SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) June 3, 1997
FNB Corp.
(Exact Name of Registrant as Specified in its Charter)
North Carolina 0-13823 56-1456589
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
101 Sunset Avenue, Asheboro, North Carolina 27203
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (910) 626-8300
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N/A
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On June 3, 1997, FNB Corp. (the "Registrant"), First National Bank and
Trust Company, a wholly owned subsidiary of the Registrant ("First National")
and Home Savings Bank of Siler City, Inc., SSB ("Home Savings") entered into an
Agreement and Plan of Reorganization and Merger (the "Agreement"), pursuant to
which Home Savings will be acquired by the Registrant by merger of Home Savings
with and into First National (the "Merger"). Concurrently with the execution of
the Agreement, Home Savings and the Registrant entered into an option agreement
whereby Home Savings granted to the Registrant an option to purchase up to 19.9%
of the outstanding shares of Home Savings Stock at a purchase price of $12.50
per share, such option to become exercisable upon the occurrence of certain
events and conditions (the "Option Agreement"). The Boards of Directors of the
Registrant, First National and Home Savings approved the Agreement and the
Option Agreement at separate meetings.
Upon consummation of the Merger, each share of the common stock of Home
Savings, par value $1.00 ("Home Savings Stock") issued and outstanding as of the
effective time of the Merger (as described in the Agreement, the "Effective
Time") shall be converted, without any action on the part of the holder of such
shares (other than the making of an election as described below) into (i) a
number of shares of the common stock of FNB, par value $2.50 ("FNB Stock"),
equal to (x) $15.50 (the "Cash Factor") divided by (y) the Average Closing Price
(as defined below) of FNB Stock (such number of shares, the "Exchange Ratio"),
(ii) the right to receive cash in an amount equal to the Cash Factor per share
of Home Savings Stock, or (iii) a combination of shares of FNB Stock and the
right to receive cash as provided in the Agreement. The Average Closing Price is
the Closing Price of FNB Stock over the period of twenty consecutive trading
days ending on the trading day that is three trading days prior to the closing
date. For this purpose, the Closing Price is the sum of the reported closing bid
price on the NASDAQ National Market plus 75% of the spread between the reported
closing bid and asked price. The Cash Factor and corresponding Exchange Ratio
may be reduced if, during the period commencing on June 3, 1997 and ending at
the Effective Time, Home Savings declares or pays cash dividends in an aggregate
amount in excess of $.30 per share ($.40 per share if the Effective Time is
after the record date for FNB's regular scheduled dividend for the first
calendar quarter of 1998) or makes any other distributions on Home Savings
Stock. In addition, outstanding options to purchase Home Savings Stock under its
existing stock option plans will be converted into rights with respect to FNB
Stock on a basis that reflects the Exchange Ratio. Restricted Stock that has
been granted to Home Savings' employees under its existing plan will be
converted into FNB Stock and the right to receive cash under the terms of the
Merger.
Each shareholder of Home Savings may elect to convert his shares of
Home Savings Stock into the right to receive cash, shares of FNB Stock or a
combination of the right to receive cash and shares of FNB Stock, subject to
certain limitations. Notwithstanding the foregoing, in no event shall shares of
FNB Stock be issued in the Merger for more than sixty percent (60%) or less than
fifty percent (50%) of the total outstanding shares of Home Savings
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Stock. Accordingly, it may be necessary for the Registrant to prorate among
shareholders the number of shares of FNB Stock to be issued in connection with
the Merger. In addition, if, upon conclusion of the Shareholders' Meeting (as
defined below), holders in excess of ten percent (10%) of Home Savings Stock
have properly exercised applicable rights of dissent and appraisal (as described
in the Agreement, "Dissenters' Rights") or have voted their shares of Home
Savings Stock against approval of the Agreement at the Shareholders' Meeting,
the above-referenced elections will not be honored. In such event, sixty percent
(60%) of the outstanding shares of Home Savings Stock held as of the Effective
Time by each shareholder of Home Savings (except for shares held, other than in
a fiduciary capacity, by Home Savings, the Registrant or any of their
subsidiaries, which shall be canceled in the Merger) shall be converted as of
the Effective Time, without any action on the part of the holder of such shares,
into a number of shares of FNB Stock equal to the Exchange Ratio and forty
percent (40%) of the outstanding shares of Home Savings Stock held as of the
Effective Time by each shareholder of Home Savings shall be converted into the
right to receive cash in an amount equal to the Cash Factor per share of Home
Savings Stock.
The Merger is intended to constitute a tax-free transaction under the
Internal Revenue Code of 1986, as amended, with respect to stock issued therein
and a taxable transaction with respect to the cash consideration paid. The
Merger will be accounted for as a purchase transaction.
The Agreement and the Merger will be submitted for approval at a
special meeting of the shareholders of Home Savings (the "Shareholders'
Meeting"). The approval of the shareholders of the Registrant is not required.
Prior to the Shareholders' Meeting, the Registrant will file a registration
statement with the Securities and Exchange Commission registering, under the
Securities Act of 1933, as amended (the "1933 Act"), the shares of FNB Stock to
be issued in exchange for Home Savings Stock or, alternatively, the Registrant
may satisfy the requirements of Section 3(a)(10) of the 1933 Act. Such shares of
FNB Stock will be offered to the shareholders of Home Savings pursuant to a
proxy statement for the Shareholders' Meeting that will also serve as a
prospectus if the shares are registered under the 1933 Act.
Consummation of the Merger is subject to various conditions, including
but not limited to: (i) receipt of the approval by the shareholders of Home
Savings of the Agreement and the Merger; (ii) a registration statement covering
the shares of FNB Stock to be issued in connection with the Merger shall have
been declared effective by the SEC or an application for an exemption pursuant
to Section 3(a)(10) of the 1933 Act shall have been finally approved; (iii)
receipt of all necessary state securities or "Blue Sky" permits or other
authorizations or confirmations as to the availability of exemptions from such
Blue Sky registration requirements; (iv) receipt of all regulatory approvals
required in connection with the transactions contemplated by the Agreement; (v)
receipt of an opinion of counsel as to the tax-free nature of certain aspects of
the Merger; (vi) all requirements for the shares of FNB Stock to be issued in
connection with the Merger to be listed on the NASDAQ National Market as of
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the Effective Time shall have been satisfied; (vii) the representations and
warranties of the respective parties shall be true and accurate under the
standards set forth in the Agreement; (vii) the Registrant and Home Savings
shall have received as of the date of consummation of the Merger a written
opinion from counsel for the other; (viii) Home Savings shall have received from
its financial advisor an opinion to the effect that the terms of the Merger are
fair, from a financial point of view, to Home Savings and its shareholders; (ix)
shareholders of Home Savings holding not more than ten percent (10%) of the
outstanding shares of Home Savings Stock shall not have exercised Dissenters'
Rights or voted against approval of the Agreement at the Shareholders' Meeting,
unless such condition is waived by the Registrant; and (x) certain other
conditions.
The Agreement may be terminated by the parties in certain
circumstances, including (i) mutual agreement of the Registrant and Home
Savings, (ii) a material violation of or failure to fully perform any
obligation, covenant or agreement contained in the Agreement, (iii) a materially
false or misleading representation or warranty of the other party, which
inaccuracy would provide the nonbreaching party ability to refuse to consummate
the Merger under the applicable standard set forth in the Agreement, (iv) if any
of the conditions to the obligations of the Registrant or Home Savings shall not
have been satisfied or effectively waived in writing by the Registrant or Home
Savings (whichever is appropriate) by April 30, 1998 (except to the extent that
the failure of such condition to be satisfied has been caused by the failure of
the other party to satisfy any of its obligations, covenants or agreements), (v)
if, the shareholders of Home Savings do not ratify and approve the Agreement and
approve the Plan of Merger at the Shareholders' Meeting and (vi) if the Merger
shall not have become effective on or before April 30, 1998 unless such date is
extended as evidenced by the written mutual agreement of FNB, First National and
Home Savings; provided, however, that in the event there is a delay of not more
than 30 days caused by circumstances beyond the control of the parties, the date
by which the Merger must be effective shall be extended by mutual agreement for
up to an additional 60 days. In addition, FNB may terminate the Agreement if the
Average Closing Price of FNB Stock for the twenty (20) consecutive trading days
ending on the trading date that is three (3) days prior to the scheduled date of
consummation of the Merger is less than $27.00 (as proportionately adjusted in
the event of any stock dividend or stock split of FNB Stock after the date
hereof), and Home Savings may terminate the Agreement if the Average Closing
Price of FNB Stock for the twenty (20) consecutive trading days ending on the
trading date that is three (3) days prior to the scheduled date of consummation
of the Merger is more than $36.50 (as proportionately adjusted in the event of
any stock dividend or stock split of FNB Stock after the date hereof).
For additional information regarding the Agreement and the Option
Agreement, reference is made to the copies of those documents which are
incorporated herein by reference and included as exhibits hereto. The foregoing
discussion is qualified in its entirety by reference to such documents.
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ITEM 7. EXHIBITS
(c) Exhibits.
The exhibits to this Form 8-K are listed in the accompanying
Index to Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FNB CORP.
(Registrant)
Date: June 10, 1997 By: /s/ Jerry A. Little
Jerry A. Little
Secretary and Treasurer
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INDEX TO EXHIBITS
The following exhibits are filed as part of this report:
EXHIBIT NO. DESCRIPTION
2(a) Agreement and Plan of Reorganization and Merger by and among Home
Savings Bank of Siler City, Inc., SSB, FNB Corp. and First National
Bank and Trust Company dated June 3, 1997.
2(b) Stock Option Agreement issued by Home Savings Bank of Siler City,
Inc., SSB to FNB Corp. dated June 3, 1997.
99 Text of Joint Press Release dated June 3, 1997, issued by FNB Corp.
And Home Savings Bank of Siler City, Inc., SSB.
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
HOME SAVINGS BANK OF SILER CITY, INC., SSB,
FNB CORP.
AND
FIRST NATIONAL BANK AND TRUST COMPANY
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
(hereinafter called the "Agreement") is entered into as of the 3rd day of June,
1997 by and among HOME SAVINGS BANK OF SILER CITY, INC., SSB, a North Carolina
savings bank with its principal office and place of business located in Siler
City, North Carolina, ("Home Savings"), FNB CORP., a North Carolina corporation
with its principal office and place of business located in Asheboro, North
Carolina ("FNB"), and FIRST NATIONAL BANK AND TRUST COMPANY, a national banking
corporation with its principal office and place of business located in Asheboro,
North Carolina and wholly owned subsidiary of FNB ("First National").
W I T N E S S E T H:
WHEREAS, the parties hereto have agreed that it is in their mutual best
interests and in the best interests of their respective shareholders for Home
Savings to be merged with and into First National (the "Merger") pursuant to a
plan of merger (the "Plan of Merger") in the form attached hereto as Schedule A,
and the parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the premises, the mutual benefits
to be derived from this Agreement, and of the representations, warranties,
conditions, covenants and promises herein contained, and subject to the terms
and conditions hereof, the parties hereto mutually agree as follows:
ARTICLE I. THE MERGER
1.1 MERGER. Subject to the provisions of this Agreement and the Plan of
Merger, as of the Effective Time (as defined in Section 1.10 hereof), Home
Savings shall be merged with and into First National (the "Merger"), the
separate corporate existence of Home Savings shall cease and the corporate
existence of First National, as the surviving corporation in the Merger,
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shall continue with all of its purposes, objects, rights, privileges, powers and
franchises, all of which shall be unaffected and unimpaired by the Merger.
1.2 ASSETS AND LIABILITIES OF HOME SAVINGS. At the Effective Time and
by reason of the Merger, and in accordance with applicable law, all of the
property, assets and rights of every kind and character of Home Savings
(including without limitation all real, personal or mixed property, all debts
due on whatever account, all other choses in action and every other interest of
or belonging to or due to Home Savings, whether tangible or intangible) shall be
transferred to and vest in First National, and First National shall succeed to
all the rights, privileges, immunities, powers, purposes and franchises of a
public or private nature of Home Savings, all without any conveyance, assignment
or further act or deed; and, First National shall become responsible for all of
the liabilities, duties and obligations of every kind, nature and description of
Home Savings as of the Effective Time.
1.3 ARTICLES OF INCORPORATION, BYLAWS AND MANAGEMENT. The Articles of
Association and Bylaws of First National in effect at the Effective Time shall
be the Articles of Association and Bylaws of First National as the surviving
corporation in the Merger. The officers and directors of First National at the
Effective Time shall continue to hold such offices and positions until removed
as provided by law or until the election or appointment of their respective
successors.
1.4 CONVERSION OF SHARES.
(A) HOME SAVINGS STOCK. Except as otherwise provided herein, at the
Effective Time (as defined in Section 1.10 below), all rights of Home Savings'
shareholders with respect to all then outstanding shares of the common stock of
Home Savings, par value $1.00 ("Home Savings Stock") shall cease to exist, and
the holders of shares of Home Savings Stock shall cease to be, and shall have no
further rights as, shareholders of Home Savings. At the Effective Time, each
such outstanding share of Home Savings Stock (except for shares held, other than
in a fiduciary capacity, by Home Savings, FNB or any of their subsidiaries,
which shall be canceled in the Merger) shall be converted, without any action on
the part of the holder of such shares (other than the making of an election as
described in Section 1.5 below) into (i) a number of shares of the common stock
of FNB, par value $2.50 (the "FNB Stock"), equal to (x) $15.50 (the "Cash
Factor") divided by (y) the Average Closing Price (as defined below) of FNB
Stock (such number of shares, the "Exchange Ratio"), (ii) the right to receive
cash in an amount equal to the Cash Factor per share of Home Savings Stock, or
(iii) a combination of shares of FNB Stock and the right to receive cash as
provided in Sections 1.5(a) through 1.5(c) below. For purposes hereof, "Average
Closing Price" shall mean the average "Closing Price" of FNB Stock over the
period of twenty (20) consecutive trading days ending on the trading day that is
three trading days prior to the Closing Date (as defined in Section 1.9 below),
and "Closing Price" shall mean the sum of the reported closing "bid" price and
seventy-five (75%) of the spread between the reported closing "bid" and "ask"
price of FNB Stock on the National Association of Securities Dealers Automated
Quotations Inc. ("NASDAQ") National Market each day. Except as otherwise
provided herein, the form of
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consideration into which each individual shareholder's shares of Home Savings
Stock will be converted will be determined in the manner described in Sections
1.5(a) through 1.5(c) below. Notwithstanding anything contained herein to the
contrary, if during the period commencing on the date of this Agreement and
ending at the Effective Time, Home Savings declares or pays cash dividends in an
aggregate amount in excess of $.30 per share ($.40 per share if the Effective
Time is after the record date for FNB's regular scheduled dividend for the first
calendar quarter of 1998) or makes any other distributions on Home Savings Stock
(collectively, the "Excess Cash Distributions"), then, for purposes of this
Agreement, the Cash Factor shall be reduced by the per share amount of any such
Excess Cash Distributions, and the Exchange Ratio shall be reduced accordingly.
(B) OUTSTANDING FNB STOCK. Each share of FNB Stock, issued and
outstanding immediately prior to the Effective Time shall continue to be issued
and outstanding and shall not be affected by the Merger.
(C) OUTSTANDING FIRST NATIONAL STOCK. Each share of capital stock of
First National issued and outstanding immediately prior to the Effective Time
shall continue to be issued and outstanding and shall not be affected by the
Merger.
1.5 PAYMENT OF MERGER CONSIDERATION.
(A) ELECTION OF CONSIDERATION. Subject to Sections 1.5(b) and 1.5(c)
below, each shareholder of Home Savings may, by written notice to FNB in the
manner described below, elect individually the form of consideration into which
all such shareholder's shares of Home Savings Stock will be converted at the
Effective Time as provided in Section 1.4(a) above. Within ten days following
approval of this Agreement and the Plan of Merger by the shareholders of Home
Savings at the Shareholders' Meeting (as defined in Section 6.1(a) below), Home
Savings will mail written instructions to each of its shareholders regarding the
making of an election, for the conversion of their respective shares, together
with a notice (a "Notice of Election"), which each shareholder shall be required
to use for purposes of making such election. Each shareholder may elect to
receive one of the following forms of consideration: (i) cash at the rate of the
Cash Factor per share of Home Savings Stock; (ii) shares of FNB Stock at the
rate of the Exchange Ratio per share of Home Savings Stock; or (iii) a
combination of cash and shares of FNB Stock at such respective rates based on
increments of five percent (5%) (for example, 85% shares of FNB Stock and 15%
cash, or 50% shares of FNB Stock and 50% cash). The instructions of Home Savings
shall specify a date by which a shareholder's election must be made (the
"Election Date," which shall be set by FNB, but in no event to be less than
fifteen (15) or more than thirty (30) days following the date that the above
instructions and form are first distributed to the shareholders of Home
Savings). The above instructions and Notice of Election distributed to the
shareholders of Home Savings shall be provided by and in a form satisfactory to
FNB. In order to make an effective election, a Home Savings shareholder must
deliver to FNB a properly completed Notice of Election on or before the close of
its business on the Election Date and in accordance with FNB's instructions. Any
shareholder who does not make an election or
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whose Notice of Election is not timely received by FNB or otherwise is not made
in accordance with FNB's instructions (including any shareholder who has
exercised Dissenters' Rights, as defined in Section 1.6 hereof) will be deemed
to have elected that sixty percent (60%) of such shareholder's shares of Home
Savings Stock be converted into FNB Stock at the rate of the Exchange Ratio per
share of Home Savings Stock and that the remaining forty percent (40%) be
converted into the right to receive cash at the rate of the Cash Factor per
share of Home Savings Stock.
(B) LIMIT ON ELECTION; PRORATION OF CASH AND FNB STOCK. Notwithstanding
anything contained herein to the contrary, in no event shall shares of FNB Stock
be issued in the Merger for more than sixty percent (60%) or less than fifty
percent (50%) of the total outstanding shares of Home Savings Stock. Depending
on the elections or deemed elections of Home Savings' shareholders, and subject
to Section 1.5(c) below, shares of FNB Stock to be issued in the Merger may be
prorated as follows:
(i) In the event that, immediately prior to the Effective
Time, the aggregate number of shares of Home Savings Stock to be
converted into shares of FNB Stock in the Merger pursuant to elections
or deemed elections by shareholders of Home Savings immediately prior
to the Effective Time is more than sixty percent (60%) of the total
outstanding shares of Home Savings Stock, then, with respect to those
shareholders of Home Savings who, immediately prior to the Effective
Time, have elected or are deemed to have elected to have all or part of
their shares of Home Savings Stock converted into FNB Stock, FNB will
reduce on a pro rata basis the number of shares of Home Savings Stock
to be converted into shares of FNB Stock such that the aggregate number
of shares of Home Savings Stock to be converted into FNB Stock in the
Merger is not more than sixty percent (60%) of the total outstanding
shares of Home Savings Stock; and, the number of remaining shares of
Home Savings Stock held by each such shareholder will be converted into
the right to receive cash as provided in Section 1.4(a)(ii) above.
(ii) In the event that, immediately prior to the Effective
Time, the difference between (A) the aggregate number of shares of Home
Savings Stock to be converted into shares of FNB Stock in the Merger
pursuant to elections or deemed elections by shareholders of Home
Savings immediately prior to the Effective Time and (B) the aggregate
number of shares of Home Savings Stock to be converted into FNB Stock
pursuant to elections or deemed elections by shareholders who have
exercised Dissenters' Rights (as provided in Section 1.6 above) or have
voted against approval of this Agreement and Plan of Merger at the
Shareholders Meeting is less than fifty percent (50%) of the total
outstanding shares of Home Savings Stock, then, with respect to those
shareholders of Home Savings who, immediately prior to the Effective
Time, have elected or are deemed to have elected to have all or part of
their shares of Home Savings Stock converted into the right to receive
cash in the Merger, FNB will reduce on a pro rata basis the number of
shares of Home Savings Stock to be converted into the right to receive
cash such that the difference between (A) and (B) above is not
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less than fifty percent (50%) of the total outstanding shares of Home
Savings Stock; and, the number of remaining shares of Home Savings
Stock held by each such shareholder will be converted into shares of
FNB Stock as provided in Section 1.4(a)(i) above.
(C) NO ELECTIONS. Notwithstanding the provisions of Sections 1.5(a) and
1.5(b) above, if, upon conclusion of the Shareholders' Meeting, holders in
excess of ten percent (10%) of Home Savings Stock have exercised Dissenters'
Rights (as provided in Section 1.6 hereof) or have voted their shares of Home
Savings Stock against approval of this Agreement and Plan of Merger at the
Shareholders' Meeting, then the provisions of Sections 1.5(a) and 1.5(b) above
shall not apply and sixty percent (60%) of the outstanding shares of Home
Savings Stock held as of the Effective Time by each shareholder of Home Savings
(except for shares held, other than in a fiduciary capacity, by Home Savings,
FNB or any of their subsidiaries, which shall be canceled in the Merger) shall
be converted as of the Effective Time, without any action on the part of the
holder of such shares, into a number of shares of FNB Stock equal to the
Exchange Ratio and forty percent (40%) of the outstanding shares of Home Savings
Stock held as of the Effective Time by each shareholder of Home Savings shall be
converted into the right to receive cash in an amount equal to the Cash Factor
per share of Home Savings Stock.
(D) EXCHANGE AND PAYMENT PROCEDURES. Following the Effective Time,
certificates representing shares of Home Savings Stock outstanding at the
Effective Time (herein sometimes referred to as "Home Savings Certificates")
shall evidence only the right of the registered holder thereof to receive, and
may be exchanged for, (i) the form of consideration into which each individual
shareholder's shares of Home Savings Stock have been converted as determined in
the manner described in Sections 1.5(a) through 1.5(c) above or (ii) in the case
of shareholders who properly exercise Dissenters' Rights, the consideration
provided in Section 1.6 below and by applicable law. At the Effective Time, FNB
shall issue and deliver, or cause to be issued and delivered, to First National,
in its capacity as the transfer agent of FNB Stock (the "Transfer Agent"), cash
and certificates representing whole shares of FNB Stock into which outstanding
shares of Home Savings Stock have been converted as provided above. As promptly
as practicable following the Effective Time, FNB shall send or cause to be sent
to each former shareholder of record of Home Savings immediately prior to the
Effective Time written instructions and transmittal materials (a "Transmittal
Letter") for use in surrendering Home Savings Certificates to the Transfer
Agent. Upon the proper surrender and delivery to the Transfer Agent (in
accordance with FNB's instructions, and accompanied by a properly completed
Transmittal Letter) by a former shareholder of Home Savings of such
shareholder's Home Savings Certificate(s), and in exchange therefor, the
Transfer Agent shall as soon as practicable, (i) in the case of a shareholder
whose Home Savings Stock, or a portion thereof, has been converted into FNB
Stock, issue, register and deliver to such shareholder a certificate evidencing
the number of shares of FNB Stock to which such shareholder is entitled pursuant
to Sections 1.5(a) through 1.5(c) above, and/or (ii) in the case of a
shareholder whose Home Savings Stock, or a portion thereof, has been converted
into the right to receive cash, issue and deliver to such shareholder a check in
the amount of cash to which the shareholder is entitled pursuant to Sections
1.5(a) through 1.5(c) above. Following the Effective Time, there
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shall be no further transfers of Home Savings Stock on the stock transfer books
of Home Savings or the registration of any transfer of a Home Savings
Certificate by any holder thereof, and the surrender of each Home Savings
Certificate as provided herein must be made by or on behalf of its holder of
record at the Effective Time.
(E) TREATMENT OF FRACTIONAL SHARES. No scrip or certificates
representing fractional shares of FNB Stock will be issued to any former
shareholder of Home Savings, and, except as provided below, no such shareholder
will have any right to vote or receive any dividend or other distribution on, or
any other right with respect to, any fraction of a share of FNB Stock resulting
from the above exchange. In the event the exchange of shares results in the
creation of fractional shares, in lieu of the issuance of fractional shares of
FNB Stock, FNB will deliver cash to the Transfer Agent in an amount equal to the
aggregate of all fractional shares multiplied by the Average Closing Price, and,
in such event, the Transfer Agent shall divide such cash among and remit it
(without interest) to the former shareholders of Home Savings in accordance with
their respective interests.
(F) SURRENDER OF CERTIFICATES. Subject to Section 1.5(g) below, no FNB
Stock certificate or cash shall be delivered to any former shareholder of Home
Savings unless and until such shareholder shall have properly surrendered to the
Transfer Agent the Home Savings Certificate(s) formerly representing his or her
shares of Home Savings Stock, together with a properly completed Transmittal
Letter in such form as shall be provided to the shareholder by FNB for that
purpose. Further, until such Home Savings Certificate(s) are so surrendered, no
dividend or other distribution payable to holders of record of FNB Stock as of
any date subsequent to the Effective Time shall be delivered to the holder of
such Home Savings Certificate(s). However, subject to prior escheatment under
applicable law, upon the proper surrender of such Home Savings Certificate(s),
the Transfer Agent shall pay to the registered holder of the shares of FNB Stock
represented by such Home Savings Certificate(s) the amount of any such cash,
dividends or distributions which have accrued but remain unpaid with respect to
such shares. Neither FNB, Home Savings nor the Transfer Agent shall have any
obligation to pay any interest on any such cash, dividends or distributions for
any period prior to such payment.
(G) LOST CERTIFICATES. Any shareholder of Home Savings whose
certificate evidencing shares of Home Savings Stock has been lost, destroyed,
stolen or otherwise is missing shall be entitled to receive a certificate
representing the shares of FNB Stock to which he or she is entitled in
accordance with and upon compliance with conditions imposed by the Transfer
Agent or FNB (including without limitation a requirement that the shareholder
provide a lost instruments indemnity or surety bond in form, substance and
amount satisfactory to the Transfer Agent and FNB).
1.6 DISSENTERS. Any shareholder of Home Savings who properly exercises
his right of dissent and appraisal ("Dissenters' Rights") with respect to the
Merger as provided in Article 13 of the North Carolina Business Corporation Act
("Article 13") or Section 215a of the National Bank Act ("Section 215a") shall
be entitled to receive payment in cash of the "fair
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value" (as defined in Article 13) or "value" (as described in Section 215a) of
his or her shares of Home Savings Stock in the manner and pursuant to the
procedures provided in Article 13 or Section 215a, respectively. Until the "fair
value" or "value" of the shares of Home Savings Stock held by any dissenting
shareholder is determined and paid pursuant to Article 13 or Section 214a,
respectively, however, such shares shall be converted into FNB Stock and the
right to receive cash in accordance with such shareholder's election or deemed
election and in the manner provided in Sections 1.5(a) through 1.5(c) above.
1.7 CONVERSION OF HOME SAVINGS STOCK OPTIONS. (a) At the Effective
Time, each option to purchase Home Savings Stock granted and outstanding under
the Home Savings Bank of Siler City, Inc., SSB 1995 Incentive Stock Option Plan
(the "ISO Plan") or the Home Savings Bank of Siler City, Inc., SSB 1995
Nonstatutory Stock Option Plan (the "NSSO Plan"), whether or not then
exercisable, shall be converted into and become rights with respect to FNB
Stock, and FNB shall assume each such stock option, in accordance with the terms
of the particular stock option plan under which it was issued and stock option
agreement by which it is evidenced, except that from and after the Effective
Time with respect to each such plan or agreement: (i) FNB shall be substituted
for Home Savings; (ii) the FNB Board of Directors or its compensation committee
shall be substituted for the Compensation Committee of the Home Savings Board of
Directors administering the ISO Plan and for the Home Savings Board of Directors
administering the NSSO Plan; (iii) service on the local advisory board of First
National in Siler City, North Carolina shall be substituted for service on the
Home Savings Board of Directors for the vesting, forfeiture and termination
provisions of the NSSO Plan; (iv) each stock option assumed by FNB may be
exercised solely for shares of FNB Stock; (v) the number of shares of FNB Stock
subject to each such stock option shall be the number of whole shares of FNB
Stock (omitting any fractional share) determined by multiplying the number of
shares of Home Savings Stock subject to such stock option immediately prior to
the Effective Time by the Exchange Ratio; and (vi) the per share exercise price
under each such stock option shall be adjusted by dividing the per share
exercise price under each such stock option by the Exchange Ratio and rounding
up to the nearest cent. In addition, notwithstanding the provisions of clauses
(v) and (vi) of the first sentence of this Section 1.7(a), each stock option
which is an "incentive stock option" under the ISO Plan shall be adjusted as
required by Section 424 of the Internal Revenue Code of 1986, as amended ("the
Code") and the regulations promulgated thereunder so as to continue as an
incentive stock option under Section 424(a) of the Code, and so as not to
constitute a modification, extension, or renewal of the option, within the
meaning of Section 424(h) of the Code. FNB and Home Savings agree to take all
necessary steps to effectuate the foregoing provisions of this Section 1.7,
including appropriate amendments to the ISO Plan and NSSO Plan.
(b) As soon as practicable after the Effective Time, FNB shall deliver
to each of the participants in the ISO Plan and the NSSO Plan an appropriate
notice setting forth such participant's rights pursuant thereto, and the grants
pursuant to such stock option plans shall continue in effect on the same terms
and conditions (subject to the adjustments required by Section 1.7(a) after
giving effect to the Merger). FNB shall comply with the terms of the ISO Plan to
ensure, to the extent required by and subject to the provisions of the ISO Plan,
that
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stock 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 Stock for delivery upon exercise
of the stock options assumed by it in accordance with this Section 1.7. Home
Savings hereby represents that the ISO Plan and the NSSO Plan in their current
forms comply with Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act"), as in effect as of the date hereof.
