864 65,412 68,430
Stockholders' equity .............. 8,923 7,764 7,269 6,415 5,959
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Return on average assets ....... 1.39% .61% .93% .86% 1.20%
Return on average equity ....... 13.86% 6.47% 10.06% 10.19% 15.43%
Average equity to average assets 10.04% 9.50% 9.26% 8.41% 7.77%
</TABLE>
12
<PAGE> 21
THE SPECIAL MEETING OF SHAREHOLDERS OF SEMINOLE
GENERAL
This Proxy Statement-Prospectus is first being furnished to the holders
of Seminole Common Stock on or about April __, 1998, and is accompanied by the
Notice of Special Meeting and a form of proxy that is solicited by the Seminole
Board for use at the Special Meeting of Shareholders of Seminole to be held at
the main office of Seminole located at 10899 Park Boulevard, Seminole, Florida,
on Wednesday, May 13, 1998, at 5:30 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 Seminole 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 Secretary of Seminole, 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 Seminole proxies should be addressed to Seminole Bank, 10899 Park
Boulevard, Seminole, Florida 33772 Attention: Secretary. For such notice of
revocation or later proxy to be valid, however, it must actually be received by
Seminole 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 a proxy is signed
and returned without indicating any voting instructions, it will be voted FOR
the proposal to approve the Merger Agreement. The Seminole 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 Seminole, 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 Seminole, 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 Seminole or FNB
since the date of the Proxy Statement-Prospectus.
All costs of solicitation of proxies from Seminole shareholders will be
borne by Seminole; provided, however, that FNB and Seminole have agreed that
each of them will bear and pay one-half of the printing costs incurred in
connection with the printing of this Proxy Statement-Prospectus and related
materials.
13
<PAGE> 22
RECORD DATE AND VOTING RIGHTS
The Seminole Board has fixed the close of business on March 20, 1998 as
the Record Date for the determination of shareholders of Seminole entitled to
receive notice of and to vote at the Special Meeting. At the close of business
on the Record Date, there were outstanding 559,118 shares of Seminole Common
Stock held by 375 holders of record. Each share of Seminole Common Stock
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 Seminole
and their affiliates held approximately an aggregate of 279,454 shares, or
49.98%, of Seminole Common Stock.
Under the National Bank Act, the affirmative vote of two-thirds of the
issued and outstanding capital stock entitled to vote on the matter is required
in order to approve a proposed merger transaction of a state bank with and into
a national bank, unless the articles of incorporation or the board of directors
require a greater number of votes. Neither the Articles of Incorporation of
Seminole nor its Board requires a greater number of votes. Since approval of the
Merger requires the affirmative vote of two-thirds of the issued and outstanding
shares of Seminole Common Stock 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 TWO-THIRDS OF THE ISSUED AND OUTSTANDING SHARES OF SEMINOLE COMMON STOCK
ENTITLED TO VOTE AT THE SPECIAL MEETING, ABSTENTIONS AND BROKER NON-VOTES WILL
HAVE THE SAME EFFECT AS NEGATIVE VOTES. ACCORDINGLY, THE SEMINOLE 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 SEMINOLE BOARD
THE SEMINOLE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF SEMINOLE AND ITS SHAREHOLDERS, AND RECOMMENDS THAT THE SHAREHOLDERS
OF SEMINOLE VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
In the course of reaching its decision to approve the Merger Agreement
and the transactions contemplated thereby, the Seminole Board, among other
things, consulted with its legal advisors regarding the legal terms of the
Merger Agreement and with its financial advisor, Carson Medlin, as to the
fairness, from a financial point of view, of the consideration to be received by
the holders of Seminole Common Stock
14
<PAGE> 23
in connection with the Merger. For a discussion of the factors considered by the
Seminole Board in reaching its conclusion, see "THE MERGER -- Background of and
Reasons for the Merger."
Seminole shareholders should note that certain members of management of
Seminole 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
Seminole Board will vote their shares in favor of the Merger Agreement and the
transactions contemplated thereby at the Special Meeting.
SEMINOLE SHAREHOLDERS SHOULD NOT SEND
ANY STOCK CERTIFICATES WITH THEIR PROXY CARDS.
15
<PAGE> 24
THE MERGER
The following summary of certain terms and provisions of the Merger
Agreement is qualified in its entirety by reference to the Merger Agreement,
which is incorporated herein by reference and, with the exception of certain
exhibits thereto, is included as Appendix A to this Proxy Statement-Prospectus.
All shareholders are urged to read the Merger Agreement and the other Appendices
hereto in their entirety.
DESCRIPTION OF THE MERGER
At the Effective Time, Seminole will be merged with and into Interim.
Interim will be the surviving entity and, following consummation of the Merger,
FNB will transfer 100% of its ownership of Interim to Southwest so that Interim
will become a wholly-owned subsidiary of Southwest. Thereafter, Interim will be
merged with and into FNBFL, a wholly-owned subsidiary of Southwest. The Interim
Charter and Bylaws in effect at the Effective Time will continue to govern
Interim until amended or repealed or until the merger of Interim with First
National. The Merger is subject to the approval of the Federal Reserve Board and
the Comptroller of the Currency. See "-- Bank Regulatory Matters."
At the Effective Time, except as described herein, each share of
Seminole Common Stock outstanding immediately prior to the Effective Time will
be converted automatically into the right to receive 1.457 shares of FNB Common
Stock. Cash will be paid in lieu of fractional shares. The Merger Agreement
further provides that the Exchange Ratio may be adjusted, subject to certain
exceptions, 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 shares of Seminole Common Stock held by
Seminole, FNB or any FNB subsidiary, other than in a fiduciary capacity or as a
result of debts previously contracted, will be canceled and retired without
consideration being paid. Seminole has represented that, as of the Effective
Time, there will be no more than 559,118 shares of Seminole Common Stock issued
and outstanding. Following the Effective Time and assuming that 559,118 shares
of Seminole Common Stock are outstanding at the Effective Time, the former
shareholders of Seminole would own 814,634 shares, or approximately 5.1%, of the
then outstanding FNB Common Stock (assuming 15,589,200 shares of FNB Common
Stock outstanding immediately prior to the Effective Time). However, if the
average of the closing bid and asked prices of FNB Common Stock in the
over-the-counter market as reported by Nasdaq, or such other trading system or
exchange upon which the FNB Common Stock is then traded, for the ten (10)
consecutive full trading days in which such shares are traded prior to the fifth
business day preceding the effective date of the last required consent of any
regulatory authority having authority over and approving or exempting the Merger
(including expiration of any applicable waiting periods following such
consents), is less than $28.00, subject to adjustment as provided in the Merger
Agreement, Seminole will not be required to consummate the Merger, and, at its
option, may terminate the Merger Agreement.
No fractional shares of FNB Common Stock will be issued in the Merger.
Instead, each holder of Seminole Common Stock 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
thereof, cash (without interest) in an amount equal to such fractional part of a
share of FNB Common Stock multiplied by the "market price" of a share of FNB
Common Stock at the Effective Time. Such holder may instead elect to contribute
any cash to be received in lieu of fractional shares to an account under FNB's
Dividend Reinvestment and Stock Purchase Plan. See "-- Voluntary Dividend
Reinvestment and Stock Purchase Plan." Market price is defined in the Merger
Agreement as the average of the high bid and low asked prices of a share of FNB
Common Stock in the over-the-counter market as reported by Nasdaq (or, if not
reported thereby, by any other authoritative source selected by FNB) on the last
trading day preceding the Closing. No such holder will be entitled to dividends,
voting rights or any other rights as a shareholder in respect of any fractional
shares. See "-- Exchange of Certificates."
16
<PAGE> 25
The shares of FNB capital stock outstanding immediately prior to the
Merger will continue to be outstanding after the Effective Time.
EFFECTIVE TIME OF THE MERGER
The Effective Time will occur on the date and at the time certification
of the Merger is received from the Comptroller of the Currency or such other
later date and time as is agreed to by the parties as specified in such
certification. Unless otherwise mutually agreed upon in writing by the parties,
FNB and Seminole have agreed to file the Certificate to Merge on the date of the
Closing and to use their best efforts to cause the Effective Time to occur on
the date of the Closing. The parties have further agreed to use their reasonable
best efforts to cause the Closing to take place on, but not prior to, the fifth
business day following the effective date of the last required consent of any
state or federal regulatory authority having authority over and approving or
exempting the Merger (including the expiration of any applicable waiting periods
following such consents).
EXCHANGE OF CERTIFICATES
Before or as soon as practicable after the Effective Time, First
National Bank of Naples (the "Exchange Agent") will mail to each holder of
record of Seminole Common Stock as of the Effective Time a letter of transmittal
and related forms (the "Letter of Transmittal") for use in forwarding stock
certificates previously representing shares of Seminole Common Stock for
surrender and exchange for certificates representing FNB Common Stock. Risk of
loss and title to the certificates theretofore representing shares of Seminole
Common Stock shall pass only upon proper delivery of such certificates to the
Exchange Agent.
SEMINOLE 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
Seminole Common Stock, 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 or other distributions in respect of such
shares, and, where applicable, a check for the amount (without interest)
representing any fractional share. A certificate for shares of FNB Common Stock,
or any check representing cash in lieu of a fractional share or declared but
unpaid dividends, may be issued in a name other than the name in which the
surrendered certificate is registered only if (i) the certificate surrendered is
properly endorsed, accompanied by a guaranteed signature if required by the
Letter of Transmittal and otherwise in proper form for transfer, and (ii) the
person requesting the issuance of such certificate either pays to the Exchange
Agent any transfer or other taxes required by reason of the issuance of a
certificate for such shares in a name other than the registered holder of the
certificate surrendered or establishes to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable. The Exchange Agent will issue
stock certificates evidencing FNB Common Stock in exchange for lost, stolen,
mutilated or destroyed certificates of Seminole Common Stock only upon receipt
of a lost stock affidavit and a bond indemnifying FNB against any claim arising
out of the allegedly lost, stolen, mutilated or destroyed certificate. In no
event will the Exchange Agent, FNB or Seminole 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 the surrender of certificates
for Seminole Common Stock to the Exchange Agent, each certificate that
represented shares of Seminole Common Stock outstanding immediately prior to the
Effective Time shall represent for all purposes only the right to receive the
shares of
17
<PAGE> 26
FNB Common Stock into which such shares are converted and any cash payment in
lieu of fractional shares pursuant to the Merger Agreement; 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
Seminole in respect of Seminole Common Stock in accordance with the terms of the
Merger Agreement and which remain unpaid at the Effective Time. In addition,
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 distributions on all shares issuable
pursuant to the Merger; provided that beginning 30 days after the Effective
Time, no shareholder will receive dividends or other distributions payable to
the holders of FNB Common Stock as of any time subsequent to the Effective Time
until the certificates representing shares of Seminole Common Stock are
surrendered for exchange. Upon surrender of Seminole Common Stock certificates,
Seminole 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.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER.
From time to time over the past two years, the Chairman of the Board
of Directors and the President of Seminole have received periodic inquiries from
other financial institutions regarding a possible combination or merger with
Seminole. No such discussions progressed beyond an informal stage, and no formal
offer to merge or acquire Seminole was extended. Over the same period, the Board
of Directors of Seminole was considering strategic issues affecting Seminole and
its shareholders and determining long-term goals for Seminole's operations. The
Seminole Board decided to engage a financial advisor to assist it in the
assessment of its current strategic position and to advise it on potential
alternatives to enhance and/or realize shareholder value.
The Seminole Board engaged Carson Medlin on July 24, 1997 to serve as
its financial advisor in assessing its strategic options. Carson Medlin is an
investment banking firm which specializes in the securities of southeastern
United States financial institutions. Carson Medlin presented its analysis to
the Seminole Board on September 16, 1997. This analysis included five possible
strategic options: (i) growing internally and remaining independent; (ii)
acquiring a smaller financial institution; (iii) effecting a "peer" merger of
Seminole with a similar sized financial institution (which would afford Seminole
additional growth in its existing markets and/or entry into new markets); (iv)
the sale of Seminole either in today's market or after five years; and (v) the
conversion for tax purposes to a Subchapter S Corporation.
With regard to the alternative for continued growth and earnings by
Seminole on an independent basis, the Board considered that this option may not
allow Seminole to accelerate growth to a greater asset size and more competitive
position with other financial institutions, would not afford increased liquidity
to Seminole's shareholders and also had the risk that the prices being received
for sales of financial institutions in the prevailing market could decline over
the ensuing years. The Board also considered the costs and operational risks
associated with future investments in Seminole's operational systems and
acquiring and instituting new technology in order to enhance its ability to
compete in the rapidly changing financial industry. With respect to the
alternative for a sale of Seminole, the Board considered factors including the
trend in the financial institutions industry for consolidation and the multiples
being paid for independent community banks, and the belief that a sale would
afford liquidity for Seminole shareholders with less risk than reliance on
future internal growth and market penetration. With respect to the alternative
for a "peer" merger or merger of equals transaction, the Board considered
potential dilution of ownership and control, the inherent risk in combining with
other financial institutions and the possibility that loan and other issues
could arise after the combination, and the perception that the probability of
success was lower than the other options given the considerations inherent in
bringing together two community banking organizations, including their
18
<PAGE> 27
customers, personnel and infrastructure. The Board also considered the
increasingly competitive banking environment in which Seminole operates, the
increased competition in both deposit and lending activities and the fact that
significantly larger financial institutions are looking to expand through
acquisitions, which raised issues regarding Seminole's ability to grow through a
"peer" merger. The Board elected not to pursue a Subchapter S conversion after
consulting with both legal and financial advisors.
Without making any determination with respect to whether Seminole
should enter into a transaction involving a sale of Seminole, on October 21,
1997 the Board authorized Seminole to retain Carson Medlin to serve as the
exclusive financial advisor to Seminole and engaged the law firm of Shutts and
Bowen, L.L.P. to serve as special counsel to assist Seminole in connection with
any sale or merger transaction that might be considered by the Board.
On November 7, 1997, representatives of Seminole and Carson Medlin
identified and evaluated potential acquirors. During the last week of November
1997, Carson Medlin contacted seven companies (including FNB) to explore, more
formally, their interest in acquiring Seminole. As to the seven companies
contacted, six elected to sign a confidentiality agreement to review
confidential information with respect to Seminole. The President and Chairman of
the Board of FNB met with Seminole's Board on December 11, 1997. On December 17,
1997, Carson Medlin received preliminary indications of interest from five
companies, including FNB.
On December 22, 1997, Carson Medlin met with Seminole's Board to review
the preliminary proposals. The board authorized Carson Medlin to continue its
discussions with the interested parties. Based upon the proposals received, the
Board authorized three of the companies (including FNB) to conduct their
respective due diligence reviews of Seminole.
From January 15 to January 20, 1998, the three financial institutions
(including FNB) conducted due diligence reviews of Seminole, and on January 23,
1998, Carson Medlin received proposals from those three parties. On January 27,
1998, the Seminole Board met with Carson Medlin representatives and reviewed the
proposals received including that from FNB (which had a value per share of
Seminole Common Stock in excess of the proposals received from the other
parties). The Board of Directors also directed Seminole's officers, with the
assistance of Seminole's financial and legal advisors, to commence negotiation
of a definitive agreement that would be brought back to the Seminole Board for
review and consideration.
The Merger Agreement was reviewed by the Seminole Board at a meeting
held on January 30, 1998. At this meeting, legal counsel reviewed generally for
Seminole's directors the fiduciary obligations of directors in sales of
financial institutions and commented on the terms of the Merger Agreement and
the related agreements to be entered into by Seminole's directors in connection
with the Merger Agreement. At the meeting, representatives of Carson Medlin
reviewed the financial terms of the proposed agreement and delivered an opinion
that the aggregate consideration provided for in the Merger Agreement is fair,
from a financial point of view, to the stockholders of Seminole. The Seminole
Board then unanimously approved the agreement and the transactions contemplated
therein. Seminole's management also was authorized to execute the Merger
Agreement on behalf of Seminole and deliver it to FNB. The Merger Agreement was
signed by FNB and Seminole and became effective on February 2, 1998.
SEMINOLE REASONS FOR THE MERGER.
In its deliberations with regard to the Merger, the Seminole Board
considered the following: (i) the consideration to be received by the
shareholders of Seminole upon the consummation of the Merger; (ii) the federal
income tax consequences of the Merger; (iii) the transferability of the FNB
Common Stock to be received in connection with the Merger; (iv) the financial
condition, earnings record and business prospects of
19
<PAGE> 28
Seminole and FNB; (v) the current and historical market prices of FNB Common
Stock; (vi) the amounts paid in recent acquisitions of other community banks
based in Florida; (vii) the opinion of Carson Medlin that the consideration to
be received by the shareholders of Seminole is fair from a financial point of
view; and (viii) the impact of the Merger on Seminole's customers, employees and
local community. The Board also considered FNB's ability to offer a broader
range of products and services to the customers of Seminole. No specific weight
or value was assigned by the Board of Directors to any of the foregoing factors.
FNB REASONS FOR THE MERGER.
The FNB Board recognized that the proposed Merger with Seminole
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
acquisitions of Southwest, WCBI, First National, Mercantile and West Coast. FNB
management believes that the proposed Merger complements FNB's acquisitions in
southwest Florida, and will provide the Company with a greater level of market
competitiveness in Pinellas County. Following the Merger, Interim will be merged
into First National and will be able to draw upon the resources and competencies
of FNB's other Florida affiliates to provide a broader range of services and
product delivery channels.
OPINION OF SEMINOLE'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated November 6, 1997, the Seminole
Board engaged Carson Medlin to provide the Seminole Board with a written opinion
regarding the fairness to Seminole's shareholders, from a financial point of
view, of any proposed merger or acquisition of Seminole. Seminole selected
Carson Medlin as its financial adviser on the basis of Carson Medlin's
experience and expertise in representing community banks in acquisition
transactions. Carson Medlin is an investment banking firm which specializes in
the securities of financial institutions located in the southeastern United
States. As part of its investment banking activities, Carson Medlin is regularly
engaged in the valuation of financial institutions and transactions relating to
their securities.
As part of its engagement, representatives of Carson Medlin attended
the meeting of Seminole's Board held on January 30, 1998, at which meeting the
terms of the proposed Merger were discussed and considered. Carson Medlin
delivered its written opinion dated February 2, 1998 to the Seminole Board
stating that the consideration provided in the Merger Agreement is fair, from a
financial point of view, to the shareholders of Seminole. Carson Medlin
subsequently confirmed such opinion in writing as of the date of this Proxy
Statement/Prospectus.
The full text of Carson Medlin's written opinion, dated as of the date
of this Proxy Statement/Prospectus, is attached as Appendix B to this Proxy
Statement/Prospectus and should be read in its entirety with respect to the
procedures followed, assumptions made, matters considered and qualification and
limitation on the review undertaken by Carson Medlin in connection with its
opinion. Carson Medlin's opinion is addressed to the Seminole Board and is
substantially identical to the written opinion delivered to the Seminole Board
dated February 2, 1998. The summary of the opinion of Carson Medlin set forth in
this Proxy Statement/Prospectus is qualified in its entirety by reference to the
full text of such opinion. Carson Medlin's opinions to Seminole Board on the
Merger do not constitute a recommendation to any Seminole shareholder regarding
how such shareholder should vote at the Special Meeting.
No limitations were imposed by the Board of Directors or management of
Seminole upon Carson Medlin with respect to the investigations made or the
procedures followed by Carson Medlin in rendering its opinion. In addition,
Carson Medlin does not have and has not previously had any relationship with FNB
and
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did not receive any instructions or other guidance from FNB with respect to the
procedures or analysis followed or undertaken by Carson Medlin in rendering its
opinion.
The preparation of a fairness opinion involves various determinations
as to the most appropriate methods of financial analysis and the application of
those methods to the particular circumstances and, therefore, is not readily
susceptible to partial analysis or summary description. In connection with
rendering its opinion, Carson Medlin performed a variety of financial analyses.
Carson Medlin believes that its analyses must be considered together as a whole
and that selecting portions of such analyses and the facts considered therein,
without considering all other factors and analyses, could create an incomplete
or inaccurate view of the analyses and the process underlying Carson Medlin's
opinion. In its analyses, Carson Medlin made numerous assumptions with respect
to industry performance, business and economic conditions and other matters,
many of which are beyond the control of FNB and Seminole and which may not be
realized. Any estimates contained in Carson Medlin's analyses are not
necessarily predictive of future results or values, which may be significantly
more or less favorable than such estimates. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the prices at which such
companies or their securities may actually be sold. Except as described below,
none of the analyses performed by Carson Medlin was assigned a greater
significance by Carson Medlin than any other.
Carson Medlin has relied, without independent verification, upon the
accuracy and completeness of the information reviewed by it for purposes of its
opinion. Carson Medlin did not undertake any independent evaluation or appraisal
of the assets and liabilities of FNB or Seminole, nor was it furnished with any
such appraisals. Carson Medlin is not expert in the evaluation of loan
portfolios, including underperforming or nonperforming assets, charge-offs or
the allowance for loan losses. It has not reviewed any individual credit files
of FNB or Seminole. Instead, it has assumed that the allowances for loan and
lease losses of each of FNB and Seminole are, in the aggregate, adequate to
cover such losses. Carson Medlin's opinion is necessarily based on economic,
market and other conditions existing on the date of its opinion, and on
information as of various earlier dates made available to it. Carson Medlin
reviewed certain financial projections prepared by FNB and Seminole. Carson
Medlin assumed that these projections were prepared on a reasonable basis using
the best and most current information available to the managements of FNB and
Seminole, and that such projections will be realized in the amounts and at the
times contemplated thereby. Neither FNB nor Seminole publicly discloses internal
management projections of the type provided to Carson Medlin. Such projections
were not prepared for, or with a view toward, public disclosure. Carson Medlin
assumed that the Merger will be recorded as a pooling-of-interests under
generally accepted accounting principles.
In connection with its opinion, dated as of the date hereof, Carson
Medlin reviewed: (i) the Merger Agreement; (ii) the Annual Reports to
Shareholders of FNB, including the audited financial statements for the five
years ended December 31, 1996 and unaudited financial statements for the year
ended December 31, 1997; (iii) audited financial statements of Seminole for the
four years ended December 31, 1997; (iv) certain financial and operating
information with respect to the business, operations and prospects of FNB and
Seminole; and (v) this Proxy Statement/Prospectus. In addition, Carson Medlin:
(a) held discussions with members of the senior management of FNB and Seminole
regarding the historical and current business operations, financial condition
and future prospects of their respective companies; (b) reviewed the historical
market prices and trading activity for the common stock of FNB and Seminole and
compared them with those of certain publicly traded companies which it deemed to
be relevant; (c) compared the results of operations of FNB and Seminole with
those of certain financial institutions which it deemed to be relevant; (d)
compared the financial terms of the Merger with the financial terms, to the
extent publicly available, of certain other recent business combinations of
financial institutions; (e) analyzed the pro forma financial impact of the
Merger on FNB; and (f) conducted such other studies, analyses, inquiries and
examinations as Carson Medlin deemed appropriate.
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VALUATION METHODOLOGIES.
The following is a summary of the principal analyses performed by
Carson Medlin and presented to the Seminole Board on January 30, 1998, in
connection with Carson Medlin's opinion dated February 2, 1998.
SUMMARY OF PROPOSAL.
Carson Medlin reviewed the terms of the proposed Merger, including the
form of consideration, the Exchange Ratio, the closing price of FNB Common Stock
as of January 29, 1998, and the resulting price per share of Seminole Common
Stock pursuant to the Merger Agreement. Under the terms of the Merger Agreement,
each outstanding share of Seminole Common Stock will be converted into 1.457
shares of FNB Common Stock resulting in an indicated value of $50.63 per share
based on the closing price of FNB Common Stock on January 29, 1998 of $34 3/4
per share. Carson Medlin calculated that the indicated value represented 317% of
stated book value per share of the Seminole Common Stock at December 31, 1997,
24.7 times 1997 earnings per share, a 24.5% core deposit premium (defined as the
aggregate transaction value minus stated book value divided by core deposits)
and 30.2% of total assets of Seminole at December 31, 1997.
INDUSTRY COMPARATIVE ANALYSIS.
In connection with rendering its opinion, Carson Medlin compared
selected operating results of Seminole to those of 47 publicly-traded community
commercial banks in Alabama, Florida, Georgia, North Carolina, South Carolina,
Virginia and West Virginia (the "SIBR Banks") as contained in the SOUTHEASTERN
INDEPENDENT BANK REVIEW(TM), a proprietary research publication prepared by
Carson Medlin quarterly since 1991. The SIBR Banks range in asset size from
approximately $123 million to $2.4 billion and in shareholders' equity from
approximately $12.9 million to $236.6 million. Carson Medlin considers this
group of financial institutions more comparable to Seminole than larger, more
widely traded regional financial institutions. Carson Medlin compared, among
other factors, profitability, capitalization and asset quality of Seminole to
these financial institutions. Carson Medlin noted that based on results through
the nine months ended September 30, 1997:
- - Seminole had a return on average assets (ROA) of 1.28%, compared to
mean ROA of 1.26% for the SIBR Banks;
- - Seminole had a return on average equity (ROE) of 12.6%, compared to
mean ROE of 12.9% for the SIBR Banks;
- - Seminole had common equity to total assets at September 30, 1997 of
10.2%, compared to mean common equity to total assets of 9.7% for the
SIBR Banks; and
- - Seminole had non-performing assets (defined as loans 90 days past due,
nonaccrual loans and other real estate) to total loans (net of unearned
income and other real estate) at June 30, 1997 of 0.11%, compared to
the mean of 0.96% for the SIBR Banks.
This comparison indicated that Seminole's financial performance was above the
average SIBR Bank for most of the factors considered.
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<PAGE> 31
Carson Medlin also compared selected operating results of FNB to those
of five other publicly-traded community-oriented bank holding companies in both
the western Pennsylvania/eastern Ohio and Florida markets (the "Peer Banks").
The Peer Banks include: Seacoast Banking Corp. (FL), First Merit Corp. (OH), BT
Financial Corp. (PA), First Western Bancorp. (PA), and USBANCORP, Inc. (PA).
Carson Medlin considers this group of financial institutions comparable to FNB
as to financial characteristics, operating philosophy, stock price performance
and trading volume. Carson Medlin compared selected balance sheet data, asset
quality, capitalization, profitability ratios and market statistics using
financial data at or for the twelve month period ended September 30, 1997 and
market data as of January 29, 1998. This comparison showed, among other things,
that:
- - for the twelve months ended September 30, 1997, FNB's ROA was 1.25%
compared to a mean of 1.19% and a median of 1.11% for the Peer Banks;
- - for the twelve months ended September 30, 1997, FNB's ROE was 14.71 %
compared to a mean of 13.87%, and a median of 14.92% for the Peer
Banks;
- - for the twelve months ended September 30, 1997, FNB's efficiency ratio
(defined as non-interest expense divided by the sum of non-interest
income and taxable equivalent net interest income before provision for
loan losses) was 59.7% compared to a mean of 58.7% and a median of
58.4% for the Peer Banks;
- - at September 30, 1997, FNB's stockholders' equity to total assets was
8.84% compared to a mean of 8.76% and a median of 9.24% for the Peer
Banks;
- - at September 30, 1997, FNB's non-performing assets to total assets were
0.54% compared to a mean of 0.36% and a median of 0.34% for the Peer
Banks;
- - at January 29, 1998, FNB's price to trailing twelve months earnings was
17.0 times compared to a mean of 19.2 times and a median of 19.9 times
for the Peer Banks;
- - at January 29, 1998, FNB's price to book value was 235% compared to a
mean of 252% and a median of 230% for the Peer Banks.
This comparison indicated that FNB's financial performance is at or above
average in comparison to the Peer Banks for most of the factors considered.
COMPARABLE TRANSACTION ANALYSIS.
Carson Medlin reviewed certain information relating to 12 other merger
transactions involving Florida banks with total assets between $50 million and
$100 million announced since January 1996 (the "Comparable Transactions"). The
Comparable Transactions were (acquiree/acquiror): Liberty Holding
Company/Whitney Holding Corp., First Central Bank/The Colonial BancGroup, Inc.,
Murdock Florida Bank/American Bancshares, Inc., American Bank & Trust/Whitney
Holding Corp., Park Bankshares/1st United Bancorp, Equity Bank/South Trust
Corporation, Tomoka Bancorp/The Colonial BancGroup, Inc., Universal National
Bancorp/Totalbank Corp., Indian Rocks State Bank/F.N.B. Corporation, Heritage
Bancshares/SouthTrust Corporation, West Coast Bancorp/F.N.B. Corporation, and
The Bank of Winter Park/Huntington Bancshares Incorporated. Carson Medlin
considered, among other factors, the earnings, capital level, asset size and
quality of assets of the acquired financial institutions. Carson Medlin compared
the transaction prices to stated book values, earnings, core deposit premiums
and total assets.
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<PAGE> 32
On the basis of the Comparable Transactions, Carson Medlin calculated a
range of purchase prices as a percentage of book value for the Comparable
Transactions from a low of 179% to a high of 272%, with a mean of 225%. These
transactions indicated a range of values for Seminole from $28.57 per share to
$43.41 per share, with a mean of $35.91 per share (based on Seminole's stated
book value of $15.96 per share at December 31, 1997). The consideration implied
by multiplying the Exchange Ratio and FNB's Common Stock price as of January 29,
1998 was $50.63 per share and implies a price to book value multiple of 317%
which is above the high end of the range for the Comparable Transactions.
Carson Medlin calculated a range of purchase prices as a multiple of
earnings for the Comparable Transactions, from a low of 10.2 times to a high of
24.6 times, with a mean of 17.8 times. These transactions indicated a range of
values for Seminole from $20.91 to $50.43 per share, with a mean of $36.49 per
share (based on Seminole's 1997 earnings per share of $2.05 per share). The
consideration implied by the terms of the Merger Agreement is $50.63 per share
and implies a price to earnings multiple of 24.7 times which is above the high
end of the range for the Comparable Transactions.
Carson Medlin calculated the core deposit premiums for the Comparable
Transactions and found a range of values from a low of 7.6% to a high of 29.1%,
with a mean of 14.7%. The premium on Seminole's core deposits implied by the
terms of the Merger Agreement is 24.5%, near the high end of the range for the
Comparable Transactions.
Finally, Carson Medlin calculated a range of purchase prices as a
percentage of total assets for the Comparable Transactions from a low of 13.0%
to a high of 41.3%, with a mean of 20.9%. The percentage of total assets implied
by the terms of the Merger Agreement is approximately 30.2%, above the average
of the range for the Comparable Transactions.
No company or transaction used in Carson Medlin's analyses is identical
to FNB, Seminole or the contemplated transaction. Accordingly, the results of
these analyses necessarily involves complex considerations and judgments
concerning differences in financial and operating characteristics of FNB and
Seminole and other factors that could affect the value of the companies to which
they have been compared.
PRESENT VALUE ANALYSIS.
Carson Medlin calculated the present value of Seminole assuming that
Seminole remained an independent bank. For purposes of this analysis, Carson
Medlin utilized certain projections of Seminole's future earnings and dividends
and assumed that the Seminole Common Stock would be sold at the end of five
years at 250% of projected book value. This value was then discounted to present
value utilizing discount rates of 15% through 17%. These rates were selected
because, in Carson Medlin's experience, they represent the rates that investors
in securities such as the Seminole Common Stock would demand in light of the
potential appreciation and risks. On the basis of these assumptions, Carson
Medlin calculated that the present value of Seminole as an independent bank
ranged from $30.69 per share to $33.37 per share. The consideration implied by
the terms of the Merger Agreement was $50.63 per share which falls above the
high end of the range under the present value analysis. Carson Medlin noted that
the present value analysis was included because it is a widely used valuation
methodology, but noted that the results of such methodology are highly dependent
upon the numerous assumptions that must be made, including earnings growth
rates, dividend payout rates, terminal values and discount rates.