(c) Notwithstanding the foregoing provisions of this Section 1.7, FNB
may at its election substitute as of the Effective Time options under the FNB
Corp. Stock Compensation Plan (the "FNB Plan") for all or a part of the stock
options granted and outstanding under the ISO Plan and the NSSO Plan, subject to
the following conditions: (i) the requirements of Section 1.7(a)(v) and (vi)
shall be met; (ii) such substitution shall not constitute a modification,
extension or renewal of any of the stock options that are incentive stock
options; and (iii) the substituted options shall continue in effect with
substantially the same terms and conditions as provided in the respective stock
option plan or stock option agreement under which the original options were
granted. As soon as practicable following the Effective Time, FNB shall deliver
to the participants receiving substitute options under the FNB Plan an
appropriate notice setting forth each such participant's rights pursuant
thereto. FNB has reserved under the FNB Plan adequate shares of FNB Stock for
delivery upon exercise of any such substituted options. FNB hereby represents
that the FNB Plan in its current form complies with Rule 16b-3 promulgated under
the 1934 Act, as in effect on the date hereof.
1.8 MANAGEMENT RECOGNITION PLAN. (a) At the Effective Time, each share
of Home Savings Stock held by the Trustees under the Home Savings Bank of Siler
City, Inc., SSB 1995 Management Recognition Plan (the "MR Plan") shall be
converted into FNB Stock and/or cash pursuant to the provisions of Sections 1.4
and 1.5 above, and such shares and/or cash shall thereafter be held to be
delivered to the respective participants at such times that the shares of
Restricted Stock (as defined in the MR Plan), or the consideration into which
they may be converted in the Merger, would have become vested and nonforfeitable
under the MR Plan. At the Effective Time, the MR Plan and each restricted stock
agreement pursuant to which Awards (as defined in the MR Plan) were granted
shall remain in effect, except that from and after the Effective Time the MR
Plan and each such restricted stock agreement shall be amended as necessary to
provide that: (i) FNB shall be substituted for Home Savings; (ii) the FNB Board
of Directors or its Compensation Committee shall be substituted for the Home
Savings Board of Directors with respect to the administration of the MR Plan;
(iii) service on the local advisory board of First National in Siler City, North
Carolina shall be substituted for service as a director of Home Savings; (iv)
unvested shares of FNB Stock and/or cash determined in accordance with the
provisions of Sections 1.4 and 1.5 above shall be substituted for unvested
shares of Home Savings Stock; (v) cash held by the Trustees of the MR Plan with
respect to the unvested portion of an Award under the Plan shall earn interest
(at the rate payable with respect to deferred directors' fees under First
National's Deferred Directors' Fee Plan) to be distributed to the participant
upon vesting of the Award or portion thereof; (vi) no shares or other assets in
addition to the Allocated Initial Plan Shares (as
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defined in the MR Plan) shall be purchased by or for the MR Plan; and (vii)
shares, cash or other interests in the MR Plan or Awards forfeited by
participants shall not be retained by the Trustee and shall not be available for
making additional Awards under the MR Plan but shall be remitted to and become
assets of FNB upon forfeiture.
(b) As soon as practicable after the Effective Time, FNB shall deliver
to each of the participants in the MR Plan an appropriate notice setting forth
such participant's rights pursuant thereto, including the consideration into
which such participant's unvested shares of Home Savings Stock subject to the
restricted stock agreement has been converted.
1.9 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Schell Bray Aycock
Abel & Livingston P.L.L.C. in Greensboro, North Carolina, or at such other place
as FNB shall designate, on a date mutually agreeable to Home Savings, FNB and
First National (the "Closing Date") after the expiration of any and all required
waiting periods following the effective date of required approvals of the Merger
by governmental or regulatory authorities (but in no event to be more than 60
days following the expiration of all such required waiting periods). At the
Closing, FNB, First National and Home Savings shall take such actions
(including, without limitation, the delivery of certain closing documents and
the execution of Articles of Merger under federal and North Carolina law) as are
required herein and as otherwise shall be required by law to consummate the
Merger and cause it to become effective.
1.10 EFFECTIVE TIME. The Merger shall become effective (the "Effective
Time") after the Office of the Comptroller of the Currency (the "OCC") has
issued its certificate of approval of the Merger and on the date and at the time
on which Articles of Merger containing the Plan of Merger and the other
provisions required by, and executed in accordance with applicable North
Carolina and applicable federal law shall have been accepted for filing by the
Secretary of State of the State of North Carolina (or such later time as may be
specified in the Articles of Merger); provided, however, that unless otherwise
mutually agreed upon by the parties hereto, the Effective Time shall in no event
be more than ten days following the Closing Date.
1.11 FURTHER ASSURANCES. If, at any time after the Effective Time,
First National, the surviving corporation in the Merger, shall consider or be
advised that any further deeds, assignments or assurances in law or any other
actions are necessary, desirable or proper to vest, perfect or confirm of record
or otherwise, in First National, the title to any property or rights of Home
Savings acquired or to be acquired by reason of, or as a result of, the Merger,
Home Savings agrees that Home Savings and their proper officers and directors
shall and will execute and deliver all such proper deeds, assignments and
assurances in law and do all things necessary, desirable or proper to vest,
perfect or confirm title to such property or rights in First National and
otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors of First National are fully authorized and directed in
the name of Home Savings or otherwise to take any and all such actions.
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ARTICLE II. REPRESENTATIONS AND WARRANTIES OF HOME SAVINGS
Except as otherwise specifically provided herein or as "Previously
Disclosed" to FNB, Home Savings hereby makes the following representations and
warranties to FNB. ("Previously Disclosed" shall mean, as to Home Savings, the
disclosure of information in a letter delivered by Home Savings to FNB
specifically referring to this Agreement and arranged in sections corresponding
to the sections, subsections and items of this Agreement applicable thereto, and
which letter has been delivered prior to the execution of this Agreement.
Information shall be deemed Previously Disclosed for the purpose of a given
section, subsection or item of this Agreement only to the extent that a specific
reference thereto is made in connection with disclosure of such information at
the time of such delivery.)
2.1 ORGANIZATION; STANDING; POWER. Home Savings (i) is duly organized
and incorporated, validly existing and in good standing as a savings bank under
the laws of the State of North Carolina, (ii) has all requisite power and
authority (corporate and other) to own, lease and operate its properties and to
carry on its business as it is now being conducted, (iii) is duly qualified to
do business and is in good standing in each other jurisdiction in which the
character of the properties owned, leased or operated by it therein or in which
the transaction of its business makes such qualification necessary, except where
failure so to qualify would not have a material adverse effect on Home Savings
and its subsidiary considered as one enterprise and (iv) is not transacting
business or operating any properties owned or leased by it in violation of any
provision of federal, state or local law or any rule or regulation promulgated
thereunder, which violation would have a material adverse effect on Home Savings
and its subsidiary considered as one enterprise.
2.2 CAPITAL STOCK. The authorized capital stock of Home Savings
consists of 5,000,000 shares of common stock, $1.00 par value per share, of
which 922,686 shares are issued and outstanding and constitute Home Savings'
only outstanding securities. Each outstanding share of Home Savings Stock has
been duly authorized, is validly issued and outstanding, is fully paid and
nonassessable, has been issued in compliance with applicable federal and state
securities laws and has not been issued in violation of the preemptive rights of
any shareholder. The Home Savings Stock has been registered with the Federal
Deposit Insurance Corporation ("FDIC") under the 1934 Act.
2.3 PRINCIPAL SHAREHOLDERS. Except as Previously Disclosed, there are
no persons or entities known to Home Savings to own beneficially, directly or
indirectly, more than 5% of the outstanding shares of Home Savings Stock.
2.4 SUBSIDIARIES. Other than Home Savings and Loan Service Corporation,
a North Carolina corporation (the "Subsidiary"), Home Savings has no
subsidiaries, direct or indirect, and does not own any stock or other equity
interest in any other corporation, service corporation, joint venture,
partnership or other entity, except for equity issues reflected in Home Savings'
investment portfolio. The Subsidiary has no operations or assets and has been
inactive since 1983.
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2.5 CONVERTIBLE SECURITIES, OPTIONS, ETC. Except for the stock options
issued under the ISO Plan and NSSO Plan as Previously Disclosed, Home Savings
does not have any outstanding (i) securities or other obligations (including
debentures or other debt instruments) which are convertible into shares of Home
Savings Stock or any other securities of Home Savings, (ii) options, warrants,
rights, calls or other commitments of any nature which entitle any person to
receive or acquire any shares of Home Savings Stock or any other securities of
Home Savings or (iii) plan, agreement or other arrangement pursuant to which
shares of Home Savings Stock or any other securities of Home Savings or options,
warrants, rights, calls or other commitments of any nature pertaining thereto,
have been or may be issued.
2.6 AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement has been
duly and validly approved by Home Savings' Board of Directors. Subject only to
approval of the Plan of Merger by the shareholders of Home Savings at a meeting
called in the manner required by law (as contemplated by Section 6.1(a) below),
(i) Home Savings has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations and agreements and carry out the
transactions described herein, (ii) all corporate proceedings and approvals
required to authorize Home Savings to enter into this Agreement and to perform
its obligations and agreements and carry out the transactions described herein
have been duly and properly completed or obtained, and (iii) this Agreement
constitutes the valid and binding agreement of Home Savings enforceable in
accordance with its terms (except to the extent enforceability may be limited by
(A) applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect which affect creditors' rights generally, (B)
legal and equitable limitations on the availability of injunctive relief,
specific performance and other equitable remedies and (C) general principles of
equity and applicable laws or court decisions limiting the enforceability of
indemnification provisions).
2.7 VALIDITY OF TRANSACTIONS; ABSENCE OF REQUIRED CONSENTS OR WAIVERS.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions described herein, nor compliance by Home Savings with any of
its obligations or agreements contained herein, will: (i) conflict with or
result in a breach of the terms and conditions of, or constitute a default or
violation under any provision of, the Articles of Incorporation or Bylaws of
Home Savings or the Subsidiary, or any material contract, agreement, lease,
mortgage, note, bond, indenture, license, or obligation or understanding (oral
or written) to which Home Savings or the Subsidiary is bound or by which it or
its business, capital stock or any of its properties or assets may be affected;
(ii) result in the creation or imposition of any lien, claim, interest, charge,
restriction or encumbrance upon any of the properties or assets of Home Savings
or the Subsidiary; (iii) violate any applicable federal or state statute, law,
rule or regulation, or any judgment, order, writ, injunction or decree of any
court, administrative or regulatory agency or governmental body; (iv) result in
the acceleration of any obligation or indebtedness of Home Savings or the
Subsidiary; or, (v) interfere with or otherwise adversely affect the ability of
Home Savings to carry on its business as presently conducted, or interfere with
or otherwise adversely affect the ability of either FNB or First National to
carry on such business after the Effective Time. No consents, approvals or
waivers are required to be obtained from any person or entity in connection with
Home Savings' execution and delivery
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of this Agreement, or the performance of its obligations or agreements or the
consummation of the transactions described herein, except for required approvals
of Home Savings' shareholders as described in Section 7.1(a) below and of
governmental or regulatory authorities as described in Section 7.1(c) below.
2.8 BOOKS AND RECORDS. Home Savings' and the Subsidiary's books of
account and business records have been maintained in substantial compliance with
all applicable legal and accounting requirements and in accordance with good
business practices, and such books and records are complete and reflect
accurately in all material respects Home Savings' and the Subsidiary's,
respectively, items of income and expense and all of its assets, liabilities and
shareholders' equity. The minute books of Home Savings and the Subsidiary
accurately reflect in all material respects the corporate actions which its
respective shareholders and board of directors, and all committees thereof, have
taken during the time periods covered by such minute books. All such minute
books have been or will be made available to FNB and its representatives.
2.9 REGULATORY REPORTS. Since January 1, 1990, Home Savings has filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that were required to be filed with (i) the
FDIC, (ii) the North Carolina Savings Institutions Division (the "Division") or
the Administrator of the Division (the "Administrator"), (iii) any other
governmental or regulatory authorities having jurisdiction over Home Savings.
All such reports, registrations and statements filed by Home Savings with the
FDIC, the Division, the Administrator or other such regulatory authority are
collectively referred to herein as the "Home Savings Reports." As of their
respective dates, the Home Savings Reports complied in all material respects
with all the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and, neither Home
Savings nor the Subsidiary has been notified that any such Home Savings Reports
were deficient in any material respect as to form or content. Following the date
of this Agreement, Home Savings shall deliver to FNB, simultaneous with the
filing thereof, a copy of each report, registration, statement or other
regulatory filing made by Home Savings, with the FDIC, the Division, the
Administrator or any other such regulatory authority.
2.10 FINANCIAL STATEMENTS. Home Savings has delivered to FNB a copy of
(i) its audited consolidated balance sheets as of September 30, 1996 and 1995
and its consolidated statements of operations, changes in shareholders' equity
and cash flows for the years ended September 30, 1996, 1995 and 1994, together
with notes thereto (collectively, the "Home Savings Financial Statements"), and
(ii) its unaudited consolidated balance sheet as of March 31, 1997 and its
statement of operations for the three months ended March 31, 1997 (the "Home
Savings Interim Financial Statements"); and, following the date of this
Agreement, Home Savings promptly will deliver to FNB all other annual or interim
financial statements prepared by or for Home Savings. The Home Savings Financial
Statements and the Home
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Savings Interim Financial Statements (including any related notes and schedules
thereto) (i) are in accordance with Home Savings' books and records, and (ii)
were prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods indicated and
present fairly Home Savings' consolidated financial condition, assets and
liabilities, results of operations, changes in shareholders' equity and changes
in cash flows as of the dates indicated and for the periods specified therein.
The Home Savings Financial Statements have been audited by Coopers & Lybrand
L.L.P., independent certified public accountants.
2.11 TAX RETURNS AND OTHER TAX MATTERS. (i) Each of Home Savings and
the Subsidiary has timely filed or caused to be filed all federal, state and
local income tax returns and reports which are required by law to have been
filed, and all such returns and reports were true, correct and complete and
contained all material information required to be contained therein; (ii) all
federal, state and local income, profits, franchise, sales, use, occupation,
property, excise, withholding, employment and other taxes (including interest
and penalties), charges and assessments which have become due from or been
assessed or levied against Home Savings, the Subsidiary or their respective
properties have been fully paid or, if not yet due, a reserve or accrual which
is adequate in all material respects for the payment of all such taxes to be
paid and the obligation for such unpaid taxes is reflected on the Home Savings
Financial Statements; (iii) tax returns and reports of Home Savings and the
Subsidiary have not been subject to audit by the Internal Revenue Service (the
"IRS") or the North Carolina Department of Revenue in the last ten years and
neither Home Savings nor the Subsidiary has received any indication of the
pendency of any audit or examination in connection with any such tax return or
report and have no knowledge that any such return or report is subject to
adjustment; and (iv) neither Home Savings nor the Subsidiary has executed any
waiver or extended the statute of limitations (or been asked to execute a waiver
or extend a statute of limitation) with respect to any tax.
2.12 ABSENCE OF MATERIAL ADVERSE CHANGES OR CERTAIN OTHER EVENTS. (a)
Since September 30, 1996, Home Savings and the Subsidiary have each conducted
its respective business only in the ordinary course, and there has been no
material adverse change, and there has occurred no event or development and
there currently exists no condition or circumstance which, with the lapse of
time or otherwise, may or could cause, create or result in a material adverse
change, in or affecting the financial condition of Home Savings or the
Subsidiary in its respective results of operations, prospects, business, assets,
loan portfolio, investments, properties or operations.
(b) Since September 30, 1996, and other than in the ordinary course of
its business, neither Home Savings nor the Subsidiary has incurred any material
liability or engaged in any material transaction or entered into any material
agreement, increased the salaries, compensation or general benefits payable to
its employees, suffered any loss, destruction or damage to any of its respective
properties or assets, or made a material acquisition or disposition of any
assets or entered into any material contract or lease.
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2.13 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Home Savings nor the
Subsidiary has any liabilities or obligations, whether known or unknown, matured
or unmatured, accrued, absolute, contingent or otherwise, whether due or to
become due (including without limitation tax liabilities or unfunded liabilities
under employee benefit plans or arrangements), other than (i) those reflected in
the Home Savings Financial Statements or the Home Savings Interim Financial
Statements, or (ii) obligations or liabilities incurred in the ordinary course
of its business since March 31, 1997 and which are not, individually or in the
aggregate, material to Home Savings.
2.14 COMPLIANCE WITH EXISTING OBLIGATIONS. Each of Home Savings and the
Subsidiary has performed in all material respects all obligations required to be
performed by it under, and it is not in default in any respect under, or in
violation in any respect of, the terms and conditions of its respective Articles
of Incorporation or Bylaws, and/or any contract, agreement, lease, mortgage,
note, bond, indenture, license, obligation, understanding or other undertaking
(whether oral or written) to which it is bound or by which its business, capital
stock or any property or asset may be affected.
2.15 LITIGATION AND COMPLIANCE WITH LAW.
(a) There are no actions, suits, arbitrations, controversies or other
proceedings or investigations (or, to the best knowledge and belief of
management of Home Savings, any facts or circumstances which reasonably could
result in such), including without limitation any such action by any
governmental or regulatory authority, which currently exist or are ongoing,
pending or, to the best knowledge and belief of management of Home Savings,
threatened, contemplated or probable of assertion, against, relating to or
otherwise affecting Home Savings, the Subsidiary or any of their respective
properties, assets or employees which, if determined adversely, could result in
liability on the part of Home Savings or the Subsidiary for, or subject Home
Savings or the Subsidiary to, monetary damages, fines or penalties or an
injunction, or which could have a material adverse effect on the financial
condition, results of operations, prospects, business, assets, loan portfolio,
investments, properties or operations of Home Savings or the Subsidiary or on
Home Savings' ability to consummate the Merger.
(b) Each of Home Savings and the Subsidiary has all licenses, permits,
orders, authorizations or approvals ("Permits") of any federal, state, local or
foreign governmental or regulatory body that are material to or necessary for
the conduct of its respective business or to own, lease and operate their
respective properties; all such Permits are in full force and effect; no
violations are or have been recorded in respect of any such Permits; and no
proceeding is pending or, to the best knowledge of management of Home Savings,
threatened or probable of assertion to suspend, cancel, revoke or limit any
Permit.
(c) Neither Home Savings nor the Subsidiary are subject to any
supervisory agreement, enforcement order, writ, injunction, capital directive,
supervisory directive, memorandum of understanding or other similar agreement,
order, directive, memorandum or consent of, with or issued by any regulatory or
other governmental authority (including without limitation the
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FDIC or the Administrator) relating to its financial condition, directors or
officers, employees, operations, capital, regulatory compliance or otherwise;
there are no judgments, orders, stipulations, injunctions, decrees or awards
against Home Savings or the Subsidiary which in any manner limits, restricts,
regulates, enjoins or prohibits any present or past business or practice of Home
Savings or the Subsidiary; and, neither Home Savings nor the Subsidiary has been
advised and has no reason to believe that any regulatory or other governmental
authority or any court is contemplating, threatening or requesting the issuance
of any such agreement, order, injunction, directive, memorandum, judgment,
stipulation, decree or award.
(d) Neither Home Savings nor the Subsidiary is in violation or default
in any material respect under, and has complied in all material respects with,
all laws, statutes, ordinances, rules, regulations, orders, writs, injunctions
or decrees of any court or federal, state, municipal or other governmental or
regulatory authority having jurisdiction or authority over it or its business
operations, properties or assets (including without limitation all provisions of
North Carolina law relating to usury, the Consumer Credit Protection Act, and
all other laws and regulations applicable to extensions of credit) and, to the
knowledge of Home Savings, there is no basis for any claim by any person or
authority for compensation, reimbursement or damages or otherwise for any
violation of any of the foregoing.
2.16 REAL PROPERTIES. Home Savings has Previously Disclosed to FNB a
listing of all real property owned or leased by Home Savings or the Subsidiary
(the "Real Property") and all leases pertaining to any such Real Property to
which Home Savings or the Subsidiary is a party (the "Real Property Leases").
With respect to all Real Property, Home Savings or the Subsidiary has good and
marketable fee simple title to such Real Property and owns the same free and
clear of all mortgages, liens, leases, encumbrances, title defects and
exceptions to title other than (i) the lien of current taxes not yet due and
payable, and (ii) such imperfections of title and restrictions, covenants and
easements (including utility easements) which do not materially affect the value
of the Real Property and which do not and will not materially detract from,
interfere with or restrict the present or future use of the properties subject
thereto or affected thereby. With respect to each Real Property Lease (i) such
lease is valid and enforceable in accordance with its terms, (ii) there
currently exists no circumstance or condition which constitutes an event of
default by Home Savings or the Subsidiary (as lessor or lessee) or its
respective lessor or which, with the passage of time or the giving of required
notices will or could constitute such an event of default, and (iii) subject to
any required consent of Home Savings' lessor, each such Real Property Lease may
be assigned to FNB and the execution and delivery of this Agreement does not
constitute an event of default thereunder. To the best of the knowledge and
belief of management of Home Savings, the Real Property (excluding other real
estate owned) complies in all material respects with all applicable federal,
state and local laws, regulations, ordinances or orders of any governmental
authority, including those relating to zoning, building and use permits, and the
Real Property (excluding other real estate owned) may be used under applicable
zoning ordinances for commercial banking facilities as a matter of right rather
than as a conditional or nonconforming use. All improvements and fixtures
included in or on the Real Property are in good condition and repair, ordinary
wear and tear excepted, and there does not exist any
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condition which affects the economic value thereof or interferes (or will
interfere after the Merger) with the contemplated use thereof.
2.17 LOANS, ACCOUNTS, NOTES AND OTHER RECEIVABLES. (a) All loans,
accounts, notes and other receivables reflected as assets on Home Savings' books
and records (i) have resulted from bona fide business transactions in the
ordinary course of its operations, (ii) in all material respects were made in
accordance with its standard loan policies and procedures, and (iii) are owned
by it free and clear of all liens, encumbrances, assignments, participation or
repurchase agreements or other exceptions to title or to the ownership or
collection rights of any other person or entity.
(b) All of Home Savings' records regarding all outstanding loans,
accounts, notes and other receivables, and all other real estate owned, are
accurate in all material respects, and, with respect to each loan which its loan
documentation indicates is secured by any real or personal property or property
rights ("Loan Collateral"), such loan is secured by valid, perfected and
enforceable liens on all such Loan Collateral having the priority described in
the Subsidiary's records of such loan.
(c) To the best knowledge of management of Home Savings, each loan
reflected as an asset on Home Savings' books and each guaranty therefor, is the
legal, valid and binding obligation of the obligor or guarantor thereon, and no
defense, offset or counterclaim has been asserted with respect to any such loan
or guaranty.
(d) Home Savings has Previously Disclosed to FNB (i) a written listing
of each loan, extension of credit or other asset of Home Savings which, as of
March 31, 1997, is classified by the FDIC or the Administrator as "Loss,"
"Doubtful," "Substandard" or "Special Mention" (or otherwise by words of similar
import), or which it has designated as a special asset or for special handling
or placed on any "watch list" because of concerns regarding the ultimate
collectibility or deteriorating condition of such asset or any obligor or Loan
Collateral therefor, and (ii) a written listing of each loan or extension of
credit that, as of March 31, 1997, was past due as to the payment of principal
and/or interest, or as to which any obligor thereon (including the borrower or
any guarantor) otherwise was in default, is the subject of a proceeding in
bankruptcy or otherwise has indicated any inability or intention not to repay
such loan or extension of credit. Each such listing is accurate and complete as
of the date indicated.
(e) Home Savings' reserve for possible loan losses (the "Loan Loss
Reserve") has been established in conformity with GAAP, sound banking practices
and all applicable requirements, rules and policies of the FDIC and the
Administrator and, in the best judgment of management of Home Savings, is
reasonable in view of the size and character of its loan portfolios, current
economic conditions and other relevant factors, and is adequate to provide for
losses relating to or the risk of loss inherent in its loan portfolios and other
real estate owned. At March 31, 1997, Home Savings' Loan Loss Reserve was
$279,659.
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2.18 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by Home
Savings or the Subsidiary (whether owned of record or beneficially) are held
free and clear of all mortgages, liens, pledges, encumbrances or any other
restriction or rights of any other person or entity, whether contractual or
statutory, which would materially impair the ability of Home Savings or the
Subsidiary to dispose freely of any such security and/or otherwise to realize
the benefits of ownership thereof at any time. There are no voting trusts or
other agreements or undertakings to which Home Savings or the Subsidiary is a
party with respect to the voting of any such securities. With respect to all
"repurchase agreements" to which Home Savings or the Subsidiary has "purchased"
securities under agreement to resell, Home Savings or the Subsidiary has a
valid, perfected first lien or security interest in the government securities or
other collateral securing the repurchase agreement, and the value of the
collateral securing each such repurchase agreement equals or exceeds the amount
of the debt owed which is secured by such collateral. Except for fluctuations in
the market values of United States Treasury and agency or municipal securities,
since March 31, 1997, there has been no significant deterioration or material
adverse change in the quality, or any material decrease in the value, of Home
Savings' securities portfolio as a whole.
2.19 PERSONAL PROPERTY AND OTHER ASSETS. All assets of Home Savings or
the Subsidiary (including without limitation all banking equipment, data
processing equipment, vehicles, and all other personal property located in any
office of or used by Home Savings in the operation of its business) are owned by
Home Savings or the Subsidiary free and clear of all liens, encumbrances,
leases, title defects or exceptions to title. All of Home Savings' or the
Subsidiary's personal property material to its business is in good operating
condition and repair, ordinary wear and tear excepted.
2.20 PATENTS AND TRADEMARKS. Home Savings and the Subsidiary own,
possess or have the right to use any and all patents, licenses, trademarks,
trade names, copyrights, trade secrets and proprietary and other confidential
information necessary to conduct their business as now conducted; and, neither
Home Savings nor the Subsidiary has violated, and currently is not in conflict
with, any patent, license, trademark, trade name, copyright or proprietary right
of any other person or entity.
2.21 ENVIRONMENTAL MATTERS. (a) Home Savings has Previously Disclosed
to FNB copies of all written reports, correspondence, notices or other
materials, if any, in its possession pertaining to environmental surveys or
assessments of the Real Property or any of its Loan Collateral and any
improvements thereon, or to any violation of "Environmental Laws" (as defined
below) on, affecting or otherwise involving the Real Property or any Loan
Collateral.
(b) There has been no presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, reporting,
testing, processing, emission, discharge, release, threatened release, control,
removal, clean-up or remediation of any "Hazardous Substances" (as defined
below) by any person prior to the date hereof on, from or
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relating to the Real Property or, to the best of the knowledge and belief of
management of Home Savings, the Loan Collateral, which constitutes a violation
of any Environmental Laws.
(c) Home Savings has not violated any federal, state or local law,
rule, regulation, order, permit or other requirement relating to health, safety
or the environment or imposing liability, responsibility or standards of conduct
applicable to environmental conditions, and there has been no violation of any
Environmental Laws (as defined in Section 2.2(f) below) (including, to the best
of the knowledge and belief of management of Home Savings, any violation with
respect to or relating to any Loan Collateral) by any other person or entity for
whose liability or obligation with respect to any particular matter or violation
Home Savings is or may be responsible or liable.
(d) Home Savings is not subject to any claims, demands, causes of
action, suits, proceedings, losses, damages, penalties, liabilities,
obligations, costs or expenses of any kind and nature which arise out of, under
or in connection with, or which result from or are based upon the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, emission, discharge,
release, threatened release, control, removal, clean-up or remediation of any
Hazardous Substances on, from or relating to the Real Property or, to the best
of the knowledge and belief of management of Home Savings, any Loan Collateral
by any person or entity.
(e) No facts, events or conditions relating to the Real Property or, to
the best knowledge of management of Home Savings, any Loan Collateral, or the
operations of Home Savings, will prevent, hinder or limit continued compliance
with Environmental Laws, or give rise to any investigatory, emergency removal,
remedial or corrective actions, obligations or liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental Laws.
(f) For purposes of this Agreement, "Environmental Laws" shall include:
(i) all federal, state and local statutes, regulations, ordinances,
orders, decrees, and similar provisions having the force or effect of
law,
(ii) all contractual agreements, and
(iii) all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all standards of
conduct and bases of obligations relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, discharge, release,
threatened release, control, emergency removal, clean-up or remediation of any
Hazardous Substances (including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, the Superfund Amendment
and Reauthorization Act, the
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Federal Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the Clean Water
Act, the Clean Air Act, the Toxic Substances Control Act, any "Superfund" or
"Superlien" law, the Americans with Disabilities Act, and the Occupational
Safety and Health Act), as such may now or at any time hereafter be defined or
in effect.
(g) For purposes of this Agreement, "Hazardous Substances" shall
include hazardous, toxic or otherwise regulated materials, substances or wastes;
chemical substances or mixtures; pesticides; pollutants; contaminants; toxic
chemicals; oil or other petroleum products, byproducts, or constituents
(including but not limited to crude oil, diesel oil, fuel oil, gasoline,
lubrication oil, oil refuse, oil mixed with other waste, oil sludge, and all
other liquid hydrocarbons regardless of specific gravity); asbestos or asbestos
containing material; flammable explosives; polychlorinated biphenyls ("PCBs") or
any material containing PCBs; radioactive materials; biological micro organisms,
viruses, fungi, spores; environmental tobacco smoke; radon or radon gas;
formaldehyde or any material containing formaldehyde; fumigants; any material or
substance comprising or contributing to conditions known as "sick building
syndrome," "building-related illness" or similar conditions or exposures; and/or
any hazardous, toxic, regulated or dangerous waste, substance or material
defined as such by the United States Environmental Protection Agency or any
other federal, state or local governmental agency or political subdivision
thereof, or for the purpose of or by any Environmental Laws, as now or at any
time hereafter may be in effect.