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STOCK TRADING HISTORY.
Carson Medlin reviewed and analyzed the historical trading prices and
volumes for the FNB Common Stock on a monthly basis from December 1992 to
December 1997. Carson Medlin also compared the price performance of the FNB
Common Stock in 1997 to the five Peer Banks. Carson Medlin considers FNB Common
Stock to be liquid and marketable in comparison with these Peer Banks and other
bank holding companies.
In 1997, the ratio of month end stock price to trailing 12 months
earnings per share for the Peer Banks ranged from 14.8 times to 19.4 times.
FNB's stock price to earnings ratio ranged from 12.8 times to 18.4 times
trailing 12 months earnings over the same period. FNB Common Stock has traded on
average at a slightly lower price to earnings ratio than the Peer Banks.
The month end stock price as a percentage of book value for Peer Banks
in 1997 ranged from 180% to 254%. FNB's month end stock price to book ratio
ranged from 149% to 254% over the same period. FNB Common Stock has traded
slightly below average on a price to book value basis compared to the Peer
Banks.
Carson Medlin also examined the trading prices and volumes of Seminole
Common Stock. Seminole Common Stock has not traded in volumes sufficient to be
meaningful. Therefore, Carson Medlin did not place any weight on the market
price of the Seminole Common Stock.
CONTRIBUTION ANALYSIS.
Carson Medlin reviewed the relative contributions in terms of various
balance sheet and income statement components to be made by Seminole and FNB to
the combined institution based on (i) balance sheet data at December 31, 1997,
and (ii) net income for the year ended December 31, 1997. The income statement
and balance sheet components analyzed included total assets, net loans, total
deposits, shareholders' equity and net income. This analysis showed that, while
Seminole shareholders would own approximately 5.3% of the aggregate outstanding
shares of the combined institution (before FNB's acquisition of WCBI (See
"Summary -- The Companies")) based on the Exchange Ratio, Seminole was
contributing 3.4% of total assets, 2.8% of loans, net of unearned income, 3.6%
of total deposits, 3.7% of shareholders' equity, and 4.5% of 1997 net income.
OTHER ANALYSIS.
Carson Medlin also reviewed selected investment research reports on and
earnings estimates for FNB and prepared a shareholder claims analysis.
The opinion expressed by Carson Medlin was based upon market, economic
and other relevant considerations as they existed and have been evaluated as of
the date of the opinion. Events occurring after the date of issuance of the
opinion, including, but not limited to, changes affecting the securities
markets, the results of operations or material changes in the assets or
liabilities of Seminole could materially affect the assumptions used in
preparing the opinion.
In connection with its opinion dated as of the date of this Proxy
Statement/Prospectus, Carson Medlin confirmed the appropriateness of its
reliance on the analyses used to render its February 2, 1998 opinion by
performing procedures to update certain of such analyses and reviewing the
assumptions on which its analyses were based and the factors considered in
connection therewith.
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COMPENSATION OF CARSON MEDLIN.
Pursuant to an engagement letter dated November 6, 1997, Seminole
engaged Carson Medlin to assist in effecting a transaction similar to the Merger
and to act as its financial advisor in connection with such proposed
transaction. Seminole has paid Carson Medlin $25,000 to date for its services
pursuant to the terms of the engagement letter. In addition, Seminole agreed to
pay Carson Medlin an Investment Banking Fee equal to 1.25% of the consideration
at the current price per share. The Investment Banking Fee is payable in cash
upon the consummation of the Merger and will be reduced by the $25,000
previously paid to Carson Medlin. Seminole has also agreed to reimburse Carson
Medlin for its reasonable out-of-pocket expenses and to indemnify Carson Medlin
against certain liabilities, including certain liabilities under the federal
securities laws.
CONDITIONS PRECEDENT TO THE MERGER
The Merger will occur only if the Merger Agreement is approved by the
requisite vote of the shareholders of Seminole. 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 regulatory and governmental consents, approvals, authorization,
clearances, exemptions, waivers and similar affirmations (including the
expiration of all applicable waiting periods following the receipt of such
items), 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 or permit of such party which, if
not obtained or made, is reasonably likely to have, individually or in the
aggregate, a material adverse effect on such party; (iii) the absence of any
action by a court or governmental or regulatory authority that prohibits,
restricts 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
listing on the Nasdaq Stock Market of the shares of FNB Common Stock to be
issued to holders of Seminole Common Stock in connection with the Merger; (vi)
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 (vii) the receipt of the tax opinion
referred to in "--Certain Federal Income Tax Consequences."
In addition, unless waived, each party's obligation to effect the
Merger is subject to the accuracy of the other party's representations and
warranties at the Effective Time and the performance by the other party of its
obligations under the Merger Agreement and the receipt of certain closing
certificates and legal opinions from the other party. The obligation of FNB to
effect the Merger also is subject to the receipt of agreements from affiliates
of Seminole restricting their ability to sell or otherwise transfer their
Seminole Common Stock prior to consummation of the Merger or their shares of FNB
Common Stock received upon consummation of the Merger, to the extent necessary
to assure, in the reasonable judgment of FNB, that the transactions contemplated
by the Merger Agreement will qualify for pooling-of-interests accounting. The
obligation of Seminole to effect the Merger is further subject to (i) Seminole's
receipt from Carson Medlin of a letter stating that in the opinion of Carson
Medlin, the consideration to be paid in the Merger to Seminole shareholders in
accordance with the Merger Agreement is fair, from a financial point of view, to
the holders of Seminole Common Stock; and (ii) FNB having delivered to the
Exchange Agent the consideration to be paid to holders of the Seminole Common
Stock. 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.
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Either Seminole 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 Seminole's shareholders and that
all required regulatory approvals be received.
CONDUCT OF BUSINESS PRIOR TO THE MERGER
Under the terms of the Merger Agreement, Seminole 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 best efforts
to preserve intact its business organization and assets and maintain its rights
and franchises, (iii) use its reasonable best 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, Seminole 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 Seminole, except as contemplated by the Merger
Agreement;
(b) except with respect to those persons who received a
commitment for a loan or extension of credit prior to the date of the Merger
Agreement, make any unsecured loan or other extension of credit in excess of
$100,000 or make any fully secured loan in excess of $250,000, except for loans
secured by a first mortgage on single family owner-occupied real estate;
provided, however, that in either case FNB shall object thereto within two (2)
business days or FNB shall be deemed to have approved such loan or extension of
credit;
(c) incur any additional debt obligation or other obligation
for borrowed money in excess of an aggregate of $100,000, except in the ordinary
course of the business of Seminole consistent with past practices, or impose, or
suffer the imposition, with certain exceptions, of a lien on any asset of
Seminole (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 Seminole or declare or pay any dividend or make
any other distribution in respect of its capital stock;
(e) except for the Merger Agreement, or pursuant to the Stock
Option Agreement or the exercise of stock options outstanding on the date of the
Merger Agreement, 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
Seminole Common Stock, 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;
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(f) adjust, split, combine or reclassify any capital stock of
Seminole or issue or authorize the issuance of any other securities in respect
of or in substitution for shares of Seminole Common Stock, or sell, lease,
mortgage or otherwise dispose of or otherwise encumber 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 Seminole 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 Seminole or a
depository institution subsidiary of Seminole 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 Seminole, 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 Seminole; grant any material increase in fees or
other compensation to directors of Seminole except in accordance with past
practice; or voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits;
(i) enter into or amend any employment contract between
Seminole and any person (unless such amendment is required by law) that Seminole
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 of Seminole or make any material change in
or to any existing employee benefit plans of Seminole 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 or 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 involving any liability of Seminole for material money damages or
restrictions upon the operations of Seminole;
(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 and
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 purchases of any
property or assets of any other individual, corporation or other entity other
than a wholly-owned subsidiary of Seminole;
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(o) sell, transfer, mortgage, encumber or otherwise dispose of
any of its material properties or assets to any individual, corporation or other
entity other than a direct or indirect wholly-owned subsidiary of Seminole, 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 Seminole 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 Seminole or any proposal or offer to acquire in
any manner a substantial equity interest in, or a substantial portion of the
assets of, Seminole ("Acquisition Proposal"). Additionally, except to the extent
necessary to comply with the fiduciary duties of the Seminole Board, as advised
by counsel, neither Seminole 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 Seminole 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 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
its business prospects and (ii) to take no action which would materially
adversely affect the ability of any party to obtain any consents 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 may
discontinue or dispose of any of its assets or business if FNB determines that
such action is desirable in the conduct of the business of FNB and its
subsidiaries. FNB further agreed that it will not, without the prior written
consent of the Chairman and Chief Executive Officer of Seminole, which consent
shall not be unreasonably withheld, amend the FNB Charter or the FNB Bylaws in
any manner adverse to the holders of Seminole Common Stock.
MODIFICATION, WAIVER AND TERMINATION
The Merger Agreement provides that, to the extent permitted by law, it
may be amended by a subsequent writing signed by each party upon the approval of
each of their respective Board of Directors, whether before or after shareholder
approval of the Merger Agreement has been obtained. However, no amendment may be
made after the Special Meeting which would reduce or modify in any material
respect the consideration to be received by the holders of the Seminole Common
Stock without the further approval of the holders of the issued and outstanding
shares of Seminole Common Stock entitled to vote thereon.
The Merger Agreement provides that prior to the Effective Time, each
party may, in a signed writing by a duly authorized officer, (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
or all 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 written agreement of
the FNB Board and the Seminole Board. The Merger Agreement may also be
terminated by either the FNB Board or the Seminole
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Board (i) in the event of the inaccuracy 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 inaccuracy and which
inaccuracy would provide the terminating party the ability to refuse to
consummate the Merger under the applicable standard set forth in the Merger
Agreement; provided that such 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;
(ii) in the event of a material breach by the other party of any covenant,
agreement or obligation in the Merger Agreement which breach cannot be or has
not been cured within 30 days of written notice of such breach; (iii) if the
required approval of the Seminole shareholders or any applicable regulatory
authority is not obtained; (iv) if the Merger is not consummated by September
30, 1998; 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) if
any of the conditions precedent to the obligations of the terminating party to
consummate this Merger cannot be satisfied or fulfilled by September 30, 1998;
provided that the terminating party is not then in breach of any representation
or warranty contained in the Merger Agreement or of any covenant or other
agreement contained in the Merger Agreement.
In addition, the Merger Agreement may be terminated by FNB if persons
owning in the aggregate more than 10% of the issued and outstanding shares of
Seminole Common Stock perfect their dissenters' rights. The Merger Agreement may
also be terminated by Seminole upon written notice to FNB at least 24 hours
prior to the Closing if the average of the closing bid and asked prices of the
FNB Common Stock in the over-the-counter market as reported by Nasdaq, or such
other trading system or exchange upon which the FNB Common Stock is then traded,
for the ten (10) consecutive full trading days in which such shares are traded
prior to the fifth business day preceding the effective date of the last
required consent of any regulatory authority having authority over and approving
or exempting the Merger (including expiration of any applicable waiting periods
following such consents), is less than $28.00, or such lesser amount due to an
adjustment as the result of a stock split, stock dividend, recapitalization,
reclassification or similar transaction. The Merger Agreement may also be
terminated by Seminole 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 Seminole Board determines in its good faith
judgment and in the exercise of its fiduciary duties, with respect to legal
matters based 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 Seminole 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 of the foregoing a "Termination Event"). There can be no assurance that
either the FNB Board or the Seminole Board would exercise its right to terminate
the Merger Agreement if a Termination Event exists. In making such decision,
both the FNB Board and the Seminole Board would, consistent with their
respective 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 Seminole at the
Special Meeting will confer on the Seminole 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 Seminole.
EXPENSES
In the Merger Agreement, each of the parties has agreed to pay its own
expenses in connection with the Merger except that FNB and Seminole have agreed
to each pay one-half of the cost of printing 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), subject to certain exceptions enumerated
in the Merger Agreement, FNB shall be entitled to a
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cash payment from Seminole in an amount equal to $250,000. 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 Seminole for its reasonable out-of-pocket expenses relating to the
Merger in an amount not to exceed $150,000.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Smith, Gambrell & Russell, LLP has delivered to FNB and Seminole 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 Seminole on the
exchange of their Seminole Common Stock 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 shares of Seminole Common Stock are
exchanged pursuant to the Merger will be the same as the basis of such Seminole
Common Stock 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 shares of Seminole Common Stock are exchanged will include the
period that such shares of Seminole Common Stock were held by the holder,
provided that such shares were capital assets of the holder; (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 Seminole Common Stock was
a capital asset in the hands of the shareholder; and (f) a holder of Seminole
Common Stock who exercises appraisal rights will recognize capital gain or loss
equal to the difference between the cash received and such holder's tax basis in
the Seminole Common Stock exchanged.
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 SEMINOLE SHOULD CONSULT THEIR OWN TAX ADVISORS
REGARDING SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE AND LOCAL TAX LAWS AND TAX CONSEQUENCES
OF SUBSEQUENT SALES OF FNB COMMON STOCK.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of Seminole's management and the Seminole
Board have interests in the Merger that are in addition to any interests they
may have as shareholders of Seminole generally. These interests include, among
others, the indemnification of Seminole directors and officers and certain
employee benefits, as hereinafter described.
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 Seminole against all costs, fees or expenses
(including reasonable attorney's fees), judgments, fines, penalties, losses,
claims, damages, liabilities and amounts paid in settlement of any litigation
arising out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by the Merger Agreement) to the fullest
extent then permitted under Florida law and by the Seminole Charter and Seminole
Bylaws as in effect on the date of the Merger Agreement, including provisions
relating to advances of expenses incurred in defense of any litigation.
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OTHER MATTERS RELATING TO SEMINOLE EMPLOYEE BENEFIT PLANS. The Merger
Agreement provides that following the Effective Time, FNB shall pay as severance
to those Seminole employees not continuing as employees after the Merger, an
amount in cash equal to such employees' weekly compensation multiplied by the
number of full years such employee was employed by Seminole; provided that such
payment shall not be less than two week's compensation for each such employee.
Following the Effective Time, FNB will provide generally to continuing officers
and employees of Seminole and any Seminole subsidiary 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 provided by Seminole or those
provided by FNB Companies to their similarly situated officers and employees on
the date of the Merger Agreement. For purposes of participation and vesting (but
not benefit accrual under any employee benefit plans of FNB and its subsidiaries
other than the Seminole benefit plans) under such employee benefit plans, the
service of the employees of Seminole and its subsidiaries prior to the Effective
Time will be treated as service with FNB or a FNB subsidiary participating in
such employee benefit plans. FNB will, and will cause its subsidiaries to, honor
in accordance with their terms all employment, severance, consulting, and other
compensation contracts disclosed by Seminole pursuant to the Merger Agreement
between any Seminole Company and any current or former director, officer, or
employee thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the Seminole benefit plans.
STOCK OPTION AGREEMENT
As an inducement and a condition to FNB to enter into the Merger
Agreement, FNB and Seminole entered into a stock option agreement (the "Stock
Option Agreement") whereby Seminole granted FNB an irrevocable stock option (the
"Stock Option") entitling FNB to purchase, subject to certain adjustments, up to
138,906 shares of Seminole Common Stock (the "Option Shares"), at an exercise
price, subject to certain adjustments, of $36.00 per share, payable in cash
under the circumstances described below. The full text of the Stock Option
Agreement is attached as Exhibit C to this Proxy Statement-Prospectus and
incorporated herein by this reference.
Pursuant to the Stock Option Agreement, FNB may purchase that number of
shares of Seminole Common Stock that would represent, when combined with the
shares of Seminole Common Stock owned by FNB at the time of its exercise, not
greater than 19.9% of the shares of Seminole Common Stock issued and outstanding
as of its date of exercise after giving effect to the exercise of the Stock
Option.
The number of shares of Seminole Common Stock subject to the Stock
Option will be increased to the extent that Seminole issues additional shares of
Seminole Common Stock (otherwise than pursuant to an exercise of the Stock
Option) such that the number of shares of Seminole Common Stock subject to the
Stock Option is equal to 19.9% of the shares of Seminole Common Stock issued and
outstanding as of its date of exercise after giving effect to the exercise of
the Stock Option. In the event of any change in the shares of Seminole Common
Stock by reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares, or the like, the
type and number of shares of Seminole Common Stock subject to the Stock Option,
and the applicable exercise price per Option Share, will be appropriately
adjusted and proper provision will be made so that, in the event that any
additional shares of Seminole Common Stock are to be issued or otherwise become
outstanding as a result of any such change (other than pursuant to an exercise
of the Stock Option), the number of shares of Seminole Common Stock that remain
subject to the Stock Option will be increased so that, after such issuance and
together with shares of Seminole Common Stock previously issued pursuant to the
exercise of the Stock Option, such number is equal to 19.9% of the number of
shares of Seminole Common Stock then issued and outstanding after giving effect
to the exercise of the adjusted Stock Option.
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
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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) Seminole 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 Seminole Board shall have
recommended that the stockholders of Seminole 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 Seminole or any significant subsidiary of Seminole, (y) a purchase,
lease, or other acquisition of all or substantially all of the assets or
deposits of Seminole, 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 Seminole or any significant
subsidiary of Seminole;
(ii) Any person (other than the officers and directors of
Seminole) other than FNB, any FNB subsidiary or any Seminole 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 shares of
Seminole Common Stock (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 regulations thereunder pursuant to which a
person is the beneficial owner of all shares over which such person has direct
or indirect voting power or investment power whether through any contract,
arrangement, understanding, relationship or otherwise);
(iii) The shareholders of Seminole shall not have approved the
transactions contemplated by the Merger Agreement at the Special Meeting held
for that purpose or any adjournment thereof, or such Special Meeting shall not
have been held or shall have been canceled prior to termination of the Merger
Agreement, in either case, after the Seminole Board shall have withdrawn or
modified (or publicly announced its intention to withdraw or modify or interest
in withdrawing or modifying) its recommendation that the stockholders of
Seminole approve the transactions contemplated by the Merger Agreement, or after
Seminole or any of its subsidiaries without having received FNB's prior written
consent, shall have authorized, recommended or proposed (or publicly announced
its intention to authorize, recommend, or propose or interest in authorizing,
recommending or proposing) to engage in an Acquisition Transaction with any
person other than FNB or one of its subsidiaries;
(iv) Any person other than FNB or any FNB subsidiary shall
have made a bona fide proposal to Seminole 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) Seminole 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 shares of Seminole Common Stock, 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%.
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After a Subsequent Triggering Event prior to the termination of the
Stock Option, FNB (on behalf of itself or any subsequent Holder) may demand by
written notice to Seminole that the Stock Option and the related Option Shares
be issued to FNB (or any subsequent holder). If prior notification to or
approval of the Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, FNB or any subsequent Holder of the option
must file the required notice or application for approval and is required to
notify Seminole of such filing. Seminole will issue the Option Shares not
earlier than three business days nor later than 10 business days 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
have passed.
FNB or any subsequent Holder shall pay to Seminole the purchase price
for the Option Shares and Seminole shall deliver to FNB or any subsequent Holder
a certificate(s) representing the Option Shares purchased to be endorsed with a
restrictive legend indicating restrictions on transfer of the Option Shares
arising under the Securities Act. Seminole will remove the restrictive legend by
delivery of a substitute share certificate(s) upon receipt of a letter from the
staff of the SEC, or an opinion of counsel, in form and substance satisfactory
to Seminole to the effect that the restrictive legend is not required for
purposes of the Securities Act.
Upon the giving by FNB (or any subsequent Holder) of written notice of
exercise of the Stock Option to Seminole and tender of the applicable purchase
price, FNB (or any subsequent Holder) will be deemed to be the holder of record
of the Option Shares issuable upon such exercise, notwithstanding that the stock
transfer books of Seminole have been closed or that certificate representing
such shares are not then actually delivered to the Holder. Seminole is
responsible for the payment of all expenses, and any taxes and other changes
that may be payable in connection with the preparation, issue and delivery of
the stock certificates.
FNB may further demand, upon the occurrence of a Subsequent Triggering
Event, that the Option Shares be registered under the Securities Act. Upon such
demand, Seminole must effect such registration promptly, subject to certain
exceptions. FNB is entitled to two such registrations, the first of which is to
be made at Seminole's expense except for underwriting commissions and fees and
expenses of FNB's counsel attributable to the registration of the Option Shares.
The second demand registration would be made 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, Seminole 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, Seminole 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, Seminole is required, subject to certain exceptions, to use its
best efforts to effect the registration under the Securities Act of all Common
Stock which Seminole has been requested to register by FNB.
Seminole 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 the failure of FNB to satisfy a condition to Closing), (iii)
the passage of 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 Seminole agree.
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Under applicable law, FNB may not acquire 5% or more of the issued and
outstanding shares of Seminole Common Stock without the prior approval of the
Federal Reserve Board. In considering whether to approve the acquisition by FNB
of shares pursuant to the exercise of the Stock Option, the Federal Reserve
Board will generally apply the same standards as in considering whether to
approve the Merger. See "--Bank Regulatory Matters -- Federal Reserve Board."
Certain other regulatory approvals may also be required before such an
acquisition could be completed. FNB has submitted an application seeking Federal
Reserve Board approval of its acquisition of up to 19.9% of the outstanding
shares of Seminole Common Stock 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), Seminole 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, Seminole shall repurchase such number of 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. The term "Market/Offer Price" means the highest of (A) the price per
share of shares of Seminole Common Stock at which a tender offer or exchange
offer therefor has been made, (B) the price per share of Seminole Common Stock
to be paid by any third party pursuant to an agreement with Seminole, (C) the
highest closing price for Seminole Common Stock within the three-month period
immediately preceding the date the Holder gives notice of the required
repurchase of the Option Shares, or (D) in the event of the sale of all or
substantially all of Seminole's 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 Seminole divided by the number of shares of Seminole
Common Stock 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. "Repurchase Event" means (i) the
consummation of certain mergers, consolidations or similar transactions
involving Seminole or any purchase, transfer or other acquisition of all or a
substantial portion of the assets or deposits of Seminole or a significant
subsidiary of Seminole 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 shares
of Seminole Common Stock.
In the event that prior to an Exercise Termination Event, Seminole
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 Seminole with Seminole as the
continuing or surviving corporation, but in connection therewith the then
outstanding shares of Seminole Common Stock are changed into or exchanged for
securities of any other person or cash or any other property, or the then
outstanding shares of Seminole Common Stock after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company,
or (iii) to sell or transfer all or substantially all of its or any 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 Seminole'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.
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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 Seminole 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 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 Seminole, (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 Seminole 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 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 Seminole. The ability of FNB to exercise the Stock
Option and to cause, subject to certain adjustments, up to an additional 138,906
shares of Seminole Common Stock to be issued may be considered a deterrent to
other potential acquisitions of control of Seminole, as it is likely to increase
the cost of an acquisition of all the shares of Seminole Common Stock which
would then be outstanding.
DISSENTERS' RIGHTS OF SEMINOLE SHAREHOLDERS
Pursuant to the Florida Banking Code and the National Bank Act, each
shareholder of Seminole entitled to vote on the Merger who objects to the Merger
shall be entitled to the rights and remedies of dissenting shareholders provided
under 12 U.S.C. ss. 215a, the text of which is included in Appendix D to this
Proxy Statement-Prospectus and is incorporated herein by reference, and any such
shareholder who follows the procedures specified in 12 U.S.C. ss. 215a will be
entitled to receive the value of his shares of Seminole Common Stock in cash. A
SEMINOLE SHAREHOLDER MUST COMPLY STRICTLY WITH THE PROCEDURES SET FORTH IN 12
U.S.C. ss 215a. FAILURE TO FOLLOW ANY OF THOSE PROCEDURES MAY RESULT IN A
TERMINATION OR WAIVER OF HIS DISSENTERS' RIGHTS.
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To perfect dissenters' rights, a holder of shares of Seminole Common
Stock must (a) vote against the Merger or otherwise notify the Secretary of
Seminole in writing at or prior to the Special Meeting that he dissents from the
Merger and (b) within thirty days after the Closing of the Merger, deliver to
FNB a written request for the value of his shares of Seminole Common Stock in
cash accompanied by the surrender of his certificates representing such shares
of Seminole Common Stock. Such written requests should be delivered either in
person or by mail (certified mail, return receipt requested, being the
recommended form of transmittal) to F.N.B. Corporation, One F.N.B. Boulevard,
Hermitage Pennsylvania 16148, Attention: Secretary.
The value of the shares of Seminole Common Stock held by a dissenting
shareholder will be determined, as of the Effective Date of the Merger, by an
appraisal made by a committee of three appraisers, one to be selected by the
holders of a majority of the shares of Seminole Common Stock (the owners of
which have exercised their dissenters' rights), one to be selected by the
directors of FNB, and one to be selected by the two appraisers so selected. The
valuation agreed upon by any two of the three appraisers will govern. If the
value so fixed is not satisfactory to any dissenting shareholder who has
requested payment, that shareholder may, within five (5) days after being
notified of the appraised value of his shares, appeal to the Comptroller of the
Currency who will cause a reappraisal to be made that will be final and binding
as to the value of the shares of such shareholder. If, within ninety (90) days
from the Closing of the Merger, for any reason one or more of the appraisers is
not selected, or the appraisers so selected fail to determine the value of the
shares of Seminole Common Stock, the Comptroller of the Currency will cause an
appraisal of such shares to be made upon the written request of any interested
party, and such appraisal will be final and binding on all parties. FNB will pay
the expenses of the Comptroller of the Currency in making any appraisal or
reappraisal described above.
The value of the shares of Seminole Common Stock held by dissenting
shareholders ascertained as described above will be promptly paid by FNB to the
dissenting shareholders. The shares of FNB Common Stock that would have been
delivered to the dissenting Seminole shareholders had they not requested payment
in accordance with 12 U.S.C. ss. 215a must be sold at any advertised public
auction, and FNB has the right to purchase any or all of such shares at such
auction if it is the highest bidder, for the purpose of reselling such shares
within thirty days thereafter. If the shares of FNB Common Stock are sold at the
public auction at a price greater than the amount paid to the dissenting
Seminole shareholders, the excess in such sale price must be paid to such
dissenting shareholders.
THE FOREGOING DISCUSSION IS ONLY A SUMMARY OF THE RIGHTS AND
OBLIGATIONS OF A DISSENTING SHAREHOLDER AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE PROVISIONS OF THE DISSENTERS' RIGHTS STATUTE, 12 U.S.C.
ss. 215a, WHICH IS REPRODUCED IN FULL AS APPENDIX D TO THIS PROXY STATEMENT.
Prior to the Closing of the Merger, dissenting shareholders of Seminole
should send any communications regarding their rights to Seminole Bank, 10899
Park Boulevard, Seminole, Florida 33772. At or after the Closing of the Merger,
dissenting shareholders should send any communications regarding their rights to
F.N.B. Corporation, One F.N.B. Boulevard, Hermitage Pennsylvania 16148,
Attention: Secretary. All such communications should be signed by or on behalf
of the dissenting Seminole shareholder in the form in which his shares are
registered on the books of Seminole.
FNB has the right to terminate the Merger prior to the Effective Time
if the number of shares of Seminole Common Stock as to which the holders thereof
legally asserting dissenting shareholders' rights is equal to or greater than
10% of the issued and outstanding shares of Seminole Common Stock. See "THE
MERGER -- Modification, Waiver and Termination."
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<PAGE> 46
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a
pooling-of-interests under GAAP. Seminole and FNB have agreed to use their
reasonable best efforts to cause the Merger, and to take no action that would
cause the Merger not, to qualify for pooling-of-interests treatment. In the
event the aggregate number of fractional shares and shares with respect to which
dissenters' rights have been perfected exceeds 10% of the total number of shares
of FNB Common Stock issued in the Merger to former holders of Seminole Common
Stock, pooling-of-interests treatment will not be permitted.
Under the pooling-of-interests method of accounting, the historical
basis of the assets and liabilities of FNB and Seminole will be combined at the
Effective Time of the Merger and carried forward at their previously recorded
amounts, and the shareholders' equity accounts of Seminole 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 and Office of the Comptroller of the Currency
(the "OCC"). The Merger is subject to prior approval by the Federal Reserve
Board and the OCC. In determining whether to approve a transaction such as the
Merger, the Federal Reserve Board and the OCC 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 and the OCC will, among other
things, evaluate the adequacy of the capital levels of the parties to a proposed
transaction.
The Federal Reserve Board and the OCC are prohibited from approving a
merger if it would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the business
of banking in any part of the United States, or if its effect in any section of
the country would be substantially to lessen competition or to tend to create a
monopoly, or if it would in any other manner result in a restraint of trade,
unless the Federal Reserve Board finds that the anti-competitive effects of a
merger are clearly outweighed in the public interest by the probable effect of
the transaction in meeting the convenience and needs of the communities to be
served. In addition, under the Community Reinvestment Act of 1977, as amended
(the "CRA"), the Federal Reserve Board and the OCC 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 nine banking subsidiaries have an
outstanding CRA rating with the appropriate federal regulator. The other six of
FNB's banking subsidiaries have a satisfactory rating with the appropriate
federal regulator.
Applicable federal law provides for the publication of notice and
public comment on applications filed with the Federal Reserve Board and the OCC
and authorizes each 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 Seminole believe that the Merger does not raise
substantial antitrust or other significant regulatory concerns and that any
divestitures that may be required in order to consummate the Merger will not be
material to the
38
<PAGE> 47
financial condition or results of operations of FNB or Seminole prior to the
Effective Time, or FNB after the Effective Time.
In addition, FNB's right to exercise the Stock Option under the Stock
Option Agreement is also subject to the prior approval of the Federal Reserve
Board, because the exercise of the Stock Option under the Stock Option Agreement
would result in FNB owning more than 5% of the outstanding shares of Seminole
Common Stock. In considering whether to approve FNB's right to exercise the
Stock Option, the Federal Reserve Board would generally apply the same statutory
criteria it would apply to its consideration of approval of the Merger.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. FNB and Seminole
have filed all applications and notices and have taken (or will take) other
appropriate action with respect to any requisite approvals or other actions of
any governmental authority. FNB has submitted applications to the Federal
Reserve Board and the OCC seeking approval of the Merger and of FNB's
acquisition of up to 19.9% of the outstanding shares of Seminole Common Stock
pursuant to a potential exercise of the Stock Option.
The Merger Agreement provides that the obligation of each of FNB and
Seminole to consummate the Merger is conditioned upon the receipt of all
requisite regulatory approvals. 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 Seminole 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 Seminole
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 LIKEWISE CAN 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 Seminole
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 Seminole 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 Seminole at the time the Merger is submitted for vote or consent of
the shareholders of Seminole will, under existing law, require either (a) the
further registration under the Securities Act of the shares of FNB Common Stock
to be
39
<PAGE> 48
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 Seminole, 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 Seminole. 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
Seminole 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 Seminole Common Stock (and to certain relatives or the spouse of any such
person and any trusts, estates, corporations or other entities in which any such
person has a 10% or greater beneficial or equity interest). Stop transfer
instructions will be given by FNB to the transfer agent with respect to the FNB
Common Stock to be received by persons subject to the restrictions described
above. Seminole has agreed that, not later than 30 days prior to the Effective
Time, it will use its best efforts to cause each of those persons identified by
Seminole as affiliates to deliver to FNB appropriate agreements that each such
individual will not transfer or otherwise dispose of the shares of Seminole
Common Stock held by such person except in accordance with such agreement or
make any further sales or otherwise dispose 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 approved a dividend reinvestment and direct stock purchase plan
(the "1998 DRP") which is expected to become effective in April 1998 and replace
the existing dividend reinvestment plan. The 1998 DRP will be available to
existing FNB shareholders and shareholders of Seminole who receive shares of FNB
Common Stock in the Merger, as well as persons who are not already shareholders,
and will permit participants to purchase shares of FNB Common Stock through
reinvestment of dividends on their shares of FNB Common Stock and/or optional
cash payments and permit participants to have their shares enrolled in the 1998
DRP held in book-entry form by the plan administrator.