2.22 ABSENCE OF BROKERAGE OR FINDERS' COMMISSIONS. All negotiations
relative to this Agreement and the transactions described herein have been
carried on by Home Savings directly with FNB, and no person or firm has been
retained by or has acted on behalf of, pursuant to any agreement, arrangement or
understanding with, or under the authority of, Home Savings or its Board of
Directors, as a broker, finder or agent or has performed similar functions or
otherwise is or may be entitled to receive or claim a brokerage fee or other
commission in connection with or as a result of the transactions described
herein. Home Savings has not agreed to pay any brokerage fee or other commission
to any person or entity in connection with or as a result of the transactions
described herein.
2.23 MATERIAL CONTRACTS. (a) Other than a benefit plan or employment
agreement Previously Disclosed to FNB pursuant to Section 2.25 below (true and
complete copies of which have been provided by Home Savings to FNB), neither
Home Savings nor its Subsidiary is a party to or bound by any agreement (i)
involving money or other property in an amount or with a value in excess of
$50,000, (ii) which is not to be performed in full prior to December 31, 1997,
(iii) which calls for the provision of goods or services to Home Savings and
cannot be terminated without material penalty upon written notice to the other
party thereto, (iv) which is material to Home Savings or the Subsidiary and was
not entered into in the ordinary course of business, (v) which involves hedging,
options or any similar trading activity, or interest rate exchanges or swaps,
(vi) which commits Home Savings or the Subsidiary to extend any loan or credit
(with the exception of letters of credit, lines of credit and loan commitments
extended in the ordinary course of the Subsidiaries' business), (vii) which
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involves the purchase or sale of any assets of Home Savings or the Subsidiary,
or the purchase, sale, issuance, redemption or transfer of any capital stock or
other securities of Home Savings or the Subsidiary, or (viii) with any director,
officer or principal shareholder of Home Savings or the Subsidiary (including
without limitation any consulting agreement, but not including any agreement
relating to loans or other banking services which were made in the ordinary
course of its business and on substantially the same terms and conditions as
were prevailing at that time for similar agreements with unrelated persons).
(b) Neither Home Savings nor the Subsidiary is in default in any
material respect, and there has not occurred any event which with the lapse of
time or giving of notice or both would constitute such a default, under any
contract, lease, insurance policy, commitment or arrangement to which it is a
party or by which it or its property is or may be bound or affected or under
which it or its property receives benefits, where the consequences of such
default would have a material adverse effect on the financial condition, results
of operations, prospects, business, assets, loan portfolio, investments,
properties or operations of Home Savings or the Subsidiary.
2.24 EMPLOYMENT MATTERS; EMPLOYEE RELATIONS. (a) Each of Home Savings
and the Subsidiary (i) has paid in full to or accrued on behalf of all its
respective directors, officers and employees all wages, salaries, commissions,
bonuses, fees and other direct compensation for all labor or services rendered,
including all wages, salaries, commissions, bonuses, fees and other direct
compensation for all labor or services performed by them to the date of this
Agreement and all vacation pay, sick pay, severance pay and other amounts
promised to the extent required by law or its existing policies or practices and
(ii) is in material compliance with all applicable federal, state and local
laws, statutes, rules and regulations with regard to employment and employment
practices, terms and conditions, and wages and hours and other compensation
matters; and, no person has, to the knowledge of management of Home Savings,
asserted that Home Savings or the Subsidiary is liable in any amount for any
arrearages in wages or employment taxes or for any penalties for failure to
comply with any of the foregoing.
(b) There is no action, suit or proceeding by any person pending or, to
the best knowledge of management of Home Savings, threatened, against Home
Savings or the Subsidiary (or their employees), involving employment
discrimination, sexual harassment, wrongful discharge or similar claims. Neither
Home Savings nor the Subsidiary is a party to or bound by any collective
bargaining agreement with any of its employees, any labor union or any other
collective bargaining unit or organization. There is no pending or threatened
labor dispute, work stoppage or strike involving Home Savings, the Subsidiary,
or any of their employees, or any pending or threatened proceeding in which it
is asserted that Home Savings or the Subsidiary has committed an unfair labor
practice; and, Home Savings is not aware of any activity involving it or any of
its employees seeking to certify a collective bargaining unit or engaging in any
other labor organization activity.
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2.25 EMPLOYMENT AGREEMENTS; EMPLOYEE BENEFIT PLANS. (a) Home Savings
has Previously Disclosed to FNB a true and complete list of all bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock and stock option
plans; all employment and severance contracts; all medical, dental, health, and
life insurance plans; all vacation, sickness and other leave plans, disability
and death benefit plans; and all other employee benefit plans, contracts, or
arrangements maintained or contributed to by Home Savings or the Subsidiary for
the benefit of any employees, former employees, directors, former directors or
any of their beneficiaries (collectively, the "Plans"). True and complete copies
of all Plans, including, but not limited to, any trust instruments and/or
insurance contracts, if any, forming a part thereof, and all amendments thereto,
previously have been supplied to FNB. Except as Previously Disclosed, neither
Home Savings nor the Subsidiary maintains, sponsors, contributes to or otherwise
participates in any "Employee Benefit Plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
any "Multiemployer Plan" within the meaning of Section 3(37) of ERISA, or any
"Multiple Employer Welfare Arrangement" within the meaning of Section 3(40) of
ERISA. Each Plan which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA and which is intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), has
received or applied for a favorable determination letter from the IRS and Home
Savings is not aware of any circumstances reasonably likely to result in the
revocation or denial of any such favorable determination letter. All reports and
returns with respect to the Plans (and any Plans previously maintained by Home
Savings or the Subsidiary) required to be filed with any governmental
department, agency, service or other authority, including without limitation
Internal Revenue Service Form 5500 (Annual Report), have been properly and
timely filed.
(b) All "Employee Benefit Plans" maintained by or otherwise covering
employees or former employees of Home Savings currently are, and at all times
have been, in compliance with all material provisions and requirements of ERISA.
There is no pending or threatened litigation relating to any Plan or any such
Plan previously maintained by Home Savings. Neither Home Savings nor the
Subsidiary has engaged in a transaction with respect to any Plan that has
subjected it, or absent the exemption under which the transaction was effected,
would subject it to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA.
(c) Home Savings has delivered to FNB a true, correct and complete copy
(including copies of all amendments thereto) of each of its retirement plans
that is intended to be qualified under Section 401(a) of the Code (collectively,
the "Retirement Plans"), together with true, correct and complete copies of the
summary plan descriptions relating to the Retirement Plans, the most recent
determination letters received from the IRS regarding the Retirement Plans, and
the most recent Annual Reports (Form 5500 series) and related schedules, if any,
for the Retirement Plans. The Retirement Plans are qualified under the
provisions of Section 401(a) of the Code, the trusts under the Retirement Plans
are exempt trusts under Section 501(a) of the Code, and determination letters
have been issued or applied for with respect to the Retirement
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Plans to said effect, including determination letters covering the current terms
and provisions of the Retirement Plans. There are no issues relating to said
qualification or exemption of the Retirement Plans currently pending before the
IRS, the United States Department of Labor, the Pension Benefit Guaranty
Corporation or any court. The Retirement Plans and the administration thereof
meet (and have met since the establishment of the Retirement Plans) all of the
material requirements of ERISA, the Code and all other laws, rules and
regulations applicable to the Retirement Plans and do not violate (and since the
establishment of the Retirement Plans have not violated) any of the material
provisions of ERISA, the Code and such other laws, rules and regulations.
Without limiting the generality of the foregoing, all reports and returns with
respect to the Retirement Plans required to be filed with any governmental
department, agency, service or other authority have been properly and timely
filed. There are no disputes or unresolved disagreements with respect to the
Retirement Plans or the administration thereof currently existing between Home
Savings, the Subsidiary or any trustee or other fiduciary thereunder, and any
governmental agency, any current or former employee of Home Savings, the
Subsidiary or beneficiary of any such employee or any other person or entity. No
"reportable event" within the meaning of Section 4043(b) of ERISA has occurred
at any time with respect to the Retirement Plans.
(d) No liability under subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by Home Savings or the Subsidiary with respect to the
Retirement Plans or with respect to any other ongoing, frozen or terminated
defined benefit pension plan currently or formerly maintained by Home Savings or
the Subsidiary. Neither Home Savings nor the Subsidiary presently contributes to
a "Multiemployer Plan" or has ever contributed to such a plan. All contributions
required to be made pursuant to the terms of each of the Plans (including
without limitation the Retirement Plans and any other "pension plan" (as defined
in Section 3(2) of ERISA, provided such plan is intended to qualify under the
provisions of Section 401(a) of the Code) maintained by Home Savings have been
timely made. Neither the Retirement Plans nor any other "pension plan"
maintained by Home Savings or the Subsidiary have an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Neither Home Savings nor the Subsidiary has
provided, and is not required to provide, security to any "pension plan" or to
any "Single Employer Plan" pursuant to Section 401(a)(29) of the Code. Under the
Retirement Plans and any other "pension plan" maintained by Home Savings or the
Subsidiary as of the last day of the most recent plan year ended prior to the
date hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in the plan's most recent
actuarial valuation) did not exceed the then current value of the assets of such
plan, and there has been no material change in the financial condition of any
such plan since the last day of the most recent plan year.
(e) There are no restrictions on the rights of Home Savings or the
Subsidiary to amend or terminate any Plan. There are no restrictions on the
rights or ability of Home Savings to satisfy its obligations under Section
4.1(g) below, or on the right or ability of FNB to terminate the ESOP (as
defined in Section 4.1(g) below), without Home Savings or FNB
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incurring any liability under the ESOP or ERISA, assuming that such termination
is in compliance with the Code and ERISA. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
(except as otherwise specifically provided for or contemplated by the
transactions described in this Agreement) (i) result in any payment to any
person (including without limitation any severance compensation or payment,
unemployment compensation, "golden parachute" or "change in control" payment, or
otherwise) becoming due under any plan or agreement to any director, officer,
employee or consultant, (ii) increase any benefits otherwise payable under any
plan or agreement, or (iii) result in any acceleration of the time of payment or
vesting of any such benefit.
2.26 INSURANCE. Home Savings has in effect a "banker's blanket bond"
and such other policies of general liability, casualty, directors and officers
liability, employee fidelity, errors and omissions and other property and
liability insurance as has been Previously Disclosed to FNB (the "Policies").
The Policies provide coverage in such amounts and against such liabilities,
casualties, losses or risks as is customary or reasonable for entities engaged
in the businesses of Home Savings and the Subsidiary or as is required by
applicable law or regulation; and, in the reasonable opinion of management of
Home Savings, the insurance coverage provided under the Policies is considered
reasonable and adequate in all respects for Home Savings or the Subsidiary. Each
of the Policies is in full force and effect and is valid and enforceable in
accordance with its terms, and is underwritten by an insurer of recognized
financial responsibility and which is qualified to transact business in North
Carolina; and, Home Savings and the Subsidiary have taken all requisite actions
(including the giving of required notices) under each such Policy in order to
preserve all rights thereunder with respect to all matters. Neither Home Savings
nor the Subsidiary is in default under the provisions of, has received notice of
cancellation or nonrenewal of or any premium increase on, or has any knowledge
of any failure to pay any premium on or any inaccuracy in any application for
any Policy. There are no pending claims with respect to any Policy, and Home
Savings has no knowledge of any facts or of the occurrence of any event that is
reasonably likely to form the basis for any such claim.
2.27 INSURANCE OF DEPOSITS. All deposits of Home Savings are insured by
the Savings Association Insurance Fund of the FDIC to the maximum extent
permitted by law, all deposit insurance premiums due from Home Savings to the
FDIC have been paid in full in a timely fashion, and, to the best of the
knowledge and belief of Home Savings, no proceedings have been commenced or are
contemplated by the FDIC or otherwise to terminate such insurance.
2.28 COMPENSATION; STOCK OWNERSHIP. Home Savings has Previously
Disclosed (i) the name and current salary or wage rate for each present employee
of Home Savings or the Subsidiary, (ii) the name of and number of shares of Home
Savings Stock beneficially owned by each of the directors and officers of Home
Savings and by any person or entity known to Home Savings to beneficially own 5%
or more of Home Savings Stock, and (iii) the name and number of outstanding
options held by each person to whom a stock option has been granted and
currently is outstanding under any stock option or other plan of Home Savings.
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2.29 AFFILIATES. Home Savings has Previously Disclosed to FNB a listing
of those persons deemed by Home Savings and its counsel as of the date of this
Agreement to be "Affiliates" of Home Savings as that term is defined in Rule 405
promulgated under 1933 Act, including persons, trust, estates or other entities
related to persons deemed to be Affiliates of Home Savings.
2.30 OBSTACLES TO REGULATORY APPROVAL OR TAX TREATMENT. To the best of
the knowledge and belief of management of Home Savings, there exists no fact or
condition relating to Home Savings or the Subsidiary that may reasonably be
expected to (i) prevent or materially impede or delay FNB or Home Savings from
obtaining the regulatory approvals required in order to consummate transactions
described herein, or (ii) prevent the Merger from qualifying to be a tax-free
reorganization under Section 368(a)(1)(A) of the Code; and, if any such fact or
condition becomes known to Home Savings, Home Savings shall promptly (and in any
event within three days after obtaining such knowledge) communicate such fact or
condition to the President of FNB.
2.31 DISCLOSURE. To the best of the knowledge and belief of management
of Home Savings, no written statement, certificate, schedule, list or other
written information furnished by or on behalf of Home Savings at any time to FNB
in connection with this Agreement (including without limitation the statements
contained herein), when considered as a whole, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading. Each document
delivered or to be delivered by Home Savings to FNB is or will be a true and
complete copy of such document, unmodified except by another document delivered
thereby.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF FNB
Except as otherwise specifically described herein or as "Previously
Disclosed" to Home Savings, FNB hereby makes the following representations and
warranties to Home Savings. ("Previously Disclosed" shall mean, as to FNB, the
disclosure of information in a letter delivered by FNB to Home Savings
specifically referring to this Agreement and arranged in sections corresponding
to the sections, subsections and items of this Agreement applicable thereto, and
which letter has been delivered prior to the execution of this Agreement.
Information shall be deemed Previously Disclosed for the purpose of a given
section, subsection or item of this Agreement only to the extent a specific
reference thereto is made in connection with disclosure of such information at
the time of such delivery.)
3.1 ORGANIZATION; STANDING; POWER. FNB is duly organized and
incorporated, validly existing and in good standing as a business corporation
under the laws of North Carolina; First National is duly organized and
incorporated, validly existing and in good standing as a national banking
association under federal law. Each of FNB and First National (i) has all
requisite power and authority (corporate and other) to own its respective
properties
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and conduct its business as now being conducted, (ii) is duly qualified to do
business and is in good standing in each other jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where
failure so to qualify would not have a material adverse effect on its business
operations or financial condition, and (iii) is not transacting business, or
operating any properties owned or leased by it, in violation of any provision of
federal or state law or any rule or regulation promulgated thereunder, which
violation would have a material adverse effect on its business operations or
financial condition.
3.2 CAPITAL STOCK. FNB's authorized capital stock consists of 5,000,000
shares of FNB Stock and 200,000 shares of preferred stock, par value $10.00. As
of March 27, 1997, an aggregate of 1,811,104 shares of FNB Stock had been issued
and were outstanding, and none of the preferred stock was issued and
outstanding. FNB's outstanding capital stock has been duly authorized and
validly issued, and is fully paid and nonassessable, and the shares of FNB Stock
issued to Home Savings' shareholders pursuant to this Agreement, when issued as
described herein, will be duly authorized, validly issued, fully paid and
nonassessable.
3.3 CONVERTIBLE SECURITIES, OPTIONS, ETC. Except as Previously
Disclosed, FNB has no outstanding (i) securities or other obligations (including
debentures or other debt instruments) which are convertible into shares of FNB
Stock or any other securities of FNB, (ii) options, warrants, rights, calls or
other commitments of any nature which entitle any person to receive or acquire
any shares of FNB Stock or any other securities of FNB, or (iii) plan, agreement
or other arrangement pursuant to which shares of FNB Stock or any other
securities of FNB, or options, warrants, rights, calls or other commitments of
any nature pertaining thereto, have been or may be issued.
3.4 AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement has been
duly and validly approved by FNB's Board of Directors. (i) FNB has the corporate
power and authority to execute and deliver this Agreement and to perform its
obligations and agreements and carry out the transactions described herein, (ii)
all corporate proceedings required to be taken to authorize FNB to enter into
this Agreement and to perform its respective obligations and agreements and
carry out the transactions described herein have been duly and properly taken,
and (iii) this Agreement constitutes the valid and binding agreement of FNB
enforceable in accordance with its terms (except to the extent enforceability
may be limited by (A) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect which affect creditors'
rights generally, (B) legal and equitable limitations on the availability of
injunctive relief, specific performance and other equitable remedies, and (C)
general principles of equity and applicable laws or court decisions limiting the
enforceability of indemnification provisions).
3.5 VALIDITY OF TRANSACTIONS; ABSENCE OF REQUIRED CONSENTS OR WAIVERS.
Except where the same would not have a material adverse effect on FNB and First
National considered as one enterprise, neither the execution and delivery of
this Agreement, nor the consummation of the transactions described herein, nor
compliance by FNB with any of its
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obligations or agreements contained herein, will: (i) conflict with or result in
a breach of the terms and conditions of, or constitute a default or violation
under any provision of, FNB's Articles of Incorporation or Bylaws, or any
contract, agreement, lease, mortgage, note, bond, indenture, license, or
obligation or understanding (oral or written) to which FNB is bound or by which
it, its business, capital stock or any of its properties or assets may be
affected; (ii) result in the creation or imposition of any lien, claim,
interest, charge, restriction or encumbrance upon any of FNB's properties or
assets; (iii) violate any applicable federal or state statute, law, rule or
regulation, or any order, writ, injunction or decree of any court,
administrative or regulatory agency or governmental body; (iv) result in the
acceleration of any obligation or indebtedness of FNB; or, (v) interfere with or
otherwise adversely affect FNB's ability to carry on its business as presently
conducted. No consents, approvals or waivers are required to be obtained from
any person or entity in connection with FNB's execution and delivery of this
Agreement, or the performance of its obligations or agreements or the
consummation of the transactions described herein, except for required approvals
of governmental or regulatory authorities described in Section 7.1(c) below.
3.6 FNB REPORTS. Since January 1, 1990, FNB and First National have
filed all reports, registrations and statements, together with any amendments
that were required to be made with respect thereto, that were required to be
filed with (i) the SEC, (ii) the Federal Reserve Board ("FRB"), (iii) the FDIC,
(iv) the OCC, and (v) any other governmental or regulatory authorities having
jurisdiction over FNB or its subsidiary. All such reports and statements filed
with the SEC, the FRB, the FDIC, the OCC or other such regulatory authority are
collectively referred to herein as the "FNB Reports." As of their respective
dates, the FNB Reports complied in all material respects with all the statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed and did 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; and, FNB has not been notified that any
such FNB Reports were deficient in any material respect as to form or content.
Following the date of this Agreement, FNB shall deliver to Home Savings upon its
request a copy of any report, registration, statement or other regulatory filing
made by FNB or First National with the SEC, the FRB, the FDIC, the OCC or any
other such regulatory authority.
3.7 FNB FINANCIAL STATEMENTS. FNB has delivered to Home Savings a copy
of (i) FNB's audited consolidated balance sheets as of December 31, 1996 and
December 31, 1995, and its consolidated statements of income, changes in
shareholders' equity, and cash flows for the years ended December 31, 1996,
December 31, 1995 and December 31, 1994 (the "FNB Financial Statements") and
(ii) FNB's unaudited consolidated balance sheet as of March 31, 1997 and its
consolidated statement of operations for the three months ended March 31, 1997
(the "FNB Interim Financial Statements"). The FNB Financial Statements and the
FNB Interim Financial Statements were prepared in accordance with GAAP applied
on a consistent basis throughout the periods indicated, the FNB Financial
Statements have been audited and certified by certified public independent
accountants, KPMG Peat Marwick, and the FNB Financial Statements and the FNB
Interim Financial Statements present fairly FNB's
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consolidated financial condition, assets and liabilities, results of operations,
changes in shareholders' equity and changes in cash flows as of the dates and
for the periods specified therein.
3.8 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1996, there
has been no material adverse change, and there has occurred no event or
development and there currently exists no condition or circumstance which, with
the lapse of time or otherwise, may or could cause, create or result in a
material adverse change, in or affecting FNB's consolidated financial condition
or results of operations, or in its prospects, business, assets, loan portfolio,
investments, properties or operations.
3.9 ABSENCE OF BROKERAGE OR FINDERS' COMMISSIONS. All negotiations
relative to this Agreement and the transactions described herein have been
carried on by FNB directly with Home Savings and no person or firm has been
retained by or has acted on behalf of, pursuant to any agreement, arrangement or
understanding with, or under the authority of, FNB or its Board of Directors, as
a broker, finder or agent or has performed similar functions or otherwise is or
may be entitled to receive or claim a brokerage fee or other commission in
connection with or as a result of the transactions described herein. FNB has not
agreed to pay any brokerage fee or other commission to any person or entity in
connection with or as a result of the transactions described herein.
3.10 OBSTACLES TO REGULATORY APPROVAL OR TAX TREATMENT. To the best of
the knowledge and belief of the executive officers of FNB, no fact or condition
relating to FNB exists that may reasonably be expected to (i) prevent or
materially impede or delay FNB or Home Savings from obtaining the regulatory
approvals required in order to consummate transactions described herein, or (ii)
prevent the Merger from qualifying to be a tax-free reorganization under Section
368(a)(1)(A) of the Code; and, if any such fact or condition becomes known to
the executive officers of FNB, FNB promptly (and in any event within three days
after obtaining such knowledge) shall communicate such fact or condition to the
President of Home Savings.
3.11 DISCLOSURE. To the best of the knowledge and belief of FNB, no
written statement, certificate, schedule, list or written information furnished
by or on behalf of FNB at any time to Home Savings in connection with this
Agreement (including without limitation the statements contained herein), when
considered as a whole, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. Each document delivered or to be delivered
by FNB to Home Savings is or will be a true and complete copy of such document,
unmodified except by another document delivered by FNB.
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ARTICLE IV. COVENANTS OF HOME SAVINGS
4.1 AFFIRMATIVE COVENANTS OF HOME SAVINGS. Home Savings hereby
covenants and agrees as follows with FNB:
(A) "AFFILIATES" OF HOME SAVINGS. Home Savings will cause each
Affiliate Previously Disclosed to FNB (in addition to each additional person who
shall become an Affiliate of Home Savings after the date of this Agreement or
who shall be deemed by FNB or its counsel, in their sole discretion, to be an
Affiliate of Home Savings, and including persons, trusts, estates, corporations
or other entities related to persons deemed to be Affiliates of Home Savings) to
execute and deliver to FNB prior to the Closing a written agreement (the
"Affiliates' Agreement") relating to restrictions on shares of FNB Stock to be
received by such Affiliates pursuant to this Agreement and confirming that the
Affiliate has no plan or intention to sell, exchange or otherwise dispose of any
FNB Stock, and which Affiliates' Agreement shall be in form and content
reasonably satisfactory to FNB and substantially in the form attached as
Schedule B to this Agreement. Certificates for the shares of FNB Stock issued to
Affiliates of Home Savings shall bear a restrictive legend (substantially in the
form as shall be set forth in the Affiliates' Agreement) with respect to the
restrictions applicable to such shares.
(B) CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME. While the parties
recognize that the operation of Home Savings until the Effective Time is the
responsibility of Home Savings and its Board of Directors and officers, Home
Savings agrees that, between the date of this Agreement and the Effective Time,
Home Savings will carry on its business, in and only in the regular and usual
course in substantially the same manner as such business heretofore was
conducted, and, to the extent consistent with such business and within its
ability to do so, Home Savings agrees that it, and where applicable, the
Subsidiary, will:
(i) preserve intact their present business organization, keep
available their present officers and employees, and preserve its
relationships with customers, depositors, creditors, correspondents,
suppliers, and others having business relationships with them;
(ii) maintain all of their properties and equipment in
customary repair, order and condition, ordinary wear and tear excepted;
(iii) maintain their books of account and records in the
usual, regular and ordinary manner in accordance with sound business
practices applied on a consistent basis;
(iv) comply with all laws, rules and regulations applicable to
them, their properties, assets or employees and to the conduct of their
business;
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(v) not change its existing loan underwriting guidelines,
policies or procedures except as may be required by law;
(vi) continue to maintain in force insurance such as is
described in Section 2.26 above; not modify any bonds or policies of
insurance in effect as of the date hereof unless the same, as modified,
provides substantially equivalent coverage; and, not cancel, allow to
be terminated or, to the extent available, fail to renew, any such bond
or policy of insurance unless the same is replaced with a bond or
policy providing substantially equivalent coverage; and,
(vii) promptly provide to FNB such information about the
financial condition, results of operations, prospects, businesses,
assets, loan portfolio, investments, properties or operations of Home
Savings and the Subsidiary, as FNB reasonably shall request.
(C) PERIODIC INFORMATION REGARDING LOANS. Home Savings agrees that each
new extension of credit that it proposes to make in excess of $150,000 will be
submitted to FNB at least three business days before Home Savings' issuance of a
commitment on such loan. Additionally, Home Savings agrees to make available and
provide to FNB the following information with respect to its loans and other
extensions of credit (such assets herein referred to as "Loans") as of March 31,
1997 and as of the end of each month thereafter until the Effective Time, such
information for each month to be in form and substance as is usual and customary
in the conduct of its business and to be furnished within 25 days of the end of
each month ending after the date hereof, except as otherwise provided:
(i) a list of Loans past due for 30 days or more as to
principal or interest;
(ii) an analysis of the Loan Loss Reserve and management's
assessment of the adequacy of the Loan Loss Reserve, which analysis and
assessment shall include a list of all classified or "watch list"
Loans, along with the outstanding balance and amount specifically
allocated to the Loan Loss Reserve for each such classified or "watch
list" Loan;
(iii) a list of Loans in nonaccrual status;
(iv) a list of all Loans over $50,000 without principal
reduction for a period of longer than one year;
(v) a list of all foreclosed real property or other real
estate owned and all repossessed personal property;
(vi) a list of reworked or restructured Loans over $50,000 and
still outstanding, including original terms, restructured terms and
status; and
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(vii) a list of any actual or threatened litigation by or
against Home Savings pertaining to any Loans or credits, which list
shall contain a description of circumstances surrounding such
litigation, its present status and management's evaluation of such
litigation.
(D) NOTICE OF CERTAIN CHANGES OR EVENTS. Following the execution of
this Agreement and up to the Effective Time, Home Savings promptly will notify
FNB in writing of and provide to it such information as it shall request
regarding (i) any material adverse change in its consolidated financial
condition, consolidated results of operations, prospects, business. assets, loan
portfolio, investments, properties or operations, or of the actual or
prospective occurrence of any condition or event which, with the lapse of time
or otherwise, may or could cause, create or result in any such material adverse
change, or of (ii) the actual or prospective existence or occurrence of any
condition or event which, with the lapse of time or otherwise, has caused or may
or could cause any statement, representation or warranty of Home Savings herein
to be or become inaccurate, misleading or incomplete, or which has resulted or
may or could cause, create or result in the breach or violation of any of Home
Savings' covenants or agreements contained herein or in the failure of any of
the conditions described in Sections 7.1 or 7.3 below.
(E) ACCRUALS FOR LOAN LOSS RESERVE AND EXPENSES. Home Savings will
cooperate with FNB and, not later than the Effective Time, Home Savings will
make such appropriate accounting entries in its books and records and take such
other actions as FNB shall, in its sole discretion, deem to be necessary or
desirable in anticipation of the Merger, including without limitation additional
provisions for its Loan Loss Reserve or accruals or the creation of reserves for
employee benefit and Merger-related expenses.
(F) CONSENTS TO ASSIGNMENT OF LEASES. Home Savings will use its best
efforts to obtain all required consents of its lessors to the assignment to FNB
of Home Savings' rights and obligations under any personal property leases, each
of which consents shall be in such form as shall be specified by FNB.
(G) REFINANCE OR TRANSFER OF ESOP LOAN. Subject to the approval of the
ESOP Trustee, the loan to the Home Savings Bank of Siler City, Inc., SSB
Employee Stock Ownership Plan (the "ESOP") from First National, the outstanding
principal balance of which was approximately $260,000 as of May 29, 1997 (the
"ESOP Loan"), shall be refinanced with a lender and on terms reasonably
satisfactory to FNB, and to pay to First National all principal, interest and
other amounts owing First National thereunder. In the alternative, Home Savings
shall either pay off the ESOP Loan in full or take such actions as may be
necessary to cause the ESOP Loan to be transferred and assigned, without
recourse to FNB or First National, to another lender and on terms reasonably
satisfactory to FNB in exchange for the payment to First National of all
principal interest and other amounts owing First National thereunder.
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(H) AMENDMENTS TO ESOP. Home Savings shall take such actions as shall
cause the ESOP to be amended in accordance with the resolutions of the Board of
Directors of Home Savings on June 3, 1997 relating to the ESOP.
(I) PENSION PLAN. Home Savings shall take such actions as may be
necessary to terminate, in advance of the Effective Time, the defined pension
plan of Home Savings (the "Home Savings Pension Plan") in such a manner as would
qualify for a standard termination pursuant to Section 4041(b) of ERISA and any
applicable provision of the Code. Prior to or in connection with such
termination, Home Savings shall have amended the Home Savings Pension Plan to
(i) reflect the adoption of PBGC interest rate assumptions for purposes of
determining the amount of participant accrued benefits under the Home Savings
Pension Plan, (ii) bring the Home Savings Pension Plan into compliance with
applicable law in effect at the time of its termination, and (iii) recognize
that, on account of the Merger, FNB shall become the sponsor of the Home Savings
Pension Plan, as terminated. Home Savings shall submit the Home Savings Pension
Plan to the Internal Revenue Service for determination as to the impact of such
amendments and termination on the tax-qualified status of the Home Savings
Pension Plan.