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<PAGE> 49
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
MARKET PRICES
Since June 16, 1997, FNB Common Stock has traded on the Nasdaq National
Market under the trading symbol "FBAN." Prior to June 16, 1997, the FNB Common
Stock traded on the Nasdaq SmallCap Market under the same symbol. Stock prices
have been adjusted to reflect a 5% stock dividend paid on May 31, 1997. As of
April 1, 1998, FNB Common Stock was held of record by approximately 5,650
persons. The following table sets forth the high ask and low bid prices of the
FNB Common Stock as reported by the Nasdaq Stock Market for the periods
indicated.
<TABLE>
<CAPTION>
FNB
HIGH ASK LOW BID
-------- -------
<S> <C> <C>
YEAR ENDING DECEMBER 31, 1996:
First Quarter 21 35/64 18 9/64
Second Quarter 22 47/64 21 29/32
Third Quarter 24 3/64 22 9 /64
Fourth Quarter 22 31/32 21 43/64
YEAR END DECEMBER 31, 1997:
First Quarter 25 15/32 21 43/64
Second Quarter 32 1/4 21 25/32
Third Quarter 32 29 1/2
Fourth Quarter 34 1/4 31 1/4
YEAR END DECEMBER 31, 1998:
First Quarter (through April 1, 1998) 38 3/4 31 1/4
</TABLE>
There is no established public market for the Seminole Common Stock. As
of the Record Date, there were 559,118 shares of Seminole Common Stock issued
and outstanding held by 375 holders of record. According to records kept by
management, since January 1, 1996, there have been only approximately 55 trades
in the Seminole Common Stock involving an aggregate of 15,282 shares. To the
best of management's knowledge, which is based on limited and incomplete
information, Seminole believes that recently negotiated sales of Seminole Common
Stock have ranged between $14.50 and $16.00 per share. In view of the extremely
limited volume of transactions and the lack of reliable pricing information
(because such information is not required to be forwarded to Seminole), there is
no assurance that the stated prices paid for the Seminole Common Stock provide a
reliable or relevant indication of the value of Seminole Common Stock.
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<PAGE> 50
DIVIDENDS
The following table sets forth the per share cash dividends declared on
FNB Common Stock for the periods indicated. Seminole has not paid cash dividends
on the Seminole Common Stock during the past two years. The FNB dividends have
been adjusted to reflect a 5% stock dividend paid on May 31, 1997. The ability
of either FNB or Seminole to pay dividends to its shareholders is subject to
certain restrictions. See "INFORMATION ABOUT FNB" and "INFORMATION ABOUT
SEMINOLE."
<TABLE>
<CAPTION>
FNB
DIVIDENDS
---------
<S> <C>
YEAR ENDING DECEMBER 31, 1996:
First Quarter......................................... 0.15
Second Quarter........................................ 0.15
Third Quarter......................................... 0.15
Fourth Quarter........................................ 0.15
YEAR ENDING DECEMBER 31, 1997:
First Quarter......................................... 0.15
Second Quarter........................................ 0.16
Third Quarter......................................... 0.16
Fourth Quarter........................................ 0.16
YEAR ENDING DECEMBER 31, 1998:
First Quarter......................................... 0.18
</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, southwestern
Florida, eastern Ohio and southwestern New York. FNB's main office is located at
One F.N.B. Boulevard, Hermitage, Pennsylvania 16148 and its telephone number is
(724) 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 eight other bank
subsidiaries and one consumer finance company in Pennsylvania, southwestern
Florida, eastern Ohio and southwestern New York. On January 21, 1997, FNB
acquired Southwest, a Florida corporation and registered bank holding company
under the BHCA, with banking subsidiaries located in Naples and Cape Coral,
Florida. On April 18, 1997, FNB acquired WCBI, a Florida corporation and
registered bank holding company under the BHCA, located in Cape Coral, Florida.
On June 30, 1997, FNB sold its wholly-owned subsidiary, Bucktail Bank and Trust
Company, a Pennsylvania state-chartered bank to Sun Bancorp, Inc. ("Sun") in
exchange for 13.8% of the outstanding stock of Sun. On October 17, 1997, FNB
acquired Indian Rocks State Bank (which was subsequently converted to a national
bank and which changed its name to First National Bank of Florida), a Florida
state bank located in Largo, Florida with assets of approximately $80 million.
On November 20, 1997, FNB acquired Mercantile Bank of Southwest Florida, a
Florida state bank located in Naples, Florida with assets of approximately $120
million. On January 20, 1998, FNB acquired West Coast Bank, a Florida state bank
located in Sarasota, Florida with assets of approximately $100 million. After
considering the acquisition of West Coast, on a consolidated basis, FNB had
approximately $2.8 billion in consolidated assets, approximately $2.3 billion in
deposits and 110 offices.
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
42
<PAGE> 51
markets it serves. FNB has emphasized its community orientation by generally
preserving the names and local boards 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 four other operating subsidiaries, Penn-Ohio Life Insurance
Company ("Penn-Ohio"), Mortgage Service Corporation, F.N.B. Building Corporation
and F.N.B. Investment 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 and F.N.B.
Building Corporation owns real estate that is leased to certain of its
affiliates. FNB Investment Corporation holds equity securities and other
miscellaneous assets on behalf of FNB.
As of January 20, 1998, after giving effect to the merger with West
Coast, FNB and its subsidiaries had approximately 1,143 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, 1997 and the Current Reports
on Form 8-K filed on February 13, 1998 and April 3, 1998, all of which are
incorporated herein by reference. Shareholders of Seminole desiring copies of
such documents may contact FNB at its address or telephone number indicated
under "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
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<PAGE> 52
INFORMATION ABOUT SEMINOLE BANK
Seminole was initially organized under the laws of the United States as
a federal savings bank and commenced business in July 1985 as Seminole Federal
Savings Bank. In April 1991, Seminole was converted to a state-chartered
commercial bank operating under the laws of the State of Florida. The deposit
accounts of Seminole are insured through the Savings Association Insurance Fund
of the Federal Deposit Insurance Corporation (the "FDIC").
Seminole provides commercial banking services primarily to residents of
Pinellas County, Florida through four banking offices located in the town of
Seminole in west central Pinellas County. On December 31, 1997, Seminole had
total assets of $93.6 million, total deposits of $82.9 million, and
stockholders' equity of $8.9 million. Seminole's executive offices and its main
banking office are located at 10899 Park Boulevard, Seminole, Florida 33772, and
its telephone number is (813) 398-5511.
The business of Seminole consists primarily of attracting retail
deposits from the general public in the areas served by its banking offices and
using those funds to make both secured and unsecured consumer and commercial
loans and loans for the purchase, construction, financing and refinancing of
commercial and residential real estate in its primary market in the west central
and southern portions of Pinellas County consisting of Seminole, Largo, St.
Petersburg and surrounding communities. The principal sources of funds for
Seminole's lending and investment activities are deposits, repayments of loans
and proceeds from the sale of investment securities. Seminole's revenues are
derived primarily from interest on loans and investments and fees received in
connection with its lending and deposit activities. Seminole's principal
expenses are the interest paid on deposits and operating and general and
administrative expenses.
Seminole originates commercial, consumer and real estate loans to
individuals and businesses. Commercial loans include both secured and unsecured
loans for working capital (including the financing of inventory and
receivables), business expansion (including real estate acquisitions and
improvements) and purchases of equipment and machinery. Consumer loans include
secured and unsecured loans for the financing of home improvements, the purchase
of automobiles and boats and personal investments. Seminole also originates a
variety of residential real estate loans, including conventional mortgage loans
collateralized by first mortgage liens to enable home owners to purchase,
refinance or improve residential real property.
Seminole provides a variety of corporate and personal banking services
to individuals, businesses and other institutions located in its market area.
Deposit services include certificates of deposit, individual retirement
accounts, checking and other demand deposit accounts, interest bearing
transaction accounts, savings accounts and money market deposit accounts. The
transaction accounts and time certificates are tailored to the principal market
areas at rates competitive to those in the area. All deposit accounts are
insured by the FDIC to the maximum extent provided by law.
Seminole offers ATM and other debit cards (with access to local, state,
national and international networks), safe deposit boxes, wire transfers, direct
deposit services and automatic drafts for various accounts. Seminole also offers
both personal and corporate VISA and MasterCard credit cards issued by a
correspondent bank which assumes the risk of repayment of credit extended
through the use of such cards.
Seminole encounters competition both in making loans and attracting
deposits. The deregulation of the banking industry and the evolution of
interstate banking has created a highly competitive environment for commercial
banking in Seminole's market area. In one or more aspects of its business,
Seminole competes with other commercial banks, savings and loan associations,
credit unions, finance companies, mutual funds, insurance companies, securities
brokerage and investment management firms, and other financial
44
<PAGE> 53
intermediaries operating in its market and elsewhere. Most of these competitors,
some of which are affiliated with large bank holding companies, have
substantially greater resources and higher lending limits than Seminole, and
they may offer certain services, such as fiduciary services, that Seminole does
not provide.
Seminole's primary market is served by twelve other commercial banks
with 28 offices and six thrift institutions with 8 offices. In addition, seven
credit unions have offices in Seminole's immediate market area.
Competition among financial institutions is based upon interest rates
offered on deposit accounts, interest rates charged on loans and other
extensions of credit, service charges, the quality of the services rendered, the
convenience of banking facilities, and, in the case of commercial borrowers,
relative lending limits.
Seminole is subject to examination, regulation and comprehensive
supervision by the Florida Department of Banking and Finance and the FDIC. As is
the case with banking institutions generally, Seminole's operations are
significantly influenced by general economic conditions and by related monetary
and fiscal policies of the Federal Reserve System. Deposit flows and interest
rates on competing investments and general market rates of interest influence
Seminole's cost of funds. Lending activities are affected by the demand for
financing of real estate and other types of loans, which in turn are affected by
the interest rates at which such financing may be offered and other factors
affecting local demand and availability of funds.
EMPLOYEES
At December 31, 1997, Seminole had 39 full-time and 4 part-time
employees. None of its employees is represented by a collective bargaining
agreement, and management believes that employee relations are good.
DESCRIPTION OF PROPERTIES
Seminole owns the land and buildings housing its executive and main
banking offices which are located at 10899 Park Boulevard, Seminole, Florida
33772. This property is a 1.5 acre parcel on which are situated both a 13,000
square foot shopping center, 10,000 square feet of which are occupied by
Seminole's executive, administrative, bookkeeping and lending functions, and a
2,500 square foot building housing Seminole's main banking functions. The bank
building includes two private offices, a walk-in vault containing 510 safe
deposit boxes, three customer service desks, and four inside tell stations. In
addition, the main office has two covered drive-through banking lanes.
Seminole also operates three branch banking offices, one of which is
owned by Seminole, and two of which are leased. Seminole owns its branch
facility located at 12020 Seminole Boulevard, Seminole, Florida 33778. The
Seminole Boulevard branch is located on a 1.8 acre parcel on which is situated a
3,000 square foot building. The building includes one manager's office, walk-in
vault with 129 safe deposit boxes, three customer service desks and five inside
teller stations. This office also has five covered drive-through banking lanes.
Seminole's two leased branch facilities are located at 9336 Oakhurst
Road, Seminole, Florida 33776, and 7846 Seminole Mall, Seminole, Florida 33772.
The Oakhurst Road branch is located in an 1,875 square foot store-front
containing a manager's office, three teller stations, 160 safe deposit boxes,
and two customer service desks. This facility is now leased on a month to month
basis. The Seminole Mall branch is located in a 1,434 square foot store front
containing a manager's office, four teller stations, and two customer service
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<PAGE> 54
desks. The lease for this facility expires on May 30, 1999, but Seminole has an
option to extend the lease for an additional five years.
LEGAL PROCEEDINGS
Seminole is involved in routine legal proceedings occurring in the
ordinary course of business that, in the aggregate, are believed by management
to be immaterial to Seminole's financial condition and results of operations.
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Seminole's directors and officers and certain business organizations
and individuals associated with them have been customers of and have had banking
transactions with Seminole and are expected to continue such transactions in the
future. In connection with such transactions, Seminole's directors and officers
from time to time have borrowed funds from Seminole for various business and
personal reasons. The extensions of credit made by Seminole to its directors and
officers (i) were made in the ordinary course of business, (ii) were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and (iii)
did not involve more than a normal risk of collectability or present other
unfavorable features.
PRINCIPAL AND MANAGEMENT SHAREHOLDERS OF SEMINOLE
The following table sets forth, as of the date of this Prospectus, (a)
the name and address of the persons known by Seminole to be beneficial owners of
more than 5% of the shares of Seminole Common Stock and the name of each of
Seminole's directors; (b) the number and percent of the shares of Seminole
Common Stock owned by each such person and by all of the directors and executive
officers of Seminole as a group; and (c) the estimated number of shares of FNB
Common Stock each such person or group is expected to receive as a result of the
Merger (assuming that such persons do not exercise their dissenters' rights),
calculated by multiplying the number of shares of Seminole Common Stock
beneficially owned by such person or group by the Exchange Ratio.
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<PAGE> 55
SEMINOLE COMMON STOCK
<TABLE>
<CAPTION>
SHARES FNB COMMON STOCK
BENEFICIALLY EXPECTED TO BE
NAME OF BENEFICIAL OWNER OWNED(1) PERCENT BENEFICIALLY OWNED PERCENT(2)
-------------------------- ------------ ------- ------------------ ----------
<S> <C> <C> <C> <C>
Robert G. Castles 49,303(3) 8.82% 71,834 .44%
Larry C. Cunningham 146(4) .03% 212 .001%
Dennis R. DeLoach, Jr. 23,351(5) 4.18% 34,022 .21%
Jeffory H. Forbes 4,854(6) .87% 7.072 .05%
George E. Fordham 34,365(7) 6.15% 50,070 .31%
Lewis L. Fraser 18,231(8) 3.26% 26,563 .16%
Robert L. Hurd 24,093(9) 4.31% 35,104 .21%
Edward J. Lurie 55,350(10) 9.90% 80,645 .49%
Bruce H. McDowell 4,376(11) 0.78% 6,376 .04%
Claude D. McMullen 18,349(12) 3.28% 26,734 .16%
Wendell E. Taylor 35,802(13) 6.40% 52,164 .32%
William R. Young 11,234(14) 2.01% 16,367 .10%
All Directors and Executive
Officers as a Group (12 Persons) 291,454(15) 52.34% 426,397 2.33%
</TABLE>
(1) Under applicable SEC regulations, shares are considered to be
beneficially owned by a person if such person either (a) directly or
indirectly has or shares the power to vote or dispose of the shares,
whether or not such person has any economic interest in the shares, or
(b) has the right to acquire such shares within 60 days of the
particular date. Unless otherwise indicated, the named beneficial owner
has the sole voting and investment power with respect to the shares
reported.
(2) Assuming 15,589,200 shares of FNB Common Stock outstanding immediately
prior to the Effective Time and the issuance of 814,634 shares of FNB
Common Stock to Seminole Shareholders in the Merger.
(3) This amount consists of 30,257 shares which he owns jointly with his
wife, 8,646 in trusts owned by his mother with Robert G. Castles as
Trustee and 10,400 in his children's names. Mr. Castle's address is
8275 113th Street, North, Seminole, Florida 33771.
(4) These shares are owned by Mr. Cunningham jointly with his wife.
(5) This amount consists of 20,814 which Mr. DeLoach owns individually, 298
shares which he is the (voting) custodian for his children, 149 shares
owned by his daughter, and 2,090 shares held in his IRA.
(6) This amount consists of 1,149 shares which Mr. Forbes owns in his IRA
and 3,485 shares which are owned jointly with his wife. A daughter,
Nicole, also owns 220 shares.
(7) This amount consists of 22,506 shares which Mr. Fordham owns as trustee
of the George E. Fordham Family Trust, 677 shares held in his IRA and
10,505 shares owned by the Fordham Agency SEP, of which Mr. Fordham is
Trustee. Mrs. Fordham also owns 677 shares held in her IRA. Mr.
Fordham's address is 5141 Seminole Boulevard, St. Petersburg, Florida
33708.
(8) This amount consists of 17,933 shares which Mr. Fraser owns jointly
with his wife. Mrs. Fraser is also custodian of 298 shares for their
grandchildren.
47
<PAGE> 56
(9) This amount consists of 10,768 shares which Mr. Hurd owns individually,
1,464 shares which he owns jointly with his wife and 11,861 shares held
in his IRA.
(10) This amounts consists of 24,046 shares in the Edward J. Lurie Trust, of
which he is the trustee, and 31,286 shares held in his IRA. Mr. Lurie's
address is 13055 Park Boulevard, Seminole, Florida 33776.
(11) This amount consists of 3,929 which Mr. McDowell owns jointly with his
wife and 447 shares of which he is trustee for his children.
(12) This amount consists of 15,693 shares owned by Mr. McMullen jointly
with his wife, 298 shares owned jointly with his father (deceased),
1,642 shares of which he is custodian for his son, and 358 shares held
in his IRA. Mrs. McMullen also has 358 shares held in her IRA.
(13) This amount consists of 506 shares which Dr. Taylor owns individually,
15,728 shares owned jointly with his wife, 14,286 shares in a trust of
which he is the trustee and 523 shares held in his IRA. Mrs. Taylor
owns 3,676 shares individually, with 523 shares held in her IRA. A son,
Brent Taylor, also owns 560 shares. Dr. Taylor's address is 1000 Court
Street, Clearwater, Florida 33777.
(14) This amount consists of 3,181 shares which Mr. Young owns in his IRA
and 8,053 shares which are owned jointly with his wife.
(15) This amount includes 12,000 shares which executive officers have the
right to purchase under outstanding stock options.
48
<PAGE> 57
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
YEARS ENDED DECEMBER 31, 1997 AND 1996
GENERAL
Seminole Bank (the "Bank") is a state-chartered SAIF-insured community
bank. The Bank provides a wide range of community banking services to small and
middle-market businesses and to individuals through its four offices located in
Pinellas County, Florida. The accounting and reporting practices of the Bank
conform to generally accepted accounting principles and to general practices
within the banking industry.
The principal services offered by the Bank include commercial and
individual checking and savings accounts, money-market accounts, certificates of
deposit, most types of loans, including commercial and working capital loans and
real estate, home equity and installment loans, as well as financing through
letters of credit. The Bank also acts as issuing agent for U.S. Savings Bonds,
travelers checks, cashiers checks, master-money issued by master card. It offers
collection teller services, wire transfer facilities, safe deposit and night
depository facilities. The transaction accounts and certificates of deposits are
tailored to the Bank's principal market area at rates competitive with those
offered in the Bank's primary service area. In addition, the Bank offers
individual retirement accounts. All deposit accounts are insured by the FDIC up
to the maximum amount allowed by law. The Bank offers a wide range of short to
medium-term commercial and personal loans. Commercial loans include both secured
and unsecured loans for working capital (including inventory and receivables),
business expansion (including acquisition of real estate and improvements),
purchase of equipment and machinery, and Small Business Administration ("SBA")
loans. Consumer loans include secured and unsecured loans for financing
automobiles, home improvements, and personal investments. The Bank also
originates and holds construction and acquisition loans on residential real
estate.
At December 31, 1997, the Bank had total assets of $93.7 million, an
increase of 22% over total assets of $76.9 million at December 31, 1996. During
the year ended December 31, 1997, loans receivable increased $2.5 million or 5%.
The Bank's portfolio of securities decreased to $16.6 million as of December 31,
1997 from $16.8 million as of December 31, 1996. The Bank's deposits increased
to $82.9 million as of December 31, 1997 from $68.0 million as of December 31,
1996, a 22% increase. The Bank's equity to assets ratio increased from 9.5% in
1996 to 10.0% in 1997. The Bank had net earnings of $1.1 million for the year
ended December 31, 1997 compared to net earnings of $.5 million for 1996. The
net earnings for the year ended December 31, 1996 included the effect of the
SAIF special assessment of $424,027 (before taxes).
REGULATION AND LEGISLATION
As a state-chartered commercial bank, the Bank is subject to extensive
regulation by the Florida Department of Banking and Finance ("Florida DBF") and
the Federal Deposit Insurance Corporation ("FDIC"). The Bank files reports with
the Florida DBF and the FDIC concerning its activities and financial condition,
in addition to obtaining regulatory approvals prior to entering into certain
transactions such as mergers with or acquisitions of other financial
institutions. Periodic examinations are performed by the Florida DBF and the
FDIC to monitor the Bank's compliance with the various regulatory requirements.
YEAR 2000 COMPLIANCE
Management has an ongoing program designed to ensure that its
operational and financial systems will not be adversely affected by year 2000
software failures, due to processing errors arising from calculations using the
year 2000 date. Based on current estimates the Bank expects to incur between
$40,000
49
<PAGE> 58
and $50,000 over the next two years on its program to redevelop, replace, or
repair its computer applications to make them "year 2000 compliant." While
management believes it is doing everything technologically possible to assure
year 2000 compliance, it is to some extent dependent upon vendor cooperation.
Management is requiring its computer system and software vendors to represent
that the products provided are, or will be, year 2000 compliant, and has planned
a program of testing for compliance which will be completed in 1998. The costs
of completing the Bank's program and the date on which the Bank believes it will
complete all application modifications are based on management's best estimates.
These estimates were derived using various assumptions of future events,
including the continued availability of certain resources, third party
modification plans and other significant factors. There can be no guarantee that
management's estimates will be achieved and results could differ materially from
those anticipated.
PROPOSED ACQUISITION OF BANK
On February 2, 1998, the Board of Directors of the Bank signed a
definitive agreement for the merger of the Bank into another financial
institution (F.N.B. Corporation). Under the terms of the agreement, the Bank's
shareholders will collectively receive 814,634 shares of F.N.B. Corporation
common stock, an exchange ratio of 1.457 shares, for each share of the Bank's
common stock. The merger is expected to be completed in 1998 and is subject to
various regulatory approvals as well as the approval of the shareholders of the
Bank.
CREDIT RISK
The Bank's primary business is making commercial, business, consumer,
and real estate loans. That activity entails potential loan losses, the
magnitude of which depend on a variety of economic factors affecting borrowers
which are beyond the control of the Bank. While the Bank has instituted
underwriting guidelines and credit review procedures to protect the Bank from
avoidable credit losses, some losses will inevitably occur.
Maintaining a low level of nonperforming assets is important to the
ongoing success of any financial institution. Nonperforming assets consist of
nonaccrual loans and foreclosed real estate. The Bank's credit review and
approval process is critical to its ability to minimize nonperforming assets on
a long term basis. In addition to the negative impact on interest income,
nonperforming assets also increase operating costs due to the expense of
collection efforts. It is the Bank's policy to place all loans which are past
due 90 days or more on nonaccrual status, unless the loan principal and interest
are determined by management to be fully collateralized and in the process of
collection.
The following table presents the Bank's nonperforming assets and past
due loans:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans $147 328
Foreclosed real estate, net -- 212
---- ---
Total nonperforming assets $147 540
==== ===
Accruing loans past due 90 days or more $ -- 45
==== ===
</TABLE>
50
<PAGE> 59
The Bank evaluates the adequacy of its allowance for loan losses as
part of its ongoing credit review and approval process. The review process is
intended to identify, as early as possible, customers who may be facing
financial difficulties. Once identified, the extent of the customer's financial
difficulty is carefully monitored by the Bank's credit administrator, who
recommends to the directors loan committee the portion of any credit that needs
a specific reserve allocation or should be charged off. Other factors considered
by the loan committee in evaluating the adequacy of the allowance include
overall loan volume, historical net loan loss experience, the level and
composition of nonaccrual and past due loans, local economic conditions, and
value of any collateral.
The allowance is not a precise amount, but is derived based upon the
above factors and represents management's best estimate of the amount necessary
to adequately cover probable losses from current credit exposures. The provision
for loan losses is a charge against current earnings and is determined by
management as the amount needed to maintain an adequate allowance.
The overall credit quality of the loan portfolio continues to be high
as evidenced by the Bank's relatively low level of nonperforming loans and net
charge-offs in recent years. Management relied on its recent history of loan
losses and its assessment of the financial condition of specific borrowers in
deciding to maintain the allowance for loan losses at the current level.
The following table presents information regarding the Bank's total
allowance for losses as well as the allocation of such amounts to the various
categories of loans:
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------
1997 1996
------------------ -----------------
LOANS LOANS
TO TO
TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS
------ ----- ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural loans $ 67 8.6% $ 67 7.3%
Real estate loans (commercial and residential) 681 79.3 610 80.9
Installment loans to individuals 22 12.1 61 11.8
----- ----- ---- -----
Total allowance for loan losses $ 770 100.0% $738 100.0%
===== ===== ==== =====
Allowance for loan losses as a percentage
of the total loans outstanding 1.44% 1.44%
===== =====
</TABLE>
51
<PAGE> 60
The following table summarizes the allowance for loan losses:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1997 1996
------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year $ 738 683
------- -------
Charge-offs:
Commercial, financial and agricultural 41 --
Installment loans to individuals 14 14
------- -------
Total charge-offs 55 14
Recoveries-
Installment loans to individuals -- 4
------- -------
Net charge-offs 55 10
------- -------
Provision charged to operations 87 65
------- -------
Balance at end of year $ 770 $ 738
======= =======
Average total loans $52,202 $50,122
======= =======
Loan loss allowance as a percentage of total loans 1.44% 1.44%
======= =======
Ratio of net charge-offs during year to average
loans outstanding during period .11% .02%
======= =======
</TABLE>
The Bank undertakes a complete review of the borrower's credit worthiness
and the value of any collateral. If these items are satisfactory, the Bank will
generally renew the loan at prevailing interest rates. The following table
summarizes the Bank's loan portfolio by type of loan:
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------
1997 % 1996 %
------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural loans $ 6,461 12.1% $ 5,599 10.9%
Real estate loans
(commercial and residential) 41,803 77.9 40,818 79.7
Installment loans to individuals 5,365 10.0 4,794 9.4
------- ----- ------- -----
Total loans $53,629 100.0% $51,211 100.0%
======= ===== ======= =====
</TABLE>
52
<PAGE> 61
Interest income that would have been recorded under the original terms
of nonaccrual loans and the interest income actually recognized are summarized
below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Interest income that would have been recognized $13 $32
Interest income recognized 10 29
--- ---
$ 3 $ 3
=== ===
</TABLE>
LOANS. The Bank maintains a high quality portfolio of real estate,
commercial and consumer loans. All loans over individual lending limits are
reviewed and approved by the Board's Loan Committee, which ensures that loans
comply with applicable credit standards. In most cases, the Bank requires
collateral from the borrower. The type and amount of collateral varies but may
include residential or commercial real estate, deposits held by the bank, U.S.
Treasury securities, other marketable securities and personal or business
property. Collateral values are monitored to ensure that they are maintained at
proper levels.
As of December 31, 1997, approximately 78% of all the Bank's loans were
real estate loans secured by real estate located primarily in Pinellas County,
Florida. This level of concentration is not considered a serious credit risk to
the Bank inasmuch as 54% are Owner-occupied, single-family residences, generally
considered one of the most secure forms of collateral. The Bank has further
addressed this risk by limiting most loans to a maximum of 80% of the appraised
value of the underlying real estate and maximum amortization schedules of 30
years. Since the Bank's conversion to a Commercial Bank in 1991, management has
focused on reallocating the loan mix to shorter term business and commercial
loans with generally higher yield and less interest-rate risk.
COMMERCIAL, FINANCIAL AND AGRICULTURAL LOANS. The Bank generally makes
commercial loans to businesses located in Pinellas County Florida. The credit
risk associated with business lending is influenced by general economic
conditions, as well as the borrower's capital position and operations. These
loans are generally collateralized by corporate assets, marketable securities or
other liquid financial instruments and the personal guarantees of the principals
are generally required. These loans totaled approximately $6,461,000 at December
31, 1997, and $5,599,000 at December 31, 1996.
REAL ESTATE LOANS. The Bank makes real estate loans from time to time
for real estate construction projects located primarily in Pinellas County
Florida. Seminole Bank requires security in the form of a mortgage on the
underlying real property and the improvements constructed thereon and may
require personal guarantees. The Bank attempts to limit its credit exposure to
75-80% of the appraised value of the underlying real property. On December 31,
1997, real estate construction loans totaled $749,000. Risks associated with
real estate construction loans include delays in construction, environmental
factors, reliability of subcontractors and timing and reliability of
inspections, and cost overruns.
The Bank makes real estate loans secured by commercial real estate,
including loans to acquire or refinance office buildings, warehouses and
apartments. At December 31, 1997, these loans totaled $12 million, or 22% of
total loans. Many of these loans have a maturity of five to ten years. Almost
all of these loans are secured by real property located in Pinellas County
Florida. These loans generally require a loan-to-collateral value of not more
than 75%.
Residential real estate loans totaled $29 million, or 54% of total
loans at December 31, 1997, compared with $31 million, or 60% at December 31,
1996. Residential real estate loans are predominately
53
<PAGE> 62
adjustable-rate home mortgages which generally require a loan-to-collateral
value of not more than 80% unless insured by PMI (Private Mortgage Insurance).
Most loans have a maximum term of thirty years. Almost all of the residential
real estate loans are collateralized by homes in Pinellas County Florida.
INSTALLMENT LOANS TO INDIVIDUALS. The Bank offers secured personal and
consumer loans. The collateral for these loans ordinarily consists of
automobiles, consumer goods, marketable securities, certificates of deposit and
similar items. These loans totaled approximately $5.4 million, or 10.0% of total
loans, on December 31, 1997, compared with $4.8 million, or 9.4% of total loans,
on December 31, 1996. Risks associated with installment loans include borrowers'
loss of employment, other declines in the financial condition of borrowers
resulting in delinquencies, and rapid depreciation of loan collateral.
LIQUIDITY AND CAPITAL RESOURCES
A Florida chartered commercial bank is required to maintain a liquidity
reserve of at least 15% of its total transaction accounts and 8% of its total
nontransaction accounts less deposits of certain public funds. The liquidity
reserve may consist of cash on hand, cash on demand with other correspondent
banks and other investments and short-term marketable securities as determined
by the rules of the Florida DBF, such as federal funds sold and United States
securities or securities guaranteed by the United States or agencies thereof. As
of December 31, 1997 and December 31, 1996, the Bank has liquidity of
approximately $36 million and $22 million, or approximately 46% and 31% of total
deposits combined with borrowings, respectively.
During the year ended December 31, 1997, the Bank's primary sources of
funds consisted of principal payments on loans and investment securities,
proceeds from sales and maturities of securities available for sale and net
increases in deposits. The Bank used its capital resources principally to
purchase investment securities and fund existing and continuing loan
commitments. At December 31, 1997, the Bank had commitments to originate loans
totaling $2.3 million. Scheduled maturities of certificates of deposit during
the 12 months following December 31, 1997 totaled $24.7 million as of December
31, 1997. Management believes the Bank has adequate resources to fund all its
commitments, that substantially all of its existing commitments will be funded
within the next twelve months and, if so desired, that it can adjust the rates
on certificates of deposit to retain deposits in a changing interest-rate
environment.
The following table sets forth information regarding the composition of
the securities portfolio stated at book value.