(J) FURTHER ACTION; INSTRUMENTS OF TRANSFER. Home Savings covenants and
agrees with FNB that it (i) will use its best efforts in good faith to take or
cause to be taken all action required of it hereunder as promptly as practicable
so as to permit the consummation of the transactions described herein at the
earliest possible date, (ii) shall perform all acts and execute and deliver to
FNB all documents or instruments required herein or as otherwise shall be
reasonably necessary or useful to or requested of Home Savings in consummating
such transactions and (iii) will cooperate with FNB in every way in carrying
out, and will pursue diligently the expeditious completion of, such
transactions.
4.2 NEGATIVE COVENANTS OF HOME SAVINGS. Home Savings hereby covenants
and agrees that, between the date hereof and the Effective Time, neither Home
Savings nor, if applicable, the Subsidiary, will do any of the following things
or take any of the following actions without the prior written consent and
authorization of the President of FNB.
(A) AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS. Amend its
Articles of Incorporation or Bylaws.
(B) CHANGE IN CAPITAL STOCK. Make any change in its authorized capital
stock, or create any other or additional authorized capital stock or other
securities, or issue, sell, purchase, redeem, retire, reclassify, combine or
split any shares of its capital stock or other securities (including securities
convertible into capital stock), or enter into any agreement or understanding
with respect to any such action.
(C) OPTIONS, WARRANTS AND RIGHTS. Grant or issue any options, warrants,
calls, puts or other rights of any kind relating to the purchase, redemption or
conversion of shares of its capital stock or any other securities (including
securities convertible into capital stock) or enter
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into any agreement or understanding with respect to any such action, other than
the Option Agreement between Home Savings and FNB executed as of the date
hereof.
(D) DIVIDENDS. Declare or pay any dividends on the outstanding shares
of capital stock or make any other distributions on or in respect of any shares
of its capital stock or otherwise to its shareholders except as may be allowed
pursuant to Section 1.4(a) above.
(E) EMPLOYMENT, BENEFIT OR RETIREMENT AGREEMENTS OR PLANS. Except as
required by law or contemplated by this Agreement, (i) enter into or become
bound by any oral or written contract, agreement or commitment for the
employment or compensation of any director, officer, employee or consultant
which is not immediately terminable by Home Savings or the Subsidiary without
cost or other liability on no more than 30 days notice; (ii) amend any existing,
or adopt, enter into or become bound by any new or additional, profit-sharing,
bonus, incentive, change in control or "golden parachute," stock option, stock
purchase, pension, retirement, insurance (hospitalization, life or other), paid
leave (sick leave, vacation leave or other) or similar contract, agreement,
commitment, understanding, plan or arrangement (whether formal or informal) with
respect to or which provides for benefits for any of its current or former
directors, officers, employees or consultants; (iii) make contributions to the
Home Savings Pension Plan to correct any underfunding in excess of $35,000; (iv)
make contributions to the ESOP for the plan year beginning October 1, 1997 in
excess of an aggregate amount determined by prorating an aggregate annual
contribution amount of $62,500 to the date of such contributions; or (v) enter
into or become bound by any contract with or commitment to any labor or trade
union or association or any collective bargaining group.
(F) INCREASE IN COMPENSATION. With the exception of the anticipated
increases in annual salary and annual officer and employee bonuses Previously
Disclosed to FNB, increase the compensation or benefits of, or pay any bonus or
other special or additional compensation to, any of its directors, officers,
employees or consultants.
(G) ACCOUNTING PRACTICES. Make any changes in its accounting methods,
practices or procedures or in depreciation or amortization policies, schedules
or rates heretofore applied (except as required by GAAP or governmental
regulations).
(H) ACQUISITIONS; ADDITIONAL BRANCH OFFICES. Directly or indirectly (i)
acquire or merge with, or acquire any branch or all or any significant part of
the assets of, any other person or entity, (ii) open any new branch office, or
(iii) enter into or become bound by any contract, agreement, commitment or
letter of intent relating to, or otherwise take or agree to take any action in
furtherance of, any such transaction or the opening of a new branch office.
(I) CHANGES IN BUSINESS PRACTICES. Except as may be required by the
FDIC, the Administrator or any other governmental or other regulatory agency or
as shall be required by applicable law, regulation or this Agreement, (i) change
in any material respect the nature of its business or the manner in which it
conducts its business, (ii) discontinue any material
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portion or line of its business or (iii) change in any material respect its
lending, investment, asset-liability management or other material banking or
business policies (except to the extent required by Sections 4.1(b) and 4.1(e)
above).
(J) EXCLUSIVE MERGER AGREEMENT. Directly or indirectly, through any
person (i) encourage, solicit or attempt to initiate or procure discussions,
negotiations or offers with or from any person or entity (other than FNB)
relating to a merger or other acquisition of Home Savings or the purchase or
acquisition of any Home Savings Stock or all or any significant part of Home
Savings' assets; or provide assistance to any person in connection with any such
offer; (ii) except to the extent required by law, disclose to any person or
entity any information not customarily disclosed to the public concerning Home
Savings or its business, or afford to any other person or entity access to its
properties, facilities, books or records; (iii) sell or transfer all or any
significant part of Home Savings' assets to any other person or entity; or (iv)
enter into or become bound by any contract, agreement, commitment or letter of
intent relating to, or otherwise take or agree to take any action in furtherance
of, any such transaction.
(K) ACQUISITION OR DISPOSITION OF ASSETS.
(i) Sell or lease (as lessor), or enter into or become bound
by any contract, agreement, option or commitment relating to the sale,
lease (as lessor) or other disposition of any real estate; or sell or
lease (as lessor), or enter into or become bound by any contract,
agreement, option or commitment relating to the sale, lease (as lessor)
or other disposition of any equipment or any other fixed or capital
asset (other than real estate) having a book value or a fair market
value, whichever is greater, of more than $25,000 for any individual
item or asset, or more than $50,000 in the aggregate for all such items
or assets;
(ii) Purchase or lease (as lessee), or enter into or become
bound by any contract, agreement, option or commitment relating to the
purchase, lease (as lessee) or other acquisition of any real property;
or purchase or lease (as lessee), or enter into or become bound by any
contract, agreement, option or commitment relating to the purchase,
lease (as lessee) or other acquisition of any equipment or any other
fixed assets (other than real estate) having a purchase price, or
involving aggregate lease payments, in excess of $25,000 for any
individual item or asset, or more than $50,000 in the aggregate for all
such items or assets;
(iii) Enter into any purchase commitment for supplies or
services which calls for prices of goods or fees for services
materially higher than current market prices or fees or which obligates
Home Savings or the Subsidiary for a period longer than 12 months;
(iv) Except in the ordinary course of its business consistent
with its past practices, sell, purchase or repurchase, or enter into or
become bound by any contract,
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agreement, option or commitment to sell, purchase or repurchase, any
loan or other receivable or any participation in any loan or other
receivable; or
(v) Sell or dispose of, or enter into or become bound by any
contract, agreement, option or commitment relating to the sale or other
disposition of, any other asset (whether tangible or intangible, and
including without limitation any trade name, trademark, copyright,
service mark or intellectual property right or license); or assign its
right to or otherwise give any other person its permission or consent
to use or do business under the corporate name of Home Savings or the
Subsidiary or any name similar thereto; or release, transfer or waive
any license or right granted to it by any other person to use any
trademark, trade name, copyright, service mark or intellectual property
right.
(L) DEBT; LIABILITIES. Except in the ordinary course of its business
consistent with its past practices, (i) enter into or become bound by any
promissory note, loan agreement or other agreement or arrangement pertaining to
its borrowing of money, (ii) assume, guarantee, endorse or otherwise become
responsible or liable for any obligation of any other person or entity, or (iii)
incur any other liability or obligation (absolute or contingent).
(M) LIENS; ENCUMBRANCES. Mortgage, pledge or subject any of its assets
to, or permit any of its assets to become or (with the exception of those liens
and encumbrances Previously Disclosed to FNB with specificity) remain subject
to, any lien or any other encumbrance (other than in the ordinary course of
business consistent with its past practices in connection with securing of
public funds deposits, repurchase agreements or other similar operating
matters).
(N) WAIVER OF RIGHTS. Waive, release or compromise any material rights
in its favor (except in the ordinary course of business) except in good faith
for fair value in money or money's worth, nor waive, release or compromise any
rights against or with respect to any of its officers, directors or shareholders
or members of families of officers, directors or shareholders.
(O) OTHER CONTRACTS. Enter into or become bound by any contracts,
agreements, commitments or understandings (other than those described elsewhere
in this Section 4.2.) (i) for or with respect to any charitable contributions;
(ii) with any governmental or regulatory agency or authority; (iii) pursuant to
which Home Savings would assume, guarantee, endorse or otherwise become liable
for the debt, liability or obligation of any other person or entity; (iv) which
is entered into other than in the ordinary course of its business; or (v) which,
in the case of any one contract, agreement, commitment or understanding and
whether or not in the ordinary course of its business, would obligate or commit
Home Savings to make expenditures of more than $25,000 (other than contracts,
agreements, commitments or understandings entered into in the ordinary course of
Home Savings' lending operations).
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(P) DEPOSIT LIABILITIES. Make any change in its current deposit
policies, including pricing and acceptance, and shall not take any actions
designed to materially decrease the aggregate level of deposits as of the date
of this Agreement.
ARTICLE V. COVENANTS OF FNB
FNB hereby covenants and agrees as follows with Home Savings:
5.1 NASDAQ NOTIFICATION. As soon as possible after the Effective Time,
FNB shall file with the National Association of Securities Dealers such
notifications and other materials (and shall pay such fees) as shall be required
for the listing on the NASDAQ National Market of the shares of FNB Stock to be
issued to Home Savings' shareholders.
5.2 EMPLOYEES; SEVERANCE PAYMENTS.
(A) EMPLOYMENT OF EDWIN E. BRIDGES. Provided he remains employed as
President of Home Savings at the Effective Time, FNB agrees to cause First
National to enter into an Employment Agreement with Edwin E. Bridges as of the
Effective Time which shall contain substantially the same terms and conditions
and be in substantially the same form as is attached hereto as Schedule C.
(B) EMPLOYMENT OF OTHER HOME SAVINGS EMPLOYEES. Provided they remain
employed by Home Savings at the Effective Time, FNB will locate suitable
positions with First National for and offer employment with First National to,
all other employees of Home Savings. Any employment so offered by FNB to an
employee of Home Savings shall be in such a position, at such location, and for
such rate of compensation as FNB or First National shall determine in its sole
discretion. Each such person's employment shall be on an "at-will" basis, and
nothing in this Agreement shall be deemed to constitute an employment agreement
with any such person or to obligate FNB or First National to employ any such
person for any specific period of time or in any specific position or to
restrict FNB's or First National's right to terminate the employment of any such
person at any time and for any reason.
(C) SEVERANCE COMPENSATION. FNB shall pay or cause First National to
pay severance compensation to any former employee of Home Savings employed by
First National at the Effective Time who is terminated by First National within
six months of the Effective Time in an amount equal to the amount of such
employee's accrued but unused vacation leave, plus an amount equal to two week's
salary or normal wages (at such employee's then current salary or wage rate)
multiplied by the number of full years and any partial year of service by such
employee with Home Savings. Notwithstanding anything contained herein to the
contrary, no payment of severance compensation pursuant to this Section 5.2(c)
shall be made to any person who does not remain an employee of Home Savings at
the Effective Time. Severance pay for any former employee of Home Savings who is
terminated by First National after six months of the Effective Time shall be
determined in accordance with First National's then existing policies.
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5.3 EMPLOYEE BENEFITS.
(A) GENERALLY. Except as otherwise provided herein and to the extent
permitted by contribution and deduction limitations of ERISA and the Code with
respect to FNB's qualified plans, any employee of Home Savings who becomes an
employee of First National at the Effective Time (a "New Employee") shall become
entitled to receive all employee benefits and to participate in all benefit
plans provided by FNB or First National on the same basis and subject to the
same eligibility and vesting requirements, and to the same conditions,
restrictions and limitations, as generally are in effect and applicable to other
newly hired employees of FNB or First National. However, each New Employee shall
be given credit for his or her full years of service with Home Savings for
purposes of (i) entitlement to vacation and sick leave and for participation in
all First National welfare, insurance and other fringe benefit plans, and (ii)
eligibility for participation and vesting in FNB's Section 401(k) savings plan
and in its defined benefit pension plan (the "FNB Pension Plan"); provided,
however, that in no event shall any New Employee be entitled to or be given
credit for past service with Home Savings for purposes of the calculation or
determination of benefits under the FNB Pension Plan. FNB will grant to each New
Employee a pro rata amount of sick leave and vacation leave, in accordance with
FNB standard leave policies, for the period between the Effective Time and the
end of the calendar year during which the Effective Time occurs. Each New
Employee will be permitted to carry over accrued and unused sick leave and
vacation leave to the extent such carryover would be consistent with and would
not exceed limitations imposed by FNB's leave policies.
(B) HEALTH INSURANCE. Any New Employee shall be entitled to participate
in First National's group health insurance plan at a cost equal to the cost for
any First National employee and such participation shall be without regard to
pre-existing condition requirements under First National's group health
insurance plan, to the extent any such condition at the Effective Time would
have been covered under the health insurance plans of Home Savings. In addition
to assuming Home Savings' obligations to provide continued health insurance for
Edwin E. Bridges, which is described in the Employment Agreement attached hereto
as Schedule C, FNB will assume the obligations of Home Savings to provide and
will pay the premiums for continued health insurance for Jack Tanner and Gayle
Loggins for the remainder of their lives with coverage at least equivalent to
the group health insurance coverage generally provided to active, full-time
employees of First National generally; provided, however, that this obligation
to provide or pay for health insurance coverage may be partially or wholly
fulfilled by any Medicare, employer or similar coverage for which the employee
is eligible in the future to the extent of any coverage provided thereby at no
cost to the employee; provided further, however, that FNB shall not be obligated
to provide or pay for any such health insurance coverage for any such individual
in the event he or she: (a) owns any interest in (other than a passive
investment not in excess of two percent (2%) of the outstanding capital stock of
any such business whose stock is publicly traded on the NASDAQ over-the-counter
market, the New York Stock Exchange or the American Stock Exchange), manages,
operates, controls, becomes employed by, renders consulting or advisory services
to, or participates in or become connected with the management or control of,
any business that is then engaged in
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the operation of a bank, savings and loan association or similar financial
institution that conducts its operations within North Carolina and its
contiguous states; (b) influences or attempts to influence any customer of First
National or FNB to discontinue such customer's use of First National or FNB's
services or to divert such business to any other person, firm or corporation;
(c) interferes with, disrupts or attempts to disrupt the relationship,
contractual or otherwise, between First National or FNB and any of their
respective customers, suppliers, principals, distributors, lessors or licensors;
or (d) solicits any officer or employee of First National or FNB, whose base
annual salary at the time of the Employee's termination was $20,000 or more, to
work for any other person, firm or corporation.
(C) ESOP. Provided that (i) the ESOP Loan from First National has been
refinanced prior to the Closing in accordance with Section 4.1(g) above, (ii)
the ESOP has been amended prior to the Closing in accordance with Section 4.1(h)
above, and (iii) Edwin E. Bridges is continuing to serve as Trustee of the ESOP,
FNB agrees to assume at the Effective Time, as successor plan sponsor, the ESOP.
Home Savings acknowledges that FNB as a successor plan sponsor shall have no
duty to continue the ESOP, provided, however, that FNB agrees that until such
time as new employees (as defined in Section 5.3) become eligible to participate
in the FNB Section 401(K) savings plan, it will continue the ESOP and make
contributions to the ESOP at the aggregate annual rate of $62,500 prorated to
the date of such contributions.
(D) OPTION AND MR PLANS. FNB shall assume each stock option granted
under the ISO Plan and NSSO Plan as provided in Section 1.7(a) above, or shall
substitute options under the FNB Plan in accordance with the provisions of
1.7(c) above. FNB will assume the obligations of Home Savings under the MR Plan
as provided in Section 1.8 above. Home Savings agrees that it will take such
actions in advance of the Effective Time as may be necessary to amend the ISO,
NSSO and MR Plans effective upon consummation of the Merger consistent with the
provisions of this Agreement and otherwise satisfactory to FNB.
5.4 BOARD OF DIRECTORS; RETIREMENT PLAN.
(A) ADVISORY BOARD. Each of the members of Home Savings' Board of
Directors at the Effective Time shall be appointed to serve as a member of First
National's local advisory board in Siler City, North Carolina. Each person so
appointed, shall diligently discharge his or her duties as an advisory board
member and promote in good faith FNB's and First National's best interests. For
their services as advisory board members, each person so appointed shall be
compensated at the rate in effect with respect to other members of First
National's advisory board in Siler City, North Carolina provided that he or she
remains a director of the advisory board and provided further that he or she not
be serving as a director or advisory director of another financial institution
or financial institution holding company. Each such person's service as an
advisory director will be at First National's pleasure and will be subject to
First National's normal policies and procedures regarding the appointment and
service of advisory directors; provided, however, that if any such person's
service as an advisory director is terminated by First National shall, upon such
termination and at its election, either (i) cause the full vesting of any
unvested options and awards of such person
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under the NSSO Plan and the MR Plan, respectively, as assumed by FNB as of the
Effective Time, or (ii) provide such person the economic equivalent to any
unvested portion of such options under the NSSO Plan or awards under the MR
Plan.
(B) RETIREMENT PLAN. FNB shall assume the obligations of Home Savings
pursuant to the Home Savings Bank of Siler City, SSB Directors' Retirement Plan
(the "Directors' Plan") effective as of January 12, 1994 and as in effect as of
the date hereof, except that from and after the Effective Time, the FNB Board of
Directors or its compensation committee shall be substituted for the "Committee"
administering the Directors' Plan. Eligible participants in the Directors' Plan
shall begin receiving their retirement benefits under the Directors' Plan upon
the Effective Time, which shall constitute their severance from service on the
Home Savings Board of Directors.
5.5 INDEMNIFICATION OF DIRECTORS AND OFFICERS. After the Effective
Time, without releasing any insurance carrier and after exhaustion of all
applicable director and liability insurance coverage for Home Savings and its
directors and officers, FNB shall indemnify, hold harmless and defend the
directors and officers of Home Savings in office at the Effective Time, to the
same extent as it indemnifies its own directors and officers, from and against
any and all claims, disputes, demands, causes of action, suits, proceedings,
losses, damages, liabilities, obligations, cost and expenses of every kind and
nature including without limitation reasonable attorneys' fees and legal costs
and expenses therewith whether known or unknown and whether now existing or
hereafter arising which may be threatened against, incurred, undertaken,
received or paid by such persons in connection with or which arise out of or
result from or are based upon any action or failure to act by such person in the
ordinary scope of his duties as a director or officer of Home Savings through
the Effective Time; provided, however, that FNB shall not be obligated to
indemnify such person for (i) any act not available for statutory or permissible
indemnification under North Carolina law, (ii) any act of self-dealing in
violation of federal or state law, (iii) any act or omission which is ultimately
determined to have constituted a breach of any implied or actual duty of fair
dealing in connection with a lending obligation (such claims being commonly
referred to as lender liability claims), (iv) any penalty, decree, order,
finding or other action imposed or taken by any regulatory authority, (v) any
violation or alleged violation of any federal or state law, rule, regulation,
order, decree or policy applicable to banks and bank holding companies, (vi) any
violation or alleged violation of federal or state securities laws, or (vii) any
claim of sexual or other unlawful harassment, or any form of employment
discrimination prohibited by federal or state law. The indemnification provided
by this Section 5.5 is the sole indemnification provided by FNB to the directors
and officers of Home Savings for service in such positions up to and through the
Effective Time. This Section 5.5 is intended to create personal rights in the
directors and officers of Home Savings, who shall be deemed to be third-party
beneficiaries hereof. Notwithstanding any other provision of this Agreement, at
the Effective Time, the indemnification rights provided herein shall not be
extinguished but shall instead survive.
ARTICLE VI. MUTUAL AGREEMENTS
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6.1 SHAREHOLDERS MEETING; REGISTRATION STATEMENT; PROXY
STATEMENT/PROSPECTUS.
(A) MEETING OF SHAREHOLDERS. Home Savings shall cause a special meeting
of its shareholders (the "Shareholders' Meeting") to be duly called and held as
soon as practicable (but in no event less than 20 business days following the
mailing to Home Savings' shareholders of the "Proxy Statement/Prospectus"
described below) for the purpose of Home Savings' shareholders voting on the
approval of the Merger and the ratification and adoption of this Agreement. In
connection with the call and conduct of and all other matters relating to the
Shareholders' Meeting (including the solicitation of proxies), Home Savings will
fully comply with all provisions of applicable federal and state law and
regulations and with its Articles of Incorporation and Bylaws.
(B) PREPARATION AND DISTRIBUTION OF PROXY STATEMENT/PROSPECTUS. FNB and
Home Savings jointly shall prepare a "Proxy Statement/Prospectus" for
distribution to Home Savings' shareholders as the proxy statement relating to
Home Savings' solicitation of proxies for use at the Shareholders' Meeting and
as FNB's prospectus relating to the offer and distribution of FNB Stock as
described herein. The Proxy Statement/Prospectus shall be in such form and shall
contain or be accompanied by such information regarding the Shareholders'
Meeting, this Agreement, the parties hereto, the Merger and other transactions
described herein as is required by applicable law and regulations and otherwise
as shall be agreed upon by FNB and Home Savings. FNB shall include the Proxy
Statement/Prospectus as the prospectus in its "Registration Statement" described
below; and, FNB and Home Savings shall cooperate with each other in good faith
and shall use their best efforts to cause the Proxy Statement/Prospectus to
comply with any comments of the SEC and FDIC thereon. Home Savings will mail the
Proxy Statement/Prospectus to its shareholders not less than 20 business days
prior to the scheduled date of the Shareholders' Meeting; provided, however,
that no such materials shall be mailed to Home Savings' shareholders unless and
until FNB shall have determined to its own satisfaction that the conditions
specified in Section 7.3(d) below have been satisfied and shall have approved
such mailing.
(C) REGISTRATION STATEMENT AND "BLUE SKY" APPROVALS. As soon as
practicable following the execution of this Agreement, FNB shall prepare and
file with the SEC under the Securities Act of 1933, as amended (the "1933 Act")
a registration statement on Form S-4 (or on such other form as FNB shall
determine to be appropriate) (the "Registration Statement") covering the FNB
Stock to be issued to shareholders of Home Savings pursuant to this Agreement.
Additionally, FNB shall take all such other actions, if any, as shall be
required by applicable state securities or "blue sky" laws (i) to cause the FNB
Stock to be issued upon consummation of the Merger, and at the time of the
issuance thereof, to be duly qualified or registered (unless exempt) under such
laws, (ii) to cause all conditions to any exemptions from qualification or
registration under such laws to have been satisfied, and (iii) to obtain any and
all required approvals or consents to the issuance of such stock. FNB shall
deliver to Home Savings and its counsel a preliminary draft of the Registration
Statement and the Proxy Statement/Prospectus not later than 90 days after the
date of this Agreement.
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(D) RECOMMENDATION OF HOME SAVINGS' BOARD OF DIRECTORS. Unless due to a
material change in circumstances or for any other reason Home Savings' Board of
Directors reasonably believes that such a recommendation would violate the
directors' duties or obligations as such to Home Savings or to its shareholders,
Home Savings' Board of Directors shall recommend to and actively encourage Home
Savings' shareholders that they vote their shares of Home Savings Stock at the
Shareholders' Meeting to ratify and approve this Agreement and the Merger, and
the Proxy Statement/Prospectus mailed to Home Savings' shareholders will so
indicate and state that Home Savings' Board of Directors considers the Merger to
be advisable and in the best interests of Home Savings and its shareholders.
(E) INFORMATION FOR PROXY STATEMENT/PROSPECTUS AND REGISTRATION
STATEMENT. FNB and Home Savings each agrees to promptly respond, and to use its
best efforts to cause its directors, officers, accountants and affiliates to
promptly respond, to requests by any other such party and its counsel for
information for inclusion in the various applications for regulatory approvals
and in the Proxy Statement/Prospectus. FNB and Home Savings each hereby
covenants with the other that none of the information provided by it for
inclusion in the Proxy Statement/Prospectus will, at the time of its mailing to
Home Savings' shareholders, contain any untrue statement of a material fact or
omit any material fact required to be stated therein or necessary in order to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading; and, at all times following such mailing up to
and including the Effective Time, none of such information contained in the
Proxy Statement/Prospectus, as it may be amended or supplemented, will contain
any untrue statement of a material fact or omit any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
(F) SECTION 3(A)(10) EXEMPTION. Notwithstanding anything in this
Agreement to the contrary, FNB, at its option, may satisfy the requirements of
the 1933 Act by effecting the issuance of the FNB Stock pursuant to Section
3(a)(10) thereof ("Section 3(a)(10)") in lieu of filing the Registration
Statement. In such case, all references to the Proxy Statement/Prospectus in
this Agreement shall mean only the proxy statement relative to Home Savings'
solicitation of proxies for use at the Shareholders' Meeting. If FNB determines
that it will utilize Section 3(a)(10), it shall notify Home Savings in writing
within 90 days of the date of this Agreement and shall file the application to
the office of the Secretary of State of North Carolina relating to the approval
of the fairness of the terms and conditions of the Merger within 120 days of the
date of this Agreement.
6.2 REGULATORY APPROVALS. Within 75 days after the date of this
Agreement, FNB and Home Savings each shall prepare and file, or cause to be
prepared and filed, all applications for regulatory approvals and actions as may
be required of them, respectively, by applicable law and regulations with
respect to the transactions described herein (including applications to the
Federal Reserve, the FDIC, the OCC and the Administrator and to any other
applicable federal or state banking, securities or other regulatory authority).
Each such party shall use their respective best efforts in good faith to obtain
all necessary regulatory
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approvals required for consummation of the transactions described herein. Each
such party shall cooperate with each other party in the preparation of all
applications to regulatory authorities and, upon request, promptly shall furnish
all documents, information, financial statements or other material that may be
required by any other party to complete any such application; and, before the
filing therefor, each party to this Agreement shall have the right to review and
comment on the form and content of any such application to be filed by any other
party. Should the appearance of any of the officers, directors, employees or
counsel of any of the parties hereto be requested by any other party or by any
governmental agency at any hearing in connection with any such application, such
party shall promptly use its best efforts to arrange for such appearance.
6.3 ACCESS. Following the date of this Agreement and to and including
the Effective Time, Home Savings shall provide FNB and its employees,
accountants, counsel or other representatives, access to all its books, records,
files and other information (whether maintained electronically or otherwise), to
all its properties and facilities, and to all its employees, accountants,
counsel and consultants as FNB shall, in its sole discretion, consider to be
necessary or appropriate; provided, however, that any investigation or reviews
conducted by FNB shall be performed in such a manner as will not interfere
unreasonably with Home Savings' normal operations or with their relationship
with their customers or employees, and shall be conducted in accordance with
procedures established by the parties having due regard for the foregoing.
6.4 COSTS. Subject to the provisions of Section 8.3(c) below, and
whether or not this Agreement shall be terminated or the Merger shall be
consummated, FNB and Home Savings each shall pay its own legal, accounting and
financial advisory fees and all its other costs and expenses incurred or to be
incurred in connection with the execution and performance of its obligations
under this Agreement or otherwise in connection with this Agreement and the
transactions described herein (including without limitation all accounting fees,
legal fees, filing fees, printing costs, travel expenses, and, in the case of
Home Savings, all fees owed to Baxter Fentriss and Company and the cost of Home
Savings' "Fairness Opinion" described in Section 7.2(e) below. However, subject
to the provisions of Section 8.3(c) below, all costs incurred in connection with
the preparation, printing and mailing of the Proxy Statement/Prospectus,
including but not limited to printing and postage expenses, shall be deemed to
be incurred and shall be paid fifty percent (50%) by Home Savings and fifty
percent (50%) by FNB.
6.5 ANNOUNCEMENTS. Home Savings and FNB each agrees that no person
other than the parties to this Agreement is authorized to make any public
announcements or statements about this Agreement or any of the transactions
described herein, and that, without the prior review and consent of the others
(which consent shall not unreasonably be denied or delayed), no party hereto may
make any public announcement, statement or disclosure as to the terms and
conditions of this Agreement or the transactions described herein, except for
such disclosures as may be required incidental to obtaining the prior approval
of any regulatory agency or official to the consummation of the transactions
described herein. However, notwithstanding anything contained herein to the
contrary, prior review and consent shall not
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be required if in the good faith opinion of counsel to FNB any such disclosure
by FNB is required by law or otherwise is prudent.
6.6 CONFIDENTIALITY. FNB and Home Savings each agrees that it shall
treat as confidential and not disclose to any unauthorized person any documents
or other information obtained from or learned about the other during the course
of the negotiation of this Agreement and the carrying out of the events and
transactions described herein (including any information obtained during the
course of any due diligence investigation or review provided for herein or
otherwise) and which documents or other information relates in any way to the
business, operations, personnel, customers or financial condition of such other
party; and, that it will not use any such documents or other information for any
purpose except for the purposes for which such documents and information were
provided to it and in furtherance of the transactions described herein. However,
the above obligations of confidentiality shall not prohibit the disclosure of
any such document or information by any party to this Agreement to the extent
(i) such document or information is then available generally to the public or is
already known to the person or entity to whom disclosure is proposed to be made
(other than through the previous actions of such party in violation of this
Section 6.6), (ii) such document or information was available to the disclosing
party on a nonconfidential basis prior to the same being obtained pursuant to
this Agreement, (iii) disclosure is required by subpoena or order of a court or
regulatory authority of competent jurisdiction, or by the SEC or other
regulatory authorities in connection with the transactions described herein, or
(iv) to the extent that, in the reasonable opinion of legal counsel to such
party, disclosure otherwise is required by law. In the event this Agreement is
terminated for any reason, then each of the parties hereto immediately shall
return to the other party all copies of any and all documents or other written
materials or information (including computer generated and stored data) of or
relating to such other party which were obtained from them during the course of
the negotiation of this Agreement and the carrying out of the events and
transactions described herein (whether during the course of any due diligence
investigation or review provided for herein or otherwise) and which documents or
other information relates in any way to the business, operations, personnel,
customers or financial condition of such other party. The parties' obligations
of confidentiality under this Section 6.6 shall survive and remain in effect
following any termination of this Agreement.