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
U.S. Treasury Securities $ 6,061 $ 6,044
U.S. Government agency obligations 4,189 4,179
Obligations of states and political subdivisions 1,475 1,250
Mortgage-backed securities 3,986 4,096
Mutual funds and corporate securities 909 1,205
------- -------
Total investments $16,620 $16,774
======= =======
</TABLE>
54
<PAGE> 63
The following table sets forth, by contractual maturity distribution,
certain information pertaining to the securities portfolio at December 31, 1997
(dollars in thousands):
<TABLE>
<CAPTION>
ONE YEAR ONE TO FIVE TO OVER
OR LESS FIVE YEARS TEN YEARS TEN YEARS
--------------- --------------- -------------- ------------
BOOK YIELD BOOK YIELD BOOK YIELD BOOK YIELD TOTAL YIELD
------ ----- ------ ----- ------ ----- ---- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities $1,501 6.11% $4,560 6.22% $ -- --% $ -- --% $ 6,061 6.19%
U.S. Governmental
agencies obligations 1,494 5.91 1,186 6.60 1,509 6.97 -- -- 4,189 6.49
Obligations of states and
political subdivisions 465 6.39 445 7.60 365 7.51 200 8.33 1,475 7.29
Corporate securities -- -- 821 6.35 -- -- -- -- 821 6.35
------ ------ ------ ---- -------
Total $3,460 6.06 $7,012 6.39 $1,874 7.08 $200 8.33 $12,546 6.42
====== ==== ====== ==== ====== ==== ==== ==== ======= ====
Mortgage-backed securities (1) 3,986 6.78
Mutual funds 88
-------
Total securities $16,620
=======
</TABLE>
- ---------------
(1) Periodic payments are received on mortgage-backed securities based on the
payment patterns of the underlying collateral which consists of mortgage
loans.
Deposits. The following table sets forth information regarding the
Bank's deposits:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996
--------------- ---------------
AVERAGE AVERAGE
BALANCE RATE BALANCE RATE
------- ---- ------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Noninterest-bearing $ 7,465 --% $ 6,222 --%
Savings accounts 15,193 3.01 14,829 2.87
Money-market and NOW accounts 20,636 2.61 20,218 2.59
Time deposits 29,173 5.21 29,830 5.33
------- -------
Total deposits $72,467 $71,099
======= =======
</TABLE>
55
<PAGE> 64
REGULATORY CAPITAL REQUIREMENTS
Under FDIC regulations, the Bank is required to meet certain minimum
regulatory capital requirements. This is not a valuation allowance and has not
been created by charges against earnings. It represents a restriction on
stockholders' equity.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1997, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the State and
Federal regulators categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table below. There are no conditions or
events since that notification that management believes have changed the Bank's
category.
The following table summarizes the capital and the capital
requirements for the Bank:
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES: ACTION PROVISIONS:
---------------- ------------------ ------------------
AMOUNT % AMOUNT % AMOUNT %
------ ---- ------ --- ------ ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1997:
Total capital
(to Risk-Weighted Assets) $9,517 19.2% $3,959 8.0% $4,949 10.0%
Tier I Capital
(to Risk-Weighted Assets) 8,897 18.0 1,979 4.0 2,969 6.0
Tier I Capital
(to Average Assets) 8,897 10.0 3,566 4.0 4,458 5.0
AS OF DECEMBER 31, 1996:
Total capital
(to Risk-Weighted Assets) $7,751 17.4% $3,554 8.0% $4,443 10.0%
Tier I Capital
(to Risk-Weighted Assets) 7,751 17.4 1,777 4.0 2,666 6.0
Tier I Capital
(to Average Assets) 7,751 10.2 3,040 4.0 3,800 5.0
</TABLE>
56
<PAGE> 65
MARKET RISK
Market risk is the risk of loss from adverse changes in market prices
and rates. The Bank's market risk arises primarily from interest rate risk
inherent in its lending and deposit taking activities. To that end, management
actively monitors and manages its interest rate risk exposure. The measurement
of market risk associated with financial instruments is meaningful only when all
related and offsetting on- and off-balance-sheet transactions are aggregated,
and the resulting net positions are identified.
The Bank's primary objective is managing interest-rate risk is to
minimize the adverse impact of changes in interest rates on the Bank's net
interest income and capital, while adjusting the Bank's asset-liability
structure to obtain the maximum yield-cost spread on that structure. The Bank
relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates may adversely
impact the Bank's earnings, to the extent that the interest rates borne by
assets and liabilities do not change at the same speed, to the same extent, or
on the same basis. The Bank does not engage in trading activities.
ASSET LIABILITY STRUCTURE
The principal functions of asset and liability management are to
provide for adequate liquidity, to manage interest-rate exposure by maintaining
a prudent relationship between rate sensitive assets and liabilities and to
manage the size and composition of the balance sheet so as to maximize net
interest income.
Liquidity is the ability to provide funds to meet fluctuating deposit
withdrawals or loan demand. These demands are met by maturing assets and the
capacity to raise funds from internal and external sources. The Bank primarily
utilizes cash and federal funds sold to meet its daily liquidity needs. Although
not utilized in managing daily liquidity needs, the sale of securities held for
sale provides a secondary source of liquidity.
Fluctuating interest rates, increased competition and changes in the
regulatory environment continue to significantly affect the importance of
interest-rate sensitivity management. Rate sensitivity arises when interest
rates on assets change in a different period of time or a different proportion
than interest rates on liabilities. The primary objective of interest-rate
sensitivity management is to prudently structure the balance sheet so that
movements of interest rates on assets and liabilities are highly correlated and
produce a reasonable net interest margin even in periods of volatile interest
rates.
The Bank monitors the interest-rate risk sensitivity with traditional
gap measurements. The gap table has certain limitations in its ability to
accurately portray interest sensitivity; however, it does provide a static
reading of the Bank's interest rate risk exposure.
The Bank's gap table at December 31, 1997 is shown on the following
table. This table shows the repricing structure of the Bank's balance sheet with
each maturity interval referring to the earliest repricing opportunity (i.e.,
the earlier of scheduled contractual maturities or next reset date) for each
asset and liability. As of that date, the Bank remained liability sensitive
(interest sensitive liabilities subject to repricing exceeded interest sensitive
assets subject to repricing) on a 365-day basis to the extent of $17 million.
This negative gap at December 31, 1997 was 18% of total assets. The Bank's
targeted gap position is in the range of negative 15 percent to positive 15
percent. The Bank intends to reduce its negative gap position to a level within
the targeted range by offering a special certificate of deposit program designed
to lengthen the maturity of a portion of its deposit liabilities. The Bank
measures its gap position as a percentage of its total assets.
Regular monitoring of assets and liabilities that are rate sensitive within
30 days, 90 days, 180 days and one year is an integral part of the Bank's
rate-sensitivity management process. It is the Bank's policy to
57
<PAGE> 66
maintain a reasonable balance of rate-sensitive assets and liabilities on a
cumulative one year basis, thus minimizing the exposure of net interest income
to changes in interest rates. The Bank's sensitivity position at December 31,
1997 was such that net interest income would decline modestly if there were a
decline in short-term interest rates.
Another measure used to assess changes in net interest income resulting from
changing interest income resulting from changing interest rates is income
simulation. Key assumptions used in income simulations include loan and deposit
growth, pricing, interest sensitivity, and the level of interest rate or balance
changes on indeterminate maturity deposit products such as savings and NOW
deposits. These assumptions have been developed through a combination of
historical analysis and future anticipated pricing behavior.
Based on the results of the income simulation, as of December 31, 1997, the
Bank would expect an increase in net interest income of $28,000 and a decrease
of $28,000 from an immediate and sustained 200 basis point increase and
decrease, respectively, in interest rates over a 12-month period.
The following table sets forth certain information relating to the
Company's interest-earning assets and interest-bearing liabilities at December
31, 1997 that are estimated to mature or are scheduled to reprice within the
period shown.
<TABLE>
<CAPTION>
MORE
THAN SIX MORE
MONTHS THAN ONE
THREE TO ONE YEAR TO MORE THAN
MONTHS YEAR FIVE YEARS FIVE YEARS TOTAL
-------- -------- ---------- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Loans (1),(2):
Real estate loans $ 4,449 $ 17,191 $ 10,102 $10,061 $41,803
All other loans 1,602 2,244 2,374 241 6,461
Installment loans to individuals 843 207 3,467 848 5,365
-------- -------- -------- ------- -------
Total loans 6,894 19,642 15,943 11,150 53,629
Federal funds sold and interest-
bearing deposits 14,153 -- -- -- 14,153
Securities (3),(4) 1,500 3,335 8,476 3,756 17,067
-------- -------- -------- ------- -------
Total rate-sensitive assets $ 22,547 $ 22,977 $ 24,419 $14,906 $84,849
-------- -------- -------- ------- -------
Deposit accounts (5):
Savings and NOW 28,382 -- -- -- 28,382
Money market 10,446 -- -- -- 10,446
Time deposits 3,699 20,979 10,572 -- 35,250
-------- -------- -------- ------- -------
Total deposit accounts 42,527 20,979 10,572 -- 74,078
-------- -------- -------- ------- -------
Gap (repricing differences) $(19,980) $ 1,998 $ 13,847 $14,906 $10,771
======== ======== ======== ======= =======
Cumulative GAP $(19,980) $(17,982) $ (4,135) $10,771
======== ======== ======== =======
Cumulative GAP/total assets (21)% (19)% (4)% 12%
======== ======== ======== =======
</TABLE>
- -------------------------
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<PAGE> 67
(1) In preparing the table above, adjustable-rate loans are included in the
period in which the interest rates are next scheduled to adjust rather
than in the period in which the loans mature. Fixed-rate loans are
scheduled, including repayment, according to their contractual
maturities.
(2) Includes nonaccrual loans.
(3) Investments are scheduled according to their respective repricing and
maturity dates.
(4) Includes Federal Home Loan Bank stock.
(5) NOW, savings and money-market accounts are regarded as ready accessible
withdrawable accounts. Time accounts are scheduled according to their
respective maturity dates.
The following table reflects the contractual principal repayments by
period of certain loan portfolios at December 31, 1997 (in thousands).
<TABLE>
<CAPTION>
WITHIN ONE TO AFTER
ONE YEAR FIVE YEARS FIVE YEARS TOTAL
-------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $1,626 $2,482 $2,353 $6,461
Real estate loans - construction 231 326 192 749
------ ------ ------ ------
$1,857 $2,808 $2,545 $7,210
====== ====== ====== ======
</TABLE>
Of the $5.4 million of loans due after 1998, 31% of such loans have
fixed rates of interest and 69% have adjustable rates.
RESULTS OF OPERATIONS
The Bank had net earnings of $1,146,273 for 1997, compared with
$490,567 in 1996. The Bank's performance in 1997 resulted in a return on average
stockholders' equity of 13.86%, compared to 6.47% in 1996. The return on average
assets was 1.39% in 1997, compared to .61% in 1996. The Bank's financial
performance in 1997 improved significantly over 1996 because it was successful
during 1997 in focusing its loan origination efforts from primarily single
family residential mortgages to a more balanced portfolio of commercial real
estate mortgages, small business loans, consumer loans and residential
mortgages. Through this careful reallocation process, the Bank realized a
significant improvement in loan yield and interest income. Also, in 1996 the
Bank was assessed a one time pretax change of $424,027 for the recapitalization
of the SAIF (FDIC) insurance fund.
NET INTEREST INCOME
The operating results of the Bank depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets and interest expense on interest-bearing liabilities, consisting
primarily of deposits. Net interest income is determined by the difference
between yields earned on interest-earning assets and rates paid on
interest-bearing liabilities ("interest-rate spread") and the relative amounts
of interest-earning assets and interest-bearing liabilities. The Bank's
interest-rate spread is affected by regulatory, economic, and competitive
factors that influence interest rates, loan demand, and deposit flows. In
addition, the Bank's net earnings are also affected by the level of
nonperforming loans and foreclosed real estate, as well as the level of its
noninterest income, and its noninterest expenses, such as salaries and employee
benefits, occupancy and equipment costs and income taxes.
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<PAGE> 68
The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest and dividend income of the
Bank from interest-earning assets and the resultant average yield; (ii) the
total dollar amount of interest expense on interest-bearing liabilities and the
resultant average costs; (iii) net interest/dividend income; (iv) interest rate
spread; (v) net interest margin. Average balances are based on average daily
balances (amounts in thousands).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1997 1996
--------------------------------- ------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans $52,201 $ 4,809 9.21% $50,122 $4,514 9.01%
Securities 17,755 1,139 6.42 18,458 1,070 5.80
Other interest-earning assets (1) 7,332 337 4.60 6,834 263 3.85
------- ------- ------- ------
Total interest-earning assets 77,288 6,285 8.13 75,414 5,847 7.75
------- ------
Noninterest earning assets 5,112 4,376
------- -------
Total assets $82,400 $79,790
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Savings accounts 15,193 457 3.01 14,829 427 2.87
Money-market and NOW accounts 20,636 538 2.61 20,218 524 2.59
Time deposits 29,173 1,519 5.21 29,830 1,591 5.33
------- ------- ------- ------
Total interest bearing liabilities 65,002 2,514 3.87 64,877 2,542 3.92
------- ------
Noninterest bearing liabilities 9,127 7,332
------- -------
Total liabilities 74,129 72,209
Stockholders' equity 8,271 7,581
------- -------
Total liabilities and stockholders' equity $82,400 $79,790
======= =======
Net interest income $ 3,771 $3,305
======= ======
Interest-rate spread (2) 4.26% 3.83%
==== ====
Net interest margin (3) 4.88% 4.38%
==== ====
Ratio of average interest-earning assets to average
interest-bearing liabilities 1.19 1.16
======= =======
</TABLE>
- ---------------------
(1) Includes interest-bearing deposits and federal funds sold.
(2) Interest-rate spread represents the difference between the average
yield on interest-earning assets and the average cost of
interest-bearing liabilities.
(3) Net interest margin is net interest income dividend by average
interest-earning assets.
RATE/VOLUME ANALYSIS
The following table sets forth certain information regarding
changes in interest income and interest expense of the Bank for the periods
indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (1) changes in
rate (change in rate multiplied by prior volume) and (2) changes in volume
(change in volume multiplied by prior rate), changes
60
<PAGE> 69
in rate-volume (change in rate multiplied by change in volume) have been
allocated to volume and rate changes (in thousands).
<TABLE>
<CAPTION>
1997 VS. 1996 1996 VS. 1995
CHANGE DUE TO: CHANGE DUE TO:
---------------------------- ----------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL
------ ---- ----- ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in interest income:
Loans $193 $102 $295 $(10) $247 $237
Securities (43) 112 69 241 103 344
Federal funds sold 20 54 74 (12) (46) (58)
---- ---- ---- ---- ---- ----
Total interest income 170 268 438 219 304 523
---- ---- ---- ---- ---- ----
Increase (decrease) in interest expense:
Savings accounts 10 20 30 23 -- 23
Money market/NOW accounts 10 4 14 95 6 101
Time deposits (36) (36) (72) (32) (1) (33)
---- ---- ---- ---- ---- ----
Total interest expense (16) (12) (28) 86 5 91
---- ---- ---- ---- ---- ----
Increase (decrease) in net $186 $280 $466 $133 $299 $432
==== ==== ==== ==== ==== ====
</TABLE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996
GENERAL. Net earnings for the year ended December 31, 1997 were
$1,146,000 compared to $491,000 for the year ended December 31, 1996. This
improvement in the Bank's net operating results was primarily due to an increase
in net interest income and noninterest income and a decrease in noninterest
expenses.
INTEREST INCOME AND EXPENSE. Interest income increased by $.4 million
from $5.9 million for the year ended December 31, 1996 to $6.3 million for the
year ended December 31, 1997. Interest income on loans increased $.3 million due
an increase in the average loan portfolio balance from $50.1 million for the
year ended December 31, 1996 to $52.2 million for 1997, as well as an increase
in the weighted-average yield of 20 basis points. Interest on securities
increased $69,000 due to an increase in the average yield from 5.80% in 1996 to
6.42% in 1997. Interest on other interest-earning assets increased $74,000
primarily due to an increase from $6.8 million in average other interest-earning
assets in 1996 to $7.3 million in 1997 as well as an increase in the rate earned
on these assets.
PROVISION FOR LOAN LOSSES. The provision for loan losses was charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by the Bank, industry standards, the amounts of nonperforming
loans, general economic conditions, particularly as they relate to the Bank's
market areas, and other factors related to the
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<PAGE> 70
collectibility of the Bank's loan portfolio. Management believes that the
allowance for loan losses of $770,000 is adequate at December 31, 1997.
OTHER INCOME. Other income increased from $665,000 in 1996 to $743,000
in 1997 primarily because of increased service charges on deposit accounts in
1997 compared to 1996.
OTHER EXPENSE. Total other expense decreased from $3.2 for the year
ended December 31, 1996 to $2.6 million in 1997, primarily due to the one-time
SAIF assessment in 1996 with no corresponding amount in 1997.
INCOME TAXES. The income tax provision was $653,000 (an effective rate
of 36.2%) for 1997 compared to $249,000 (an effective rate of 33.7%) for 1996.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein have been
prepared in accordance with GAAP, which requires the measurement of financial
position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation. Unlike most industrial companies, substantially all of the assets and
liabilities of the Bank are monetary in nature. As a result, interest rates have
a more significant impact on the Bank's performance than the effects of general
levels of inflation. Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services, since
such prices are affected by inflation to a larger extent than interest rates.
FUTURE ACCOUNTING REQUIREMENTS
Financial Accounting Standards 130 - Reporting Comprehensive Income
establishes standards for reporting comprehensive income. The Standard defines
comprehensive income as the change in equity of an enterprise except those
resulting from stockholder transactions. All components of comprehensive income
are required to be reported in a new financial statement that is displayed with
equal prominence as existing financial statements. The Bank will be required to
adopt this Standard effective January 1, 1998. As the Statement addresses
reporting and presentation issues only, there will be no impact on operating
results from the adoption of this Standard.
Financial Accounting Standards 131 - Disclosures about Segments of an
Enterprise and Related Information establishes standards for related disclosures
about products and services, geographic areas, and major customers. The Bank
will be required to adopt this Standard effective January 1, 1998. As the
Standard addresses reporting and disclosure issues only, there will be no impact
on operating results from adoption of this Standard.
DESCRIPTION OF FNB CAPITAL STOCK AND SEMINOLE CAPITAL STOCK
FNB COMMON STOCK
GENERAL. FNB is authorized to issue 100,000,000 shares of FNB Common
Stock, of which 14,634,833 shares were outstanding as of December 31, 1997. FNB
Common Stock is traded on the Nasdaq National Market under the trading symbol
"FBAN." FNB provides transfer agent and registrar services for FNB Common Stock.
As of December 31, 1997, 3,330,447 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, as well as 686,271 shares of FNB Common Stock reserved in
connection with the January 20, 1998 merger of West Coast, the number of
authorized shares of FNB
62
<PAGE> 71
Common Stock available for other corporate purposes as of December 31, 1997 was
80,648,034. Since that date, 832,118 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 Seminole 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.
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 21,318
shares of FNB Series A Preferred Stock (the "FNB Series A Preferred Stock")
issued and outstanding as of December 31, 1997 and 266,182 shares of FNB Series
B 7 1/2% Cumulative Convertible Preferred Stock (the "FNB Series B Preferred
Stock") issued and outstanding as of December 31, 1997.
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.
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<PAGE> 72
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 Stock 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 Stock is
convertible at the option of the holder into shares of the FNB Common Stock
having a market value of $25.00 at time of conversion. FNB has the right to
require the conversion of the balance of all outstanding shares at the
conversion rate at any time after 50% of the 49,512 shares issued are no longer
outstanding. Through December 31, 1997, 2,270 shares of the FNB Series A
Preferred Stock were converted to 1,903 shares of FNB Common Stock. At December
31, 1997, 15,182 shares of FNB Common Stock were reserved by FNB for the
conversion of the remaining 21,318 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 December 31, 1997, 62,761
shares of FNB Series B Preferred Stock were converted to 131,197 shares of FNB
Common Stock. At December 31, 1997, 571,641 shares of FNB Common Stock were
reserved by FNB for the conversion of the remaining 266,182 outstanding shares
of FNB Series B Preferred Stock.
SEMINOLE COMMON STOCK
GENERAL. Seminole is authorized to issue 1,000,000 shares of Seminole
Common Stock, of which 559,118 shares were issued and outstanding as of the
Record Date. Seminole Common Stock is not publicly traded and it acts as its own
transfer agent and the registrar for the Seminole Common Stock. Seminole has
only one class of common stock and is not authorized to issue, and does not have
any outstanding, preferred stock.
COMPARISON OF SHAREHOLDER RIGHTS
At the Effective Time, the shareholders of Seminole, a Florida state
banking corporation, will become shareholders of FNB, a Pennsylvania
corporation, and Pennsylvania law will govern shareholder rights after the
Merger. Differences between the FFIC (which is the primary law regulating
Florida banks and supersedes the FBCA except when the provisions of the FFIC and
the FBCA are not in direct conflict) and the FBCA, where applicable
(collectively the "Florida Laws") and the PBCL and between the Seminole Charter
and the Seminole Bylaws and the FNB Charter and the FNB Bylaws will result in
various changes in the rights of shareholders of Seminole.
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 Seminole shareholders under the Florida Laws,
the Seminole Charter and the Seminole 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 FFIC, the Seminole Charter, the Seminole
Bylaws, the FNB Charter and the FNB Bylaws, to which Seminole 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
64
<PAGE> 73
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 Seminole director may be removed by the Seminole
shareholders with or without cause at a duly convened special meeting of
shareholders called for that purpose when a quorum is present if the votes cast
in favor of removal exceed the votes cast opposing removal. Such action also may
be taken in action by written consent where a majority of the outstanding shares
consent to the removal of the director.
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 election of the class for which such director has been chosen,
and until a successor has been selected and qualified.
The FBCA provides that vacancies on the board of directors of a Florida
corporation 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. The Seminole Bylaws provide that vacancies on the
Seminole Board may be filled by the affirmative vote of majority of the
remaining directors, though less than a quorum. A director elected to fill a
vacancy is elected to serve only until the next election of directors by the
shareholders. Seminole's Charter does not authorize the board of directors to
increase the number of directors.
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 Seminole 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 Seminole. 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 and the Seminole 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 FBCA also provides that whenever a meeting is adjourned to another
time or place, it generally 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
given at the adjourned meeting. The FNB Bylaws and the Seminole 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 Seminole Bylaws, notice of shareholder meetings must be provided to
each shareholder of record entitled to vote at such meeting not less than 20 or
more than 50 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 Seminole Bylaws provide that special meetings of
the shareholders may be called by the Chairman of the Board, by the President,
or by the
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<PAGE> 74
Secretary upon the written request of the holders of not less than 25% of the
outstanding shares entitled to vote at such meetings.
SHAREHOLDER CONSENT IN LIEU OF MEETING
The PBCL provides that 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 provides 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 which all shares entitled to vote thereon were
present and voted. Under Florida law, 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 Florida law, in the event of a merger transaction in which the
surviving entity will be a Florida state bank, shareholders of the acquired
institution shall be afforded dissenters' rights under the FFIC. If the
shareholders of the acquired institution properly perfect their rights of
dissent, they shall have the following rights with respect to those shares.
Under the FFIC, on or promptly after the effective date of the merger, the
surviving state bank may fix an amount which it will pay in cash to dissenting
shareholders of the acquired institution. If the surviving state bank fixes such
an amount (which it is not legally required to do), it shall offer to pay such
amount to the holders of all dissenting shares of the acquired institution. The
owners of dissenting shares who have accepted the offer shall be entitled to
receive the amount so offered upon surrender of their stock certificates at any
time within thirty (30) days after the effective date of the merger. Those
owners who have not accepted such an offer for their shares shall have the value
of their dissenting shares determined as of the effective date of the merger by
three appraisers; one to be selected by the owners of at least two-thirds (2/3)
of such dissenting shares, one to be selected by the board of directors for the
surviving bank, and the third to be selected by the other two appraisers so
chosen. The value agreed upon by any two of the three appraisers shall control
and be final and binding on all parties. If, within ninety (90) days from the
effective date of the merger, for any reason one or more of the appraisers is
not selected as required under the FFIC, or the appraisers fail to determine the
value of the dissenting shares, the Department shall cause an appraisal of the
dissenting shares to be made, which appraisal shall be paid by the surviving
state bank. Upon conclusion of the appraisal process, the value determined
pursuant to the appraisal shall be paid to all dissenting shareholders in cash
upon surrender of the stock certificates representing such shares within thirty
(30) days after the appraisal has been made.
However, when a Florida state bank merges with and into a national bank
such that the national bank is the surviving entity, the Florida state bank
shareholders' dissenters' rights are those set forth in 12 U.S.C. ss. 215a and
not those outlined under the FFIC. See "THE MERGER -- Dissenter's Rights of
Seminole Shareholders."
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
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<PAGE> 75
are listed on a national securities exchange or the Nasdaq National Market or
held of record by at least 2,000 persons. The FFIC does not contain any similar
exemption from the application of dissenters' rights.
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.
DIVIDENDS AND DISTRIBUTIONS
Subject to any restrictions in a corporation's charter, the PBCL
generally provides that a corporation may make distributions to 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.
The payment of dividends or distributions by Seminole is subject to the
restrictions of the FBCA and the FFIC. Under the FBCA, a corporation may not
generally authorize and make distributions if, after giving effect thereto, it
would be unable to satisfy its debts as they become due in the ordinary course
of business or if the corporation's total assets would be less than its total
liabilities plus the amount that would be needed, if it were to be dissolved at
the time of the distribution, to satisfy preferential rights of shareholders
whose preferential rights are superior to those of the class of shareholders
receiving the dividend or other distribution. Under the FFIC, before declaring
any dividend, the board of directors of a state bank such as Seminole must
charge off bad debts, depreciation, and other worthless assets and make adequate
provision for reasonably anticipated future losses on loans and other assets.
Except with the prior approval of the Florida Department of Banking and Finance,
the board may then only declare and pay dividends from the bank's net profits
for the period with respect to which the dividend is paid together with its
retained net profits of the preceding two years. In no case, however, may a
state bank pay a dividend (i) when its net income for the current year combined
with its retained net income for the preceding two years is a loss, or (ii)
which would cause its capital accounts to fall below any required minimum.
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 FFIC requires that a bank's board must consist of at least five
elected directors. The FFIC further requires that at all times not less than a
majority of directors must be citizens of the United States and at least
three-fifths of the directors must have resided in Florida for at least one year
preceding their election and must be residents of Florida during their
continuance in office. In addition, the FFIC requires that at least
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one outside director of Seminole must have at least one year's experience as an
executive officer, regulator or director of a financial institution within the
last three years. Under the FBCA, directors must be at least 18 years of age but
need not be shareholders of the corporation unless the articles of incorporation
or bylaws of the corporation so require. The Seminole Charter provides that the
Seminole Board shall consist of nine members divided into three classes of three
members each. Under the Seminole Bylaws, directors are elected to terms of three
years with one class elected each year. Each director is required to be the
beneficial owner of not less than 1,000 shares of Seminole Common Stock.
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 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 permits 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 in the 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 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, Seminole 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 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
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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.
Florida law provides that indemnification of the costs and expenses of
defending any action is required to be made to any officer or director who is
successful (on the merits or otherwise) in defending an action of the type
referred to in the immediately preceding paragraph. Except with regard to the
costs and expenses of successfully defending an action as may be ordered by a
court, indemnification as described in the previous paragraph is only required
to be made to a director or officer if a determination is made that
indemnification is proper under the circumstances. Such determination shall be
made: (i) by Seminole'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 Seminole 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
Seminole Board; or (iv) by the Seminole 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 further provides that expenses incurred in defending any action or
proceeding may be paid by the corporation in advance of the final disposition
upon receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined that the director or officer is
not entitled to be indemnified by the corporation.
Under Florida law, the provisions for indemnification and advancement
of expenses are not exclusive. Accordingly, a corporation may make any other or
further indemnification or advancement of expenses of any of its officers or
directors under any bylaw, agreement, vote of shareholders or disinterested
directors, or 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 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.
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.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING FNB PURSUANT
TO THE FOREGOING PROVISIONS OF THE PBCL AND
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THE FNB CHARTER, FNB HAS BEEN INFORMED THAT IN THE OPINION OF THE COMMISSION
SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS
THEREFORE UNENFORCEABLE.
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 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 corporate law, shareholder approval is not
required for certain non-material amendments.
Under Florida law, a corporation's Bylaws may be amended or repealed by
the board of directors or shareholders; provided, however, that the board may
not amend or repeal the corporation's Bylaws if the articles of incorporation
reserve such power to the shareholders, or the shareholders, in amending or
repealing the Bylaws, expressly provide that the board of directors may not
amend or repeal the Bylaws or a particular bylaw provision.
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 a share of, or is 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 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.
Under the FBCA, 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
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the affirmative vote of the holders of a majority of the shares entitled to vote
thereon unless the corporation's articles of incorporation require a higher
vote. The Seminole Charter establishes no such requirement.
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.
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). Seminole has not opted out of this statutory provision.
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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 a 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 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 prospects 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
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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.
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.
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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. Seminole has not opted out of this statutory
provision.
In addition to the provisions of Section 607.0902 of the FBCA,
Seminole's classified Board may serve as an anti-takeover protection.
LEGAL OPINIONS
The legality of the shares of FNB Common Stock to be issued to the
holders of Seminole Common Stock pursuant to the 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. Certain other legal matters will be
passed upon for FNB by Smith, Gambrell & Russell, LLP, Atlanta, Georgia, and for
Seminole by Shutts & Bowen LLP, Orlando, Florida.
The Merger Agreement provides as a condition to each party's obligation
to consummate the Merger that FNB and Seminole 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, 1997, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report incorporated by reference therein and incorporated herein by reference
which, as to the years 1996 and 1995, are based, in part, on the reports of
Hill, Barth & King, Inc., independent auditors, who audited Southwest Banks,
Inc., and Coopers & Lybrand L.L.P., independent auditors, who audited West Coast
Bancorp, Inc.
The supplemental consolidated financial statements of FNB at December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon, included in F.N.B.'s Current Report on Form 8-K
dated April 3, 1998, and incorporated herein by reference. As to 1996 and 1995,
their report is based, in part, on the reports of Hill, Barth & King, Inc.,
independent auditors, who audited Southwest Banks, Inc., and Coopers & Lybrand
LLP, independent auditors, who audited West Coast Bancorp, Inc.
The financial statements referred to above are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
The financial statements of Seminole as of and for the year ended
December 31, 1997 and 1996 included in this Proxy Statement-Prospectus and in
the Registration Statement have been audited by Hacker, Johnson, Cohen & Grieb
PA, independent auditors, as set forth in their report thereon included herein
on such financial statements and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
OTHER MATTERS
As of the date of this Proxy Statement-Prospectus, the Seminole 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 Seminole.
74
<PAGE> 83
INDEX TO
SEMINOLE BANK
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Hacker, Johnson, Cohen & Grieb PA, independent auditors...............................................F-2
Balance Sheets at December 31, 1997 and 1996 ...................................................................F-3
Statements of Earnings for the years ended
December 31, 1997 and 1996 ............................................................................F-4
Statements of Stockholders' Equity for the years
ended December 31, 1997 and 1996 ......................................................................F-5
Statements of Cash Flows for the years ended December 31, 1997 and 1996.........................................F-6
Notes to Financial Statements, December 31, 1997 and 1996.......................................................F-8
</TABLE>
F-1
<PAGE> 84
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Seminole Bank
Seminole, Florida:
We have audited the balance sheets of Seminole Bank (the "Bank") at December 31,
1997 and 1996, and the related statements of earnings, stockholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of the Bank at December 31, 1997
and 1996, and the results of its operations and cash flows for the years then
ended, in conformity with generally accepted accounting principles.