6.7 ENVIRONMENTAL STUDIES. At its option, FNB may cause to be conducted
Phase I environmental assessments of the Real Property, the real estate subject
to any Real Property Lease, or the Loan Collateral, or any portion thereof,
together with such other studies, testing and intrusive sampling and analyses as
FNB shall deem necessary or desirable (collectively, the "Environmental
Survey"); provided, however, that the Environmental Survey, as much as possible,
shall be performed in such a manner as will not interfere unreasonably with Home
Savings' normal operations. FNB shall attempt in good faith to complete all such
Phase I environmental assessments within 60 days following the date of this
Agreement and thereafter to conduct and complete any such additional studies,
testing, sampling and analyses as promptly as practicable. Subject to the
provisions of Section 8.3(c) below, the costs of the Environmental Survey shall
be paid by FNB. If (i) the final results of any Environmental
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Survey (or any related analytical data) reflect that there likely has been any
discharge, disposal, release or emission by any person of any Hazardous
Substance on, from or relating to any of the Real Property, real estate subject
to a Real Property Lease or Loan Collateral at any time prior to the Effective
Time, or that any action has been taken or not taken, or a condition or event
likely has occurred or exists, with respect to any of the Real Property, real
estate subject to a Real Property Lease or Loan Collateral which constitutes or
would constitute a violation of any Environmental Laws, and if, (ii) based on
the advice of its legal counsel or other consultants, FNB believes that Home
Savings or, following the Merger, FNB or First National, could become
responsible for the remediation of such discharge, disposal, release or emission
or for other corrective action with respect to any such violation, or that Home
Savings or, following the Merger, FNB or First National, could become liable for
monetary damages (including without limitation any civil or criminal penalties
or assessments) resulting therefrom (or that, in the case of any of the Loan
Collateral, Home Savings or, following the Merger, FNB or First National, could
incur any such liability if it acquired title to such Loan Collateral), and if,
(iii) based on the advice of their legal counsel or other consultants, FNB
believes the amount of expenses or liability which either of them could incur or
for which either of them could become responsible or liable on account of any
and all such remediation, corrective action or monetary damages at any time or
over any period of time could equal or exceed an aggregate of $100,000 over any
period of time, then FNB shall give Home Savings prompt written notice thereof
(together with all information in its possession relating thereto) and, at FNB's
sole option and discretion, at any time thereafter and up to the Effective Time,
it may terminate this Agreement without further obligation or liability to Home
Savings or its shareholders.
6.8 TAX-FREE REORGANIZATION. FNB and Home Savings each undertakes and
agrees that it will use its best efforts to cause the Merger to qualify as a
tax-free "reorganization" within the meaning of Section 368(a)(1)(A) of the Code
and that it shall not intentionally take any action that would cause the Merger
to fail to so qualify.
6.9 TRANSITION TEAM. FNB and Home Savings shall create a transition
team comprised of staff and representatives of Home Savings and staff and
representatives of FNB and First National (the "Transition Team"). The purpose
of the Transition Team shall be to provide detailed guidance to FNB in
fulfilling and consummating the Merger, to maintain open lines of communication
between Home Savings and First National, and to handle customer inquiries
regarding the Merger. The Transition Team shall meet as necessary until the
Effective Time. Members of the Transition Team shall receive no compensation for
such service.
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER
7.1 CONDITIONS TO ALL PARTIES' OBLIGATIONS. Notwithstanding any other
provision of this Agreement to the contrary, the obligations of each of the
parties to this Agreement to consummate the transactions described herein shall
be conditioned upon the satisfaction of each of the following conditions
precedent on or prior to the Closing Date:
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(A) CORPORATE ACTION. All corporate action necessary to authorize the
execution, delivery and performance of this Agreement and the Plan of Merger in
consummation of the transactions contemplated hereby and thereby shall have been
duly and validly taken, including without limitation the approval of the
shareholders of Home Savings of this Agreement and the Plan of Merger.
(B) REGISTRATION STATEMENT EFFECTIVE OR SECTION 3(A)(10) EXEMPTION
APPROVED. Either (i) the Registration Statement (including any post-effective
amendments thereto) shall be effective under the 1933 Act, and no stop orders or
proceedings shall be pending or, to the knowledge of FNB, threatened by the SEC
to suspend the effectiveness of such Registration Statement or (ii) the
application contemplated by Section 6.1(f) above shall have been finally
approved such that the requirements of Section 3(a)(10) shall have been met. FNB
Stock to be issued as contemplated in the Plan of Merger shall have been
registered or shall either be not subject to registration or subject to
exemption from registration under applicable state securities laws.
(c) "BLUE SKY" APPROVALS. FNB Corp. shall have received all state
securities or "Blue Sky" permits or other authorizations, or confirmations as to
the availability of exemptions from Blue Sky registration requirements as may be
necessary, and no stop orders or proceedings shall be pending or, to the
knowledge of FNB, threatened by any state Blue Sky administration to suspend the
effectiveness of any registration statement filed therewith with respect to the
issuance of FNB Stock in the Merger.
(D) REGULATORY APPROVALS. (i)The Merger and other transactions
described herein shall have been approved, to the extent required by law, by the
Federal Reserve, the FDIC, the OCC, the Administrator, and by all other
governmental or regulatory agencies or authorities having jurisdiction over such
transactions, (ii) no governmental or regulatory agency or authority shall have
withdrawn its approval of such transactions or imposed any condition on such
transactions or conditioned its approval thereof, which condition is reasonably
deemed by FNB to be materially disadvantageous or burdensome or to so adversely
impact the economic or business benefits of this Agreement to FNB as to render
it inadvisable for it to consummate the Merger; (iii) all applicable waiting
periods following regulatory approvals shall have expired without objection to
the Merger by the United States Department of Justice or other applicable
regulatory authorities; and (iv) all other consents, approvals and permissions,
and the satisfaction of all of the requirements prescribed by law or regulation,
necessary to the carrying out of the transactions contemplated herein shall have
been procured.
(E) ADVERSE PROCEEDINGS, INJUNCTION, ETC. There shall not be (i) any
order, decree or injunction of any court or agency of competent jurisdiction
which enjoins or prohibits the Merger or any of the other transactions described
herein or any of the parties hereto from consummating any such transaction, (ii)
any pending or threatened investigation of the Merger or any of such other
transactions by the United States Department of Justice, or any actual or
threatened litigation under federal antitrust laws relating to the Merger or any
other such transaction, (iii) any suit, action or proceeding by any person
(including any governmental,
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administrative or regulatory agency), pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit Home Savings
or FNB from consummating the Merger or carrying out any of the terms or
provisions of this Agreement, or (iv) any other suit, claim, action or
proceeding pending or threatened against Home Savings or FNB or any of their
respective officers or directors which shall reasonably be considered by Home
Savings or FNB to be materially burdensome in relation to the proposed Merger or
materially adverse in relation to the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of either such corporation, and which has not been
dismissed, terminated or resolved to the satisfaction of all parties hereto
within 90 days of the institution or threat thereof.
(F) TAX OPINION. FNB and Home Savings shall have received an opinion of
Schell Bray Aycock Abel & Livingston P.L.L.C., in form and substance
satisfactory to them, substantially to the effect that: (i) for federal income
tax purposes, consummation of the Merger will constitute a "reorganization" as
defined in Section 368(a) of the Code; (ii) no taxable gain will be recognized
by a shareholder of Home Savings upon such shareholder's receipt solely of FNB
Stock in exchange for his or her Home Savings Stock; (iii) dividend income or
capital gain will be recognized by a shareholder of Home Savings who receives
FNB Stock and cash in exchange for his or her Home Savings Stock pursuant to
Section 1.5 above, limited to an amount not to exceed the amount of cash
received; (iv) the basis of the FNB Stock received by the shareholder in the
Merger will have the same basis as his or her Home Savings Stock surrendered in
exchange therefor decreased by the amount of cash received, if any, and
increased by any gain recognized on the exchange; (v) if Home Savings Stock is a
capital asset in the hands of the shareholder at the Effective Time, then the
holding period of the FNB Stock received by the shareholder in the Merger will
include the holding period of Home Savings Stock surrendered in exchange
therefor; (vi) cash received by a shareholder who receives solely cash pursuant
to Section 1.5 above will generally be treated as a distribution in redemption
of his or her Home Savings Stock subject to the provisions of Section 302 of the
Code and the constructive ownership rules of Section 318 of the Code; and (vii)
a shareholder who receives cash in lieu of a fractional share of FNB Stock will
recognize gain or loss equal to any difference between the amount of cash
received and the shareholder's basis in the fractional share interest. In
rendering its opinion, Schell Bray Aycock Abel & Livingston P.L.L.C. will
require and rely on representations by officers of FNB and Home Savings, and
will be entitled to make reasonable assumptions.
(G) NASDAQ LISTING. FNB shall have satisfied all requirements for the
shares of FNB Stock to be issued to the shareholders of Home Savings in
connection with the Merger to be listed on the NASDAQ National Market as of the
Effective Time.
7.2 ADDITIONAL CONDITIONS TO HOME SAVINGS' OBLIGATIONS. Notwithstanding
any other provision of this Agreement to the contrary, Home Savings' separate
obligation to consummate the transactions described herein shall be conditioned
upon the satisfaction of each of the following conditions precedent on or prior
to the Closing Date:
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(A) MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the consolidated financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of FNB and its consolidated subsidiary considered as one enterprise
and there shall not have occurred any event or development and there shall not
exist any condition or circumstance which, with the lapse of time or otherwise,
may or could cause, create or result in any such material adverse change.
(B) COMPLIANCE WITH LAWS. FNB shall have complied in all material
respects with all federal and state laws and regulations applicable to the
transactions described herein and where the violation of or failure to comply
with any such law or regulation could or may have a material adverse effect on
the consolidated financial condition, results of operations, prospects,
businesses, assets, loan portfolio, investments, properties or operations of FNB
and its consolidated subsidiary considered as one enterprise.
(C) FNB'S REPRESENTATIONS AND WARRANTIES AND PERFORMANCE OF AGREEMENTS;
OFFICERS' CERTIFICATE. Unless waived in writing by Home Savings as provided in
Section 10.2 below, each of the representations and warranties of FNB contained
in this Agreement shall have been true and correct as of the date hereof and
shall remain true and correct on and as of the Effective Time with the same
force and effect as though made on and as of such date, except (i) for changes
which are not, in the aggregate, material and adverse to the consolidated
financial condition, results of operations, prospects, businesses, assets, loan
portfolio, investments, properties or operations of FNB and its consolidated
subsidiary considered as one enterprise, and (ii) as otherwise contemplated by
this Agreement; and FNB shall have performed in all material respects all of its
obligations, covenants and agreements hereunder to be performed by it on or
before the Closing Date. Home Savings shall have received a certificate dated as
of the Closing Date and executed by its President to the foregoing effect and as
to such other matters as may be reasonably requested by Home Savings.
(D) LEGAL OPINION OF FNB'S COUNSEL. Home Savings shall have received
from Schell Bray Aycock Abel & Livingston P.L.L.C., counsel for FNB, a written
opinion dated as of the Closing Date and substantially in the form of Schedule D
attached hereto or otherwise in form and substance reasonably satisfactory to
Home Savings.
(E) FAIRNESS OPINION. Home Savings shall have received from its
financial advisor, Baxter Fentriss & Company ("Baxter Fentriss"), a written
opinion ( the "Fairness Opinion"), dated as of a date prior to the mailing of
the Proxy Statement/Prospectus to Home Savings' shareholders in connection with
the Shareholders Meeting, to the effect that the consideration to be received by
Home Savings' shareholders in the Merger is fair, from a financial point of
view, to Home Savings and its shareholders; and, Baxter Fentriss shall have
delivered a letter to Home Savings, dated as of a date within ten business days
preceding the Closing Date, to the effect that it remains its opinion that the
terms of the Merger are fair, from a financial point of view, to Home Savings
and its shareholders.
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(F) NO STOCK DIVIDENDS OR SPLITS. FNB shall not have effected any stock
dividends or stock splits with respect to the FNB Stock beginning on the date
that is thirty-five (35) days prior to the Closing Date.
(G) OTHER DOCUMENTS AND INFORMATION FROM FNB. FNB shall have provided
to Home Savings correct and complete copies of its Articles of Incorporation,
Bylaws and Board and shareholder resolutions approving this Agreement and the
Merger (all certified by its Secretary), together with certificates of the
incumbency of its officers and such other closing documents and information as
may be reasonably requested by Home Savings or its counsel.
(H) ACCEPTANCE BY HOME SAVINGS' COUNSEL. The form and substance of all
legal matters described herein or related to the transactions contemplated
herein shall be reasonably acceptable to Home Savings' legal counsel.
7.3 ADDITIONAL CONDITIONS TO FNB'S OBLIGATIONS. Notwithstanding any
other provision of this Agreement to the contrary, FNB's obligations to
consummate the transactions described herein shall be conditioned upon the
satisfaction of each of the following conditions precedent on or prior to the
Closing Date:
(A) MATERIAL ADVERSE CHANGE. There shall not have occurred any material
adverse change in the consolidated financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of Home Savings and there shall not have occurred any event or
development and there shall not exist any condition or circumstance which, with
the lapse of time or otherwise, may or could cause, create or result in any such
material adverse change.
(B) COMPLIANCE WITH LAWS. Home Savings shall have complied in all
material respects with all federal and state laws and regulations applicable to
the transactions described herein and where the violation of or failure to
comply with any such law or regulation could or may have a material adverse
effect on the consolidated financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of FNB or Home Savings.
(C) HOME SAVINGS' REPRESENTATIONS AND WARRANTIES AND PERFORMANCE OF
AGREEMENTS; OFFICERS' CERTIFICATE. Unless waived in writing by FNB as provided
in Section 10.2 below, each of the representations and warranties of Home
Savings contained in this Agreement shall have been true and correct as of the
date hereof and shall remain true and correct at and as of the Effective Time
with the same force and effect as though made on and as of such date, except (i)
for changes which are not, in the aggregate, material and adverse to the
consolidated financial condition, results of operations, prospects, businesses,
assets, loan portfolio, investments, properties or operations of Home Savings
considered as one enterprise, and (ii) as otherwise contemplated by this
Agreement; and Home Savings shall have performed in all material respects all
its obligations, covenants and agreements hereunder to be performed by it on or
before the Closing Date. FNB shall have received a certificate dated as of the
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Closing Date and executed by Home Savings and its President to the foregoing
effect and as to such other matters as may be reasonably requested by FNB.
(D) LEGAL OPINION OF HOME SAVINGS' COUNSEL. FNB shall have received
from Moore & Van Allen, PLLC, counsel to Home Savings, a written opinion, dated
as of the Closing Date and substantially in the form of Schedule E attached
hereto or otherwise in form and substance reasonably satisfactory to FNB.
(E) OTHER DOCUMENTS AND INFORMATION FROM HOME SAVINGS. Home Savings
shall have provided to FNB correct and complete copies of Home Savings' Articles
of Incorporation, Bylaws and board and shareholder resolutions (all certified by
Home Savings' Secretary), together with certificates of the incumbency of Home
Savings' officers and such other closing documents and information as may be
reasonably requested by FNB or its counsel.
(F) AMENDMENTS TO BENEFIT PLANS; TERMINATION OF HOME SAVINGS PENSION
PLAN. The Board of Directors of Home Savings shall have adopted and implemented,
effective as of the Effective Time, amendments to the ISO Plan, the NSSO Plan,
the MR Plan, the ESOP and the Directors' Plan, in form and content consistent
with the provisions of this Agreement and satisfactory to FNB. Home Savings
shall have taken such actions to terminate the Home Savings Pension Plan in
accordance with Section 4.1(i) above.
(G) ESOP LOAN. The ESOP Loan from First National shall have been
refinanced, paid off or transferred as contemplated in accordance with Section
4.1(g) above, and Edwin E. Bridges shall be continuing to serve as the ESOP
Trustee.
(H) CONSENTS TO ASSIGNMENT OF PROPERTY LEASES. Home Savings shall have
obtained all required consents to the assignment to FNB of its rights and
obligations under any personal property lease material to the business of Home
Savings and any Real Property Lease, and such consents shall be in such form and
substance as shall be satisfactory to FNB; and, each of the lessors of Home
Savings shall have confirmed in writing that Home Savings is not in default
under the terms and conditions of any personal property lease or any Real
Property Lease.
(I) AFFILIATES' AGREEMENTS. FNB shall have received the written
Affiliates' Agreements in form and content satisfactory to FNB and signed by all
persons Previously Disclosed to FNB as an Affiliate (other than those principal
shareholders Previously Disclosed under Section 2.3 of this Agreement) or who
otherwise are deemed by FNB or its counsel to be Affiliates of Home Savings as
provided in Section 4.1(a) above.
(J) DISSENTERS' RIGHTS. The holders of no more than ten percent (10%)
of the Home Savings Stock shall have exercised Dissenters' Rights or voted
against approval of this Agreement and the Plan of Merger at the Shareholders'
Meeting (as provided in Section 1.6 above).
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(K) ACCEPTANCE BY FNB'S COUNSEL. The form and substance of all legal
matters described herein or related to the transactions contemplated herein
shall be reasonably acceptable to FNB's legal counsel.
ARTICLE VIII. TERMINATION; BREACH; REMEDIES
8.1 MUTUAL TERMINATION. At any time prior to the Effective Time (and
whether before or after approval hereof by the shareholders of Home Savings),
this Agreement may be terminated by the mutual agreement of FNB and Home
Savings. Upon any such mutual termination, all obligations of Home Savings and
FNB hereunder shall terminate and each party shall pay costs and expenses as
provided in Section 6.4 above.
8.2 UNILATERAL TERMINATION. This Agreement may be terminated by either
FNB or Home Savings (whether before or after approval hereof by Home Savings'
shareholders) upon written notice to the other parties and under the
circumstances described below.
(A) TERMINATION BY FNB. This Agreement may be terminated by FNB by
action of its Board of Directors or Executive Committee:
(i) if any of the conditions to the obligations of FNB (as set
forth in Section 7.1 or 7.3 above) shall not have been satisfied or
effectively waived in writing by FNB by April 30, 1998 (except to the
extent that the failure of such condition to be satisfied has been
caused by the failure of FNB to satisfy any of its obligations,
covenants or agreements contained herein);
(ii) if Home Savings shall have violated or failed to fully
perform any of its obligations, covenants or agreements contained in
Article IV or Article VI herein in any material respect;
(iii) if FNB determines at any time that any of Home Savings'
representations or warranties contained in Article II above or in any
other certificate or writing delivered pursuant to this Agreement shall
have been false or misleading in any material respect when made, or
that there has occurred any event or development or that there exists
any condition or circumstance which has caused or, with the lapse of
time or otherwise, may or could cause any such representations or
warranties to become false or misleading in any material respect;
(iv) if, notwithstanding FNB's satisfaction of its obligations
under Sections 6.1(b), (c), (e) and (f) above, Home Savings'
shareholders do not ratify and approve this Agreement and approve the
Plan of Merger at the Shareholders' Meeting;
(v) if the Merger shall not have become effective on or before
April 30, 1998 unless such date is extended as evidenced by the written
mutual agreement of the parties hereto; provided, however, that in the
event there is a delay of not more than 30
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days caused by circumstances beyond the control of the parties hereto,
the parties hereto agree that the dates set forth in this Section
8.2(a) shall be extended by mutual agreement for up to an additional 60
days;
(vi) if the average Closing Price of FNB Stock for the twenty
(20) consecutive trading days ending on the trading date that is three
(3) days prior to the scheduled Closing Date is less than $27.00 (as
proportionately adjusted in the event of any stock dividend or stock
split of FNB Stock after the date hereof); or,
(vii) under the circumstances described in Section 6.7 above.
However, before FNB may terminate this Agreement for any of the reasons
specified above in (i), (ii) or (iii) of this Section 8.2(a), it shall give
written notice to Home Savings as provided herein stating its intent to
terminate and a description of the specific breach, default, violation or other
condition giving rise to its right to so terminate, and, such termination by FNB
shall not become effective if, within 30 days following the giving of such
notice, Home Savings shall cure such breach, default or violation or satisfy
such condition to the reasonable satisfaction of FNB. In the event Home Savings
cannot or does not cure such breach, default or violation or satisfy such
condition to the reasonable satisfaction of FNB within such 30-day period, FNB
shall have 30 days to notify Home Savings of its intention to terminate this
Agreement. A failure to so notify Home Savings will be deemed to be a waiver by
FNB of the breach, default or violation pursuant to Section 10.2 below.
(B) TERMINATION BY HOME SAVINGS. This Agreement may be terminated by
Home Savings:
(i) if any of the conditions of the obligations of Home
Savings (as set forth in Section 7.1 or 7.2 above) shall not have been
satisfied or effectively waived in writing by Home Savings by April 30,
1998 (except to the extent that the failure of such condition to be
satisfied has been caused by the failure of Home Savings to satisfy any
of its obligations, covenants or agreements contained herein);
(ii) if FNB shall have violated or failed to fully perform any
of its obligations, covenants or agreements contained in Article V or
Article VI herein in any material respect;
(iii) if Home Savings determines that any of FNB's
representations and warranties contained in Article III herein or in
any other certificate or writing delivered pursuant to this Agreement
shall have been false or misleading in any material respect when made,
or that there has occurred any event or development or that there
exists any condition or circumstance which has caused or, with the
lapse of time or otherwise, may or could cause any such representations
or warranties to become false or misleading in any material respect;
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(iv) if, notwithstanding Home Savings' satisfaction of its
obligations contained in Sections 6.1(a), (b), (d) and (e) above, its
shareholders do not ratify and approve this Agreement and approve the
Plan of Merger at the Shareholders' Meeting by the requisite vote under
federal and state law; or,
(v) if the Merger shall not have become effective on or before
April 30, 1998, unless such date is extended as evidenced by the
written mutual agreement of the parties hereto; provided, however, that
in the event there is a delay of not more than 30 days caused by
circumstances beyond the control of the parties hereto, the parties
hereto agree that the dates set forth in this Section 8.2(b) shall be
extended by mutual agreement for up to an additional 60 days; or
(vi) if the average Closing Price for the twenty (20)
consecutive trading days ending on the trading date that is three (3)
days prior to the scheduled Closing Date is more than $36.50 (as
proportionately adjusted in the event of any stock dividend or stock
split of FNB Stock after the date hereof).
However, before Home Savings may terminate this Agreement for any of
the reasons specified above in clause (i), (ii) or (iii) of this Section 8.2(b),
it shall give written notice to FNB as provided herein stating its intent to
terminate and a description of the specific breach, default, violation or other
condition giving rise to its right to so terminate, and, such termination by
Home Savings shall not become effective if, within 30 days following the giving
of such notice, FNB shall cure such breach, default or violation or satisfy such
condition to the reasonable satisfaction of Home Savings. In the event FNB
cannot or does not cure such breach, default or violation or satisfy such
condition to the reasonable satisfaction of Home Savings within such 30-day
period, Home Savings shall have 30 days to notify FNB of its intention to
terminate this Agreement. A failure to so notify FNB will be deemed to be a
waiver by Home Savings of the breach, default or violation pursuant to Section
10.2 below.
8.3 BREACH; REMEDIES. (a) Except as otherwise provided below, in the
event of a breach by Home Savings of any of its representations or warranties
contained in this Agreement or in any other certificate or writing delivered
pursuant to this Agreement, or in the event of its failure to perform or
violation of any of its obligations, agreements or covenants contained in this
Agreement, then FNB's sole right and remedy shall be to terminate this Agreement
prior to the Effective Time as provided in Section 8.2 above, or, in the case of
a failure to perform or violation of any obligations, agreements or covenants,
to seek specific performance thereof.
(b) Likewise, and except as otherwise provided below, in the event of a
breach by FNB of any of its representations or warranties contained in this
Agreement, or in the event of its failure to perform or violation of any of its
obligations, agreements or covenants contained in this Agreement, then Home
Savings' sole right and remedy shall be to terminate this Agreement prior to the
Effective Time as provided in Section 8.2 above, or, in the case of a
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failure to perform or violation of any obligations, agreements or covenants, to
seek specific performance thereof.
(c) Notwithstanding anything contained herein to the contrary, if
either party to this Agreement breaches this Agreement by willfully or
intentionally failing to perform or violating any of its obligations, agreements
or covenants contained in this Agreement, such party shall be obligated to pay
all expenses of the other party described in Section 6.4, together with other
damages recoverable at law or in equity.
ARTICLE IX. INDEMNIFICATION
9.1 AGREEMENT TO INDEMNIFY. Home Savings and FNB hereby agree that in
the event this Agreement is terminated for any reason and the Merger is not
consummated, then they will indemnify each other as provided below.
(A) BY HOME SAVINGS. Home Savings shall indemnify, hold harmless and
defend FNB from and against any and all claims, disputes, demands, causes of
action, suits, proceedings, losses, damages, liabilities, obligations, costs and
expenses of every kind and nature, including without limitation reasonable
attorneys' fees and legal costs and expenses in connection therewith, whether
known or unknown, and whether now existing or hereafter arising, which may be
threatened against, incurred, undertaken, received or paid by FNB:
(i) in connection with or which arise out of or result from or
are based upon (A) Home Savings' operations or business transactions or
its relationship with any of its employees, or (B) Home Savings'
failure to comply with any statute or regulation of any federal, state
or local government or agency (or any political subdivision thereof) in
connection with the transactions described in this Agreement;
(ii) in connection with or which arise out of or result from
or are based upon any fact, condition or circumstance that constitutes
a breach by Home Savings of, or any inaccuracy, incompleteness or
inadequacy in, any of its representations or warranties under or in
connection with this Agreement, or any failure of Home Savings to
perform any of its covenants, agreements or obligations under or in
connection with this Agreement;
(iii) in connection with or which arise out of or result from
or are based upon any information provided by Home Savings which is
included in the Proxy Statement/Prospectus and which information causes
the Proxy Statement/Prospectus at the time of its mailing to Home
Savings' shareholders to contain any untrue statement of a material
fact or to omit any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not false or
misleading; and,
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(iv) in connection with or which arise out of or result from
or are based upon the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling,
reporting, testing, processing, emission, discharge, release,
threatened release, control, removal, clean-up or remediation on, from
or relating to the Real Property by Home Savings or any other person of
any Hazardous Substances, or any action taken or any event or condition
occurring or existing with respect to the Real Property which
constitutes a violation of any Environmental Laws by Home Savings or
any other person.
(B) BY FNB. FNB shall indemnify, hold harmless and defend Home Savings
from and against any and all claims, disputes, demands, causes of action, suits,
proceedings, losses, damages, liabilities, obligations, costs and expenses of
every kind and nature, including without limitation reasonable attorneys' fees
and legal costs and expenses in connection therewith, whether known or unknown,
and whether now existing or hereafter arising, which may be threatened against,
incurred, undertaken, received or paid by Home Savings:
(i) in connection with or which arise out of or result from or
are based upon (A) FNB's operations or business transactions or its
relationship with any of its employees, or (B) FNB's failure to comply
with any statute or regulation of any federal, state or local
government or agency (or any political subdivision thereof) in
connection with the transactions described in this Agreement;
(ii) in connection with or which arise out of or result from
or are based upon of any fact, condition or circumstance that
constitutes a breach by FNB of, or any inaccuracy, incompleteness or
inadequacy in, any of its representations or warranties under or in
connection with this Agreement, or any failure of FNB to perform any of
its covenants, agreements or obligations under or in connection with
this Agreement; and,
(iii) in connection with or which arise out of or result from
or are based upon any information provided by it which is included in
the Proxy Statement/Prospectus and which information causes the Proxy
Statement/Prospectus at the time of its mailing to Home Savings'
shareholders to contain any untrue statement of a material fact or to
omit any material fact required to be stated therein or necessary in
order to make the statements contained therein, in light of the
circumstances under which they were made, not false or misleading.
9.2 PROCEDURE FOR CLAIMING INDEMNIFICATION.
(A) BY FNB. If any matter subject to indemnification hereunder arises
in the form of a claim against FNB, its successors and assigns (collectively,
"Indemnitee") (herein referred to as a "Third Party Claim"), the applicable
Indemnitee promptly shall give notice and details thereof, including copies of
all pleadings and pertinent documents, to Home Savings. Within 15 days of such
notice, Home Savings either (i) shall pay the Third Party Claim either in full
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or upon agreed compromise or (ii) shall notify the applicable Indemnitee and FNB
that Home Savings disputes the Third Party Claim and intends to defend against
it, and thereafter shall so defend and pay any adverse final judgment or award
in regard thereto. Such defense shall be controlled by Home Savings and the cost
of such defense shall be borne by Home Savings except that the applicable
Indemnitee shall have the right to participate in such defense at its own
expense and provided that Home Savings shall have no right in connection with
any such defense or the resolution of any such Third Party Claim to impose any
cost, restriction, limitation or condition of any kind upon any of the parties
comprising Indemnitee hereunder. FNB agrees that it shall cooperate in all
reasonable respects in the defense of any such Third Party Claim, including
making personnel, books and records relevant to the Third Party Claim available
to Home Savings without charge therefor except for out-of-pocket expenses. If
Home Savings fails to take action within 15 days as hereinabove provided or,
having taken such action, thereafter fails diligently to defend and resolve the
Third Party Claim, the parties comprising Indemnitee shall have the right to
pay, compromise or defend the Third Party Claim and to assert the
indemnification provisions hereof. Each of the parties comprising Indemnitee
also shall have the right, exercisable in good faith, to take such action as may
be necessary to avoid a default prior to the assumption of the defense of the
Third Party Claim by Home Savings.
(B) BY HOME SAVINGS. If any matter subject to indemnification hereunder
arises in the form of a claim against Home Savings or its successors and assigns
(herein referred to as a "Third Party Claim"), Home Savings promptly shall give
notice and details thereof, including copies of all pleadings and pertinent
documents, to FNB. Within 15 days of such notice, FNB either (i) shall pay the
Third Party Claim either in full or upon agreed compromise or (ii) shall notify
Home Savings that FNB disputes the Third Party Claim and intends to defend
against it, and thereafter shall so defend and pay any adverse final judgment or
award in regard thereto. Such defense shall be controlled by FNB and the cost of
such defense shall be borne by FNB except that Home Savings shall have the right
to participate in such defense at its own expense and provided that FNB shall
have no right in connection with any such defense or the resolution of any such
Third Party Claim to impose any cost, restriction, limitation or condition of
any kind upon Home Savings. Home Savings agrees that it shall cooperate in all
reasonable respects in the defense of any such Third Party Claim, including
making personnel, books and records relevant to the Third Party Claim available
to FNB without charge therefor except for out-of-pocket expenses. If FNB fails
to take action within 15 days as hereinabove provided or, having taken such
action, thereafter fails diligently to defend and resolve the Third Party Claim,
Home Savings shall have the right to pay, compromise or defend the Third Party
Claim and to assert the indemnification provisions hereof. Home Savings also
shall have the right, exercisable in good faith, to take such action as may be
necessary to avoid a default prior to the assumption of the defense of the Third
Party Claim by FNB.
ARTICLE X. MISCELLANEOUS PROVISIONS
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, INDEMNIFICATION AND OTHER
AGREEMENTS.
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(A) REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. None of the
representations, warranties or agreements herein shall survive the effectiveness
of the Merger, and no party shall have any right after the Effective Time to
recover damages or any other relief from any other party to this Agreement by
reason of any breach of representation or warranty, any nonfulfillment or
nonperformance of any agreement contained herein, or otherwise; provided,
however, that the parties' agreements contained in Section 6.6. above, FNB's
covenants contained in Article V above, and FNB's representation and warranty
contained in Section 3.2 above, shall survive the effectiveness of the Merger.
(B) INDEMNIFICATION. The parties' indemnification agreements and
obligations pursuant to Section 9.1 above shall become effective only in the
event this Agreement is terminated, and neither of the parties shall have any
obligations under Section 9.1 in the event of or following consummation of the
Merger.
10.2 WAIVER. Any term or condition of this Agreement may be waived
(except as to matters of regulatory approvals and approvals required by law),
either in whole or in part, at any time by the party which is, and whose
shareholders are, entitled to the benefits thereof, provided, however, that any
such waiver shall be effective only upon a determination by the waiving party
(through action of its Board of Directors) that such waiver would not adversely
affect the interests of the waiving party or its shareholders; and, provided
further, that no waiver of any term or condition of this Agreement by any party
shall be effective unless such waiver is in writing and signed by the waiving
party or as provided in Sections 8.2(a) and 8.2(b) above, or be construed to be
a waiver of any succeeding breach of the same term or condition. No failure or
delay of any party to exercise any power, or to insist upon a strict compliance
by any other party of any obligation, and no custom or practice at variance with
any terms hereof, shall constitute a waiver of the right of any party to demand
full and complete compliance with such terms.
10.3 AMENDMENT. This Agreement may be amended, modified or supplemented
at anytime or from time to time prior to the Effective Time, and either before
or after its approval by the shareholders of Home Savings, by an agreement in
writing approved by a majority of the Boards of Directors of FNB and Home
Savings executed in the same manner as this Agreement; provided however, that,
except with the further approval of Home Savings' shareholders of that change or
as otherwise provided herein, following approval of this Agreement by Home
Savings' shareholders, no change may be made in the Cash Factor or the Exchange
Ratio.
10.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally
or by courier, or mailed by certified mail, return receipt requested, postage
prepaid, and addressed as follows:
(a) If to Home Savings, to:
Home Savings Bank of Siler City, Inc., SSB
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300 East Raleigh Street
Siler City, North Carolina 27344
Attention: Edwin E. Bridges, President
With copy to:
Moore & Van Allen, L.L.P.
One Hanover Square, Suite 1700
Raleigh, North Carolina 27611
Attention: Anthony Gaeta, Jr.
(b) If to FNB or First National, to:
FNB Corp.
Post Office Box 1328 (27204)
101 Sunset Avenue
Asheboro, North Carolina 27203
Attention: Mr. Michael C. Miller, President
With copy to:
Schell Bray Aycock Abel & Livingston P.L.L.C.
230 North Elm Street
1500 Renaissance Plaza
Greensboro, North Carolina 27420
Attention: Kenneth N. Shelton
10.5 FURTHER ASSURANCE. Home Savings and FNB each agree to furnish to
the other such further assurances with respect to the matters contemplated
herein and their respective agreements, covenants, representations and
warranties contained herein, including the opinion of legal counsel, as such
other party may reasonably request.
10.6 HEADINGS AND CAPTIONS. Headings and captions of the sections and
Sections of this Agreement have been inserted for convenience of reference only
and do not constitute a part hereof.
10.7 ENTIRE AGREEMENT. This Agreement (including all schedules and
exhibits attached hereto and all documents incorporated herein by reference)
contains the entire agreement of the parties with respect to the transactions
described herein and supersedes any and all other oral or written agreement(s)
heretofore made, and there are no representations or
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inducements by or to, or any agreements between, any of the parties hereto other
than those contained herein in writing.
10.8 SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of
any term, phrase, clause, Section, restriction, covenant, agreement or other
provision hereof shall in no way affect the validity or enforceability of any
other provision or part hereof.
10.9 ASSIGNMENT. This Agreement may not be assigned by any party hereto
except with the prior written consent of the other parties hereto.
10.10 COUNTERPARTS. Any number of counterparts of this Agreement may be
signed and delivered, each of which shall be considered an original and which
together shall constitute one agreement.
10.11 GOVERNING LAW. This Agreement is made in and shall be construed
and enforced in accordance with the laws of North Carolina.
10.12 INSPECTION. Any right of FNB hereunder to investigate or inspect
the assets, books, records, files and other information of Home Savings in no
way shall establish any presumption that FNB should have conducted any
investigation or that such right has been exercised by FNB, its agents,
representatives or others. Any investigations or inspections that have been made
by FNB or its agents, representatives or others prior to the Closing Date shall
not be deemed in any way in derogation or limitation of the covenants,
representations and warranties made by or on behalf of Home Savings in this
Agreement.
[Continued on Following Page]
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IN WITNESS WHEREOF, Home Savings and FNB each has caused this Agreement
to be executed in its name by its duly authorized officers and its corporate
seal to be affixed hereto as of the date first above written.
HOME SAVINGS BANK OF SILER CITY, INC., SSB
ATTEST:
/s/ Jack L. Tanner By: /s/ Edwin E. Bridges
Secretary Edwin E. Bridges, President
[CORPORATE SEAL]
FNB CORP.
ATTEST:
Jerry A. Little By: /s/ Michael C. Miller
Secretary Michael C. Miller, President
[CORPORATE SEAL]
FIRST NATIONAL BANK AND TRUST COMPANY
ATTEST:
Jerry A. Little By: /s/ Michael C. Miller
Secretary Michael C. Miller, President
[CORPORATE SEAL]
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SCHEDULES TO AGREEMENT AND PLAN OF
REORGANIZATION AND MERGER
SCHEDULE DESCRIPTION
A Plan of Merger
B Form of Affiliate's Letter
C Form of Employment Agreement
D Form of Legal Opinion of Counsel
for FNB
E Form of Legal Opinion of Counsel
for Home Savings
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SCHEDULE A
to Agreement and Plan of Reorganization and Merger
dated ______ __, 1997
PLAN OF MERGER
OF
HOME SAVINGS BANK OF SILER CITY, INC., SSB
WITH AND INTO
FIRST NATIONAL BANK AND TRUST COMPANY
A. Names of Merging Corporations. The names of the corporations
proposed to be merged are Home Savings Bank of Siler City, Inc., SSB, a North
Carolina savings bank ("Home Savings"), and First National Bank and Trust
Company, a national banking corporation ("First National") and wholly owned
subsidiary of FNB Corp., a North Carolina corporation ("FNB").
B. Nature of Transaction. Subject to the provisions of this Plan of
Merger, Home Savings shall be merged into and with First National (the "Merger")
with the effect provided in the North Carolina Business Corporation Act and the
National Bank Act.
C. Name of Surviving Corporation. First National shall be the surviving
corporation in the Merger and shall exist under the name "First National Bank
and Trust Company."
D. Terms and Conditions of the Merger.
1. The Merger shall be effected pursuant to the terms and
conditions of this Plan of Merger and of the Agreement and Plan of
Reorganization and Merger dated as of June __, 1997, by and among FNB,
Home Savings and First National (the "Agreement"). As provided herein
and in the Agreement, except insofar as the same may be continued by
law and except as continued in and merged into First National, at the
effective time of the Merger (the "Effective Time") the separate
corporate existence of Home Savings shall cease and the corporate
existence of First National shall continue with all of its purposes,
objects, rights, privileges, powers and franchises, all of which shall
be unaffected and unimpaired by the Merger.
2. At the Effective Time and by reason of the Merger, and in
accordance with applicable law, all of Home Savings' property, assets
and rights of every kind and character (including without limitation
all real, personal or mixed property, all debts due on whatever
account, all other choses in action and all and every other interest of
or belonging to or due to Home Savings, whether tangible or intangible)
shall be transferred to and vest in First National, and First National
shall succeed to all the rights, privileges, immunities, powers,
purposes and franchises of a public or private nature (including all
trust and fiduciary properties, powers and rights) of Home Savings, all
without any conveyance, assignment or further act or deed; and, First
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National shall become responsible for all of the liabilities, duties
and obligations of every kind, nature and description (including duties
as trustee or fiduciary) of Home Savings as of the Effective Time.
3. The Articles of Association and Bylaws of First National in
effect at the Effective Time shall be the Articles of Association and
Bylaws of First National as the surviving corporation in the Merger and
shall continue in full force and effect following the Effective Time,
until amended in accordance with applicable laws. The officers and
directors of First National at the Effective Time shall continue to
hold such offices and positions until removed as provided by law or
until the election or appointment of their respective successors.
E. Conversion and Exchange of Shares.
1. Except as otherwise provided herein, at the Effective Time,
all rights of Home Savings's shareholders with respect to all then
outstanding shares of the common stock of Home Savings, par value $1.00
("Home Savings Stock") shall cease to exist, and the holders of Home
Savings Stock shall cease to be, and shall have no further rights as,
shareholders of Home Savings. At the Effective Time, each such
outstanding share of Home Savings Stock (except for shares held, other
than in a fiduciary capacity, by Home Savings, FNB or any of their
subsidiaries, which shall be canceled in the Merger) shall be
converted, without any action on the part of the holder of such shares
(other than the making of an election as described in Section E.4
below) into (i) a number of shares of the common stock of FNB, par
value $2.50 (the "FNB Stock"), equal to (x) $15.50 (the "Cash Factor")
divided by (y) the Average Closing Price (as defined below) of FNB
Stock (such number of shares, the "Exchange Ratio"), (ii) the right to
receive cash in an amount equal to the Cash Factor per share of Home
Savings Stock, or (iii) a combination of shares of FNB Stock and the
right to receive cash as provided in Sections E.4 through E.6 below.
For purposes hereof, "Average Closing Price" shall mean the average
"Closing Price" of FNB Stock over the period of twenty (20) consecutive
trading days ending on the trading day that is three trading days prior
to the date on which the closing of the Merger takes place, and
"Closing Price" shall mean the sum of the reported closing "bid" price
and seventy-five (75%) of the spread between the reported closing "bid"
and "ask" price of FNB Stock on the National Association of Securities
Dealers Automated Quotations Inc. ("NASDAQ") National Market each day
during such twenty (20) day period. Except as otherwise provided
herein, the form of consideration into which each individual
shareholder's shares of Home Savings Stock will be converted will be
determined in the manner described in Sections E.4 through E.6 below.
Notwithstanding anything contained herein to the contrary, if during
the period commencing on the date of this Agreement and ending at the
Effective Time, Home Savings declares or pays cash dividends in an
aggregate amount in excess of $.30 per share ($.40 per share if the
Effective Time is after the record date for FNB's regularly scheduled
dividend for the first calendar quarter of 1998) or makes any other
distributions on Home Savings Stock (collectively, the
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<PAGE>
"Excess Cash Distributions"), then, for purposes of this Agreement, the
Cash Factor shall be reduced by the per share amount of any such Excess
Cash Distributions, and the Exchange Ratio shall be reduced
accordingly.
2. Each share of FNB Stock, issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding
and shall not be affected by the Merger.
3. Each share of capital stock of First National issued and
outstanding immediately prior to the Effective Time shall continue to
be issued and outstanding and shall not be affected by the Merger.
4. Subject to Sections E.5 and E.6 below, each shareholder of
Home Savings may, by written notice to FNB in the manner described
below, elect individually the form of consideration into which all such
shareholder's shares of Home Savings Stock will be converted at the
Effective Time as provided in Section E.1 above. Within ten days
following approval of this Agreement and the Plan of Merger by the
shareholders of Home Savings at a special meeting of its shareholders
to be duly called and held for the purpose of Home Savings'
shareholders voting on the approval of the Merger and the ratification
and adoption of the Agreement (the "Shareholders' Meeting"), Home
Savings will mail written instructions to each of its shareholders
regarding the making of an election, for the conversion of their
respective shares, together with a notice (a "Notice of Election"),
which each shareholder shall be required to use for purposes of making
such election. Each shareholder may elect to receive one of the
following forms of consideration: (i) cash at the rate of the Cash
Factor per share of Home Savings Stock; (ii) shares of FNB Stock at the
rate of the Exchange Ratio per share of Home Savings Stock; or (iii) a
combination of cash and shares of FNB Stock at such respective rates
based on increments of five percent (5%) (for example, 85% shares of
FNB Stock and 15% cash, or 50% shares of FNB Stock and 50% cash). The
instructions of Home Savings shall specify a date by which a
shareholder's election must be made (the "Election Date," which shall
be set by FNB, but in no event to be less than fifteen (15) or more
than thirty (30) days following the date that the above instructions
and form are first distributed to the shareholders of Home Savings).
The above instructions and Notice of Election distributed to the
shareholders of Home Savings shall be provided by and in a form
satisfactory to FNB. In order to make an effective election, a Home
Savings shareholder must deliver to FNB a properly completed Notice of
Election on or before the close of its business on the Election Date
and in accordance with FNB's instructions. Any shareholder who does not
make an election or whose Notice of Election is not timely received by
FNB or otherwise is not made in accordance with FNB's instructions
(including any shareholder who has exercised Dissenters' Rights as
defined in Section F hereof) will be deemed to have elected that sixty
percent (60%) of such shareholder's shares of Home Savings Stock be
converted into FNB Stock at the rate of the Exchange Ratio per share of
Home Savings
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<PAGE>
Stock and that the remaining forty percent (40%) be converted into the
right to receive cash at the rate of the Cash Factor per share of Home
Savings Stock.
5. Notwithstanding anything contained herein to the contrary,
in no event shall shares of FNB Stock be issued in the Merger for more
than sixty percent (60%) or less than fifty percent 50% of the total
outstanding shares of Home Savings Stock. Depending on the elections or
deemed elections of Home Savings' shareholders, and subject to Section
E.6 below, shares of FNB Stock to be issued in the Merger may be
prorated as follows:
(a) In the event that, immediately prior to the
Effective Time, the aggregate number of shares of Home Savings Stock to
be converted into shares of FNB Stock in the Merger pursuant to
elections or deemed elections by shareholders of Home Savings
immediately prior to the Effective Time is more than sixty percent
(60%) of the total outstanding shares of Home Savings Stock, then, with
respect to those shareholders of Home Savings who, immediately prior to
the Effective Time, have elected or are deemed to have elected to have
all or part of their shares of Home Savings Stock converted into FNB
Stock, FNB will reduce on a pro rata basis the number of shares of Home
Savings Stock to be converted into shares of FNB Stock such that the
aggregate number of shares of Home Savings Stock to be converted into
FNB Stock in the Merger is not more than sixty percent (60%) of the
total outstanding shares of Home Savings Stock; and, the number of
remaining shares of Home Savings Stock held by each such shareholder
will be converted into the right to receive cash at the rate of the
Cash Factor per share of Home Savings Stock.
(b) In the event that, immediately prior to the
Effective Time, the difference between (A) the aggregate number of
shares of Home Savings Stock to be converted into shares of FNB Stock
in the Merger pursuant to elections or deemed elections by shareholders
of Home Savings immediately prior to the Effective Time and (B) the
aggregate number of shares of Home Savings Stock to be converted into
FNB Stock pursuant to elections or deemed elections by shareholders who
have exercised Dissenters' Rights (as provided in Section F) or have
voted against approval of this Agreement and Plan of Merger at the
Shareholders' Meeting is less than fifty percent (50%) of the total
outstanding shares of Home Savings Stock, then, with respect to those
shareholders of Home Savings who, immediately prior to the Effective
Time, have elected or are deemed to have elected to have all or part of
their shares of Home Savings Stock converted into the right to receive
cash, FNB will reduce on a pro rata basis the number of shares of Home
Savings Stock to be converted into the right to receive cash such that
the difference between (A) and (B) above is not less than fifty percent
(50%) of the total outstanding shares of Home Savings Stock; and, the
number of remaining shares of Home Savings Stock held by each such
shareholder will be converted into shares of FNB Stock at the rate of
the Exchange Ratio per share of Home Savings Stock.
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<PAGE>
6. Notwithstanding the provisions of Sections E.4 and E.5
above, if, upon conclusion of the Shareholders' Meeting, holders in
excess of ten percent (10%) of Home Savings Stock have exercised
Dissenters' Rights (as provided in Section F hereof) or have voted
their shares of Home Savings Stock against approval of this Agreement
and Plan of Merger at the Shareholders' Meeting, then the provisions of
Sections E.4 and E.5 above shall not apply and sixty percent (60%) of
the outstanding shares of Home Savings Stock held as of the Effective
Time by each shareholder of Home Savings (except for shares held, other
than in a fiduciary capacity, by Home Savings, FNB or any of their
subsidiaries, which shall be canceled in the Merger) shall be converted
as of the Effective Time, without any action on the part of the holder
of such shares, into a number of shares of FNB Stock equal to the
Exchange Ratio and forty percent (40%) of the outstanding shares of
Home Savings Stock held as of the Effective Time by each shareholder of
Home Savings shall be converted into the right to receive cash in an
amount equal to the Cash Factor per share of Home Savings Stock.
7. Following the Effective Time, certificates representing
shares of Home Savings Stock outstanding at the Effective Time (herein
sometimes referred to as "Home Savings Certificates") shall evidence
only the right of the registered holder thereof to receive, and may be
exchanged for, (i) the form of consideration into which each individual
shareholder's shares of Home Savings Stock have been converted as
determined in the manner described in Sections E.4 through E.6 above or
(ii) in the case of shareholders who properly exercise Dissenters'
Rights, the consideration provided in Section F below and by applicable
law. At the Effective Time, FNB shall issue and deliver, or cause to be
issued and delivered, to First National, in its capacity as the
transfer agent of FNB Stock (the "Transfer Agent"), cash and
certificates representing whole shares of FNB Stock into which
outstanding shares of Home Savings Stock have been converted as
provided above. As promptly as practicable following the Effective
Time, FNB shall send or cause to be sent to each former shareholder of
record of Home Savings immediately prior to the Effective Time written
instructions and transmittal materials (a "Transmittal Letter") for use
in surrendering Home Savings Certificates to the Transfer Agent. Upon
the proper surrender and delivery to the Transfer Agent (in accordance
with FNB's instructions, and accompanied by a properly completed
Transmittal Letter) by a former shareholder of Home Savings of such
shareholder's Home Savings Certificate(s), and in exchange therefor,
the Transfer Agent shall as soon as practicable, (i) in the case of a
shareholder whose Home Savings Stock, or a portion thereof, has been
converted into FNB Stock, issue, register and deliver to such
shareholder a certificate evidencing the number of shares of FNB Stock
to which such shareholder is entitled pursuant to Sections E.4 through
E.6 above, and/or (ii) in the case of a shareholder whose Home Savings
Stock, or a portion thereof, has been converted into the right to
receive cash, issue and deliver to such shareholder a check in the
amount of cash to which the shareholder is entitled pursuant to
Sections E.4 through E.6 above. Following the Effective Time, there
shall be no further transfers of Home Savings Stock on the stock
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<PAGE>
transfer books of Home Savings or the registration of any transfer of a
Home Savings Certificate by any holder thereof, and the surrender of
each Home Savings Certificate as provided herein must be made by or on
behalf of its holder of record at the Effective Time.
8. No scrip or certificates representing fractional shares of
FNB Stock will be issued to any former shareholder of Home Savings,
and, except as provided below, no such shareholder will have any right
to vote or receive any dividend or other distribution on, or any other
right with respect to, any fraction of a share of FNB Stock resulting
from the above exchange. In the event the exchange of shares results in
the creation of fractional shares, in lieu of the issuance of
fractional shares of FNB Stock, FNB will deliver cash to the Transfer
Agent in an amount equal to the aggregate of all fractional shares
multiplied by the Average Closing Price, and, in such event, the
Transfer Agent shall divide such cash among and remit it (without
interest) to the former shareholders of Home Savings in accordance with
their respective interests.
9. Subject to Section E.10 below, no FNB Stock certificate or
cash shall be delivered to any former shareholder of Home Savings
unless and until such shareholder shall have properly surrendered to
the Transfer Agent the Home Savings Certificate(s) formerly
representing his or her shares of Home Savings Stock, together with a
properly completed Transmittal Letter in such form as shall be provided
to the shareholder by FNB for that purpose. Further, until such Home
Savings Certificate(s) are so surrendered, no dividend or other
distribution payable to holders of record of FNB Stock as of any date
subsequent to the Effective Time shall be delivered to the holder of
such Home Savings Certificate(s). However, subject to prior escheatment
under applicable law, upon the proper surrender of such Home Savings
Certificate(s), the Transfer Agent shall pay to the registered holder
of the shares of FNB Stock represented by such Home Savings
Certificate(s) the amount of any such cash, dividends or distributions
which have accrued but remain unpaid with respect to such shares.
Neither FNB, Home Savings nor the Transfer Agent shall have any
obligation to pay any interest on any such cash, dividends or
distributions for any period prior to such payment.
10. Any shareholder of Home Savings whose certificate
evidencing shares of Home Savings Stock has been lost, destroyed,
stolen or otherwise is missing shall be entitled to receive a
certificate representing the shares of FNB Stock to which he or she is
entitled in accordance with and upon compliance with conditions imposed
by the Transfer Agent or FNB (including without limitation a
requirement that the shareholder provide a lost instruments indemnity
or surety bond in form, substance and amount satisfactory to the
Transfer Agent and FNB).
F. Dissenters' Rights. Any shareholder of Home Savings who properly
exercises his right of dissent and appraisal ("Dissenters' Rights") with respect
to the Merger as provided in Article 13 of the North Carolina Business
Corporation Act ("Article 13") or Section 215a of
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<PAGE>
the National Bank Act ("Section 215a") shall be entitled to receive payment in
cash of the "fair value" (as defined in Article 13) or "value" (as described in
Section 215a) of his or her shares of Home Savings Stock in the manner and
pursuant to the procedures provided in Article 13 and Section 215a,
respectively. Until the "fair value" or "value" of the shares of Home Savings
Stock held by any dissenting shareholder is determined and paid pursuant to
Article 13 and Section 215a, respectively, however, such shares shall be
converted into FNB Stock and the right to receive cash in accordance with such
shareholder's election or deemed election and in the manner provided in Sections
E.4 through E.6 above.
G. Abandonment. This Plan of Merger may be terminated and the Merger
may be abandoned at any time prior to the Effective Time upon termination of the
Agreement as provided therein.
H. Effectiveness. This Plan of Merger shall be effective upon the later
to occur of (i) the receipt of a certificate of approval from the Office of the
Comptroller of the Currency and (ii) the filing of Articles of Merger with
respect hereto with the North Carolina Secretary of State.
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<PAGE>
SCHEDULE B
to Agreement and Plan of Reorganization and Merger
dated ____ __, 1997
Affiliate's Letter
____________ ___, 1997
FNB Corp.
101 Sunset Avenue
Asheboro, North Carolina 27203
Dear Sirs:
Pursuant to the terms of that certain Agreement and Plan of
Reorganization and Merger dated ________ ___, 1997 (the "Agreement") by and
among FNB Corp., a North Carolina corporation ("FNB"), First National Bank and
Trust Company, a national banking association ("First National"), and Home
Savings Bank of Siler City, Inc., SSB ("Home Savings"), Home Savings will be
merged into and with First National (the "Merger") and outstanding shares of the
common stock of Home Savings ("Savings Bank Stock") will be converted into newly
issued shares of FNB's common stock, par value $2.50 ("FNB Stock"), and/or the
right to receive cash, as determined by the Agreement.
Based upon the list of persons submitted by Home Savings and approved
by FNB, the undersigned "Affiliate" is considered an "affiliate" of Home Savings
as that term is defined and used for purposes of Rule 145 promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"). As required by the Agreement, this Affiliates'
Agreement is being delivered to FNB in connection with and as a condition of its
execution and delivery of the Agreement.
The undersigned (jointly and severally if more than one) hereby
represents and warrants to FNB as follows:
A. The names of all "Persons," if any, having a relationship to the
Affiliate as described under the definition of "Person" attached as Exhibit A
hereto and who may receive shares of the FNB Stock in connection with the Merger
(the Affiliate's "Related Persons") are listed on the signature page hereto and
also have signed this letter agreement;
B. The Affiliate and each of the Related Persons, if any, have
carefully read this letter and have discussed its requirements and other
applicable limitations upon the sale, transfer or other disposition of FNB Stock
to be received by them in connection with the Merger, to the extent they deem
necessary, with their own legal counsel; As an inducement for First National and
FNB to enter into the Agreement and to consummate the Merger and for FNB to
issue the FNB Stock as provided in the Agreement, the undersigned
<PAGE>
(jointly and severally if more than one) hereby covenants and agrees with First
National and FNB as follows:
1. The Affiliate and each of the Related Persons, if any, have
been informed that, since at the time the Plan of Merger (as defined in
the Agreement) is to be submitted to a vote of Home Savings'
shareholders the Affiliate and each such Related Person will be
considered to be an "affiliate" of Home Savings, any resale by the
Affiliate or a Related Person of any such FNB Stock would require
either (i) the registration under the Act of the FNB Stock to be sold,
(ii) compliance by the Affiliate or such Related Person with the
requirements of Rule 145(d) promulgated under the Act, or (iii) the
availability of another exemption from the registration requirements of
the Act;
2. Neither the Affiliate nor any of the Related Persons, if
any, (i) will make any sale, transfer or other disposition of FNB Stock
during the 60 days prior to the date of the Merger, or, (ii) following
the effective date of the Merger, will make any sale, transfer or other
disposition of FNB Stock acquired by them in connection with the Merger
except in compliance with the requirements of the Act and the rules and
regulations of the Commission (including Rule 145) promulgated
thereunder;
3. Notwithstanding compliance with the requirements of the
Act, neither the Affiliate nor any of the Related Persons, if any,
shall make any sale, transfer or other disposition of the FNB Stock
acquired by them in connection with the Merger until such time as
consolidated financial statements covering FNB's operations for a
period of at least thirty (30) days following the Merger either have
been (i) filed with the Commission in a Quarterly Report on Form 10-Q,
(ii) sent to the shareholders of FNB, or (iii) published in newspapers
of general circulation in accordance with FNB's normal practices for
releasing financial information to the general public;
4. The Affiliate and each of the Related Persons, if any,
understands and agrees that FNB is under no obligation to register the
sale, transfer or other disposition of the FNB Stock for them or on
their behalf or to take any other action necessary in order to render
available an exemption from the registration requirements of the Act.
Therefore, they may be compelled to hold such shares for a period of at
least two years after which such shares may be sold, transferred, or
otherwise disposed of without restriction, provided that at the time of
any such sale, transfer or other disposition, they are not considered
to be "affiliates" of FNB. However, for the period that the sale,
transfer or other disposition of such shares is so restricted, it is
understood and agreed that FNB will file on a timely basis with the
Commission all reports required to be filed by it pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the Commission thereunder; and,
5. FNB may place stock transfer restrictions on the shares of
FNB Stock held by the Affiliate and each of the Related Persons, if
any, which are subject to this Agreement,
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<PAGE>
and there will be placed on the certificates evidencing such shares,
and any substitutions therefor, a legend stating in substance as
follows:
"The shares represented by this certificate were issued
pursuant to a business combination which was accounted for as
a "pooling-of-interests" and may not be sold, nor may the
owner hereof reduce the owner's risks relative hereto in any
way, until FNB Corp. ("FNB") has published the financial
results covering at least thirty (30) days of combined
operations after ________ __, 1997. In addition, the shares
represented by this certificate may not be sold, transferred,
or otherwise disposed of except or unless (1) covered by an
effective registration statement under the Securities Act of
1933, as amended, (2) in accordance with (i) Rule 145(d) (in
the case of shares issued to an individual who is not an
affiliate of FNB) or (ii) Rule 144 (in the case of shares
issued to an individual who is an affiliate of FNB) of the
Rules and Regulations of such Act, or (3) in accordance with a
legal opinion satisfactory to counsel for FNB that such sale
or transfer is otherwise exempt from the registration
requirements of such Act."