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
January 9, 1998
F-2
<PAGE> 85
SEMINOLE BANK
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Cash and due from banks $ 6,447,498 3,068,058
Federal funds sold 13,315,447 2,031,833
----------- ----------
Cash and cash equivalents 19,762,945 5,099,891
Interest-bearing deposits with banks 837,445 458,414
Securities available for sale 6,148,973 6,102,702
Securities held to maturity 10,471,334 10,671,047
Loans held for sale 372,535 774,579
Loans receivable, net of allowance for loan losses of $769,762
and $738,366 52,751,973 50,222,231
Restricted securities, Federal Home Loan Bank of Atlanta stock 447,000 447,000
Accrued interest receivable 529,968 515,874
Premises and equipment 2,087,755 2,144,419
Foreclosed real estate -- 212,188
Deferred income tax asset 137,925 133,576
Other assets 102,234 116,128
----------- ----------
Total assets $93,650,087 76,898,049
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits 8,784,904 6,443,948
Savings and NOW deposits 28,381,679 26,315,184
Money-market deposits 10,446,114 8,111,756
Time deposits 35,249,924 27,118,412
----------- ----------
Total deposits 82,862,621 67,989,300
Advance payments by borrowers for taxes and insurance 182,336 140,622
Accounts payable and accrued expenses 1,681,899 1,004,500
----------- ----------
Total liabilities 84,726,856 69,134,422
----------- ----------
Commitments and contingencies (Notes 4, 6 and 9)
Stockholders' equity:
Common stock, $.10 par value; 1,000,000 shares
authorized; 559,118 issued and outstanding 55,912 55,912
Additional paid-in capital 5,260,008 5,260,008
Retained earnings 3,581,083 2,434,810
Net unrealized appreciation on securities available for sale,
net of tax of $16,075 and $7,773 26,228 12,897
----------- ----------
Total stockholders' equity 8,923,231 7,763,627
----------- ----------
Total liabilities and stockholders' equity $93,650,087 76,898,049
=========== ==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 86
SEMINOLE BANK
STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
Interest income:
Loans receivable $ 4,809,364 4,514,194
Securities available for sale 382,955 304,645
Securities held to maturity 755,442 764,664
Other interest-earnings assets 337,062 263,168
----------- ----------
Total interest income 6,284,823 5,846,671
Interest expense on deposits 2,513,749 2,541,671
----------- ----------
Net interest income 3,771,074 3,305,000
Provision for loan losses 86,500 65,000
----------- ----------
Net interest income after provision for loan losses 3,684,574 3,240,000
----------- ----------
Noninterest income:
Service charges 459,799 336,276
Gain on sale of loans, net 199,576 188,770
Gain (loss) on sale of securities, net (254) 1,413
Other 83,902 138,521
----------- ----------
Total noninterest income 743,023 664,980
----------- ----------
Noninterest expenses:
Salaries and employee benefits 1,455,557 1,452,898
Occupancy expense 389,040 338,552
Deposit insurance premiums 22,800 153,752
SAIF recapitalization assessment -- 424,027
Data processing services 194,258 190,894
Other 566,669 605,308
----------- ----------
Total noninterest expenses 2,628,324 3,165,431
----------- ----------
Earnings before income taxes 1,799,273 739,549
Income taxes 653,000 248,982
----------- ----------
Net earnings $ 1,146,273 490,567
=========== ==========
Basic and diluted earnings per share $ 2.05 .88
=========== ==========
Weighted-average number of shares outstanding 559,118 559,118
=========== ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 87
SEMINOLE BANK
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
ON
ADDITIONAL SECURITIES TOTAL
COMMON PAID-IN RETAINED AVAILABLE STOCKHOLDERS'
STOCK CAPITAL EARNINGS FOR SALE EQUITY
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $50,822 4,592,895 2,616,446 8,773 7,268,936
Net earnings -- -- 490,567 -- 490,567
Stock dividend 5,090 667,113 (672,203) -- --
Unrealized appreciation on
securities available
for sale -- -- -- 4,124 4,124
------- --------- ---------- ------ ---------
Balance at December 31, 1996 55,912 5,260,008 2,434,810 12,897 7,763,627
Net earnings -- -- 1,146,273 -- 1,146,273
Unrealized appreciation on
securities available
for sale -- -- -- 13,331 13,331
------- --------- ---------- ------ ---------
Balance at December 31, 1997 $55,912 5,260,008 3,581,083 26,228 8,923,231
======= ========= ========== ====== =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 88
SEMINOLE BANK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,146,273 490,567
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 219,031 176,540
Provision for loan losses 86,500 65,000
Net deferred loan fees 33,977 (259)
Net amortization of discounts and premiums 11,305 32,861
Proceeds from sale of loans held for sale 7,661,616 12,656,986
Originations and purchases of loans held for sale (7,059,996) (12,158,700)
Gain on sale of loans (199,576) (188,770)
Increase in accrued interest receivable (14,094) (7,851)
Increase (decrease) in other assets 13,894 (64,947)
Increase in accounts payable and accrued expenses 677,399 813,728
Deferred income tax credit (12,651) (44,179)
Loss (gain) on sale of securities available for sale 254 (1,413)
Loss (gain) on sale of foreclosed real estate 24,234 (22,725)
----------- ----------
Net cash provided by operating activities 2,588,166 1,746,838
----------- ----------
Cash flows from investing activities:
Net increase in loans (2,650,219) (398,708)
Purchases of securities available for sale (2,000,039) (4,532,616)
Purchase of securities held to maturity (1,980,706) (5,410,032)
Proceeds from maturities and repayments of securities
held to maturity 2,165,187 4,069,745
Proceeds from maturity of securities available for sale 500,000 2,500,000
Proceeds from sale of securities available for sale 1,479,076 996,133
Proceeds from the sale of foreclosed real estate, net 187,952 98,541
Net purchases of premises and equipment (162,367) (800,287)
Net increase in interest-bearing deposits with banks (379,031) (268,414)
----------- ----------
Net cash used by investing activities (2,840,147) (3,745,638)
----------- ----------
Cash flows from financing activities:
Net increase in demand, savings and NOW and money
market deposit accounts 6,741,809 3,586,337
Net increase (decrease) in time deposits 8,131,512 (4,461,456)
Increase in advance payments by borrowers for taxes
and insurance 41,714 48,609
----------- ----------
Net cash provided by (used in) financing activities 14,915,035 (826,510)
----------- ----------
Increase (decrease) in cash and cash equivalents 14,663,054 (2,825,310)
Cash and cash equivalents at beginning of year 5,099,891 7,925,201
----------- ----------
Cash and cash equivalents at end of year $19,762,945 5,099,891
=========== ==========
(continued)
</TABLE>
F-6
<PAGE> 89
SEMINOLE BANK
STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
Supplemental disclosures:
Cash paid during the year for:
Interest $2,502,501 2,535,335
========== =========
Income taxes $ 487,000 413,911
========== =========
Noncash transactions:
Increase in unrealized appreciation on securities available
for sale, net of income tax $ 13,331 4,124
========== =========
Transfer of loans to foreclosed real estate $ -- 174,678
========== =========
Stock dividend $ -- 672,203
========== =========
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE> 90
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Seminole Bank (the "Bank") is a state-charter SAIF-insured
community bank. The Bank provides a wide range of community banking
services to small and middle-market businesses and to individuals
through its four offices located in Pinellas County, Florida. The
accounting and reporting practices of the Bank conform to generally
accepted accounting principles and to general practices within the
banking industry. The following summarizes the more significant of these
policies and practices:
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
SECURITIES. The Bank may classify its securities as either trading, held to
maturity or available for sale. Trading securities are held principally
for resale and recorded at their fair values. Unrealized gains and
losses on trading securities are included immediately in earnings.
Held-to-maturity securities are those which the Bank has the positive
intent and ability to hold to maturity and are reported at amortized
cost. Available-for-sale securities consist of securities not classified
as trading securities nor as held-to-maturity securities. Unrealized
holding gains and losses, net of tax, on available-for- sale securities
are reported as a net amount in a separate component of stockholders'
equity until realized. Gains and losses on the sale of
available-for-sale securities are determined using the
specific-identification method. Premiums and discounts on securities
available for sale and held to maturity are recognized in interest
income using the interest method over the period to maturity.
LOANS HELD FOR SALE. Mortgage loans originated and purchased that are
intended for sale in the secondary market are carried at the lower of
cost or estimated market value in the aggregate. Net unrealized losses
are recognized through a valuation allowance by charges to earnings. At
December 31, 1997 and 1996 book value approximated market value in the
aggregate for loans held for sale.
LOANS RECEIVABLE. Loans receivable that management has the intent and
ability to hold for the foreseeable future or until maturity or pay-off
are reported at their outstanding principal adjusted for any
charge-offs, the allowance for loan losses, and any deferred fees or
costs on originated loans and unamortized premiums or discounts on
purchased loans.
Discounts and premiums on purchased residential real estate loans are
amortized to income using the interest method over the remaining period
to contractual maturity, adjusted for anticipated prepayments.
(continued)
F-8
<PAGE> 91
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED LOANS
RECEIVABLE, CONTINUED. Loan origination fees and certain direct
origination costs are capitalized and recognized as an adjustment of the
yield of the related loan.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently recognized
only to the extent cash payments are received.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Bank's past
loan loss experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral, and current economic
conditions.
STOCK-BASED COMPENSATION. Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("Statement 123")
establishes a "fair value" based method of accounting for stock-based
compensation plans and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However,
it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees" (Opinion 25). The Bank has elected to follow Opinion 25 and
related interpretations in accounting for its employee stock options.
Statement 123 requires the disclosure of proforma net earnings and
earnings per share determined as if the Bank accounted for its employee
stock options under the fair value method of that Statement.
FORECLOSED REAL ESTATE. Real estate properties acquired through, or in lieu
of, loan foreclosure are to be sold and are initially recorded at fair
value at the date of foreclosure establishing a new cost basis. After
foreclosure, valuations are periodically performed by management and the
real estate is carried at the lower of carrying amount or fair value
less cost to sell. Revenue and expenses from operations and changes in
the valuation allowance are included in the statements of earnings.
INCOME TAXES. Deferred tax assets and liabilities are reflected at currently
enacted income tax rates applicable to the period in which the deferred
tax assets or liabilities are expected to be realized or settled. As
changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization
are computed on the straight-line method over the estimated useful lives
of the assets.
EARNINGS PER SHARE. Earnings per share ("EPS") of common stock has been
computed on the basis of the weighted-average number of shares of common
stock outstanding. For purposes of calculating the effect of outstanding
stock options on diluted EPS, because there is no active trading market
for the Company's common stock, the average book value per share was
used. For 1997 and 1996, outstanding stock options were not materially
dilutive.
OFF-BALANCE-SHEET INSTRUMENTS. In the ordinary course of business the Bank
has entered into off-balance-sheet financial instruments consisting of
commitments to extend credit. Such financial instruments are recorded in
the financial statements when they are funded.
RECLASSIFICATIONS. Certain amounts in the 1996 financial statements have
been reclassified to conform to the 1997 presentation.
(continued)
F-9
<PAGE> 92
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(2) SECURITIES
Securities have been classified in the balance sheets according to
management's intent. The carrying amount of securities and their
approximate fair values at December 31, are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ------ ------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES:
AT DECEMBER 31, 1997:
United States treasury obligations $6,018,240 44,637 (2,335) 6,060,542
Mutual funds 88,431 -- -- 88,431
---------- ------ ------ ---------
Total $6,106,671 44,637 (2,335) 6,148,973
========== ====== ====== =========
AT DECEMBER 31, 1996:
United States treasury obligations 6,023,541 27,700 (7,030) 6,044,211
Mutual funds 58,491 -- -- 58,491
---------- ------ ------ ---------
Total $6,082,032 27,700 (7,030) 6,102,702
========== ====== ====== =========
Sales of securities are summarized as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996
---- ----
Proceeds $ 1,479,076 996,133
=========== ========
Gross gains 498 5,170
Gross losses (752) (3,757)
----------- --------
Net gain (loss) $ (254) 1,413
=========== ========
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------ ------- -------- ------
HELD-TO-MATURITY SECURITIES:
AT DECEMBER 31, 1997:
U.S. Government Agency
obligations $ 4,188,900 24,472 (235) 4,213,137
Mortgage-backed securities 3,986,425 25,252 (3,187) 4,008,490
Municipal bonds 1,474,858 28,547 (395) 1,503,010
Corporate securities 821,151 6,269 -- 827,420
----------- ------ ------- ----------
$10,471,334 84,540 (3,817) 10,552,057
=========== ====== ======= ==========
AT DECEMBER 31, 1996:
U.S. Government Agency
obligations 4,179,438 14,096 (3,985) 4,189,549
Mortgage-backed securities 4,096,279 9,450 (36,950) 4,068,779
Municipal bonds 1,249,632 13,145 (4,724) 1,258,053
Corporate securities 1,145,698 4,916 (1,235) 1,149,379
----------- ------ ------- ----------
$10,671,047 41,607 (46,894) 10,665,760
=========== ====== ======= ==========
(continued)
</TABLE>
F-10
<PAGE> 93
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(2) SECURITIES, CONTINUED
The scheduled maturities of securities available for sale and held to
maturity at December 31, 1997 are summarized as follows:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
---------------------- ----------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Due in one year or less $1,497,258 1,500,863 1,959,139 1,965,988
Due from one to five years 4,520,982 4,559,679 2,452,273 2,472,455
Due from five to ten years -- -- 1,873,497 1,893,500
Due in over ten years -- -- 200,000 211,624
Mutual funds 88,431 88,431 -- --
Mortgage-backed securities -- -- 3,986,425 4,008,490
---------- --------- ---------- ----------
Total $6,106,671 6,148,973 10,471,334 10,552,057
========== ========= ========== ==========
</TABLE>
The Bank had pledged certain securities with a carrying value of $500,000
as of December 31, 1997 as collateral to the Federal Reserve Bank of
Atlanta.
(3) LOANS RECEIVABLE
The components of loans in the balance sheet consist of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------
1997 1996
---- ----
<S> <C> <C>
Mortgage loans:
Secured by one-to-four family dwellings $ 28,994,427 30,850,944
Nonresidential real estate 12,059,095 9,822,848
Residential construction 749,391 144,501
Commercial loans 6,461,462 5,599,008
Consumer loans 5,364,738 4,793,688
------------ ----------
Total loans receivable 53,629,113 51,210,989
Deduct:
Allowance for loan losses (769,762) (738,366)
Deferred loan fees, net (107,378) (250,392)
------------ ----------
$ 52,751,973 50,222,231
============ ==========
</TABLE>
An analysis of the change in the allowance for loan losses is summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Balance at January 1 $ 738,366 683,366
Loans charged-off (55,104) (10,000)
Provision for loan losses 86,500 65,000
--------- -------
Balance at December 31 $ 769,762 738,366
========= =======
(continued)
</TABLE>
F-11
<PAGE> 94
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(3) LOANS RECEIVABLE, CONTINUED
Impaired loans having recorded investments of $337,000 at December 31, 1997
and $328,000 at December 31, 1996 has been recognized by the Bank. The
average recorded investment in impaired loans during 1997 and 1996 was
$333,000 and $212,000, respectively. The total allowance for loan
losses related to these loans was $6,000 and $54,000 on December 31,
1997 and 1996, respectively. Interest income on impaired loans of
$24,300 and $50,200 was recognized for cash payments received in 1997
and 1996, respectively.
(4) PREMISES AND EQUIPMENT
Premises and equipment is summarized as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Cost:
Land $ 798,086 798,086
Building and leasehold improvements 1,422,818 1,421,654
Furniture and equipment 1,212,262 1,051,060
----------- ---------
Total at cost 3,433,166 3,270,800
Less accumulated depreciation and amortization 1,345,411 1,126,381
----------- ---------
Net book value $ 2,087,755 2,144,419
=========== =========
</TABLE>
Certain bank facilities are leased under various operating leases. Rent
expense was $48,788 in 1997 and $48,113 in 1996. The operating leases
contain escalation clauses based on the consumer price index and
increases in proportionate operating costs. Futures minimum lease
payments under noncancelable operating leases at December 31, 1997 are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
1998 $ 15,344
1999 5,115
--------
Total minimum lease payments $ 20,459
========
(continued)
</TABLE>
F-12
<PAGE> 95
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(5) DEPOSITS
The aggregate amount of short-term certificates of deposit with a minimum
denomination of $100,000 was $3,789,444 and $1,763,977 at December 31,
1997 and 1996, respectively.
At December 31, 1997, the scheduled maturities of certificates of deposit
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ ------
<S> <C>
1998 $ 24,681,494
1999 7,393,530
2000 2,252,924
2001 454,108
2002 and thereafter 467,868
-----------
$ 35,249,924
============
</TABLE>
(6) FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its
customers. These financial instruments are commitments to extend credit
and may involve, to varying degrees, elements of credit and
interest-rate risk in excess of the amount recognized in the balance
sheet. The contract amounts of these instruments reflect the extent of
involvement the Bank has in these financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend
credit is represented by the contractual amount of those instruments.
The Bank uses the same credit policies in making commitments as it does
for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since some of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained if deemed necessary by the Bank upon
extension of credit is based on management's credit evaluation of the
counterparty.
A summary of the notional amounts of the Bank's financial instruments,
with off-balance-sheet risk at December 31, 1997 follows:
<TABLE>
<CAPTION>
NOTIONAL
AMOUNT
------
<S> <C>
Commitments to extend credit $ 2,272,800
===========
</TABLE>
(continued)
F-13
<PAGE> 96
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(7) CREDIT RISK
The Bank grants real estate and consumer loans to customers primarily in
the State of Florida with the majority of such loans in the Pinellas
County area. Therefore, the Bank's exposure to credit risk is
significantly affected by changes in the economy of the Pinellas County
area.
The contractual amounts of credit related financial instruments such as
commitments to extend credit represent the amounts of potential
accounting loss should the contract be fully drawn upon, the customer
default and the value of any existing collateral become worthless.
(8) INCOME TAXES
The provision (credit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997: CURRENT DEFERRED TOTAL
----------------------------- ------- -------- -----
<S> <C> <C> <C>
Federal $ 581,597 (10,851) 570,746
State 84,054 (1,800) 82,254
--------- ------ -------
Total $ 665,651 (12,651) 653,000
========= ====== =======
YEAR ENDED DECEMBER 31, 1996:
-----------------------------
Federal 271,720 (37,722) 233,998
State 21,441 (6,457) 14,984
--------- ------ -------
Total $ 293,161 (44,179) 248,982
========= ====== =======
</TABLE>
The provision for income taxes is different than that computed by applying
the federal statutory rate of 34% as indicated in the following
analysis:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1996
------------------ --------------
% OF % OF
PRETAX PRETAX
AMOUNT EARNINGS AMOUNT EARNINGS
------ -------- ------ --------
<S> <C> <C> <C> <C>
Tax provision at statutory Federal
income tax rate $ 611,753 34% $ 251,447 34%
Increases (decreases) resulting from:
Tax-exempt interest income (14,549) (1) (16,079) (2)
State taxes, net of federal tax
benefit 54,288 3 9,889 1
Other, net 1,508 -- 3,725 1
--------- ---- --------- ---
$ 653,000 36% $ 248,982 34%
========= ==== ========= ===
(continued)
</TABLE>
F-14
<PAGE> 97
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(8) INCOME TAXES, CONTINUED
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------
1997 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Premises and equipment $ -- 13,215
Allowance for loan losses 233,000 220,954
Other, net 4,000 --
----------- --------
Total gross deferred tax assets 237,000 234,169
----------- --------
Deferred tax liabilities:
Federal Home Loan Bank of Atlanta stock, principally
due to nontaxable stock dividends (49,000) (49,411)
Premises and equipment (1,000) --
Deferred loan origination fees (33,000) (43,409)
Net unrealized appreciation on available-for-sale
securities (16,075) (7,773)
----------- --------
Total gross deferred tax liabilities (99,075) (100,593)
----------- --------
Net deferred income tax asset $ 137,925 133,576
=========== ========
</TABLE>
(9) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Bank has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying financial statements.
(10) STOCK OPTION PLAN
During 1996, the Bank established a nonqualified management stock
option plan. The Bank accounts for the plan in accordance with
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," which establishes
financial accounting and reporting standards for stock-based
employee compensation plans. As permitted by this Statement,
the Bank has elected to utilize the intrinsic value method of
accounting defined in APB Opinion No. 25. Due to the exercise
price of the options approximating the market value of the
common stock at the date of grant, no compensation expense has
been recognized in the consolidated statements of earnings.
The following is a summary of options granted and outstanding:
<TABLE>
<CAPTION>
NUMBER EXERCISABLE
OF PRICE
OPTIONS PER SHARE
------- -----------
<S> <C> <C>
Stock options outstanding at December 31, 1995 --
Stock options granted during 1996 12,000 $ 14.50
-----------
Stock options outstanding at December 31, 1996 and 1997 12,000 $ 14.50
=========== ========
</TABLE>
(continued)
F-15
<PAGE> 98
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(10) STOCK OPTION PLAN, CONTINUED
In order to calculate the fair value of the options, it was assumed that
the risk-free interest rate was 6.0%, there would be no dividends paid
by the Company over the exercise period, the expected life of the
options would be the entire exercise period and stock volatility would
be zero due to the lack of an active market for the stock. The
following information pertains to the fair value of the options granted
to purchase common stock in 1996:
<TABLE>
<CAPTION>
1996
----
<S> <C>
Fair value of options issued during the year $ 79,000
========
</TABLE>
The options vest at the rate of twenty percent each anniversary of the
option beginning in year six and expire after ten years. Therefore, no
options were exercisable at December 31, 1996 or 1997 and the proforma
earnings are the same as the reported historical amounts.
(11) RELATED PARTIES
The Bank has entered into loan transactions with certain directors and
executive officers and their related entities. The activity for the
year ended December 31, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
Balance at beginning of year $ 346
Additions 66
Repayments (80)
-----
Balance at end of year $ 332
=====
</TABLE>
(12) SAIF RECAPITALIZATION ASSESSMENT
On September 30, 1996, a law was enacted which imposed a one-time
assessment on all SAIF insured deposits as of March 31, 1995. The
effect on the Bank was a pretax charge in 1996 of $424,027.
(continued)
F-16
<PAGE> 99
SEMINOLE BANK
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(13) REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal and state banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgements by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in
the table below) of total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I
capital (as defined) to average assets (as defined). Management
believes, as of December 31, 1997, that the Bank meets all capital
adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the regulatory
authorities categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as
well capitalized the Bank must maintain minimum total risk-based, Tier
I risk-based, and Tier I leverage ratios as set forth in the table.
There are no conditions or events since that notification that
management believes have changed the Bank's category.
The Bank's actual capital amounts and ratios are also presented in the
table.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES: ACTION PROVISIONS:
--------------- --------------------- ------------------
AMOUNT % AMOUNT % AMOUNT %
------ --- ------- --- ------ ---
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1997:
Total capital
(to Risk-Weighted Assets) $ 9,517 19.2% $ 3,959 8.0% $ 4,949 10.0%
Tier I Capital
(to Risk-Weighted Assets) 8,897 18.0 1,979 4.0 2,969 6.0
Tier I Capital
(to Average Assets) 8,897 10.0 3,566 4.0 4,458 5.0
AS OF DECEMBER 31, 1996:
Total capital
(to Risk-Weighted Assets) $ 7,751 17.4% $ 3,554 8.0% $ 4,443 10.0%
Tier I Capital
(to Risk-Weighted Assets) 7,751 17.4 1,777 4.0 2,666 6.0
Tier I Capital
(to Average Assets) 7,751 10.2 3,040 4.0 3,800 5.0
</TABLE>
F-17
<PAGE> 100
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
F.N.B. CORPORATION,
SOUTHWEST BANKS, INC.
AND
SEMINOLE BANK
DATED AS OF FEBRUARY 2, 1998
<PAGE> 101
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER...................................................................... A-2
1.1 Merger....................................................................................... A-2
1.2 Time and Place of Closing.................................................................... A-2
1.3 Effective Time............................................................................... A-2
1.4 Execution of Stock Option Agreement.......................................................... A-2
ARTICLE 2
TERMS OF MERGER....................................................................................... A-2
2.1 Articles of Incorporation.................................................................... A-2
2.2 Bylaws....................................................................................... A-2
ARTICLE 3
MANNER OF CONVERTING SHARES........................................................................... A-3
3.1 Conversion of Shares......................................................................... A-3
3.2 Anti-Dilution Provisions..................................................................... A-4
3.3 Shares Held by Seminole or FNB............................................................... A-4
3.4 Fractional Shares............................................................................ A-4
3.5 Conversion of Options and Warrants........................................................... A-4
ARTICLE 4
EXCHANGE OF SHARES.................................................................................... A-5
4.1 Exchange Procedures.......................................................................... A-5
4.2 Rights of Former Seminole Shareholders....................................................... A-6
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SEMINOLE............................................................ A-7
5.1 Organization, Standing, and Power............................................................ A-7
5.2 Authority; No Breach by Agreement............................................................ A-7
5.3 Capital Stock................................................................................ A-8
5.4 Seminole Subsidiaries........................................................................ A-8
5.5 Regulatory Filings; Financial Statements..................................................... A-9
5.6 Notes and Obligations........................................................................ A-9
5.7 Absence of Certain Changes or Events.........................................................A-10
5.8 Tax Matters..................................................................................A-10
5.9 Assets.......................................................................................A-11
</TABLE>
i
<PAGE> 102
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.10 Environmental Matters........................................................................A-11
5.11 Compliance With Laws.........................................................................A-12
5.12 Labor Relations..............................................................................A-13
5.13 Employee Benefit Plans.......................................................................A-13
5.14 Material Contracts...........................................................................A-15
5.15 Legal Proceedings............................................................................A-15
5.16 Reports......................................................................................A-15
5.17 Statements True and Correct..................................................................A-16
5.18 Accounting, Tax and Regulatory Matters.......................................................A-16
5.19 State Takeover Laws..........................................................................A-16
5.20 Articles of Incorporation Provisions.........................................................A-16
5.21 Derivatives Contracts........................................................................A-16
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FNB, SOUTHWEST AND INTERIM..........................................A-17
6.1 Organization, Standing and Power.............................................................A-17
6.2 Authority; No Breach By Agreement............................................................A-17
6.3 Capital Stock................................................................................A-18
6.4 FNB Subsidiaries.............................................................................A-18
6.5 SEC Filings; Financial Statements............................................................A-19
6.6 Absence of Certain Changes or Events.........................................................A-20
6.7 Tax Matters..................................................................................A-20
6.8 Compliance With Laws.........................................................................A-20
6.9 Assets.......................................................................................A-21
6.10 Legal Proceedings............................................................................A-21
6.11 Reports......................................................................................A-22
6.12 Statements True and Correct..................................................................A-22
6.13 Accounting, Tax and Regulatory Matters.......................................................A-22
6.14 Environmental Matters........................................................................A-22
6.15 Derivatives Contracts........................................................................A-23
6.16 Outstanding Seminole Common Stock............................................................A-23
6.17 Material Contracts...........................................................................A-23
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION..............................................................A-23
7.1 Affirmative Covenants of Seminole............................................................A-23
7.2 Negative Covenants of Seminole...............................................................A-24
7.3 Covenants of FNB.............................................................................A-26
</TABLE>
ii
<PAGE> 103
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
7.4 Adverse Changes In Condition.................................................................A-26
7.5 Reports......................................................................................A-26
ARTICLE 8
ADDITIONAL AGREEMENTS.................................................................................A-27
8.1 Registration Statement; Proxy Statement; Shareholder Approval................................A-27
8.2 Applications.................................................................................A-27
8.3 Filings With State Offices...................................................................A-28
8.4 Agreement As To Efforts To Consummate........................................................A-28
8.5 Access to Information; Confidentiality.......................................................A-28
8.6 Current Information..........................................................................A-29
8.7 Other Actions................................................................................A-29
8.8 Press Releases...............................................................................A-29
8.9 No Solicitation..............................................................................A-29
8.10 Accounting and Tax Treatment.................................................................A-30
8.11 Articles of Incorporation Provisions.........................................................A-30
8.12 Agreement of Affiliates......................................................................A-30
8.13 Severance, Employee Benefits and Contracts...................................................A-31
8.14 Indemnification..............................................................................A-31
8.15 Takeover Laws................................................................................A-31
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.....................................................A-32
9.1 Conditions to Obligations of Each Party......................................................A-32
9.2 Conditions to Obligations of FNB.............................................................A-33
9.3 Conditions to Obligations of Seminole........................................................A-34
ARTICLE 10
TERMINATION...........................................................................................A-35
10.1 Termination..................................................................................A-35
10.2 Effect of Termination........................................................................A-36
10.3 Non-Survival of Representations and Covenants................................................A-36
ARTICLE 11
MISCELLANEOUS.........................................................................................A-37
11.1 Definitions..................................................................................A-37
11.2 Expenses.....................................................................................A-44
</TABLE>
iii
<PAGE> 104
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
11.3 Brokers and Finders..........................................................................A-44
11.4 Entire Agreement.............................................................................A-45
11.5 Amendments...................................................................................A-45
11.6 Obligations of FNB...........................................................................A-45
11.7 Waivers......................................................................................A-45
11.8 Assignment...................................................................................A-46
11.9 Notices......................................................................................A-46
11.10 Governing Law................................................................................A-47
11.11 Counterparts.................................................................................A-47
11.12 Captions.....................................................................................A-47
11.13 Enforcement of Agreement.....................................................................A-47
11.14 Severability.................................................................................A-47
</TABLE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
1. Form of Stock Option Agreement (Section 1.4).
2. Form of Agreement of Affiliates of Seminole (Section 8.12).
</TABLE>
iv
<PAGE> 105
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of February 2, 1998, 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, and a wholly-owned subsidiary
of FNB; to be joined in by Southwest Interim Bank No. 4, N.A., a national bank
to be chartered under the laws of the United States and to become a wholly-owned
subsidiary of FNB ("Interim"); and SEMINOLE BANK ("Seminole"), a Florida state
banking corporation having its principal office located in Seminole, Florida.
PREAMBLE
The Boards of Directors of Seminole, FNB and once it is chartered,
Interim, 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 merger of Seminole with and into Interim (the "Merger"), which
will be a new Florida bank chartered by FNB as soon as practicable after the
execution of the Agreement. At the effective time of such Merger, the
outstanding shares of the capital stock of Seminole shall be converted into the
right to receive shares of the common stock of FNB (except as provided herein).
As a result, shareholders of Seminole shall become shareholders of FNB.
Immediately upon consummation of the Merger, FNB shall transfer 100% of its
ownership of Interim to Southwest so that Interim will become a wholly-owned
subsidiary of Southwest, whereupon Interim will then be merged into First
National Bank of Florida, a wholly-owned subsidiary of Southwest. The
transactions described in this Agreement are subject to the approvals of the
shareholders of Seminole, the Board of Governors of the Federal Reserve System,
the Comptroller of the Currency, 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,
Seminole and FNB are entering into a stock option agreement (the "Stock Option
Agreement"), in substantially the form of Exhibit 1, pursuant to which Seminole
is granting to FNB an option to purchase shares of Seminole Common Stock.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
A-1
<PAGE> 106
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, Seminole shall be merged with and into Interim in accordance
with the provisions of the FFIC. The separate existence of Seminole shall
thereupon cease, and Interim, which shall be a wholly-owned subsidiary of FNB,
shall have the name "Seminole Bank, N.A." and shall be governed by the National
Bank Act and shall be the Surviving Corporation resulting from the Merger. The
Merger shall have the effects specified in the National Bank Act and in the
FFIC. The Merger shall be consummated pursuant to the terms of this Agreement,
which has been approved and adopted by the respective Boards of Directors of
Seminole, FNB, Southwest and Interim.
1.2 Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at 9:00 A.M.,
local time, on a date specified by the Parties as they, acting through their
chief executive officers or chief financial officers, may mutually agree.
Subject to the terms and conditions hereof, unless mutually agreed upon in
writing by each Party, the Parties shall use their reasonable best efforts to
cause the Closing to occur on but not prior to the fifth business day following
the Determination Date. 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 certification
of the Merger is received from the Comptroller of the Currency (the "Effective
Time"). Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon in writing by each Party, the Parties file the Certificate to Merge
on the date of Closing and shall use their best efforts to cause the Effective
Time to occur on the date of Closing.
1.4 Execution of Stock Option Agreement. Concurrently with the
execution of this Agreement and as a condition thereto, Seminole 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 Interim in effect immediately prior to 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 Interim in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until otherwise amended or repealed.
A-2
<PAGE> 107
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, Interim or Seminole, or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of common stock of the Surviving Corporation
issued and outstanding immediately prior to the Effective Time shall
remain outstanding and entirely issued to FNB.
Immediately following the Effective Time, FNB shall transfer all of its
ownership of the Surviving Corporation to Southwest, and at such time the
Surviving Corporation shall be a wholly-owned subsidiary of Southwest, whereupon
the Surviving Corporation will be merged into First National Bank of Florida, a
wholly-owned subsidiary of Southwest.
(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) Except for Seminole Common Stock issued and outstanding
immediately prior to the Effective Time as to which dissenters' rights
have been perfected and not withdrawn, and subject to Section 3.4
relating to fractional shares, each share of Seminole Common Stock
(excluding shares held by any Seminole Company or any FNB Company, in
each case other than in a fiduciary capacity or as a result of debts
previously contracted) issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged
for 1.457 shares of FNB Common Stock (the "Exchange Ratio").
(d) If the Designated Price of FNB Common Stock shall be less
than $28.00, then Seminole may, at any time during the period
commencing on the Determination Date and ending at the close of
business five (5) business days thereafter, terminate the Agreement
pursuant to Section 10.1(i) hereof.
(e) Notwithstanding Section 3.1(c) of this Agreement, Seminole Common
Stock issued and outstanding at the Effective Time which is held by a holder who
has not voted in favor of the Merger and who has demanded payment of the fair
cash value of such shares in accordance with 12 U.S.C. ss.215a ("Dissenting
Seminole Shares") shall not be converted into or represent the right to receive
the FNB Common Stock payable thereon pursuant to Section 3.1(c) of this
Agreement, and shall be entitled only to such rights of appraisal as are granted
by 12 U.S.C. ss.215a ("Dissent Provisions"), unless and until such holder fails
to perfect or effectively withdraws or otherwise loses his right to appraisal.
If after the Effective Time any such holder fails to perfect or effectively
withdraws or loses his right to appraisal, such shares of Seminole Common Stock
shall be treated as if they had been converted at the Effective Time into the
right to receive the FNB Common Stock payable thereon pursuant to Section 3.1(c)
of this Agreement. Seminole shall give FNB prompt notice upon receipt by
Seminole of any written objection to the Merger and such written demands for
payment of the fair value of shares of Seminole Common Stock, and the
withdrawals of such demands, and any other instruments provided to Seminole
pursuant to the Dissent Provisions (any shareholder duly making such demand
being hereinafter called a "Dissenting Shareholder"). Each Dissenting
Shareholder that becomes entitled, pursuant to the Dissent Provisions, to
A-3
<PAGE> 108
payment for any shares of Seminole Common Stock held by such Dissenting
Shareholder shall receive payment therefore from FNB (but only after the amount
thereof shall have been agreed upon or at the times and in the amounts required
by the Dissent Provisions) and all of such Dissenting Shareholders shares of
Seminole Common Stock shall be cancelled. Seminole shall not, except with the
prior written consent of FNB, voluntarily make any payment with respect to, or
settle or offer to settle, any demand for payment by any Dissenting Shareholder.
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 Seminole or FNB. Each of the shares of Seminole
Common Stock held by any Seminole Company or by any FNB Company, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of Seminole Common Stock 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 price of one share of FNB Common Stock at the Effective Time. The
market price 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 Closing. 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 Options and Warrants.
(a) At the Effective Time of the Merger, all rights with
respect to Seminole Common Stock issuable pursuant to the exercise of options,
warrants or other rights to purchase or acquire Seminole Common Stock
(collectively, the "Seminole Options") granted by Seminole pursuant to stock
option plans or other agreements of Seminole, which Seminole Options and plans
as of the date hereof are listed and described in Section 3.5 of the Seminole
Disclosure Memorandum and which Seminole Options are outstanding at the
Effective Time of the Merger, whether or not such Seminole Options are then
exercisable, shall be converted into and become rights with respect to FNB
Common Stock, and FNB shall assume each Seminole Option, in accordance with the
terms of the Seminole Stock Plan, stock option agreement or warrant agreement by
which it is evidenced, except that from and after the Effective Time, (i) FNB
and its Board of Directors or any committee thereof responsible for
administering FNB option plans shall be substituted for Seminole and the
committee of Seminole's Board of Directors (including, if applicable, the entire
Board of Directors of Seminole) administering such Seminole Stock Plan, (ii)
each Seminole 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 Seminole Option shall be
equal to the number of shares of Seminole Common Stock subject to such Seminole
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
and (iv) the per
A-4
<PAGE> 109
share exercise price under each such Seminole Option shall be adjusted by
dividing the per share exercise price under each such Seminole Option by the
Exchange Ratio and rounding down 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 Seminole
Options and any fraction of a share of FNB Common Stock that otherwise would be
subject to a converted Seminole Option shall represent the right to receive a
cash payment equal to the product of such fraction and the difference between
the market value of one share of FNB Common Stock and the per share exercise
price of such Option. In addition, notwithstanding the provisions of clauses
(iii) and (iv) of the first sentence of this Section 3.5, each Seminole 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. Seminole 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 Seminole Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants pursuant
to such Seminole Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments required by Section 3.5(a) after giving
effect to the Merger), and FNB shall comply with the terms of each Seminole
Stock Plan to ensure, to the extent required by, and subject to the provisions
of, such Seminole Stock Plan, that Seminole 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 Seminole Options assumed by it in accordance with this
Section 3.5. As soon as practicable after the Effective Time, FNB shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), with respect to the shares of FNB Common
Stock subject to such 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 1934 Act, where applicable, FNB shall administer the Seminole Stock Plan
assumed pursuant to this Section 3.5 in a manner that complies with Rule 16b-3
promulgated under the 1934 Act to the extent the Seminole Stock Plan complied
with such rule prior to the Merger.
(c) All restrictions or limitations on transfer with respect to
Seminole Common Stock awarded under the Seminole Stock Plans or any other plan,
program or arrangement of any Seminole Company, 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
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of FNB Common Stock in such amount necessary to provide all consideration
required to be exchanged by FNB for Seminole Common Stock pursuant to the terms
of this Agreement. Promptly after the Effective Time, FNB shall cause the
Exchange Agent to mail to the former shareholders of Seminole appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Seminole Common Stock shall pass, only upon proper delivery of such certificates
to the Exchange Agent). After the Effective Time, each holder of shares of
Seminole Common Stock (other than shares to be canceled pursuant to Section 3.3
of this Agreement) issued and outstanding at the Effective Time shall surrender
the certificate or certificates representing such shares to the Exchange Agent
and shall upon surrender thereof promptly receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
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 shares of Seminole
Common Stock issued and outstanding at the Effective Time also shall receive,
upon surrender of the certificate or certificates representing such shares, cash
in lieu of any fractional share of FNB Common Stock to which such holder may be
otherwise entitled (without interest). FNB shall not be obligated to deliver the
consideration to which any former holder of Seminole Common Stock is entitled as
a result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of Seminole Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of Seminole Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
Any other provision of this Agreement notwithstanding, neither FNB nor the
Exchange Agent shall be liable to a holder of Seminole Common Stock 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 Seminole Shareholders. At the Effective Time, the
stock transfer books of Seminole shall be closed as to holders of Seminole
Common Stock immediately prior to the Effective Time and no transfer of Seminole
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Seminole
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.4 of
this Agreement in exchange therefor, subject, however, to FNB's obligation to
pay any dividends or make any other distributions with a record date prior to
the Effective Time which have been declared or made by Seminole in respect of
such shares of Seminole Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. 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 Seminole Common Stock issued and outstanding
at the Effective Time until such holder surrenders such certificate for exchange
as provided in Section 4.1 of this Agreement. However, upon surrender of such
Seminole Common Stock certificate, both the FNB Common Stock certificate
(together with all such undelivered dividends or other distributions without
interest) and any undelivered dividends and cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate. Any portion of the
consideration (including the proceeds of any investments thereof) which had been
made payable to the Exchange Agent pursuant to Section 4.1 of this Agreement
that remain unclaimed by the shareholders of Seminole for six (6) months after
the Effective Time shall be paid to FNB. Any shareholders of Seminole who have
not theretofore complied with this Article 4 shall thereafter look only to FNB
for payment of their shares of FNB Common Stock and cash in lieu of fractional
shares and unpaid dividends and distributions on the
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FNB Common Stock deliverable in respect of each Seminole share of Common Stock
such shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SEMINOLE
Seminole hereby represents and warrants to FNB as follows:
5.1 Organization, Standing, and Power. Seminole is a state banking
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.
Seminole 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 Seminole.
5.2 Authority; No Breach by Agreement.
(a) Seminole 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 Seminole, to perform
its obligations under this Agreement and consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by Seminole and the consummation by Seminole 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 Seminole, subject to the approval of this
Agreement by its shareholders as contemplated by Section 8.1 of this
Agreement. Subject to such requisite shareholder approval (and assuming
due authorization, execution and delivery by FNB, Southwest and
Interim), this Agreement represents a legal, valid, and binding
obligation of Seminole, enforceable against Seminole 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 Seminole Board
of Directors has received from The Carson Medlin Company 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 Seminole Common Stock.
(b) Neither the execution and delivery of this Agreement by
Seminole, nor the consummation by Seminole of the transactions
contemplated hereby, nor compliance by Seminole with any of the
provisions hereof, will (i) conflict with or result in a breach of any
provision of Seminole's Articles of Incorporation or Bylaws, or, (ii)
except as disclosed in Section 5.2(b)(ii) of the Seminole Disclosure
Memorandum, 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 Seminole Company under, any Contract or Permit of any Seminole
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 Seminole, or, (iii) subject to
receipt of the requisite Consents referred to
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in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any Seminole Company 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 the 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 Seminole, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Seminole of the Merger and the other transactions
contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Seminole consists of
1,000,000 shares of Seminole Common Stock, of which 559,118 shares are
issued and outstanding as of the date of this Agreement and not more
than 559,118 shares will be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of capital stock of
Seminole are duly and validly issued and outstanding and are fully paid
and nonassessable under the FFIC. None of the outstanding shares of
capital stock of Seminole has been issued in violation of any
preemptive rights. Seminole has reserved 25,000 shares of Seminole
Common Stock for issuance under the Seminole Stock Plans, pursuant to
which options and warrants to purchase not more than 12,000 shares of
Seminole Common Stock 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 Seminole outstanding and
no outstanding Rights relating to the capital stock of Seminole.
5.4 Seminole Subsidiaries. Seminole has disclosed in Section 5.4 of the
Seminole Disclosure Memorandum all of the Seminole Subsidiaries as of the date
of this Agreement. Except as disclosed in Section 5.4 of the Seminole Disclosure
Memorandum, Seminole or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Seminole Subsidiary. No equity
securities of any Seminole Subsidiary are or may become required to be issued
(other than to another Seminole Company) by reason of any Rights, and there are
no Contracts by which any Seminole Subsidiary is bound to issue (other than to
another Seminole Company) additional shares of its capital stock or Rights or by
which any Seminole Company is or may be bound to transfer any shares of the
capital stock of any Seminole Subsidiary (other than to another Seminole
Company). There are no Contracts relating to the rights of any Seminole Company
to vote or to dispose of any shares of the capital stock of any Seminole
Subsidiary. All of the shares of capital stock of each Seminole Subsidiary held
by a Seminole Company are fully paid and nonassessable under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the Seminole Company free and clear of any Lien. Each
Seminole 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 Seminole Subsidiary 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
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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 Seminole. Each Seminole 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 Savings Association Insurance Fund.
5.5 Regulatory Filings; Financial Statements. Seminole has made
available to FNB copies of the Seminole Financial Statements and all management
letters of its outside independent certified public accountants relating to any
audits performed in connection with the preparation of the Seminole Financial
Statements. Each of the Seminole Financial Statements (including, in each case,
any related notes), including any Seminole Financial Statements filed after the
date of this Agreement until the Effective Time, was 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), and
fairly present or will present the financial position of Seminole at the
respective dates and the 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 interim financial statements, and except
for the absence of certain footnote information in the unaudited statements.
5.6 Notes and Obligations.
(a) Except as set forth in Section 5.6 of the Seminole
Disclosure Memorandum or as provided in the loss reserve described in
subparagraph (b) below, without conducting any independent
investigation, Seminole is not aware of any facts which would cause
management of Seminole to believe that any notes receivable or any
other obligations owned by Seminole or due to it shown on the Seminole
Interim Balance Sheet or any such notes receivable and obligations on
the date hereof and as of the Effective Time have not been and will not
be genuine, legal, valid and collectible obligations of the respective
makers thereof and are not and will not be subject to any offset or
counterclaim. Except as set forth in subparagraph (b) below, all such
notes and obligations are evidenced by written agreements, true and
correct copies of which will be made available to FNB for examination
prior to the Effective Time. All such notes and obligations were
entered into by Seminole in the ordinary course of its business and in
compliance with all applicable laws and regulations, except as to any
non-compliance which has not and will not have a Material Adverse
Effect on Seminole.
(b) Seminole has established a loss reserve on the Seminole
Interim Balance Sheet which is adequate to cover anticipated losses
which might result from such items as the insolvency or default of
borrowers or obligors on such loans or obligations, defects in the
notes or evidences of obligation (including losses of original notes or
instruments), offsets or counterclaims properly chargeable to such
reserve, or the availability of legal or equitable defenses which might
preclude or limit the ability of Seminole to enforce the note or
obligation, and the representations set forth in subparagraph (a) above
are qualified in their entirety by the aggregate of such loss reserves.
As of the Effective Time, the ratio of the loss reserve, as established
on such date in good faith by management of Seminole, to total loans
outstanding at such time, shall not exceed the ratio of the loss
reserve to the total loans outstanding as reflected on the Seminole
Interim Balance Sheet (except as otherwise agreed to by Seminole and
FNB), and the representations set forth in subparagraph (a) above made
as of the Effective Time shall be qualified in their entirety by the
aggregate of such loss reserve on such date.
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5.7 Absence of Certain Changes or Events. Since December 31, 1996,
except as disclosed in Section 5.7 of the Seminole Disclosure Memorandum, (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 Seminole, and (ii) the Seminole 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
Seminole provided in Article 7 of this Agreement.
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any
of the Seminole 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, 1996, except to the extent that
all such failures to file, taken together, are not reasonably likely to
have a Material Adverse Effect on Seminole, and all Tax Returns filed
are complete and accurate in all material respects to the Knowledge of
Seminole. 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 Seminole, except as reserved against in the Seminole Financial
Statements delivered prior to the date of this Agreement or as
disclosed in Section 5.8 of the Seminole Disclosure Memorandum. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) Except as disclosed in Section 5.8 of the Seminole
Disclosure Memorandum, none of the Seminole Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for
any of the Seminole Companies for the period or periods through and
including the date of the respective Seminole Financial Statements has
been made and is reflected on such Seminole Financial Statements,
except as disclosed in Section 5.8 of the Seminole Disclosure
Memorandum.
(d) Deferred Taxes of the Seminole Companies have been
adequately provided for in the Seminole Financial Statements.
(e) Each of the Seminole 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
Seminole.
(f) Except as disclosed in Section 5.8 of the Seminole
Disclosure Memorandum, none of the Seminole Companies has made any
payments, is obligated to make any payments, or is a party to any
contract, agreement, or other arrangement that could obligate it to
make any payments that would be disallowed as a deduction under Section
280G or 162(m) of the Internal Revenue Code.
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(g) There are no Liens with respect to Taxes upon any of the
assets of the Seminole Companies.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Seminole Companies that
occurred during or after any Taxable Period in which the Seminole
Companies incurred a net operating loss that carries over to any
Taxable Period ending after December 31, 1996.
(i) No Seminole Company has filed any consent under Section
341(f) of the Internal Revenue Code concerning collapsible
corporations.
(j) All material elections with respect to Taxes affecting the
Seminole Companies as of the date of this Agreement have been or will
be timely made as set forth in Section 5.8 of the Seminole Disclosure
Memorandum. After the date hereof, other than as set forth in Section
5.8 of the Seminole 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.
(k) No Seminole Company has or has had a permanent
establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign
country.
5.9 Assets. Except as disclosed in Section 5.9 of the Seminole
Disclosure Memorandum, the Seminole Companies have good and marketable title,
free and clear of all Liens, to all of their respective Assets. All tangible
properties used in the businesses of the Seminole Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Seminole's past practices. All Assets which
are material to Seminole's business on a consolidated basis, held under leases
or subleases by any of the Seminole 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 Seminole Companies currently maintain insurance in amounts, scope and
coverage as disclosed in Section 5.9 of the Seminole Disclosure Memorandum. None
of the Seminole Companies has received written notice from any insurance carrier
that (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. Except as disclosed in Section 5.9 of
the Seminole Disclosure Memorandum, there are presently no claims pending under
such policies of insurance and no notices have been given by any Seminole
Company under such policies. The Assets of the Seminole Companies include all
Assets required to operate the business of the Seminole Companies as presently
conducted.
5.10 Environmental Matters.
(a) To the Knowledge of Seminole, except as disclosed in
Section 5.10 of the Seminole Disclosure Memorandum, each Seminole
Company, its Participation Facilities, and its Loan Properties are, and
have been, in compliance with all Environmental Laws, except for
violations
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which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Seminole.
(b) Except as disclosed in Section 5.10 of the Seminole
Disclosure Memorandum, to the Knowledge of Seminole, there is no
Litigation pending or threatened before any court, governmental agency,
or authority or other forum in which any Seminole Company or any of its
Loan Properties or Participation Facilities (or any Seminole Company in
respect of any such Loan Property or Participation Facility) has been
or, with respect to threatened Litigation, may be named as a defendant
or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material,
whether or not occurring at, on, under, or involving any of its Loan
Properties or Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Southwest.
(c) To the Knowledge of Seminole, except as disclosed in
Section 5.10 of the Seminole Disclosure Memorandum, there is no
reasonable basis for any Litigation of a type described above in
subsection (b), except such as is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Seminole.
(d) To the Knowledge of Seminole, except as disclosed in
Section 5.10 of the Seminole Disclosure Memorandum, there have been no
releases of Hazardous Material in, on, under, or affecting any
Participation Facility or Loan Property of a Seminole Company, except
such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Seminole.
5.11 Compliance With Laws. Each Seminole 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 Seminole, and there has occurred no 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 Seminole. None of
the Seminole Companies:
(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 Seminole; 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
Seminole 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
Seminole, (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 Seminole , or (iii) requiring any Seminole
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
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manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
5.12 Labor Relations. No Seminole Company is the subject of any
Litigation asserting that it or any other Seminole 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 Seminole 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 Seminole Company,
pending or, to the Knowledge of Seminole, threatened, nor is there any activity
involving any Seminole Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.13 Employee Benefit Plans.
(a) Seminole has disclosed in Section 5.13 of the Seminole
Disclosure Memorandum, and has delivered or made available to FNB prior
to the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other
incentive plans, 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 any Seminole
Company or ERISA Affiliate (as defined below) thereof for the benefit
of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the
"Seminole Benefit Plans"). Any of the Seminole 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 an "Seminole ERISA Plan." Each
Seminole ERISA Plan which is also a "defined benefit plan" (as defined
in Section 4140) of the Internal Revenue Code) is referred to herein as
a "Seminole Pension Plan." No Seminole Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) Except as disclosed in Section 5.13 of the Seminole
Disclosure Memorandum, all Seminole Benefit Plans are in compliance
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 Seminole, and each Seminole ERISA Plan which is intended to
be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue
Service, and Seminole is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. Except
as disclosed in Section 5.13 of the Seminole Disclosure Memorandum, to
the Knowledge of Seminole, no Seminole Company has engaged in a
transaction with respect to any Seminole Benefit Plan that, assuming
the taxable period of such transaction expired as of the date hereof,
would subject any Seminole Company to a Tax imposed by either Section
4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts
which are reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Seminole.
(c) Except as disclosed in Section 5.13 of the Seminole
Disclosure Memorandum, no Seminole Pension Plan has any "unfunded
current liability" (as that term is defined in Section 302(d)(8)(A) of
ERISA) and the fair market value of the assets of any such plan exceeds
the plan's
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"benefit liabilities," as that term is defined in Section 4001(a)(16)
of ERISA, when determined under actuarial factors that would apply if
the plan terminated in accordance with all applicable legal
requirements. Except as disclosed in Section 5.13 of the Seminole
Disclosure Memorandum, since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial
position of any Seminole Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Seminole Pension Plan, and (iii) no
increase in benefits under any Seminole Pension Plan as a result of
plan amendments or changes in applicable Law which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Seminole or materially adversely affect the funding status of any such
plan. Neither any Seminole Pension Plan nor any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any Seminole Company, or the single-employer
plan of any entity which is considered one employer with Seminole under
Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has
an "accumulated funding deficiency" within the meaning of Section 412
of the Internal Revenue Code or Section 302 of ERISA, which is
reasonably likely to have a Material Adverse Effect on Seminole. No
Seminole Company has provided, or is required to provide, security to
an Seminole Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any Seminole Company with respect to any
ongoing, frozen or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate, which Liability is
reasonably likely to have a Material Adverse Effect on Seminole. No
Seminole Company has incurred any withdrawal Liability with respect to
a multiemployer plan under Subtitle B of Title IV of ERISA (regardless
of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Material Adverse Effect on
Seminole. No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Seminole Pension
Plan or by any ERISA Affiliate within the 12-month period ending on the
date hereof
(e) Except as disclosed in Section 5.13 of the Seminole
Disclosure Memorandum, no Seminole Company has any Liability for
retiree health and life benefits under any of the Seminole Benefit
Plans and there are no restrictions on the rights of such Seminole
Company to amend or terminate any such plan without incurring any
Liability thereunder, which Liability is reasonably likely to have a
Material Adverse Effect on Seminole.
(f) Except as disclosed in Section 5.13 of the Seminole
Disclosure Memorandum, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any
director or any employee of any Seminole Company from any Seminole
Company under any Seminole Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Seminole Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any
such benefit, where such payment, increase, or acceleration is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Seminole.
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(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of
employees and former employees of any Seminole Company and their
respective beneficiaries, other than entitlements accrued pursuant to
funded retirement plans subject to the provisions of Section 412 of the
Internal Revenue Code or Section 302 of ERISA, have been fully
reflected on the Seminole Financial Statements to the extent required
by and in accordance with GAAP.
5.14 Material Contracts. Except as disclosed in Section 5.14 of the
Seminole Disclosure Memorandum, none of the Seminole 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 $50,000, (ii) any Contract relating to
the borrowing of money by any Seminole Company or the guarantee by any Seminole
Company of any such obligation exceeding $50,000 (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
material Contract or amendment thereto as of the date of this Agreement not made
in the ordinary course of business to which Seminole is a party or by which it
is bound (together with all Contracts referred to in Sections 5.9 and 5.13(a) of
this Agreement, the "Seminole Contracts"). With respect to each Seminole
Contract and except as disclosed in Section 5.14 of the Seminole Disclosure
Memorandum: (i) the Contract is in full force and effect; (ii) no Seminole
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
Seminole; (iii) no Seminole Company has repudiated or waived any material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of Seminole, in Default in any respect, other than Defaults
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Seminole, or has repudiated or waived any material
provision thereunder. Except for Federal Home Loan Bank advances, all of the
indebtedness of any Seminole Company for money borrowed is prepayable at any
time by such Seminole Company without penalty or premium.
5.15 Legal Proceedings. Except as disclosed in Section 5.15 of the
Seminole Disclosure Memorandum, there is no Litigation instituted or pending,
or, to the Knowledge of Seminole, 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 Seminole 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 Seminole, nor are there any Orders of any Regulatory Authorities,
other governmental authorities, or arbitrators outstanding against any Seminole
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Seminole. Section 5.15 of the Seminole Disclosure
Memorandum includes a summary report of all Litigation as of the date of this
Agreement to which any Seminole Company is a party and which names a Seminole
Company as a defendant or cross-defendant and where the estimated maximum
exposure to be $10,000 or more.
5.16 Reports. For the three years ended December 31, 1997, 1996 and
1995, and since January 1, 1997, or the date of organization if later, each
Seminole Company has timely filed and to the extent permitted by Law has made
available for FNB to review, all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file 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.
As of its respective date, each such report and document did not contain any
untrue statement of a material fact or
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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.
5.17 Statements True and Correct. None of the information supplied or
to be supplied by any Seminole 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 Seminole Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Seminole's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by a Seminole 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 Seminole, 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 Seminole 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.
5.18 Accounting, Tax and Regulatory Matters. To the knowledge of
Seminole, neither Seminole nor any Affiliate thereof has taken or agreed to take
any action or has any Knowledge of any fact or circumstance that is reasonably
likely to (i) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) 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.
5.19 State Takeover Laws. Each Seminole Company has taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "control share," "fair price," "business combination,"
or other anti-takeover laws and regulations of the State of Florida
(collectively, "Takeover Laws").
5.20 Articles of Incorporation Provisions. Each Seminole Company has
taken all action so that the entering into of 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 Seminole 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 Seminole
Company that may be directly or indirectly acquired or controlled by it.
5.21 Derivatives Contracts. Except as disclosed in Section 5.21 of the
Seminole Disclosure Memorandum, neither Seminole 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").
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FNB, SOUTHWEST AND INTERIM
FNB and Southwest hereby represent and warrant to Seminole and Interim,
when formed, will represent and warrant to Seminole 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.
(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.
(c) Interim will be a Florida state banking corporation
organized under the FFIC (as a wholly-owned subsidiary of FNB), after
the execution of this Agreement and prior to the Effective Time and
shall have the corporate power and authority to carry on the business
of banking. Interim shall become duly qualified or licensed to transact
business as a foreign corporation, and shall maintain its corporate
status in good standing, in the States of the United States and foreign
jurisdictions where the character of the assets or the nature or
conduct of the business, to be purchased, received or operated by
Interim, shall require 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 Interim.
6.2 Authority; No Breach By Agreement.
(a) Each of FNB and Southwest has, and upon its formation
Interim shall have, 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 and shall be duly and validly
authorized by all necessary corporation action in respect thereof by
Interim upon its formation. This Agreement
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represents a legal, valid, and binding obligation of FNB and Southwest
and shall become such an obligation of Interim upon its formation,
enforceable against FNB and Southwest, and to become enforceable
against Interim upon its formation, 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, Southwest or, upon its formation, Interim, nor the consummation by
FNB, Southwest or Interim of the transactions contemplated hereby, nor
compliance by FNB, Southwest or Interim with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision
of the Articles of Association or Bylaws of FNB, Southwest or, upon its
formation, Interim, 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, Southwest or Interim under, any
Contract or Permit of any FNB Company, Southwest or Interim, 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, Southwest or Interim, 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, Southwest or,
upon its formation, Interim 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, Southwest and, upon its
formation, Interim, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by FNB,
Southwest and Interim 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 15,271,164 shares were issued
and outstanding as of the date of this Agreement and (ii) 20,000,000 shares of
FNB Preferred Stock, of which 287,300 shares were issued and outstanding as of
the date of this Agreement. 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
Seminole Common Stock upon consummation of the Merger will be authorized and
reserved for issuance prior to the Effective Time and, when issued in accordance
with the terms of this Agreement, will be, duly and validly issued and
outstanding and fully paid and nonassessable under the 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 Seminole Common Stock 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
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or may become required to be issued (other than to another FNB Company) by
reason of any Rights, and there are no Contracts by which any FNB Subsidiary is
bound to issue (other than to another FNB Company) additional shares of its
capital stock or Rights or by which any FNB Company is or may be bound to
transfer any shares of the capital stock of any FNB Subsidiary (other than to
another FNB Company). There are no Contracts relating to the rights of any FNB
Company to vote or to dispose of any shares of the capital stock of any FNB
Subsidiary. All of the shares of capital stock of each FNB Subsidiary held by a
FNB Company are fully paid and nonassessable under the applicable corporation
Law of the jurisdiction in which such Subsidiary is incorporated or organized
(except, in the case of Subsidiaries that are national banks, for the assessment
contemplated by 12 U.S.C. ss. 55), and are owned by the FNB Company free and
clear of any Lien. Each FNB Subsidiary is either a bank 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. Interim, when
formed, will be a national banking association formed under the laws of the
United States and, through the Effective Time, shall be a wholly-owned direct
subsidiary of FNB. Each FNB Subsidiary is duly qualified or licensed to transact
business as a foreign corporation and is in good standing in each jurisdiction
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FNB. Each
FNB Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, 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 Seminole all forms,
reports, and documents required to be filed by FNB with the SEC since
January 1, 1994 (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. None of the FNB
subsidiaries is required to file any forms, reports or other documents
with the SEC under the 1933 Act or Sections 12, 13, 14, or 16 of the
1934 Act.
(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 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
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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 December 31, 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, 1996, 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 to the
knowledge of FNB 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. Both FNB and Southwest are duly registered as
bank holding companies 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
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Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB. No FNB
Company:
(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;
(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.
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6.11 Reports. Since January 1, 1997, 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 Seminole'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 Seminole, 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
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Facility) has been or, with respect to threatened Litigation, may be
named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous
Material, whether or not occurring at, on, under, or involving any of
its Loan Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FNB.
(c) To the Knowledge of FNB, except as disclosed in Section
6.14 of the FNB Disclosure Memorandum, there is no reasonable basis for
any Litigation of a type described above in Section 6.14(b), except
such as is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FNB.
(d) To the Knowledge of FNB, except as disclosed in Section
6.14 of the FNB Disclosure Memorandum, during the period of (i) FNB's
or any of its Subsidiaries' ownership or operation of any of their
respective properties, (ii) FNB's or any of its Subsidiaries'
participation in the management of any 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 Seminole Common Stock. As of the date of this
Agreement, no FNB Company beneficially owns any shares of Seminole Common Stock
for their own accounts (not including those held in a fiduciary or trust
capacity for, or on behalf of, unaffiliated third parties). During the term of
this Agreement, no FNB Company shall purchase or otherwise acquire beneficial
ownership of any Seminole Common Stock 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 Seminole. Unless the prior written
consent of FNB shall have been obtained, and except as otherwise expressly
contemplated herein, Seminole 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 best
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
Consents of Regulatory Authorities required for the transactions contemplated
hereby without imposition of a condition or
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restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement, or materially adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement.