The legend stated above may be removed from the certificates evidencing
the FNB Stock to which this letter agreement applies by the delivery of new
certificates without such legend in substitution therefor if the holder thereof
delivers to FNB an opinion of legal counsel acceptable to FNB, and in form and
substance acceptable to FNB, to the effect that the restrictions described above
are no longer applicable to such person and that such legend is not or is no
longer required for purposes of the Act.
Yours very truly,
By:___________________________(Seal)
"Related Persons", if any:
______________________________(Seal)
______________________________(Seal)
______________________________(Seal)
______________________________(Seal)
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EXHIBIT A
Rule 145 of the Securities Act of 1933, as amended, incorporates by
reference the definition of "person" set forth under Section (a)(2) of Rule 144,
as follows:
"(2) The term "person" when used with reference to a person for whose
account securities are to be sold in reliance upon this rule includes,
in addition to such person, all of the following persons:
(A) Any relative or spouse of such person, or any relative of
such spouse, any of whom has the same home as such person;
(B) Any trust or estate in which such person or any of the
persons specified in (A) collectively own ten percent (10%) or more of
the total beneficial interest or of which any of such persons serve as
trustee, executor or in any similar capacity; and,
(C) Any corporation or other organization (other than the
issuer) in which such person or any of the persons specified in (A) are
the beneficial owners collectively of ten percent (10%) or more of any
class of equity securities or ten percent (10%) or more of the equity
interest."
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<PAGE>
SCHEDULE C
to Agreement and Plan of Reorganization and Merger
dated ______ __, 1997
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (this "Agreement") made
and entered into as of the ____ day of ______, 199__, by and between FIRST
NATIONAL BANK AND TRUST COMPANY, a national banking corporation with its
principal office and place of business located in Asheboro, North Carolina (the
"Bank") and EDWIN E. BRIDGES (the "Employee").
W I T N E S S E T H:
WHEREAS, the Bank desires to employ the Employee, the Employee desires
to accept employment with the Bank, and each desires to enter into an agreement
embodying the terms of such employment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
1. Employment. The Bank hereby employs the Employee, and the Employee
hereby accepts employment with the Bank, for the term set forth in Section 2
below, in the position and with the duties and responsibilities set forth in
Section 3 below, and upon the other terms and conditions hereinafter stated.
2. Term. The term of this Agreement shall commence as of the date
hereof and, unless otherwise terminated as hereinafter provided, shall continue
for an initial term of five years and shall automatically be extended each
anniversary date of this Agreement for an additional one year period unless the
Bank notifies Employee of its decision not to allow such annual renewal upon
written notice given not less than 90 days prior to such anniversary date.
3. Position and Responsibilities. The Employee shall serve as the
Bank's Area Manager for Siler City and, in such capacity, shall at all times
report to, and his activities shall at all times be subject to the direction and
control of, the principal executive officer of the Bank or his designee. The
Employee agrees to devote substantially all of his business time, attention and
services to discharge faithfully and diligently his duties and responsibilities
under this Agreement and to use his best efforts for both the successful
operation of the Bank's business and the successful implementation of the
policies established by the Bank or its parent, FNB Corp.
("FNB").
<PAGE>
4. Compensation: Salary and Other Benefits. During the term of this
Agreement, and with respect to Section 4(b) below thereafter, the Bank shall pay
to the Employee the following compensation:
(a) Salary. In consideration of the services to be rendered by
the Employee to the Bank and the Employee's covenants hereunder, the Bank shall
pay to the Employee a base salary at the rate of $99,000 per annum (such salary
as it may be increased from time to time being hereinafter referred to as the
"Base Salary"). The Employee shall receive from the Bank a formal review of
Employee's performance at least as frequently as annually, and Employee may be
considered for merit increases to his Base Salary in accordance with the Bank's
policies and practices for employee compensation as established or modified from
time to time. Except as may otherwise be agreed, the Base Salary shall be
payable in accordance with the Bank's policies and practices for employee
compensation as established or modified from time to time; provided that the
Base Salary shall be payable not less frequently than monthly. Salary payments
shall be subject to all applicable federal and state withholding, payroll and
other taxes.
(b) Health Insurance. The Bank or FNB shall provide or pay the
premiums for continued health insurance coverage for the Employee for the
remainder of his natural life, the extent of such health insurance coverage to
be at least equivalent with that provided by the Bank to its active, full-time
employees generally; provided that, this obligation to provide health insurance
coverage to the Employee may be partially or wholly fulfilled by any Medicare,
employer or similar coverage for which the Employee becomes eligible in the
future to the extent of any coverage provided thereby at no cost to Employee.
The Bank's obligation to provide health insurance coverage to the Employee
pursuant to this Section 4(b) shall survive the termination of the Employee's
employment under this Agreement other than a termination pursuant to Section
5(a) or Section 5(c) hereof; provided, however, that such obligation to provide
health insurance coverage to the Employee will cease if the Employee, at any
time, whether or not within the term of this Agreement, takes any of the actions
described in Section 7(a) hereof, with the geographical limitation for purposes
of this Section 4(b) being North Carolina and its contiguous states rather than
the geographical limitation contained in that Section 7(a).
(c) Club Membership. The Bank shall pay up to $1500 annually of the
membership fees necessary for Employee to maintain the status of an active
member of the Siler City Country Club.
(d) Vacation. The Employee shall be entitled to such vacation
and other leave as may be provided by the Bank or FNB to their employees in
similar positions generally; provided, however, that, to the extent that the
amount of vacation and other leave to which the Employee is entitled is related
to the Employee's years of service to the Bank or FNB, the Employee shall be
given credit for each full year of his employment with Home Savings Bank of
Siler City, Inc., SSB as if he had been employed by the Bank or FNB for such
years.
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<PAGE>
(e) Other Benefits. The Employee will be entitled to
participate, in accordance with the provisions thereof, in any disability and
life insurance and other employee benefit plans and programs made available by
the Bank or FNB to their employees generally.
(f) Travel Expenses. The Bank shall reimburse the Employee for
any reasonable out-of-pocket travel expenses incurred by the Employee in the
ordinary course of performing his duties for the Bank upon presentation by the
Employee, from time to time, of appropriate documentation therefor in accordance
with the Bank's policies and practices as established or modified from time to
time.
5. Termination. The Employee's term of employment under this Agreement
may be terminated before the end of the initial term or any extension thereof as
follows:
(a) Death. In the event of the death of the Employee during his
employment under this Agreement, this Agreement shall be deemed terminated as of
the date of death. In such event, the Bank shall pay the Employee's Base Salary,
at the rate in effect at the time of his death, through the last day of the
calendar month in which such death occurs to the Employee's designated
beneficiary, or, in the absence of such designation, to the estate or other
legal representative of the Employee. Any rights and benefits the Employee's
estate or any other person may have under employee benefit plans and programs of
the Bank in the event of the Employee's death shall be determined in accordance
with the terms of such plans and programs.
(b) Long-Term Disability. If the Employee suffers any disability while
employed under this Agreement that prevents him from performing his duties under
this Agreement for a period of 30 consecutive days, then, unless otherwise then
agreed in writing by the parties hereto, the employment of the Employee under
this Agreement shall be deemed terminated effective as of the thirtieth day.
Upon termination of the Employee's employment by reason of disability under this
Section 5(b), the Employee shall be entitled to receive his Base Salary, at the
rate in effect on the date of such termination, less any disability insurance
payments paid to the Employee on a policy maintained for the benefit of the
Employee by the Bank or FNB through the end of the term of this Agreement. Any
rights and benefits the Employee may have under employee benefit plans and
programs of the Bank generally in the event of the Employee's disability shall
be determined in accordance with the terms of such plans and programs, except
that Employee's right to continued health insurance coverage shall be governed
by Section 4(b) hereof.
For purposes of this Agreement, "disability" shall mean the inability,
by reason of bodily injury or physical or mental disease, or any combination
thereof, of the Employee to perform his customary or other comparable duties
with the Bank. In the event that the Employee and the Bank are unable to agree
as to whether the Employee is suffering a disability, the Employee and the Bank
shall each select a physician and the two physicians so chosen shall make the
determination or, if they are unable to agree, they shall select a third
physician, and the determination as to whether the Employee is suffering a
disability shall be based upon the determination of a majority of the three
physicians. The Bank shall pay the reasonable fees and expenses of all
physicians selected pursuant to this Section 5(b).
3
<PAGE>
(c) Termination for Cause. Nothing herein shall prevent the Bank from
terminating the Employee's employment at any time for Cause (as hereinafter
defined). Upon termination for Cause, the Employee shall receive his Base Salary
only through the date that such termination becomes effective. Neither the
Employee nor any other person shall be entitled to any further payments from the
Bank, for salary or any other amounts. Any rights and benefits the Employee may
have under employee benefit plans and programs of the Bank generally following a
termination of the Employee's employment for Cause shall be determined in
accordance with the terms of such plans and programs. For purposes of this
Agreement, termination for Cause shall mean:
(i) a determination by the Bank, in good faith, that the
Employee has (A) breached in any material respect any
of the terms and conditions of this Agreement or (B)
is engaging or has engaged in willful misconduct or
conduct that is detrimental to the business prospects
of the Bank or FNB or that has had or likely will
have a material adverse effect on the Bank's or FNB's
business or reputation.
Prior to any termination by the Bank of the
Employee's employment for a breach, failure to
perform or conduct described in this Section 5(c)(i),
the Bank shall give to the Employee written notice
that describes such breach, failure to perform or
conduct and if during a period of five business days
following such notice, the Employee cures or corrects
the same to reasonable satisfaction of the Bank, then
this Agreement shall remain in full force and effect.
However, notwithstanding the above, if the Bank has
given written notice to the Employee of the same or a
substantially similar breach, failure to perform or
conduct that the Bank determines in good faith to be
of substantially similar import, or if the Bank
determines in good faith that the then current
breach, failure to perform or conduct is not
reasonably curable, then termination under this
Section 5(c)(i) shall be effective immediately, and
the Employee shall have no right to cure such breach,
failure to perform or conduct;
(ii) the violation by the Employee of any applicable
federal or state law, or any applicable rule,
regulation, order or statement of policy promulgated
by any governmental agency or authority having
jurisdiction over the Bank or FNB (a "Regulatory
Authority," including without limitation the Federal
Deposit Insurance Corporation, the Federal Reserve
Board, the Office of the Comptroller of the Currency,
the North Carolina Commissioner of Banks or any other
banking regulator), which results from the Employee's
gross negligence, willful misconduct or intentional
disregard of such law, rule, regulation, order or
policy statement and results in any substantial
damage, monetary, reputation or otherwise, to the
Bank or FNB;
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<PAGE>
(iii) the commission in the course of the Employee's
employment with the Bank of an act of fraud,
embezzlement, theft or proven personal dishonesty
(whether or not resulting in criminal prosecution or
conviction);
(iv) the conviction of the Employee of any felony or any
criminal offense, or a plea of no contest entered by
the Employee to a charge of a felony or any criminal
offense, involving dishonesty or breach of trust, or
the occurrence of any event described in Section 19
of the Federal Deposit Insurance Act or any other
event or circumstance that disqualifies the Employee
from serving as an employee of, or a party affiliated
with, the Bank or FNB;
(v) the Employee becomes unacceptable to, or is removed,
suspended or prohibited from participating in the
conduct of the Bank's affairs (or if proceedings for
that purpose are commenced) by any Regulatory
Authority; or
(vi) the occurrence of any event believed by the Bank, in
good faith, to have resulted in the Employee being
excluded from coverage, or having coverage limited as
to the Employee as compared to other covered
employees, under the Bank's then current "blanket
bond" or other fidelity bond or insurance policy
covering its directors, officers or employees.
(d) Termination Other Than For Cause. The Bank may terminate the
Employee's employment under this Agreement at any time upon 90 days written
notice to the Employee for whatever reason it deems appropriate, or for no
reason. In the event such termination by the Bank occurs and is not due to death
as provided in Section 5(a) above or for Cause as provided in Section 5(c)
above, the Bank agrees to continue the Employee's Base Salary, at the rate in
effect at the time of such termination through the end of the term hereof. Such
salary continuation shall be subject to all applicable federal and state
withholding taxes. Any rights and benefits the Employee may have under employee
benefit plans and programs of the Bank generally following a termination of the
Employee's employment other than for Cause shall be determined in accordance
with the terms of such plans and programs, except that Employee's right to
continued health insurance coverage shall be governed by Section 4(b) hereof. In
the event of a termination pursuant to this Section 5(d), FNB shall, upon such
termination and at its election, either (i) cause the full vesting of any
unvested options and awards of Employee under the Home Savings Bank of Siler
City, Inc., SSB 1995 Incentive Stock Option Plan ( the "ISO Plan") and the Home
Savings Bank of Siler City, Inc., SSB 1995 Management Recognition Plan (the "MR
Plan"), respectively, as assumed by FNB as of the effective time of the merger
of Home Savings Bank of Siler City, Inc., SSB into the Bank or (ii) provide the
Employee the economic equivalent of any unvested portion of such options under
the ISO Plan and such awards under the MR Plan.
(e) At the Employee's Option. The Employee may terminate his employment
at any time upon at least 60 days advance written notice to the Bank; provided,
however, that the Bank, in its discretion, may cause such termination to be
effective at any time during such notice period.
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<PAGE>
In the event of such a voluntary termination of employment, the Employee will be
entitled to receive only any earned but unpaid Base Salary through the date on
which the Employee's termination becomes effective; provided, however, that if
at any time after two years from the date hereof, the Employee terminates this
Agreement pursuant to this Section 5(e), the Employee may, by written notice to
the Bank, elect to become a consultant to the Bank to perform such services as
may be customarily performed by advisory directors to banks, savings and loan
associations or other similar financial institutions and shall be entitled to
receive for such services his Base Salary from the Bank until the expiration of
three years from the date of such notice or until January 1, 2006, whichever is
sooner, and shall continue to be entitled for such period to any rights and
benefits the Employee may have under employee benefit plans and programs of the
Bank as determined in accordance with the terms of such plans and programs,
except that the Employee's right to continued health insurance coverage shall be
governed by Section 4(b) hereof.
(f) Notwithstanding anything in this Agreement to the contrary, if any
payments and benefits provided for under this Section 5, either alone or
together with any other payments and benefits that the Employee may have the
right to receive, would constitute a "parachute payment" (as defined in Section
280G of the Internal Revenue Code of 1986, as amended (the "Code")), such
payments and, if necessary, such benefits shall be reduced to the largest
amounts as will result in no portion thereof being subject to the excise tax
imposed by Section 4999 of the Code. The determination of any reductions under
the foregoing proviso shall be made by independent counsel to the Bank in
consultation with the independent certified public accountants of the Bank.
6. No Solicitation of Change in Control. The Employee hereby agrees
that he will not solicit, counsel or encourage a change in control without the
prior written approval of the Board of Directors of the Bank or FNB. A violation
of this Section 6 shall be deemed to constitute a forfeiture by the Employee of
all of his rights under Section 5(e) hereof.
7. Noncompetition Covenant; Nonsolicitation.
(a) For a period commencing on the date hereof and continuing until (i)
two years after the date of expiration of the term hereof or the date that any
termination of the Employee's employment under this Agreement becomes effective
or (ii) the last day of the period after the date that any termination of the
Employee's employment under this Agreement becomes effective in which the
Employee is entitled to receive any payments pursuant to Section 5 hereof,
whichever is later, the Employee agrees that he will not, directly or
indirectly:
(i) own any interest in, manage, operate, control, be employed
by, render consulting or advisory services to, or participate in or be
connected with the management or control of any business that is then
engaged in the operation of a bank, savings and loan association or
similar financial institution that conducts any of its operations
within 50 miles of Siler City, North Carolina; provided, however, that
Employer may, without violating this Agreement, own as a passive
investment not in excess of two percent (2%) of the outstanding capital
stock of any such business whose stock is publicly traded on the
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NASDAQ over-the-counter market, the New York Stock Exchange or the
American Stock Exchange;
(ii) influence or attempt to influence any customer of the
Bank or FNB to discontinue its use of the Bank's or FNB's services or
to divert such business to any other person, firm or corporation;
(iii) interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Bank or FNB and any
of its respective customers, suppliers, principals, distributors,
lessors or licensors; and
(iv) solicit any officer or employee of the Bank or FNB, whose
base annual salary at the time of the Employee's termination was
$20,000 or more, to work for any other person, firm or corporation.
(b) It is the desire and intent of the parties that the provisions of
Section 7(a) shall be enforced to the fullest extent permitted under the laws
and public policies of each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of Section 7(a) shall be adjudicated to
be invalid or unenforceable, such adjudication shall apply only with respect to
the operation of that portion in the particular jurisdiction in which such
adjudication is made, and all other portions shall continue in full force and
effect.
(c) It is expressly agreed that the provisions and covenants in this
Section 7 shall not apply and shall be of no force or effect in the event that
the Bank fails to honor its obligations hereunder.
8. Confidentiality. The Employee hereby acknowledges and agrees that (i)
in the course of his service as an employee of the Bank, he will gain
substantial knowledge of and familiarity with the Bank's customers and its
dealings with them, and other information concerning the business of the Bank
and FNB, all of which constitute valuable assets and privileged information that
is particularly sensitive due to the fiduciary responsibilities inherent in the
banking business; and (ii) in order to protect the interest in and to assure the
benefit of the business of the Bank and FNB, it is reasonable and necessary to
place certain restrictions on the Employee's ability to disclose information
about the business and customers of the Bank and FNB. For that purpose, and in
consideration of the agreements contained herein, the Employee covenants and
agrees as provided below.
The Employee covenants and agrees that any and all data, figures,
projections, estimates, lists, files, records, documents, manuals or other such
materials or information (financial or otherwise) relating to the Bank or FNB
and their business, regulatory examinations, financial results and condition,
lending and deposit operations, customers (including lists of the customers and
information regarding their accounts and business dealings with the Bank or
FNB), policies and procedures, computer systems and software, shareholders,
employees, officers and directors (herein referred to as "Confidential
Information") are proprietary to the Bank and FNB and are
7
<PAGE>
valuable, special and unique assets of the business to which the Employee will
have access during his employment with the Bank. The Employee agrees that (i)
all such Confidential Information shall be considered and kept as the
confidential, private and privileged records and information of the Bank and
FNB, and (ii) at all times during the term of his employment with the Bank and
following the termination of his employment under this Agreement for any reason,
and except as shall be required in the course of the performance by the Employee
of his duties on behalf of the Bank or FNB or otherwise pursuant to the direct,
written authorization of the Bank or FNB, the Employee will not: divulge any
such Confidential Information to any other person, firm, corporation, bank,
savings and loan association or similar financial institution; remove any such
Confidential Information in written or other recorded form from the Bank's
premises; or make any use of the Confidential Information for his own purposes
or for the benefit of any person, firm, corporation, bank, savings and loan
association or similar financial institution other than the Bank or FNB.
However, following the termination of the Employee's employment with the Bank,
this Section 8 shall not apply to any Confidential Information which then is in
the public domain (provided that the Employee was not responsible, directly or
indirectly, for permitting such Confidential Information to enter the public
domain without the Bank's consent), or which is obtained by the Employee from a
third party which or who is not obligated under an agreement of confidentiality
with respect to such information.
9. Remedies Upon Breach. The Employee agrees that any breach of this
Agreement by him could cause irreparable damage to the Bank and that in the
event of such breach the Bank shall have, in addition to any and all remedies of
law, the right to an injunction, specific performance or other equitable relief
to prevent the violation of his obligations hereunder, without the necessity of
posting a bond, plus the recovery of any and all costs and expenses incurred by
the Bank, including reasonable attorneys' fees in connection with the
enforcement of this Agreement, provided that the Bank shall have been successful
on the merits or otherwise in any proceeding related to the enforcement thereof.
10. Acknowledgments. The Employee hereby acknowledges that (i) the
enforcement of the provisions of Section 7 hereof may potentially interfere with
his ability to pursue a proper livelihood, (ii) the enforcement of this
Agreement is necessary to ensure the preservation, protection and continuity of
the business, trade secrets and goodwill of the Bank, and (iii) the restrictions
set forth in Sections 7 and 8 of this Agreement are reasonable as to time, scope
and territory and in all other respects.
11. Tolling Period and Legal Costs. In the event the Employee breaches
any of the provisions contained herein and the Bank seeks compliance with such
provisions by judicial proceedings, the time period during which the Employee is
restricted by such provisions shall be extended by the time during which the
Employee has actually competed with the Bank or been in violation of any such
provision and any period of litigation required to enforce the Employee's
obligations under this Agreement. In the event such judicial proceedings are
brought, the Employee shall pay all court costs, including reasonable attorney's
fees, associated with the enforcement of such provisions.
8
<PAGE>
12. Reformation of Scope or Duration of Agreement. The Employee and the
Bank intend that Section 7 of this Agreement be enforced as written. However, if
one or more of the provisions contained in Section 7 shall for any reason be
held to be unenforceable because of the duration or scope of such provision or
the area covered thereby, the Employee and the Bank agree that the court making
such determination shall have the power to reform the duration, scope and/or
area of such provision and in its reformed form such provision shall then be
enforceable and shall be binding on the parties. To the extent that the courts
of any one or more jurisdictions may hold any part of Section 7 unenforceable,
that determination shall not bar or in any way hinder the Bank's right to relief
as provided in this Agreement in courts of any other jurisdiction as to breaches
of this Agreement in such other jurisdiction.
13. Retirement Payment Agreement. As of the date hereof, the Bank shall
assume any and all obligations of Home Savings Bank of Siler City, Inc., SSB
(the "Savings Bank") with respect to that Retirement Payment Agreement between
the Savings Bank and the Employee dated as of July 1, 1987 including all
attachments thereto, as amended by Amendment No.1 thereto dated as of November
12, 1996 (as amended, the "Retirement Payment Agreement"), except that from and
after the date hereof with respect to the Retirement Payment Agreement: (i)
"First National Bank and Trust Company" or "the Bank" shall be substituted for
"Home Savings and Loan Association of Siler City" or "the Association"; (ii)
"Employee" shall be substituted for "Director"; (iii) "employed by the Bank"
shall be substituted for "in the Directorship of the Association"; and (iv)
"employment with the Bank" shall be substituted for "Directorship."
14. Termination of Previous Employment Agreement. The Employee and the
Bank specifically agree that this Agreement supersedes that certain Employment
Agreement dated November 14, 1995, as amended, by and between the Employee and
the Savings Bank and the Employee hereby waives any and all of his rights, and
releases the Bank and the Savings Bank from any and all obligations, under such
agreement and agrees that such agreement hereby is terminated and shall be of no
further force or effect.
15. Severability. In case any one or more of the provisions contained in
this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
been contained herein.
16. Consent and Waiver by Third Parties. The Employee hereby represents
and warrants that his employment with the Bank on the terms and conditions set
forth herein and his execution and performance of this Agreement do not
constitute a breach or violation of any other agreement, obligation or
understanding with any third party. The Employee represents that he is not bound
by any agreement or any other existing or previous business relationship which
conflicts with, or may conflict with, the performance of his obligations
hereunder or prevents the full performance of his duties and obligations
hereunder.
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<PAGE>
17. Waivers and Modifications. This Agreement may be modified, and the
rights and remedies of any provision hereof may be waived, only in accordance
with this Section 15. No waiver by either party of any breach by the other or
any provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any other provision of this Agreement. This Agreement
sets forth all of the terms of the understandings between the parties with
reference to the subject matter set forth herein and may not be waived, changed,
discharged or terminated orally or by any course of dealing between the parties,
but only by an instrument in writing signed by the party against whom any
waiver, change, discharge or termination is sought.
18. Assignment. The Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Employee may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The Bank shall have the right to assign this Agreement to its
successors and assigns, and the rights and obligations of the Bank under this
Agreement shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Bank.
19. Notices. All notices hereunder shall be (i) delivered by hand, (ii)
sent by first-class certified mail, postage prepaid, return receipt requested,
(iii) delivered by overnight commercial courier, or (iv) transmitted by telecopy
or facsimile machine, to the following address of the party to whom such notice
is to be made, or to such other address as such party may designate in the same
manner provided herein:
If to the Bank:
FNB Corp.
101 Sunset Avenue
Asheboro, North Carolina 27203
Attention: Mr. Michael C. Miller, President
With copy to:
Schell Bray Aycock Abel & Livingston P.L.L.C.
230 North Elm Street
1500 Renaissance Plaza
Greensboro, North Carolina 27420
Attention: Kenneth N. Shelton
If to the Employee, to his last address as shown on the personnel
records of the Bank.
With copy to:
Moore & Van Allen, L.L.P.
One Hanover Square, Suite 1700
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<PAGE>
Raleigh, North Carolina 27611
Attention: Anthony Gaeta, Jr.
20. Survival of Obligations. The Employee's obligations under this
Agreement shall survive the termination of his employment with the Bank
regardless of the manner of such termination and shall be binding upon his
heirs, executors and administrators. Except as otherwise provided herein, the
provisions of Sections 4(b), 7, 8, 9, 10, 11, 12 and 13 shall survive the
termination or expiration of this Agreement as a continuing agreement of the
Bank and the Employee. The existence of any claim or cause of action by Employee
against the Bank or FNB shall not constitute and shall not be asserted as a
defense to the enforcement by the Bank of this Agreement.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BANK: EMPLOYEE:
FIRST NATIONAL BANK
AND TRUST COMPANY
By: (SEAL)
Edwin E. Bridges
Title:
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SCHEDULE D
to Agreement and Plan of Reorganization and Merger
dated ______ __, 1997
Form of Legal Opinion of Counsel for FNB and First National
__________ ___, 1997
Home Savings Bank of Siler City, Inc., SSB
300 East Raleigh Street
Siler City, North Carolina 27344
Gentlemen:
We have acted as counsel to FNB Corp., a North Carolina corporation
("FNB"), and its national bank subsidiary, First National Bank and Trust Company
("First National"), and, in such capacity, we have reviewed that certain
Agreement and Plan of Reorganization and Merger dated May __, 1997, by and among
Home Savings Bank of Siler City, Inc., SSB, a North Carolina savings bank ("Home
Savings"), First National and FNB (including the Plan of Merger referenced
therein, the "Agreement"). Pursuant to and in accordance with the terms and
conditions of the Agreement, Home Savings is proposed to be merged into and with
First National (the "Merger") and the outstanding shares of the common stock of
Home Savings will be converted into (i) the right to receive cash, (ii) shares
of FNB's common stock, par value $2.50 ("FNB Stock"), or (iii) a combination of
(i) and (ii) as provided in the Agreement. This letter is delivered in
connection with the consummation and closing of the Merger and other
transactions described in the Agreement (the "Closing"). Capitalized terms
appearing herein and not otherwise defined are used as defined in the Agreement.
As counsel to First National and FNB, we have examined originals or
copies of their Articles of Association or Articles of Incorporation, as the
case may be, and Bylaws, the Agreement, the [Registration Statement (No. ____)
on Form S-4 (the "Registration Statement") filed by FNB with the Securities and
Exchange Commission (the "Commission") and containing the Prospectus/]Proxy
Statement, dated _________ ___, 1997, certificates and written statements of
officers and agents of First National and FNB, certificates of public officials,
and such other documents and records of FNB and First National as we have deemed
necessary for the purpose of giving the opinions hereinafter expressed.
In giving certain of the opinions set forth below, we have relied solely
upon certifications and letters provided to us by public officials. As to
matters of fact set forth below, and matters of fact which form the basis for
any opinion set forth below, we have relied solely upon (i) certificates and
statements of officers, employees and accountants of FNB and First National,
(ii) the representations and warranties of FNB and First National set forth in
the Agreement, and (iii) a letter dated
<PAGE>
_________ ___, 1997, from the National Association of Securities Dealers, Inc.
("NASD") with respect to approval of FNB's Notification to the NASD for the
listing on the NASD's Automated Quotation System ("NASDAQ") National Market of
shares FNB Stock to be issued in connection with the Merger. Except as expressly
stated herein, we have not independently verified any factual matters in
connection with the giving of the opinions set forth below.
Subject to the qualifications and limitations set forth herein, and
except as set forth in [the Registration Statement or] the Agreement or as
Previously Disclosed by FNB or First National to Home Savings:
1. Each of First National and FNB (i) is duly organized and
incorporated and validly existing as a national banking association or a
business corporation, as the case may be, under the laws of the United
States or of North Carolina, as the case may be, (ii) has all requisite
corporate power and authority to own its properties and conduct its
business as now being conducted, (iii) is duly qualified to do business
and is in good standing in each other jurisdiction in which the
character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary,
except where failure so to qualify would not have a material adverse
effect on FNB and First National considered as one enterprise, and (iv)
to our Actual Knowledge, is not transacting business, or operating any
properties owned or leased by it, in violation of any provision of
federal or state law or any rule or regulation promulgated thereunder,
which violation would have a material adverse effect on FNB and First
National subsidiary considered as one enterprise.
2. FNB's authorized capital stock consists of 5,000,000 shares
of FNB Stock and 200,000 shares of preferred stock, par value $10.00.
FNB's Board of Directors has reserved and authorized the issuance of the
shares of FNB Stock into which the outstanding shares of Home Savings
Stock may be converted in connection with the Merger and which may be
purchased upon the exercise of outstanding options that are converted
into rights to purchase FNB Stock as provided in the Agreement, and such
shares (i) have been approved for listing on the NASDAQ National Market
and (ii) when issued as described in the Agreement, will be duly
authorized, validly issued, fully paid and nonassessable.