7.2 Negative Covenants of Seminole. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Seminole 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 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 Seminole Company, except as expressly
contemplated by this Agreement; or
(b) make any unsecured loan or other extension of credit in
excess of $100,000, or make any fully secured loan to any Person
(except those who have received a commitment for a loan or extension of
credit prior to the date of this Agreement) in excess of $250,000 (in
either case FNB shall object thereto within two business days, and the
failure to provide a written objection within two business days shall
be deemed as the approval of FNB to make such loan or extend such
credit), except for loans secured by a first mortgage on single family
owner-occupied real estate; or
(c) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a Seminole Company to
another Seminole Company) in excess of an aggregate of $100,000 (for
the Seminole Companies on a consolidated basis) except in the ordinary
course of the business of Seminole consistent with past practices (it
being understood and agreed that the incurrence of indebtedness in the
ordinary course of business shall include, without limitation, creation
of deposit liabilities, purchases of federal funds, advances from the
Federal Reserve Bank 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
Seminole 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 Seminole 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 Seminole Company, or declare or
pay any dividend or make any other distribution in respect of
Seminole's capital stock; 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 Seminole
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 Seminole Common Stock or any
other capital stock of any Seminole 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
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(f) adjust, split, combine or reclassify any capital stock of
any Seminole Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Seminole
Common Stock, or sell, lease, mortgage or otherwise dispose of or
otherwise encumber (i) any shares of capital stock of any Seminole
Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another Seminole 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 Seminole 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 Seminole or 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 Seminole Company, except in accordance
with past practice except as disclosed in Section 7.2(h) of the
Seminole 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 Seminole Disclosure
Memorandum; enter into or amend any severance agreements with officers
of any Seminole Company; grant any material increase in fees or other
increases in compensation or other benefits to directors of any
Seminole Company except in accordance with past practice disclosed in
Section 7.2(h) of the Seminole Disclosure Memorandum; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits; or
(i) enter into or amend any employment Contract between any
Seminole Company and any Person (unless such amendment is required by
Law) that the Seminole 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 Seminole
Disclosure Memorandum, adopt any new employee benefit plan of any
Seminole Company or make any material change in or to any existing
employee benefit plans of any Seminole 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 Seminole
Disclosure Memorandum, commence any Litigation other than in accordance
with past practice or settle any Litigation
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involving any Liability of any Seminole Company for material money
damages or restrictions upon the operations of any Seminole Company; or
(m) except in the ordinary course of business, modify, amend,
or terminate any material Contract other than renewals without material
adverse change of terms, or waive, release, compromise, or assign any
material rights or claims; or
(n) except as disclosed in Section 7.2(n) of the Seminole
Disclosure Memorandum and 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; or
(o) sell, transfer, mortgage, encumber or otherwise dispose of
any of its material properties or assets to any individual, corporation
or other entity other than a direct or indirect wholly-owned
Subsidiary, or cancel, release or assign any indebtedness to any such
Person or any claims held by any such Person, except in the ordinary
course of business consistent with past practice or pursuant to
contracts or agreements in force at the date of this Agreement; or
(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 Chairman and Chief Executive Officer of Seminole, 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 Seminole Common Stock.
7.4 Adverse Changes In Condition. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable best efforts to prevent or promptly
to remedy the same.
7.5 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
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financial statements are contained in any such reports filed with the SEC, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material and except for the absence of certain footnote information in the
unaudited financial statements). As of their respective dates, such reports
filed with the SEC will comply in all material respects with the Securities Laws
and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any financial statements contained in any other reports to
another Regulatory Authority shall be prepared in accordance with Laws
applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval.
Seminole 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. As soon as practicable after
execution of this Agreement (in no event later than March 16, 1998), FNB and
Seminole shall prepare, a Proxy Statement relating to the Merger. In connection
with such Proxy Statement, (i) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement and (ii) the Board of Directors of Seminole shall recommend
(subject to compliance with their fiduciary duties under applicable law as
advised by counsel) to its shareholders the approval of this Agreement. FNB
shall promptly file the Registration Statement with the SEC, and shall use its
reasonable best efforts to cause the Registration Statement to become effective
under the 1933 Act and take any action required to be taken under the applicable
state blue sky or securities Laws in connection with the issuance of the shares
of FNB Common Stock upon consummation of the Merger. Seminole shall furnish all
information concerning it and the holders of its capital stock as FNB may
reasonably request in connection with such action. Seminole shall mail such
Proxy Statement to its shareholders, the Board of Directors and officers of
Seminole shall (subject to compliance with their fiduciary duties under
applicable law as advised by counsel) use their reasonable best efforts to
obtain the requisite shareholders' approval and each member of the Board of
Directors of Seminole shall vote all Seminole Common Stock beneficially owned by
him in favor of the approval of this Agreement.
8.2 Applications. FNB shall promptly prepare and file, and Seminole
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. Further, FNB shall, prior to the Closing, prepare
and file with the National Association of Securities Dealers, Inc. the required
documents and make payment of the required fees for the listing of the shares of
FNB Common Stock to be issued to holders of Seminole Common Stock in connection
with the Merger on the Nasdaq Stock Market.
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8.3 Filings With State Offices. Upon the terms and subject to the
conditions of this Agreement, FNB shall execute and file any required
applications, notices or other documents 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 herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its reasonable
best efforts to obtain all Permits and Consents of all third parties and
Regulatory Authorities necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.5 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time or termination
pursuant to Article 10 of this Agreement, upon reasonable notice and
subject to applicable Laws, FNB and Seminole 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 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. Each party hereto shall, and shall cause its
advisors and representatives to (x) conduct its investigation in such a
manner which will not unreasonably interfere with the normal
operations, customers or employee relations of the other and shall be
in accordance with procedures established by the parties having the due
regard for the foregoing, and (y) refrain from using for any purposes
other than as set forth in this Agreement, and shall treat as
confidential, all information obtained by each hereunder or in
connection herewith and not otherwise known to them prior to the
Effective Time.
(b) FNB, the FNB Companies and their Affiliates will hold, and
will use their best efforts to cause their officers, directors,
employees, consultants, advisors, representatives and agents to hold,
in confidence, unless compelled by judicial or other legal process, all
confidential documents and information concerning Seminole furnished to
FNB, any FNB Company, or their
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Affiliates in connection with the transactions contemplated by this
Agreement, including information provided in accordance with this
Section 8.5, except to the extent that such information can clearly be
demonstrated by FNB to have been (i) previously known on a
nonconfidential basis by FNB, (ii) in the public domain other than as a
result of disclosure by FNB, any FNB Company, or any of their
Affiliates, or (iii) later lawfully acquired by FNB from sources other
than Seminole; provided, however, that FNB may disclose such
information to its officers, directors, employees, consultants,
advisors, representatives and agents in connection with the
transactions contemplated by this Agreement only to the extent that
such Persons who, in FNB's reasonable judgment, need to know such
information for the purpose of evaluating Seminole (provided that such
Persons shall be informed of the confidential nature of such
information and shall agree to be bound by the terms of this provision)
and, in any event, such disclosures shall be made only to the extent
necessary for such purposes. If this Agreement is terminated in
accordance with Article 10 hereof, FNB, the FNB Companies and their
Affiliates shall maintain the confidence of such information and will,
and will use their best efforts to cause its officers, directors,
employees, consultants, advisors, representatives and agents to, return
to Seminole all documents and other materials, and all copies made
thereof, obtained by FNB, any FNB Company, or any of their Affiliates
in connection with this Agreement that are subject to this Section 8.5.
8.6 Current Information. During the period from the date of this
Agreement until the Effective Time or termination of this Agreement pursuant to
Article 10 hereof, each of Seminole and FNB shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other. Each of Seminole and FNB shall promptly notify the other of (i)
any material change in its business or operations, (ii) any material complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) of any Regulatory Authority, (iii) the institution or threat of
material Litigation involving such party, or (iv) the occurrence or
nonoccurrence, of an event or condition, the occurrence, or nonoccurrence, of
which would be reasonably expected to result in or represent either a material
breach of any representation, warranty, covenant or agreement of such Party or
which has had or is reasonably likely to have a Material Adverse Effect on the
other Party and in each case shall keep the other fully informed with respect
thereto.
8.7 Other Actions. No Party shall, or shall permit any of its
Subsidiaries, if any, to, take any action, except in every case as may be
required by applicable Law, that would or is intended to result in (i) any of
its representations and warranties set forth in this Agreement that are
qualified as to materiality being or becoming untrue, (ii) any of such
representations and warranties that are not so qualified become 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 Regulatory Authorities
(unless such action is required by sound banking practice).
8.8 Press Releases. Prior to the Effective Time, Seminole 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 8.8
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.
8.9 No Solicitation. 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, no Seminole Company nor
any Affiliate thereof nor any Representatives thereof retained by any Seminole
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Company shall directly or indirectly solicit any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary duties of
Seminole's Board of Directors determined after consultation with counsel, no
Seminole 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 Seminole 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. Seminole shall promptly notify FNB orally and
in writing in the event that it receives any inquiry or proposal relating to any
such transaction. Seminole 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 best efforts to cause of all its Representatives
not to engage in any of the foregoing.
8.10 Accounting and Tax Treatment. Each of the Parties undertakes and
agrees to use its reasonable best 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 Seminole undertake and agree to
use their respective reasonable best efforts to cause the Merger, and to take no
action that would cause the Merger not, to qualify for pooling-of-interests
accounting treatment.
8.11 Articles of Incorporation Provisions. Each Seminole 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 grant
of any rights to any Person under the Articles of Incorporation, Bylaws, or
other governing instruments of any Seminole 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 Seminole Company that may
be directly or indirectly acquired or controlled by it.
8.12 Agreement of Affiliates. Seminole has disclosed in Section 8.12 of
the Seminole Disclosure Memorandum all Persons whom it reasonably believes are
"affiliates" of Seminole for purposes of Rule 145 under the 1933 Act. Seminole
shall use its reasonable best 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 attached hereto, providing that such
Person will not sell, pledge, transfer or otherwise dispose of the shares of
Seminole Common Stock held by such Person except as contemplated by such
agreement or by this Agreement and will not sell, pledge, transfer, or otherwise
dispose of the shares of FNB Common Stock to be received by such Person upon
consummation of the Merger except in compliance with applicable provisions of
the 1933 Act and the rules and regulations thereunder and until such time as
financial results covering at least 30 days of combined operations of FNB and
Seminole 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 Seminole in exchange for shares of Seminole Common Stock
shall not be transferable until such time as financial results covering at least
30 days of combined operations of FNB and Seminole have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section 8.12 (and FNB shall be entitled to place
restrictive legends upon certificates for shares of FNB Common Stock issued to
affiliates of Seminole pursuant to this Agreement to enforce the provisions of
this Section 8.12). FNB shall not be required to maintain the effectiveness of
the Registration Statement under the 1933 Act for the purposes of resale of FNB
Common Stock by such affiliates.
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8.13 Severance, Employee Benefits and Contracts. Following the
Effective Time, FNB shall pay as severance to those Seminole employees not
continuing as employees after the Merger, an amount in cash equal to such
employees' weekly compensation multiplied by the number of full years such
employee was employed by Seminole; provided that such payment shall not be less
than two week's compensation for each such employee. Following the Effective
Time, FNB shall provide generally to continuing officers and employees of the
Seminole 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 Seminole or those currently provided
by the FNB Companies to their similarly situated officers and employees. For
purposes of participation and vesting (but not benefit accrual under any
employee benefit plans of FNB and its subsidiaries other than the Seminole
Benefit Plans) under such employee benefit plans, the service of the employees
of the Seminole Companies prior to the Effective Time shall be treated as
service with a FNB Company participating in such employee benefit plans. FNB
shall, and shall cause its Subsidiaries to, honor in accordance with their terms
all employment, severance, consulting, and other compensation Contracts
disclosed in Section 8.13 of the Seminole Disclosure Memorandum between any
Seminole Company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the Seminole Benefit Plans.
8.14 Indemnification.
(a) FNB shall, and shall cause the Surviving Corporation (and
its successors and assigns) to, indemnify, defend and hold harmless the
present and former directors, officers, employees and agents of the
Seminole Companies (each, an "Indemnified Party") against all costs,
fees or expenses (including reasonable attorneys' fees), judgments,
fines, penalties, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any Litigation arising out of actions
or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the full extent
permitted under Florida Law and by Seminole's Articles of Incorporation
and Bylaws as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any
Litigation. Without limiting the foregoing, in any case in which
approval by FNB is required to effectuate any indemnification, FNB
shall direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel
mutually agreed upon between FNB and the Indemnified Party.
(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 8.14.
(c) The provisions of this Section 8.14 are intended to be for
the benefit of and shall be enforceable by, each Indemnified Party, his
or her heirs and representatives and shall survive the consummation of
the Merger and be binding on all successors and assigns of FNB and the
Surviving Corporation.
8.15 Takeover Laws. Each Seminole 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.
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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 11.6 of
this Agreement:
(a) Shareholder Approval. The shareholders of Seminole shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent
required by Law.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital
or the disposition of Assets) which in the reasonable judgment of the
Board of Directors of either Party would so materially adversely impact
the economic or business benefits of the transactions contemplated by
this Agreement that, had such condition or requirement been known, such
Party would not, in its reasonable judgment, have entered into this
Agreement.
(c) Consents and Approvals. Other than filing 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
Seminole Disclosure Memorandum) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or
made, is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on such Party.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions
contemplated by this Agreement.
(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) Listing of Shares. The shares of FNB Common Stock to be
issued to holders of Seminole Common Stock in connection with the
Merger shall have been listed on the Nasdaq Stock Market.
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(g) Pooling of Interests. Ernst & Young LLP, FNB's independent
public accountants, shall have issued a letter dated as of the
Effective Time, to Seminole and FNB, respectively, to the effect that
the Merger shall be accounted for as a pooling-of-interests under GAAP.
(h) Tax Matters. Each Party shall have received a written
opinion or opinions from Smith, Gambrell & Russell, LLP, and in a form
reasonably satisfactory to such Parties (the "Tax Opinion"), to the
effect that (i) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code and (ii) the
exchange in the Merger of Seminole Common Stock for FNB Common Stock
will not give rise to gain or loss to the shareholders of Seminole 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 Seminole 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 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
Seminole 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 Seminole 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 Seminole set forth in Sections 5.18, 5.19, 5.20 and 5.21
of this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and
warranties of Seminole set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.18, 5.19,
5.20 and 5.21) such that the aggregate effect of such inaccuracies has,
or is reasonably likely to have, a Material Adverse Effect on Seminole;
provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"Immaterial" 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 Seminole 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. Seminole 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 Seminole'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.
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(d) Affiliates Agreements. FNB shall have received from each
affiliate of Seminole the affiliates letter referred to in Section 8.12
of this Agreement, to the extent necessary to assure in the reasonable
judgment of FNB that the transactions contemplated hereby will qualify
for pooling-of-interests accounting treatment.
(e) Opinion of Counsel. FNB shall have received a written
opinion of Shutts & Bowen, LLP, counsel to Seminole, dated as of the
Effective Time, with respect to such matters and in such form as shall
be agreed upon between such firm and FNB.
9.3 Conditions to Obligations of Seminole. The obligations of Seminole
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 Seminole 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 6.13 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 6.13) 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 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 Seminole (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. Seminole shall have received from The
Carson Medlin Company 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 is fair, from a financial
point of view, to the holders of Seminole Common Stock.
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(e) Payment of Consideration. FNB shall have delivered to the
Exchange Agent the consideration to be paid to holders of the Seminole
Common Stock pursuant to Sections 3.1 and 3.4 of this Agreement.
(f) Opinion of Counsel. Seminole 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 Seminole.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Seminole, 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 Seminole; or
(b) By the Board of Directors of either FNB or Seminole
(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 Seminole 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 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 Seminole and Section 9.3(a) of this
Agreement in the case of FNB; or
(c) By the Board of Directors of either FNB or Seminole 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 Seminole 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 Seminole
fail to vote their approval of this Agreement and the transactions
contemplated hereby as required by the FFIC 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 Seminole in the
event that the Merger shall not have been consummated by September 30,
1998, if the failure to consummate the transactions
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contemplated hereby on or before such date is not caused by any breach
of this Agreement by the Party electing to terminate pursuant to this
Section 10.1(e); or
(f) By the Board of Directors of either FNB or Seminole
(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 Seminole and Section 9.3(a) in the case of FNB or in
material breach of any covenant or other agreement contained in this
Agreement) in the event that any of the conditions precedent to the
obligations of such Party to consummate the Merger cannot be satisfied
or fulfilled by the date specified in Section 10.1(e) of this
Agreement; or
(g) By FNB in the event dissenters' rights are claimed,
pursuant to the applicable provisions of the FFIC, by persons owning in
the aggregate more than 10% of the issued and outstanding Seminole
Common Stock; or
(h) By Seminole, 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 Seminole Board determines in its
good faith judgment and in the exercise of its fiduciary duties, with
respect to legal matters based 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 Seminole
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; or
(i) By Seminole, if its Board of Directors determines by a vote
of a majority of the members of the entire Board of Directors, upon
written notice to FNB at least 24 hours prior to the Closing, if the
Designated Price of FNB Common Shares shall be less than $28.00.
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 Section 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) or 10.1(c) of this Agreement shall not relieve the breaching
Party from liability for an uncured willful breach of a representation,
warranty, covenant or agreement giving rise to such termination; provided,
further, that in the event of any termination of this Agreement following the
occurrence of an Initial Triggering Event (as defined in the Stock Option
Agreement) other than termination due to (A) the failure of FNB to satisfy a
condition to closing, (B) the failure to satisfy the conditions set forth in
Section 9.1 Paragraphs (b), (d), (e), (f) and (g), FNB shall be entitled to a
cash payment from Seminole in an amount equal to $250,000. 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
Seminole for its reasonable out-of-pocket expenses relating to the Merger in an
amount not to exceed $150,000.
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.
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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).
"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;
(ii) any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person; or (iii) any other Person for which a Person described in
clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"Seminole" shall have the meaning set forth in the first
paragraph of this Agreement.
"Seminole Benefits Plans" shall have the meaning set forth in
Section 5.13(a) of this Agreement.
"Seminole Common Stock" shall mean the $0.10 par value common
stock of Seminole.
"Seminole Companies" shall mean, collectively, Seminole and all
Seminole Subsidiaries.
"Seminole Contract" shall have the meaning set forth in Section
5.14.
"Seminole Disclosure Memorandum" shall mean the written
information entitled "Seminole Bank 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.
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Information disclosed with respect to one Section shall not be deemed
to be disclosed for purposes of any other Section not specifically
referenced with respect thereto.
"Seminole ERISA Plan" shall have the meaning set forth in
Section 5.13(a) of this Agreement.
"Seminole Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Seminole as of December 31, 1997, 1996 and 1995, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for each of the three
fiscal years ended December 31, 1997, 1996 and 1995, as filed by
Seminole with the Federal Deposit Insurance Corporation and the Florida
Department of Banking and Finance, and (ii) the consolidated balance
sheets of Seminole (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
Seminole's Call Reports filed and published in accordance with
applicable federal regulation with respect to periods ended subsequent
to December 31, 1997.
"Seminole Options" shall have the meaning set forth in Section
3.5(a) of this Agreement.
"Seminole Pension Plan" shall have the meaning set forth in
Section 5.13(a) of this Agreement.
"Seminole Stock Plans" shall mean the existing stock option and
other stock-based compensation plans and warrant instruments of
Seminole set forth in Section 3.5 of the Seminole Disclosure
Memorandum.
"Seminole Subsidiaries" shall mean the Subsidiaries of
Seminole, which shall include the Seminole Subsidiaries described in
Section 5.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of Seminole
in the future and owned by Seminole at the Effective Time.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character,
and description, whether real, personal, or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.
"BHC Act" shall mean the Federal Bank Holding Company Act of
1956, as amended.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order or Permit.
"Contract" shall mean any written agreement, commitment,
contract, note, bond, mortgage, indenture, instrument, lease,
obligation, license or plan of any kind or character, or other document
to which any Person is a party or that is binding on any Person or its
capital stock or Assets.
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"Default" shall mean (i) any breach or violation of or default
under any Contract, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, or (iii) any
occurrence of any event that with or without the passage of time or the
giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase
or impose any liability under, any Contract where, in any such event,
such default is reasonably likely to have a Material Adverse Effect on
a Party.
"Derivatives Contract" shall have the meaning set forth in
Section 5.21 of this Agreement.
"Designated Price" shall mean the average of the closing bid
and asked prices of FNB Common Stock in the over-the-counter market as
reported by Nasdaq or such other trading system or exchange upon which
the FNB Common Stock shall then be traded for the ten (10) consecutive
full trading days in which such shares are traded prior to the fifth
business day preceding the Determination Date.
"Determination Date" shall mean the effective date (including
expiration of any applicable waiting period required by Law) of the
last required Consent of any Regulatory Authority having authority over
and approving or exempting the Merger.
"Effective Time" shall have the meaning set forth in Section
1.3 of this Agreement.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata)
and which are administered, interpreted, or enforced by the United
States Environmental Protection Agency and state and local agencies
with jurisdiction over, and including common law in respect of,
pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901 et seq., and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of any
Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section
5.13(c) of this Agreement.
"Exchange Agent" shall have the meaning set forth in Section
4.1 of this Agreement.
"Exchange Ratio" shall have the meaning set forth in Section
3.1(c) of this Agreement.
"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
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may be referred to in this Agreement and any other related instrument
or document without being attached hereto.
"FFIC" shall mean the Florida Financial Institutions Code,
which includes those Florida Laws identified in Section 655.005(j) of
the Florida Statutes.
"FNB" shall have the meaning set forth in the first paragraph
of this Agreement.
"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 $2.00 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 September 30, 1997, and as of December 31, 1996 and 1995,
and the related statements of income, changes in shareholders' equity,
and cash flows (including related notes and schedules, if any) for the
nine months ended September 30, 1997, and for each of the three years
ended December 31, 1996, 1995 and 1994, 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 September 30, 1997.
"FNB Preferred Stock" shall mean the $10.00 par value preferred
stock of FNB.
"FNB SEC Reports" shall have the meaning set forth in Section
6.5(a) of this Agreement.
"FNB Subsidiaries" shall mean the Subsidiaries of FNB, which
shall include any corporation, bank, savings association, or other
organization acquired as a Subsidiary of FNB in the future and owned by
FNB at the Effective Time.
"GAAP" shall mean generally accepted accounting principles in
the United States, consistently applied during the periods involved
applicable to banks or bank holding companies, as the case may be.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any
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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
8.14 of this Agreement.
"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 executive
officer, 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.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice by any Person alleging
potential liability.
"Loan Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or its Subsidiary holds a security or other interest
(including an interest in a fiduciary capacity), and, where required by
the context, includes the owner or operator of such property, but only
with respect to such property.
"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
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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 of
this Agreement.
"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 Seminole, FNB or Southwest, and
"Parties" shall mean Seminole, FNB and Southwest.
"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
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
Seminole 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 Seminole Common Stock.
"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
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be issued to the shareholders of Seminole 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 Office
of the Comptroller of the Currency, the Board of the Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation, the
SEC, Nasdaq and all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries.
"Rights" shall mean all arrangements, calls, Contracts,
options, rights to subscribe to, scrip, understandings, warrants or
other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of
the capital stock of a Person or any Contract, commitments or other
arrangements by which a Person is or may be bound to issue additional
shares of its capital stock or options, warrants, rights to purchase or
acquire any additional shares of its capital stock, or other Rights.
"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 Seminole 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 of this Agreement.
"Stock Option Agreement" shall have the meaning set forth in
the Preamble of this Agreement.
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, there shall not be included any
such entity acquired through foreclosure or any such entity the equity
securities of which are owned or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean Interim as the surviving
corporation resulting from the Merger.
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"Takeover Laws" shall have the meaning set forth in Section
5.19 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) of this Agreement.
"Taxable Period" shall mean any period prescribed by any
governmental authority, including the United States or any state,
local, foreign government or subdivision or agency thereof for which a
Tax Return is required to be filed or Tax is required to be paid.
"Tax Return" shall mean any report, return, information return,
or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or
combined or unitary group that includes a Party or its Subsidiaries.
(b) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the
words "include," "includes," or "including" are used in this Agreement,
they shall be deemed followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of
FNB and Seminole 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 Seminole 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 The Carson Medlin Company as to
Seminole, 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 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
Seminole or FNB, each of Seminole and FNB, as the case may
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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 8.14 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 Seminole Common Stock, there shall be made
no amendment that reduces or modifies in any material respect the consideration
to be received by holders of Seminole Common Stock 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 Seminole, to waive or
extend the time for the compliance or fulfillment by Seminole 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, Seminole, 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 Seminole 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 Seminole.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other
provision of this Agreement. No waiver of any condition or of the
breach of any term contained in this Agreement in one or more instances
shall be deemed to be or construed as a further or continuing waiver of
such condition or breach or a waiver of any other condition or of the
breach of any other term of this Agreement.
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11.8 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.9 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Seminole: Seminole Bank
10899 Park Boulevard
Seminole, Florida 33772
Telecopy Number: 813-397-1645
Attention: President and Chief Executive Officer
Copy to Counsel: Shutts & Bowen, LLP
20 N. Orange Avenue, Suite 1000
Orlando, Florida 32801
Telecopy Number: 407-425-8316
Attention: Rod Jones, Esq.
FNB: One F.N.B. Boulevard
Hermitage, PA 16148
Telecopy Number: 412-983-3515
Attention: Chairman and Chief Executive Officer
Copy to Counsel: Smith, Gambrell & Russell, LLP
1230 Peachtree Street, N.E.
Suite 3100
Atlanta, Georgia 30309
Telecopy Number: 404-685-7058
Attention: Robert C. Schwartz, Esquire
Southwest: 2911 Tamiami Trail North
Naples, Florida 33940
Telecopy Number: 941-435-7658
Attention: Chairman and Chief Executive Officer
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Copy to Counsel: Smith, Gambrell & Russell, LLP
1230 Peachtree Street, N.E.
Suite 3100
Atlanta, Georgia 30309
Telecopy Number: 404-685-7058
Attention: Robert C. Schwartz, Esquire
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.
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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/ Peter Mortensen
-------------------------------------------
Name: Peter Mortensen
Title: Director
SEMINOLE BANK
By: /s/ Jeffory H. Forbes
-------------------------------------------
Name: Jeffory H. Forbes
Title: President and Chief Executive Officer
Southwest Interim Bank No. 4, N.A., hereby joins in the foregoing
Agreement, undertakes that it will be bound thereby and that it will duly
perform all the acts and things therein referred to or provided to be done by
it.
IN WITNESS WHEREOF, Southwest Interim Bank No. 4, N.A., has caused this
undertaking to be made in counterparts by its duly authorized officers and its
corporate seal to be hereunto affixed as of this _____ day of April, 1998.
SOUTHWEST INTERIM BANK NO. 4, N.A.
By:
-------------------------------------------
Name:
Title: President
Attest:
--------------------------
Secretary
[CORPORATE SEAL]
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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 April 6, 1998, 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
SEMINOLE BANK ("Seminole"), a Florida state banking corporation, and to be
joined in by SOUTHWEST INTERIM BANK NO. 4, N.A. ("Interim"), a national bank to
be chartered under the laws of the United States and to become a wholly-owned
subsidiary of FNB.
PREAMBLE
The parties hereto entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated as of February 2, 1998 whereby FNB, Southwest and
Seminole agreed to the merger of Seminole with and into Interim. 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. Conversion of Shares. Section 3.1(d) of the Merger Agreement is
hereby amended by deleting the text of such section in its entirety and by
substituting in lieu thereof the following:
"If the Designated Price of FNB Common Stock shall be
less than $28.00 (or such lesser amount as may result from an
adjustment in accordance with Section 10.1(i) hereof), then
Seminole may, at any time during the period commencing on the
Determination Date and ending at the close of business five
(5) business days thereafter, terminate the Agreement pursuant
to Section 10.1(i) hereof."
2. Termination by Seminole. Section 10.1(i) of the Merger Agreement is
hereby amended by adding the following proviso at the end of such section:
"; provided, however, that such price shall be
proportionately adjusted in the same manner as that provided
for the proportionate adjustment of the Exchange Ratio
pursuant to Section 3.2 hereof."
3. Change of Name of Indian Rocks National Bank. The Merger Agreement
is hereby amended by deleting all references to "Indian Rocks National Bank" and
substituting in lieu thereof "First National Bank of Florida" to reflect the
change of name of Indian Rocks National Bank to First National Bank of Florida.
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<PAGE> 154
4. 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.
5. 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.
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. This First
Amendment may be executed in two or more counterparts which, when taken together
shall constitute a single original hereof.
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
SEMINOLE BANK
By: /s/ Jeffory H. Forbes
----------------------------------------
Name: Jeffory H. Forbes
Title: President
Southwest Interim Bank No. 4, N.A. hereby joins in the foregoing First
Amendment, undertakes that it will be bound thereby and that it will duly
perform all the acts and things therein referred to or provided to be done by
it.
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IN WITNESS WHEREOF, Southwest Interim Bank No. 4, N.A., has caused this
undertaking to be made in counterparts by its duly authorized officers and its
corporate seal to be hereunto affixed as of this ___ day of April, 1998.
SOUTHWEST INTERIM BANK NO. 4, N.A.
By:
----------------------------------
Name:
Title: President
Attest:
------------------------
Secretary
[Corporate Seal]
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<PAGE> 156
APPENDIX B
February 2, 1998
Board of Directors
Seminole Bank
10899 Park Blvd.
Seminole, FL 33772
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, of the consideration to be received by the shareholders of Seminole Bank
("Seminole") under the terms of a certain Agreement and Plan of Merger dated
February 2, 1998 (the "Agreement") pursuant to which Seminole will be merged
into and with F.N.B. Corporation, Hermitage, PA ("FNB") (the "Merger"). Under
the terms of the Agreement, each of the outstanding shares of Seminole Common
Stock shall be converted into 1.457 shares of FNB Common Stock. The foregoing
summary of the Merger is qualified in its entirety by reference to the
Agreement.
The Carson Medlin Company is a National Association of Securities Dealers, Inc.
(NASD) member investment banking firm which specializes in the securities of
southeastern United States financial institutions. As part of our investment
banking activities, we are regularly engaged in the valuation of southeastern
United States financial institutions and transactions relating to their
securities. We regularly publish our research on independent community banks
regarding their financial and stock price performance. We are familiar with the
commercial banking industry in Florida and the major commercial banks operating
in that market. We have been retained by Seminole in a financial advisory
capacity to render our opinion hereunder, for which we will receive
compensation.
In reaching our opinion, we have analyzed the respective financial positions,
both current and historical, of FNB and Seminole. We have reviewed: (i) the
Agreement; (ii) the annual reports to shareholders of FNB, including audited
financial statements for the five years ended December 31, 1996; (iii) audited
financial statements of Seminole for the five years ended December 31, 1996;
(iv) the draft unaudited financial statements of FNB for the year ended December
31, 1997; (v) the draft audited financial statements of Seminole for the year
ended December 31, 1997; (vi) the unaudited interim financial statements of FNB
for the nine months ended September 30, 1997; (vii) the unaudited interim
financial statements of Seminole for the nine months ended September 30, 1997;
and, (viii) certain financial and operating information with respect to the
business, operations and prospects of FNB and Seminole. We also: (i) held
discussions with members of the senior management of FNB and Seminole regarding
historical and current business operations, financial condition and future
prospects of their respective companies; (ii) reviewed the historical market
prices and trading activity for the common stocks of FNB and Seminole and
compared them with those of certain publicly traded companies which we deemed to
be relevant; (iii) compared the results of operations of FNB and Seminole with
those of certain banking companies which we deemed to be relevant; (iv) compared
the proposed financial terms of the
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Merger with the financial terms, to the extent publicly available, of certain
other recent business combinations of commercial banking organizations; (v)
analyzed the pro forma financial impact of the Merger on FNB; and (vi) conducted
such other studies, analyses, inquiries and examinations as we deemed
appropriate.
We have relied upon and assumed, without independent verification, the accuracy
and completeness of all information provided to us. We have not performed or
considered any independent appraisal or evaluation of the assets of FNB or
Seminole. The opinion we express herein is necessarily based upon market,
economic and other relevant considerations as they exist and can be evaluated as
of the date of this letter.
Based upon the foregoing, it is our opinion that the consideration provided for
in the Agreement is fair, from a financial point of view, to the shareholders of
Seminole Bank.
Very truly yours,
/s/ The Carson Medlin Company
THE CARSON MEDLIN COMPANY
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<PAGE> 158
APPENDIX C
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated February 2, 1998, between F.N.B. Corporation,
a Pennsylvania corporation ("FNB") and Seminole Bank, a Florida state banking
corporation ("Seminole").
W I T N E S S E T H :
WHEREAS, FNB and Seminole 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, Seminole 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) Seminole hereby grants to FNB an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to 138,906 authorized but
unissued fully paid and nonassessable Common Shares, $0.10 par value, of
Seminole ("Common Shares"), at a price per Share equal to $36.00 (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
Seminole Common Shares beneficially owned at such time by FNB, exceed 19.9% of
the issued and outstanding Common Shares. The number of Common Shares that may
be received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional Common Shares are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of Common Shares subject to the Option
shall be increased so that, after such issuance, it equals 19.9% of the number
of Common Shares then issued and outstanding including Common Shares
beneficially owned by FNB, but without giving effect to any Shares subject or
issued pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Agreement shall be deemed to authorize Seminole 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 the failure of FNB to
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satisfy a condition to closing; (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 Seminole 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) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Seminole or any of its Subsidiaries (as hereinafter
defined) (each a "Seminole 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 Seminole
shall have recommended that the shareholders of Seminole 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
Seminole or any Significant Subsidiary (as defined in Rule 1-02 of Regulation
S-X promulgated by the Securities and Exchange Commission (the "SEC")) of
Seminole, (y) a purchase, lease or other acquisition of all or substantially all
of the assets or deposits of Seminole or any Significant Subsidiary of Seminole,
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 Seminole or any Significant Subsidiary of Seminole,
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
Seminole) other than FNB, any FNB Subsidiary or any Seminole 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 Seminole 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 Seminole'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
Seminole approve the transactions contemplated by the Merger Agreement, or
Seminole or any Seminole 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 Seminole or its shareholders to engage in an
Acquisition Transaction, which proposal has an economic value equivalent to or
in excess of that of FNB.
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(v) Seminole shall have willfully and materially breached any
material covenant or obligation contained in the Merger Agreement in
anticipation of engaging in an Acquisition Transaction, and such breach would
entitle FNB to terminate the Merger Agreement; or
(vi) Any person other than FNB or any FNB Subsidiary, other
than in connection with a transaction to which FNB has given its prior written
consent, shall have filed an application or notice with the Federal Reserve
Board or other federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of
25% or more of the then outstanding Common Shares; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) shall be 25%.
(d) Seminole 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 Seminole 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 Seminole 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 Seminole 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 Seminole 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 Seminole, provided that
failure or refusal of Seminole 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,
Seminole 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
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purchasable thereunder. In addition, the Holder shall provide to Seminole 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 Seminole 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 Seminole and will be provided to the holder hereof
without charge upon receipt by Seminole 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 Seminole a copy of a letter from the
staff of the SEC, or an opinion of counsel, in form and
substance satisfactory to Seminole, to the effect that such
legend is not required for purposes of the 1933 Act; (ii) the
reference to the provisions of this Agreement in the above
legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the proceeding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by
law.
(j) Upon the giving by the Holder to Seminole 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 Seminole shall then be closed or that certificates
representing such Common Shares shall not then be actually delivered to the
Holder. Seminole 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. Seminole agrees: (a) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Shares so that the Option may be exercised without additional
authorization of Common Shares after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Shares; (b)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Seminole;
(c) promptly to take all action as may from time to time be required (including
(i) complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. Section 18a and regulations promulgated
thereunder and (ii) in the event, under the Bank Holding Company Act of 1956, as
amended, or any state or other federal banking law, prior approval of or notice
to the Federal Reserve Board or to any state or other federal regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state or other federal
regulatory authority as they may require) in order to permit the Holder to
exercise the Option
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and Seminole duly and effectively to issue Common Shares pursuant hereto; and
(d) promptly to take all action provided herein to protect the rights of the
Holder against dilution as set forth in Section 5 hereof.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Seminole, 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 Seminole 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, Seminole will
execute and deliver a new Agreement of like tenor and date.
5. The number of Common Shares purchasable upon the exercise of the
Option shall be subject to adjustment from time to time as provided in this
Section 5.
(a) In the event of any change in Common Shares by reason of stock
dividends, splitups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of Common
Shares purchasable upon exercise hereof shall be appropriately adjusted and
proper provision shall be made so that, in the event that any additional Common
Shares are to be issued or otherwise become outstanding as a result of any such
change (other than pursuant to an exercise of the Option), the number of Common
Shares that remain subject to the Option shall be increased so that, after such
issuance and together with Common Shares previously issued pursuant to the
exercise of the Option (together with the number of Shares previously issued
under this Option and the number of Shares otherwise beneficially owned by FNB)
(as adjusted on account of any of the foregoing changes in the Common Shares),
it equals 19.9% of the number of Common Shares then issued and outstanding.
(b) Whenever the number of Common Shares purchasable upon exercise
hereof is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of Common Shares purchasable prior to the
adjustment and the denominator of which shall be equal to the number of Common
Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Seminole 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. Seminole 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 Seminole'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, Seminole proposes to register any of its equity
securities under the 1933 Act, whether for sale for its own account or
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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), Seminole will use its best efforts to effect
the registration under the 1933 Act of all Common Shares which Seminole 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. Seminole shall be obligated to effect only one such
piggy-back registration pursuant to this Section 6. FNB shall pay such
incremental expenses incurred by Seminole 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 Seminole 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, Seminole
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 Seminole, 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 Seminole in the aggregate; and provided further, however, that if
such reduction occurs, then Seminole 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 Seminole for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Seminole 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
Seminole. In any such registration, Seminole 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, Seminole
agrees to send a copy thereof to any other person known to Seminole 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), Seminole 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), Seminole 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 Seminole, (iii) the highest
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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
Seminole'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
Seminole 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 Seminole 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 Seminole to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Seminole, 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 Seminole 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, Seminole 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 Seminole is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Seminole 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, Seminole shall immediately so
notify the Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering, within ten
business days after the date on which Seminole is no longer so prohibited;
provided, however, that if Seminole 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 Seminole
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, Seminole 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
Seminole 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,
Seminole 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 Seminole and Seminole
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
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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 Seminole (if other than
Seminole), (ii) Seminole in a merger in which Seminole is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Seminole's assets or deposits (or the assets or deposits of a Significant
Subsidiary of Seminole).
(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 Seminole is the issuer of the
Substitute Option, the Average Price shall be computed with respect to common
shares issued by the person merging into Seminole 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 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 Seminole") 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
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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 Seminole 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 Seminole to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Seminole, 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 Seminole 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 Seminole 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 Seminole is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Seminole 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 Seminole 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 Seminole is no longer so prohibited; provided,
however, that if the Substitute Option Seminole 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 appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Seminole 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 Seminole 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 Seminole 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.
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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. Seminole hereby represents and warrants to FNB as follows:
(a) Seminole 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 Seminole and no other corporate proceedings on the part of
Seminole are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Seminole.
(b) Seminole 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 Seminole will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation applying to the Federal Reserve
Board under the Bank Holding Company Act for approval to acquire the shares
issuable hereunder, but FNB shall not be obligated to apply to state banking
authorities for approval to acquire the Common Shares issuable hereunder until
such time, if ever, as it deems appropriate to do so.
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 Seminole is not permitted to
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<PAGE> 168
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 Seminole to allow the Holder to acquire or to require
Seminole 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.
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
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SEMINOLE
By: /s/ Jeffory H. Forbes
Name: Jeffory H. Forbes
Title: President and Chief Executive Officer
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APPENDIX D
12 U.S.C. ss.215a
MERGER OF NATIONAL BANKS OR STATE BANKS INTO NATIONAL BANKS
(A) APPROVAL OF COMPTROLLER, BOARD AND SHAREHOLDERS; MERGER AGREEMENT; NOTICE;
CAPITAL STOCK; LIABILITY OF RECEIVING ASSOCIATION
One or more national banking associations or one or more State banks, with
the approval of the Comptroller, under an agreement not inconsistent with this
subchapter, may merge into a national banking association located within the
same State, under the charter of the receiving association. The merger agreement
shall --
(1) be agreed upon in writing by a majority of the board of
directors of each association or State bank participating in the plan of
merger;
(2) be ratified and confirmed by the affirmative vote of the
shareholders of each such association or State bank owning at least
two-thirds of its capital stock outstanding, or by a greater proportion of
such capital stock in the case of a State bank if the laws of the State
where it is organized so require, at a meeting to be held on the call of
the directors, after publishing notice of the time, place, and object of
the meeting for four consecutive weeks in a newspaper of general
circulation published in the place where the association or State bank is
located, or, if there is no such newspaper, then in the newspaper of
general circulation published nearest thereto, and after sending such
notice to each shareholder of record by certified or registered mail at
least ten days prior to the meeting, except to those shareholders who
specifically waive notice, but any additional notice shall be given to the
shareholders of such State bank which may be required by the laws of the
State where it is organized. Publication of notice may be waived, in cases
where the Comptroller determines that an emergency exists justifying such
waiver, by unanimous action of the shareholders of the association or State
banks;
(3) specify the amount of the capital stock of the receiving
association, which shall not be less than that required under existing law
for the organization of a national bank in the place in which it is located
and which will be outstanding upon completion of the merger, the amount of
stock (if any) to be allocated, and cash (if any) to be paid, to the
shareholders of the association or State bank being merged into the
receiving association; and
(4) provide that the receiving association shall be liable for all
liabilities of the association or State bank being merged into the
receiving association.
(B) DISSENTING SHAREHOLDERS
If a merger shall be voted for at the called meetings by the necessary
majorities of the shareholders of each association or State bank participating
in the plan of merger, and thereafter the merger shall be approved by the
Comptroller, any shareholder of any association or State bank to be merged into
the receiving association who has voted against such merger at the meeting of
the association or bank of which he is a stockholder, or has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
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from the plan of merger, shall be entitled to receive the value of the shares so
held by him when such merger shall be approved by the Comptroller upon written
request made to the receiving association at any time before thirty days after
the date of consummation of the merger, accompanied by the surrender of his
stock certificates.
(C) VALUATION OF SHARES
The value of the shares of any dissenting shareholder shall be ascertained,
as of the effective date of the merger, by an appraisal made by a committee of
three persons, composed of (1) one selected by the vote of the holders of the
majority of the stock, the owners of which are entitled to payment in cash; (2)
one selected by the directors of the receiving association; and (3) one selected
by the two so selected. The valuation agreed upon by any two of the three
appraisers shall govern. If the value so fixed shall not be satisfactory to any
dissenting shareholder who has requested payment, that shareholder may, within
five days after being notified of the appraised value of his shares, appeal to
the Comptroller, who shall cause a reappraisal to be made which shall be final
and binding as to the value of the shares of the appellant.
(D) APPLICATION TO SHAREHOLDERS OF MERGING ASSOCIATIONS: APPRAISAL BY
COMPTROLLER; EXPENSES OF RECEIVING ASSOCIATION; SALE AND RESALE OF
SHARES; STATE APPRAISAL AND MERGER LAW
If, within ninety days from the date of consummation of the merger, for any
reason one or more of the appraisers is not selected as herein provided, or the
appraisers fail to determine the value of such shares, the Comptroller shall
upon written request of any interested party cause an appraisal to be made which
shall be final and binding on all parties. The expenses of the Comptroller in
making the reappraisal or the appraisal, as the case may be, shall be paid by
the receiving association. The value of the shares ascertained shall be promptly
paid to the dissenting shareholders by the receiving association. The shares of
stock of the receiving association which would have been delivered to such
dissenting shareholders had they not requested payment shall be sold by the
receiving association at an advertised public auction, and the receiving
association shall have the right to purchase any of such shares at such public
auction, if it is the highest bidder therefor, for the purpose of reselling such
shares within thirty days thereafter to such person or persons and at such price
not less than par as its board of directors by resolution may determine. If the
shares are sold at public auction at a price greater than the amount paid to the
dissenting shareholders, the excess in such sale price shall be paid to such
dissenting shareholders. The appraisal of such shares of stock in any State bank
shall be determine in the manner prescribed by the law of the State in such
cases, rather than as provided in this section, if such provision is made in the
State law; and no such merger shall be in contravention of the law of the State
under which such bank is incorporated. The provisions of this subsection shall
apply only to shareholders of (and stock owned by them in) a bank or association
being merged into the receiving association.
(E) STATUS OF RECEIVING ASSOCIATION; PROPERTY RIGHTS AND INTERESTS VESTED AND
HELD AS FIDUCIARY
The corporate existence of each of the merging banks or banking
associations participating in such merger shall be merged into and continued in
the receiving association and such receiving association shall be deemed to be
the same corporation as each bank or banking association participating in the
merger. All rights, franchises, and interests of the individual merging banks or
banking associations in and to every type of property (real, personal, and
mixed) and choses in action shall be transferred to and vested in the receiving
association by virtue of such merger without any deed or other transfer. The
receiving association, upon the merger and without any order or other action on
the part of any court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations, and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver, and committee of estates of lunatics, and in every other fiduciary
capacity, in the same
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manner and to the same extent as such rights, franchises, and interests were
held or enjoyed by any one of the merging banks or banking associations at the
time of the merger, subject to the conditions hereinafter provided.
(F) REMOVAL AS FIDUCIARY; DISCRIMINATION
Where any merging bank or banking association, at the time of the merger,
was acting under appointment of any court as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates, assignee, receiver, or
committee of estates of lunatics, or in any other fiduciary capacity, the
receiving association shall be subject to removal by a court of competent
jurisdiction in the same manner and to the same extent as was such merging bank
or banking association prior to the merger. Nothing contained in this section
shall be considered to impair in any manner the right of any court to remove the
receiving association and to appoint in lieu thereof a substitute trustee,
executor, or other fiduciary, except that such right shall not be exercised in
such a manner as to discriminate against national banking associations, nor
shall any receiving association be removed solely because of the fact that it is
a national banking association.
(G) ISSUANCE OF STOCK BY RECEIVING ASSOCIATION; PREEMPTIVE RIGHTS
Stock of the receiving association may be issued as provided by the terms
of the merger agreement, free from any preemptive rights of the shareholders of
the respective merging banks.
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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 paragraph. 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.
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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.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed with or incorporated by reference in this
Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<S> <C>
2.1 Agreement and Plan of Merger, by and among F.N.B. Corporation,
Southwest Banks, Inc. and Seminole Bank, dated February 2,
1998 and amended as of April 6, 1998 (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 F.N.B. Corporation and
Seminole Bank, dated February 2, 1998 (included as Appendix C
to the Proxy Statement-Prospectus)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Hill, Barth & King
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Hacker, Johnson, Cohen & Grieb PA
23.5 Consent of Cohen & Grigsby, P.C. (included in Exhibit 5.1).
23.6 Consent of Smith, Gambrell & Russell, LLP (included in Exhibit 8.1).
23.7 Consent of The Carson Medlin Company
24.1 Power of Attorney
99.1 Form of Proxy for Special Meeting of Shareholders of Seminole.
99.2 Opinion of The Carson Medlin Company (included as Appendix B to the Proxy Statement-
Prospectus).
99.3 Provisions of Pennsylvania law regarding indemnification of directors and officers.
99.4 Provisions of the United States Code regarding rights of dissenting Shareholders of
Seminole (included as Appendix D to the Proxy Statement-Prospectus).
</TABLE>
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.
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(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change in such information in
the Registration Statement:
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report, to security
holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Exchange Act; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered
to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the Registration
Statement and will not be used until such amendment is effective, and
that, for purposes of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event
that a claim for 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
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<PAGE> 177
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(f) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to items 4, 10(b), 11, or 13 of this Form, within one business
day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to
the request.
(g) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the
subject of and included in the Registration Statement when it became
effective.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF HERMITAGE, COMMONWEALTH OF PENNSYLVANIA, ON APRIL 6, 1998.
F.N.B. CORPORATION
By: /s/ Peter Mortensen
Peter Mortensen
Chairman of the Board and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Peter Mortensen CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER April 6, 1998
- --------------------------------------------- (PRINCIPAL EXECUTIVE OFFICER)
PETER MORTENSEN
*
- --------------------------------------------- PRESIDENT, CHIEF OPERATING OFFICER AND DIRECTOR April 6, 1998
GARY L. TICE
*
- --------------------------------------------- VICE CHAIRMAN April 6, 1998
STEPHEN J. GURGOVITS
*
- --------------------------------------------- EXECUTIVE VICE PRESIDENT April 6, 1998
WILLIAM J. RUNDORFF
/s/ John D. Waters
- --------------------------------------------- VICE PRESIDENT AND CHIEF FINANCIAL April 6, 1998
JOHN D. WATERS OFFICER (PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
- --------------------------------------------- DIRECTOR
W. RICHARD BLACKWOOD
- --------------------------------------------- DIRECTOR
WILLIAM B. CAMPBELL
- --------------------------------------------- DIRECTOR
CHARLES T. CRICKS
*
- --------------------------------------------- DIRECTOR April 6, 1998
HENRY M. EKKER, ESQ.
- --------------------------------------------- DIRECTOR
THOMAS C. ELLIOTT
- --------------------------------------------- DIRECTOR
THOMAS W. HODGE
</TABLE>
<PAGE> 179
<TABLE>
<S> <C> <C>
*
- --------------------------------------------- DIRECTOR April 6, 1998
JAMES S. LINDSAY
- --------------------------------------------- DIRECTOR
PAUL P. LYNCH
*
- --------------------------------------------- DIRECTOR April 6, 1998
EDWARD J. MACE
*
- --------------------------------------------- DIRECTOR April 6, 1998
ROBERT S. MOSS
- --------------------------------------------- DIRECTOR
RICHARD C. MYERS
- --------------------------------------------- DIRECTOR
WILLIAM A. QUINN
*
- --------------------------------------------- DIRECTOR April 6, 1998
GEORGE A. SEEDS
*
- --------------------------------------------- DIRECTOR April 6, 1998
WILLIAM J. STRIMBU
*
- --------------------------------------------- DIRECTOR April 6, 1998
ARCHIE O. WALLACE
*
- --------------------------------------------- DIRECTOR April 6, 1998
JOSEPH M. WALTON
*
- --------------------------------------------- DIRECTOR April 6, 1998
JAMES T. WELLER
- --------------------------------------------- DIRECTOR
ERIC J. WERNER, ESQ.
*
- --------------------------------------------- DIRECTOR April 6, 1998
ROBERT B. WILEY
- --------------------------------------------- DIRECTOR
DONNA C. WINNER
</TABLE>
*BY: /S/ John D. Waters
JOHN D. WATERS, AS ATTORNEY-IN-FACT
PURSUANT TO POWERS OF ATTORNEY FILED
AS EXHIBIT 24.1 TO THIS REGISTRATION STATEMENT
<PAGE> 180
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, Southwest
Banks, Inc. and Seminole Bank, dated February 2, 1998 and amended as of April
6, 1998 (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 F.N.B.
Corporation and Seminole Bank, dated February 2,
1998 (included as Appendix C to the Proxy
Statement-Prospectus)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Hill, Barth & King, Inc.
23.3 Consent of Coopers & Lybrand L.L.P.
23.4 Consent of Hacker, Johnson, Cohen & Grieb PA
23.5 Consent of Cohen & Grigsby, P.C. (included in Exhibit 5.1).
23.6 Consent of Smith, Gambrell & Russell, LLP (included in Exhibit 8.1).
23.7 Consent of The Carson Medlin Company
24.1 Power of Attorney
99.1 Form of Proxy for Special Meeting of Shareholders of Seminole.
99.2 Opinion of The Carson Medlin Company (included as Appendix B to the Proxy
Statement-Prospectus).
99.3 Provisions of Pennsylvania law regarding indemnification of directors and
officers.
99.4 Provisions of the United States Code regarding
rights of dissenting Shareholders of Seminole
(included as Appendix D to the Proxy
Statement-Prospectus).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[COHEN & GRIGSBY, P.C. LETTERHEAD]
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 Seminole Bank, a Florida bank ("Seminole"), upon consummation
of the merger of Seminole with and into Southwest Interim Bank No. 4, N.A., a
national bank to be chartered under the laws of the United States that will be
a wholly-owned subsidiary of the Company ("Interim")(the "Merger") in
accordance with the terms of the Agreement and Plan of Merger (the "Agreement")
dated as of February 2, 1998 among the Company, Southwest Banks, Inc. and
Seminole.
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, the resolutions
adopted by the Executive Committee of the Board of Directors of the Company on
January 19, 1998 with respect to the Merger, the Agreement and the transactions
related thereto and the Company's Articles of Incorporation and Bylaws, as
amended. In all such reviews, we have assumed the genuineness of all
signatures on originals and certified documents and the conformity to original
or certified documents of all copies submitted to us as conformed or
photocopies.
Based upon such examination, and subject to compliance with applicable
federal and state securities and "Blue Sky" laws, in our opinion the shares of
Common Stock to be issued to the shareholders of Seminole upon consummation of
the Merger, when issued in accordance with the terms of the
<PAGE> 2
Board of Directors of
F.N.B. Corporation
March 30, 1998
Page 2
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 of the
Company and Proxy Statement of Seminole constituting part of the Registration
Statement and to the inclusion of this letter as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Cohen & Grigsby, P.C.
COHEN & GRIGSBY, P.C.
<PAGE> 1
EXHIBIT 8.1
[SMITH, GAMBRELL & RUSSELL, LLP LETTERHEAD]
March 30, 1998
F.N.B. Corporation
One F.N.B. Boulevard
Hermitage, Pennsylvania 16148
Seminole Bank
10899 Park Boulevard
Seminole, Florida 33772
Re: Agreement and Plan of Merger under which Seminole
Bank will merge with and into Southwest Interim Bank
No. 4, N.A., to be 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 Seminole Bank ("Seminole")
with and into Southwest Interim Bank No. 4, N.A. ("Interim"), a national bank to
be chartered under the laws of the United States and to become 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 February 2,
1998 and amended as of April 6, 1998, by and among FNB, Interim, Southwest
Banks, Inc. ("Southwest") and Seminole, described in the FNB Registration
Statement on Form S-4, to be filed with the Securities and Exchange Commission
on or about April 8, 1998 (the "Registration Statement"). At your request, in
connection with the filing by FNB of the Registration Statement and the Proxy
Statement-Prospectus of Seminole and FNB (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 the parties set forth therein, and upon certain statements
and representations made to us in certificates by officers of FNB and Seminole,
in each case without independent verification thereof. With the consent of FNB
and Seminole, 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 shares of Seminole Common Stock will be exchanged for
FNB Common Stock in the Merger, and that the shares of Seminole Common Stock
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:
I. The Merger will constitute a reorganization under Code ss.ss.368(a)(1)(A) and
368(a)(2)(D), and FNB, Interim and Seminole will each be a party to the
reorganization within the meaning of Code ss.368(b).
II. Holders of shares of Seminole Common Stock who exchange such shares solely
for shares of FNB Common Stock will not recognize gain or loss on the exchange.
<PAGE> 2
III. The federal income tax basis of shares of FNB Common Stock received in
exchange for shares of Seminole Common Stock will be equal to the holder's basis
of the shares of Seminole Common Stock surrendered in exchange therefor, and the
holding period of such FNB Common Stock will include the holding period of the
Seminole Common Stock surrendered in exchange therefor.
IV. 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.
V. A holder of Seminole Common Stock who exercises appraisal rights will
recognize capital gain or loss equal to the difference between the cash received
and such holder's tax basis in the Seminole Common Stock exchanged.
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:
A. The appropriate method to determine the fair market value of any
stock or other consideration received in any sale or exchange;
B. The state, local or foreign tax consequences of any aspect of the
Merger; or
C. The federal income tax consequences of any aspect of the Merger to
holders of Seminole Common Stock 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 warrants or options
to purchase Seminole Common Stock, if any, 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
<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 832,118 shares of its common stock and to the incorporation
by reference therein of our report dated February 19, 1998, with respect to the
consolidated financial statements of F.N.B. Corporation incorporated by
reference in its annual report on Form 10-K dated March 18, 1998 and our report
dated March 31, 1998, with respect to the supplemental consolidated financial
statements of F.N.B. Corporation included in its Current Report on Form 8-K
dated April 3, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
April 8, 1998
<PAGE> 1
EXHIBIT 23.2
Consent of Hill, Barth & King, Inc.
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement and related Prospectus of F.N.B. Corporation on Form S-4
and to the incorporation by reference therein of our report dated January 22,
1997 relating to the consolidated financial statements of Southwest Banks, Inc.
which have been incorporated into the consolidated financial statements of
F.N.B. Corporation and Subsidiaries for the year ended December 31, 1997 by
reference in the Current Report on Form 8-K dated April 2, 1998.
HILL, BARTH & KING, INC.
Certified Pubic Accountants
Naples, Florida
April 6, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-4 of our report dated January 24, 1997 on our audits of the consolidated
financial statements of West Coast Bancorp, Inc. for the years ended December
31, 1996 and 1995. We also consent to the reference to our firm under the
caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Tampa, Florida
April 6, 1998
<PAGE> 1
EXHIBIT 23.4
Accountants' Consent
The Board of Directors
Seminole Bank
Seminole, Florida:
We consent to the use of our report dated January 9, 1998 relating to the
balance sheets as of December 31, 1997 and 1996 and the related statements of
earnings, stockholders' equity and cash flows for the years then ended of
Seminole Bank and to the use of our name under the caption of "Experts", in the
Registration Statement on Form S-4 of F.N.B. Corporation.
/s/ Hacker, Johnson, Cohen & Grieb PA
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
April 6, 1998
<PAGE> 1
EXHIBIT 23.7
[LETTERHEAD]
THE CARSON MEDLIN COMPANY
INVESTMENT BANKERS
April 6, 1998
CONSENT OF THE CARSON MEDLIN COMPANY
In connection with the proposed merger of Seminole Bank and F.N.B. Corporation,
the undersigned, acting as an independent financial advisor to the common
shareholders of Seminole Bank, hereby consents to the reference to our firm and
our fairness opinion in the Form S-4 Registration Statement and to the inclusion
of our fairness opinion as an exhibit to the S-4 Registration Statement.
/s/ The Carson Medlin Company
THE CARSON MEDLIN COMPANY
<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 on its,
his and her behalf, and in each of the undersigned Officer's 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 832,118 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 Seminole Bank, Seminole, Florida, upon consummation of
the proposed merger of Seminole Bank with and into Southwest Bank Interim No. 4,
a national chartered interim bank wholly-owned by F.N.B. Corporation, 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 called 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 effect 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 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.
<PAGE> 2
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. This Power of Attorney may be executed in
counterparts which, when taken together, constitute a single original hereof.
F.N.B. CORPORATION
(Registrant)
By: /s/ Peter Mortensen
----------------------
Peter Mortensen
Chairman and President
Dated: April 6, 1998
--------------
<TABLE>
<S> <C> <C>
/s/ Peter Mortensen Chairman of the Board Date: April 6, 1998
- ------------------------ President and Chief Executive Officer
Peter Mortensen (Principal Executive Officer)
/s/ Stephen J. Gurgovits Executive Vice President Date: April 6, 1998
- ------------------------ and Director
Stephen J. Gurgovits
/s/ William J. Rundorff Executive Vice President Date: April 6, 1998
- ------------------------
William J. Rundorff
/s/ John D. Waters Vice President and Chief Finance Date: April 6, 1998
- ------------------------ Officer (Principal Financial and
John D. Waters Accounting Officer
Director Date:________________
- ------------------------
W. Richard Blackwood
Director Date:________________
- ------------------------
William B. Campbell
Director Date:________________
- ------------------------
Charles T. Cricks
/s/ Henry M. Ekker, Esq. Director Date: April 6, 1998
- ------------------------
Henry M. Ekker, Esq.
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Director Date:
- ------------------------- -------------
Thomas C. Elliott
Director Date:
- ------------------------- -------------
Thomas W. Hodge
/s/ James S. Lindsay Director Date: April 6, 1998
- -------------------------
James S. Lindsay
Director Date:
- ------------------------- -------------
Paul P. Lynch
/s/ Edward J. Mace Director Date: April 6, 1998
- -------------------------
Edward J. Mace
/s/ Robert S. Moss Director Date: April 6, 1998
- -------------------------
Robert S. Moss
Director Date:
- ------------------------- -------------
Richard C. Myers
Director Date:
- ------------------------- -------------
William A. Quinn
/s/ George A. Seeds Director Date: April 6, 1998
- -------------------------
George A. Seeds
/s/ William J. Strimbu Director Date: April 6, 1998
- -------------------------
William J. Strimbu
/s/ Gary L. Tice Director Date: April 6, 1998
- -------------------------
Gary L. Tice
/s/ Archie O. Wallace Director Date: April 6, 1998
- -------------------------
Archie O. Wallace
/s/ Joseph M. Walton Director Date: April 6, 1998
- -------------------------
Joseph M. Walton
/s/ James T. Weller Director Date: April 6, 1998
- -------------------------
James T. Weller
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Director Date:
- ------------------------- -------------
Eric J. Werner, Esq.
/s/ Robert B. Wiley Director Date: April 6, 1998
- -------------------------
Robert B. Wiley
Director Date:
- ------------------------- -------------
Donna C. Winner
</TABLE>
<PAGE> 1
EXHIBIT 99.1
SEMINOLE BANK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT
THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 13,1998 AT 5:30 P.M.,
EASTERN STANDARD TIME.
The undersigned hereby appoints _____________ and _______________, and
each of them, attorneys and proxies with full power to each of substitution, to
vote in the name of and as proxy for the undersigned at the Special Meeting of
Shareholders of Seminole Bank (the "Bank") to be held on May 13, 1998 at 5:30
p.m. at the main office of the Bank located at 10899 Park Boulevard, Seminole,
Florida, and at any adjournment thereof, according to the number of votes that
the undersigned would be entitled to cast if personally present.
(1) To consider and vote on a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of February 2, 1998 and amended as of
April 6, 1998 (the "Merger Agreement"), among F.N.B. Corporation
("FNB"), Southwest Banks, Inc., a wholly-owned subsidiary of FNB
("Southwest") and the Bank. The Merger Agreement provides for the
merger of the Bank with and into Southwest Interim Bank No. 4, N.A., a
national bank to be chartered under the laws of the United States and
to become a wholly-owned subsidiary of FNB. Upon consummation of the
Merger, except as described in the Proxy Statement-Prospectus, each
issued and outstanding share of the Bank's common stock, par value
$0.10 per share ("Seminole Common Stock") will be converted into and
exchanged for the right to receive 1.457 shares of FNB common stock,
par value $2.00 per share ("FNB Common Stock"); provided, however, that
Seminole may terminate the Merger Agreement prior to such exchange if
the average of the closing bid and asked prices of FNB Common Stock for
a specified period prior to the Closing is less than $28.00, subject to
adjustment as provided in the Merger Agreement. The complete text of
the Merger Agreement is attached to the Proxy Statement as Appendix
"A."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
<PAGE> 2
PROPERLY EXECUTED PROXIES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED. IF NO SUCH DIRECTIONS ARE GIVEN, SUCH PROXIES WILL BE VOTED FOR THE
PROPOSITION REFERRED TO IN PARAGRAPH (1).
---------------------------------
Signature
---------------------------------
Signature
Date:____________________, 1998
(When signing as attorney, executor,
administrator, trustee or guardian, please
give title as such. If shareholder is a
corporation, corporate name should be signed
by an authorized officer and the corporate
seal affixed. For joint accounts, each joint
owner should sign.)
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED REPLY ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<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.
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 forth 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;
<PAGE> 2
(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.
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.
<PAGE> 3
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.