3. (i) Each of FNB and First National has the corporate power
and authority to execute and deliver the Agreement and to perform its
obligations and agreements and carry out the transactions described
therein, (ii) all corporate proceedings required to be taken to
authorize FNB and First National to enter into the Agreement and to
perform their obligations and agreements and carry out the transactions
described therein have been duly and properly taken, and (iii) the
Agreement has been duly executed and delivered by, and constitutes the
valid and binding agreement of, FNB and First National enforceable in
accordance with its terms.
4. Except where the same would not have a material adverse
effect on FNB and First National considered as one enterprise, neither
the execution and delivery of the Agreement, nor the consummation of the
transactions described therein, nor compliance by FNB or First
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National with any of its obligations or agreements contained therein,
will: (i) conflict with or result in a breach of the terms and
conditions of, or constitute a default or violation under any provision
of, FNB's or First National's Articles of Association or Articles of
Incorporation, as the case may be, or Bylaws, or, to our Actual
Knowledge, any contract, agreement, lease, mortgage, note, bond,
indenture, license, or obligation or understanding (oral or written) to
which FNB or First National is bound or by which it, its business,
capital stock or any of its properties or assets may be affected; (ii)
to our Actual Knowledge, result in the creation or imposition of any
lien, claim, interest, charge, restriction or encumbrance upon any of
FNB's or First National's properties or assets; (iii) violate any
applicable federal or state statute, law, rule or regulation, or to our
actual knowledge, any judgment order, writ, injunction or decree of any
court, administrative or regulatory agency or governmental body; or (iv)
to our Actual Knowledge, result in the acceleration of any obligation or
indebtedness of FNB or First National.
5. To our Actual Knowledge, no consents, approvals or waivers
are required to be obtained from any person or entity in connection with
FNB's or First National's execution and delivery of the Agreement, or
the performance of its obligations or agreements or the consummation of
the transactions described therein, except for required approvals of
governmental or regulatory authorities ("Regulatory Approvals").
6. All Regulatory Approvals required to be obtained by FNB or
First National for the consummation of the transactions contemplated by
the Agreement (other than the filing of Articles of Merger) have been
obtained and are in full force and effect. To our Actual Knowledge, all
conditions imposed on FNB or First National in connection therewith that
are required to be satisfied prior to consummation of such transactions
have been satisfied or waived, and no other consents, approvals,
authorizations or other orders of any court or any governmental agency
are required to be obtained by FNB or First National for the
consummation of the transactions contemplated by the Agreement (other
than the filing of Articles of Merger with respect to the Merger);
7. (i) To our Actual Knowledge, there is no action, suit,
arbitration, controversy or other proceeding or investigation (or any
facts or circumstances which reasonably could result in such), including
without limitation any such action by any governmental or regulatory
authority, which currently exists or is ongoing, pending, threatened,
contemplated or probable of assertion, against, relating to or otherwise
affecting FNB or First National or any of its properties or assets
which, if determined adversely, could result in liability on the part of
FNB or First National for, or subject either to, monetary damages, fines
or penalties, an injunction, or which could have a material adverse
effect on FNB's or First National's financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations or on the ability of FNB or First National to
consummate the Merger; and
(ii) To our Actual Knowledge, neither FNB nor First National is
subject to any supervisory agreement, enforcement order, writ,
injunction, capital directive, supervisory directive, memorandum of
understanding or other similar agreement, order, directive,
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<PAGE>
memorandum or consent of, with or issued by any regulatory or other
governmental authority (including without limitation the FRB, the OCC or
the FDIC) relating to its financial condition, directors or officers,
operations, capital, regulatory compliance or otherwise; to our Actual
Knowledge there are no judgments, orders, stipulations, injunctions,
decrees or awards against FNB or First National which in any manner
limit, restrict, regulate, enjoin or prohibit any present or past
business or practice of FNB or First National; and, to our Actual
Knowledge, neither FNB nor First National has been advised or has any
reason to believe that any regulatory or other governmental authority or
any court is contemplating, threatening or requesting the issuance of
any such agreement, order, injunction, directive, memorandum, judgment,
stipulation, decree or award.
8. When a certificate of approval of the Merger has been issued
by the OCC and Articles of Merger have been duly executed by Home
Savings and First National and have been filed with the Secretary of
State of North Carolina in accordance with North Carolina law, the
Merger will become effective at the time of such filing or, if later, at
the time specified in such Articles of Merger.
Although we have made certain inquiries and investigations in connection
with the preparation of [the Registration Statement and] the [Prospectus/]Proxy
Statement, the limitations inherent in the role of outside counsel are such that
we cannot and do not assume responsibility for the accuracy or completeness of
the statements made in [the Registration Statement] and the [Prospectus/]Proxy
Statement except insofar as such statements relate to us and except to the
extent set forth in paragraph 2 of this opinion. Subject to the foregoing, we
have no reason to believe that [the Registration Statement at the time it became
effective, or] the [Prospectus/]Proxy Statement at the time it was distributed
to Home Savings' shareholders, contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, we make no statement regarding any information included in the
Registration Statement regarding Home Savings or regarding any of FNB's or First
National's financial statements or other financial, accounting or statistical
data.
In giving the opinions set forth above, we have assumed, without
independent verification, that:
a. Home Savings is duly organized, validly existing and in good standing
as a savings bank under the laws of North Carolina and all other applicable laws
to which it is subject. Home Savings has the full power and authority (corporate
and otherwise) to enter into and perform its obligations under the Agreement and
to consummate the transactions described therein. The Agreement and all other
documents and instruments executed by Home Savings in connection therewith have
been duly and validly executed and delivered on behalf of and are enforceable in
accordance with their terms against Home Savings;
b. Other than persons executing documents on behalf of FNB or First
National, the signatures of all persons signing any document or instrument
delivered in connection with the
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Agreement or the consummation of the transactions described therein are genuine,
and all such persons executing such documents have been duly authorized to
execute and deliver such documents and instruments;
c. All natural persons executing any document or instrument delivered in
connection with the Agreement or the consummation of the transactions described
therein, or on whose behalf any such documents were executed, had and continue
to have legal competency to do so and to become legally bound thereby;
d. All documents submitted to us as originals are authentic, and all
documents submitted to us as certified or photostatic copies conform to the
original documents, which are themselves authentic;
e. No event will take place subsequent to the date hereof that would
cause any action taken in connection with the Agreement or the transactions
described therein to fail to comply with any law, rule, regulation, order,
judgment, decree or duty, or that would permit any party to cancel, rescind or
otherwise avoid any act;
f. Home Savings has complied or will comply with all conditions of all
required approvals of regulatory authorities having jurisdiction over Home
Savings, FNB, First National and the transactions described in the Agreement.
g. All certificates of public officials have been properly given and
are accurate and complete; and
h. There has been no mutual mistake of fact, fraud, duress or undue
influence in connection with the Agreement or the transactions described
therein, and the conduct of the parties to the Agreement has complied with any
requirement of good faith, fair dealing and conscionability. Each party to the
Agreement has acted without notice of any defense against the enforcement of any
rights created thereby; and there are no agreements or understandings, or any
usage of trade or course of dealing, among the parties that, in either case,
would define, supplement or qualify the terms of the Agreement.
In addition, all opinions and statements set forth in this letter are
expressly limited and qualified as follows:
a. The opinions expressed herein are limited to matters of North
Carolina law and the federal laws of the United States of America, and no
opinion is expressed as to any matter that is governed by the laws of any other
jurisdiction or to the effect of any such laws on the matters dealt with herein.
b. As used in any paragraph of this letter, the phrase "Actual
Knowledge" means that, in giving the opinion contained in such paragraph, we
have relied with your consent exclusively on certificates of officers of First
National and FNB, certificates of others as to the existence or
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non-existence of the circumstances upon which this opinion is predicated, or
various representations and warranties contained in the Agreement (and we have
not conducted any independent investigation in this regard), and that we have no
actual conscious awareness of any information to the contrary.
c. Our opinions are limited to the matters expressly stated herein, and
no opinion may be inferred or implied beyond the matters expressly stated.
d. The enforceability of all or various provisions of the Agreement may
be limited by (A) the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect relating
to or limiting the enforcement of creditors' rights generally, (B) by legal and
equitable limitations on availability of injunctive relief, specific performance
and other equitable remedies and (C) general principles of equity and applicable
laws or court decisions limiting the availability of specific performance,
injunctive relief and other equitable remedies (including the enforceability of
indemnification provisions, regardless of whether such enforceability is
considered in a proceeding in equity or at law).
e. We express no opinion with respect to compliance by FNB or First
National with any federal, state or local law, rule, regulation, ordinance,
order or decree relating to hazardous substances, hazardous wastes, hazardous
materials or the protection of the environment, or with respect to any
Environmental Law.
f. These opinions are delivered to you pursuant to Section 7.2(d) of the
Agreement and in connection with consummation of the transactions described
therein and are solely for your benefit. No other person shall be entitled to
rely on our opinions herein, and you are not entitled to rely on such opinions
in any other context or for any other purpose. No copy of this letter or any
portion thereof may be delivered to any other person, or quoted, published or
otherwise disseminated, without our prior written consent.
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g. Except as otherwise expressly specified herein, the opinions herein
are limited to matters in existence as of the date hereof, and we undertake no
responsibility to revise or supplement this letter or the opinions herein to
reflect any change in the law or facts.
Yours truly,
SCHELL BRAY AYCOCK ABEL & LIVINGSTON P.L.L.C.
7
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SCHEDULE E
to Agreement and Plan of Reorganization and Merger
dated _______ ___, 1997
Form of Legal Opinion of Counsel for Home Savings
____________ ___, 1997
FNB Corp.
101 Sunset Avenue
Asheboro, North Carolina 27203
Gentlemen:
We have acted as special counsel to Home Savings Bank of Siler City,
Inc., SSB, a North Carolina savings bank ("Home Savings"), in connection with
the transactions described in that certain Agreement and Plan of Reorganization
and Merger dated May ___, 1997, by and among Home Savings, First National Bank
and Trust Company ("First National") and FNB Corp. ("FNB") (including the Plan
of Merger referenced therein, the "Agreement"). Pursuant to and in accordance
with the terms and conditions of the Agreement, Home Savings is proposed to be
merged into and with First National (the "Merger") and the outstanding shares of
Home Savings' common stock will be converted into (i) the right to receive cash,
(ii) shares of FNB's common stock or (iii) a combination of (i) and (ii) as
provided in the Agreement. This letter is delivered in connection with the
consummation and closing of the Merger and other transactions described in the
Agreement (the "Closing"). Capitalized terms appearing herein and not otherwise
defined are used as defined in the Agreement.
As counsel to Home Savings, we have examined originals or copies of Home
Savings' Articles of Incorporation or Articles of Association, as the case may
be, and Bylaws, the Agreement, the [Registration Statement (No. ) on Form S-4
(the "Registration Statement") filed by FNB with the Securities and Exchange
Commission (the "Commission") and containing the Prospectus/]Proxy Statement,
dated ___________ ___, 1997, certificates and written statements of officers and
agents of Home Savings, certificates of public officials, and such other
documents and records of Home Savings as we have deemed necessary for the
purpose of giving the opinions hereinafter expressed.
In giving certain of the opinions set forth below, we have relied solely
upon certifications and letters provided to us by public officials. As to
matters of fact set forth below, and matters of fact which form the basis for
any opinion set forth below, we have relied solely upon (i) certificates and
statements of officers, employees and accountants of Home Savings and (ii) the
<PAGE>
representations and warranties of Home Savings set forth in the Agreement.
Except as expressly stated herein, we have not independently verified any
factual matters in connection with the giving of the opinions set forth below.
Subject to the qualifications and limitations set forth herein, and
except as set forth in [the Registration Statement or] the Agreement or as
Previously Disclosed by Home Savings to First National and FNB in connection
therewith, we are of the opinion that:
1. Home Savings and its subsidiary each (i) is duly organized and
incorporated and validly existing as a savings bank and a business corporation,
as the case may be, under the laws of North Carolina; (ii) has all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as now being conducted; (iii) is duly qualified to do
business and is in good standing in each other jurisdiction in which the
character of the properties owned, leased or operated by it therein or in which
the transaction of its business makes such qualification necessary, except where
failure so to qualify would not have a material adverse effect on Home Savings
and its subsidiary considered as one enterprise; and (iv) to our Actual
Knowledge, is not transacting business or operating any properties owned or
leased by it in violation of any provision of federal or state law or any rule
or regulation promulgated thereunder, which violation would have a material
adverse effect on Home Savings and its subsidiary considered as one enterprise.
2. Home Savings' authorized capital stock consists of 5,000,000 shares
of common stock, $1.00 par value per share ("Home Savings Stock").
Each outstanding share of Home Savings Stock (i) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable (except to the extent Home Savings' stock is assessable under
North Carolina banking law), (ii) has not been issued in violation of the
preemptive rights of any shareholder, and (iii) has been issued pursuant to and
in compliance with the requirement of an applicable exemption from registration
requirements under the Securities Act of 1933, as amended (the "1933 Act").
3. Except for options to purchase shares of Home Savings Stock issued
and outstanding under Home Savings' ISO Plan and NSSO Plan or the Option
Agreement, Home Savings has no outstanding (i) securities or other obligations
(including debentures or other debt instruments) which are convertible into
shares of Home Savings Stock or any other securities of Home Savings, (ii)
options, warrants, rights, calls or other commitments of any nature which
entitle any person to receive or acquire any shares of Home Savings Stock or any
other securities of Home Savings, or (iii) plan, agreement or other arrangement
pursuant to which shares of Home Savings Stock or any other securities of Home
Savings, or options, warrants, rights, calls or other commitments of any nature
pertaining thereto, have been or may be issued.
4. (i) Home Savings has the corporate power and authority to execute and
deliver the Agreement and to perform its obligations and agreements and carry
out the transactions described therein, (ii) all corporate proceedings and
approvals required to authorize Home Savings to enter into
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the Agreement and to perform its obligations and agreements and carry out the
transactions described therein have been duly and properly completed or
obtained, and (iii) the Agreement constitutes the valid and binding agreement of
Home Savings enforceable in accordance with its terms.
5. Except where the same would not have a material adverse effect on
Home Savings and its subsidiary considered as one enterprise, neither the
execution and delivery of the Agreement, nor the consummation of the
transactions described therein, nor compliance by Home Savings with any of its
obligations or agreements contained therein, will: (i) conflict with or result
in a breach of the terms and conditions of, or constitute a default or violation
under any provision of, Home Savings' or its subsidiary's Articles of
Association or Articles of Incorporation, as the case may be, or Bylaws, or, to
our Actual Knowledge, any contract, agreement, lease, mortgage, note, bond,
indenture, license, or obligation or understanding (oral or written) to which
Home Savings or its subsidiary is bound or by which Home Savings or its
subsidiary or the business, capital stock, properties or assets of either may be
affected; (ii) to our Actual Knowledge, result in the creation or imposition of
any lien, claim, interest, charge, restriction or encumbrance upon any of Home
Savings' or its subsidiary's properties or assets; (iii) violate any applicable
federal or state statute, law, rule or regulation, or to our Actual Knowledge,
any judgment, order, writ, injunction or decree of any court, administrative or
regulatory agency or governmental body; or (iv) to our Actual Knowledge, result
in the acceleration of any obligation or indebtedness of Home Savings or its
subsidiary.
6. To our Actual Knowledge, no consents, approvals or waivers are
required to be obtained from any person or entity in connection with Home
Savings' execution and delivery of the Agreement, or the performance of its
obligations or agreements or the consummation of the transactions described
therein, except for approvals of Home Savings' Board of Directors and
shareholders and required approvals of governmental or regulatory authorities
("Regulatory Approvals").
7. The Agreement has been duly and validly approved by Home Savings'
Board of Directors and shareholders to the extent and in the manner required by
applicable law, and the Agreement has been executed and delivered on Home
Savings' behalf.
8. All Regulatory Approvals required to be obtained by Home Savings for
the consummation of the transactions contemplated by the Agreement (other than
the filing of Articles of Merger) have been obtained and are in full force and
effect. To our Actual Knowledge, all conditions imposed on Home Savings in
connection therewith that are required to be satisfied prior to consummation of
such transactions have been satisfied or waived, and, no other consents,
approvals, authorizations or other orders of any court or any governmental
agency are required to be obtained by Home Savings for the consummation of the
transactions contemplated by the Agreement (other than the filing of Articles of
Merger with respect to the Merger);
9. (i) To our Actual Knowledge, there is no action, suit, arbitration,
controversy or other proceeding or investigation (or any facts or circumstances
which reasonably could result in such),
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including without limitation any such action by any governmental or regulatory
authority, which currently exists or is ongoing, pending or threatened,
contemplated or probable of assertion, against, relating to or otherwise
affecting Home Savings or its subsidiary or their properties or assets, if
determined adversely, could result in liability on the part of Home Savings or
its subsidiary for, or subject either to, monetary damages, fines or penalties,
an injunction, or which could have a material adverse effect on Home Savings' or
its subsidiary's financial condition, results of operations, prospects,
businesses, assets, loan portfolio, investments, properties or operations or on
the ability of Home Savings to consummate the Merger; and
(ii) To our Actual Knowledge, neither Home Savings nor its subsidiary is
subject to any supervisory agreement, enforcement order, writ, injunction,
capital directive, supervisory directive, memorandum of understanding or other
similar agreement, order, directive, memorandum or consent of, with or issued by
any regulatory or other governmental authority (including without limitation the
FRB, the FDIC or the Administrator) relating to its financial condition,
directors or officers, operations, capital, regulatory compliance or otherwise;
there are no judgments, orders, stipulations, injunctions, decrees or awards
against Home Savings or its subsidiary which in any manner limit, restrict,
regulate, enjoin or prohibit any present or past business or practice of Home
Savings or its subsidiary; and, to our Actual Knowledge, neither Home Savings
nor its subsidiary has been advised or has any reason to believe that any
regulatory or other governmental authority or any court is contemplating,
threatening or requesting the issuance of any such agreement, order, injunction,
directive, memorandum, judgment, stipulation, decree or award.
10. When a certificate of approval of the Merger has been issued by the
OCC and Articles of Merger have been duly executed by Home Savings and First
National and have been filed with the Secretary of State of North Carolina in
accordance with North Carolina law, the Merger will become effective at the time
of such filing or, if later, at the time specified in such Articles of Merger.
Although we have made certain inquiries and investigations in connection
with the preparation of [the Registration Statement and] the [Prospectus/]Proxy
Statement, the limitations inherent in the role of outside counsel are such that
we cannot and do not assume responsibility for the accuracy or completeness of
the statements made in [the Registration Statement] and the [Prospectus/]Proxy
Statement except insofar as such statements relate to us and except to the
extent set forth in paragraph 2 of this opinion. Subject to the foregoing, we
have no reason to believe that [the Registration Statement at the time it became
effective, or] the [Prospectus/]Proxy Statement at the time it was distributed
to Home Savings' shareholders, contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, we make no statement regarding any information included in the
Registration Statement regarding Home Savings or regarding any of FNB's or First
National's financial statements or other financial, accounting or statistical
data.
In giving the opinions set forth above, we have assumed, without
independent verification, that the following is true:
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a. First National and FNB each is duly organized, validly existing and
in good standing (as a national banking association and a business corporation,
respectively) under the laws of the United States and North Carolina. First
National and FNB each has the full power and authority (corporate and otherwise)
to enter into and perform its obligations under the Agreement and to consummate
the transactions described therein. The Agreement and all other documents and
instruments executed by First National and FNB in connection therewith have been
duly and validly executed and delivered on behalf of and are enforceable in
accordance with their terms against First National and FNB;
b. Other than persons executing documents on behalf of Home Savings, the
signatures of all persons signing any document or instrument delivered in
connection with the Agreement or the consummation of the transactions described
therein are genuine, and all such persons executing such documents have been
duly authorized to execute and deliver such documents and instruments;
c. All natural persons executing any document or instrument delivered in
connection with the Agreement or the consummation of the transactions described
therein, or on whose behalf any such documents were executed, had and continue
to have legal competency to do so and to become legally bound thereby;
d. All documents submitted to us as originals are authentic, and all
documents submitted to us as certified or photostatic copies conform to the
original documents, which are themselves authentic;
e. No event will take place subsequent to the date hereof that would
cause any action taken in connection with the Agreement or the transactions
described therein to fail to comply with any law, rule, regulation, order,
judgment, decree or duty, or that would permit any party to cancel, rescind or
otherwise avoid any act;
f. FNB and First National have complied or will comply with all
conditions of all required approvals of regulatory authorities having
jurisdiction over Home Savings, FNB, First National and the transactions
described in the Agreement;
g. All certificates of public officials have been properly given and
are accurate and complete; and
h. There has been no mutual mistake of fact, fraud, duress or undue
influence in connection with the Agreement or the transactions described
therein, and the conduct of the parties to the Agreement has complied with any
requirement of good faith, fair dealing and conscionability. Each party to the
Agreement has acted without notice of any defense against the enforcement of any
rights created thereby; and there are no agreements or understandings, or any
usage of trade or course of dealing, among the parties that, in either case,
would define, supplement or qualify the terms of the Agreement.
5
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In addition, all opinions and statements set forth in this letter are
expressly limited and qualified as follows:
a. The opinions expressed herein are limited to matters of North
Carolina law and the federal laws of the United States of America, and no
opinion is expressed as to any matter that is governed by the laws of any other
jurisdiction or to the effect of any such laws on the matters dealt with herein.
b. As used in any paragraph of this letter, the phrase "Actual
Knowledge" means that, in giving the opinion contain in such paragraph, we have
relied with your consent exclusively on certificates of officers of Home Savings
as to the existence or non-existence of the circumstances upon which this
opinion is predicated, or various representations and warranties contained in
the Agreement (and we have not conducted any independent investigation in this
regard), and that we have no actual conscious awareness of any information to
the contrary.
c. Our opinions are limited to the matters expressly stated herein, and
no opinion may be inferred or implied beyond the matters expressly stated.
d. The enforceability of all or various provisions of the Agreement may
be limited by (A) the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect relating
to or limiting the enforcement of creditors' rights generally, (B) by legal and
equitable limitations on the availability of injunctive relief, specific
performance and other equitable remedies and (C) general principles of equity
and applicable laws or court decisions limiting the availability of specific
performance, injunctive relief and other equitable remedies (including the
enforceability of indemnification provisions, regardless of whether such
enforceability is considered in a proceeding in equity or at law).
e. We express no opinion with respect to compliance by Home Savings with
any federal, state or local law, rule, regulation, ordinance, order or decree
relating to hazardous substances, hazardous wastes, hazardous materials or the
protection of the environment, or with respect to any Environmental Law.
f. These opinions are delivered to you pursuant to Section 7.3(e) of the
Agreement and in connection with consummation of the transactions described
therein and are solely for your benefit. No other person shall be entitled to
rely on our opinions herein, and you are not entitled to rely on such opinions
in any other context or for any other purpose. No copy of this letter or any
portion thereof may be delivered to any other person, or quoted, published or
otherwise disseminated, without our prior written consent.
g. Except as otherwise expressly specified herein, the opinions herein
are limited to matters in existence as of the date hereof, and we undertake no
responsibility to revise or supplement this letter or the opinions herein to
reflect any change in the law or facts.
6
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Yours truly,
MOORE & VAN ALLEN, PLLC
7
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OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement") dated as of the 3rd day of
June, 1997, between FNB CORP. ("FNB"), a North Carolina corporation, and HOME
SAVINGS BANK OF SILER CITY, INC., SSB ("Home Savings"), a North Carolina state
savings bank.
RE C I T A L S :
WHEREAS, the Boards of Directors of FNB and Home Savings have approved
an Agreement and Plan of Reorganization and Merger (the "Merger Agreement"),
dated as of the date hereof, between FNB and Home Savings, providing for the
merger (the "Merger") of Home Savings into First National Bank and Trust
Company, a wholly owned subsidiary of FNB ("First National"), which Merger
Agreement has been executed by the parties concurrently with this Agreement, and
WHEREAS, as a condition to FNB's execution of the Merger Agreement, and
in consideration thereof, Home Savings has agreed to grant to FNB the option set
forth herein;
NOW, THEREFORE, in consideration of the premises herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned thereto in the Merger Agreement.
2. Grant of Option. Home Savings hereby grants to FNB an option (the
"Option") to purchase up to 183,615 shares of authorized but unissued shares of
Home Savings common stock, par value $1.00 per share (the "Home Savings Common
Stock"), at a price of $12.50 per share (the "Exercise Price") payable in cash
as provided in Section 4 below; provided, however, that such number of shares
shall be reduced if and to the extent necessary so that the number of shares for
which this Option is exercisable shall not exceed 19.9% of the issued and
outstanding Home Savings Common Stock as of the date hereof. The number of
shares of Home Savings Common Stock that may be received upon the exercise of
this Option is subject to adjustment as set forth herein.
3. Exercise of Option.
(a) Subject to compliance with applicable laws and regulations, and
unless FNB shall have breached in any material respect and failed to cure any
covenant or representation in the Merger Agreement, FNB may exercise the Option,
in whole or in part, at any time or from time to time following the occurrence
of a Purchase Event (as defined below) and prior to the occurrence of a
Termination Event (as defined below).
(b) (i) As used herein, a "Purchase Event" shall mean when:
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(A) Home Savings shall have authorized, recommended,
proposed or publicly announced an intention to authorize,
recommend or propose a transaction with a person (other than
FNB or First National) to, or entered into an agreement with a
person (other than FNB or First National) to: (a) effect a
merger or consolidation with, or enter into any similar
business combination with, Home Savings, (b) sell, lease or
otherwise dispose of the assets of Home Savings to such
person, aggregating 15 percent or more of the consolidated
assets of Home Savings (other than a sale of loan receivables
in a financing transaction in the normal course of business
consistent with past practices), or (c) issue, sell or
otherwise dispose of to such person (including by way of
merger, consolidation, share exchange or any similar
transaction) securities representing more than 15 percent of
the voting power of Home Savings; or
(B) any person other than FNB or First National shall
have acquired beneficial ownership of more than 15 percent of
the outstanding shares of Home Savings Common Stock; or any
person shall have merged, consolidated with or consummated a
similar transaction with Home Savings or any person shall have
purchased, leased or otherwise acquired 15 percent or more of
the assets of Home Savings (other than a sale of loan
receivables in a financing transaction in the normal course of
business consistent with past practices); or
(C) a bona fide proposal is made by any person (other
than FNB or First National) by public announcement or written
communication that is or becomes the subject of public
disclosure, or disclosure in an application to any federal or
state regulatory authority, to (a) acquire, merge or
consolidate with, or enter into any similar transaction with
Home Savings, (b) purchase, lease or otherwise acquire 10
percent or more of the assets of Home Savings (other than a
sale of loan receivables in a financing transaction in the
normal course of business consistent with past practices), or
(c) purchase or otherwise acquire (including by way of tender
offer, merger, consolidation, share exchange, tender or
exchange offer or any similar transaction) securities
representing more than 10 percent of the voting power of Home
Savings.
(ii) The term "person" shall have the meaning specified in
Section 3(a)(9), and "beneficial ownership" shall have the meaning
specified under Section 13(d)(3), of the Securities Exchange Act of
1934, as amended.
(c) Home Savings shall notify FNB promptly in writing of the occurrence
of any transaction, offer or event giving rise to a Purchase Event.
(d) In the event FNB determines to exercise the Option, it shall send
to Home Savings a written notice (an "Exercise Notice," the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares of Home Savings Common Stock
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FNB will purchase pursuant to such exercise, and (ii) a place and date not
earlier than three business days nor later than 20 business days from the Notice
Date for the closing of such purchase with respect to such exercise (the "Option
Closing Date"); provided, that if the closing of the purchase and sale pursuant
to the Option cannot be consummated by reason of any applicable judgment,
decree, order, law or regulation, the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated; and provided
further, without limiting the foregoing, if prior notification to, or approval
of, any federal or state regulatory agency is required in connection with such
purchase, FNB, and Home Savings if required by applicable law, shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which the last required
notification period has expired or been terminated or such approvals have been
obtained and any requisite waiting periods shall have passed.
(e) The Option shall expire and terminate, to the extent not previously
exercised, upon the earliest to occur of the following (each a "Termination
Event"):
(i) the Effective Time of the Merger; or
(ii) the termination of the Merger Agreement without a
Purchase Event having occurred, other than a termination based upon,
following, or in connection with, either (A) a willful and material
breach by Home Savings of any of its covenants or agreements in the
Merger Agreement, or (B) the failure of Home Savings to obtain
shareholder approval of the transactions contemplated by the Merger
Agreement by the vote required under applicable law; or
(iii) 18 months after the first occurrence of a Purchase
Event; or
(iv) 36 months after the date hereof.
(f) Notwithstanding the termination of the Option, FNB shall be
entitled to purchase any shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the termination of the
Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
4. Payment and Delivery of Certificates.
(a) On each Option Closing Date, FNB shall pay to Home Savings the
aggregate purchase price for the shares being purchased on that Option Closing
Date in immediately available funds by a wire transfer to a financial
institution designated by Home Savings.
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(b) At each closing relating to an exercise of the Option,
simultaneously with the delivery of cash by FNB as provided in subsection (a)
with respect to the Option, Home Savings shall deliver to FNB a certificate or
certificates representing the number of shares of Home Savings Common Stock
purchased by FNB, and FNB shall deliver to Home Savings a letter agreeing that
FNB will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement and providing such
undertakings and representations as necessary for the issuance and sale of such
shares to be exempt from registration under applicable securities laws.
5. Representation by Home Savings. Home Savings hereby represents and
warrants to, and covenants with, FNB as follows:
(a) Home Savings has all requisite corporate power and authority to
enter into this Option Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Option Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Home Savings. This Option Agreement has been duly executed and
delivered by Home Savings and constitutes a valid and binding obligation of Home
Savings, enforceable in accordance with its terms.
(b) Home Savings has taken all necessary corporate action to authorize
and reserve for issuance the full number of shares of Home Savings Common Stock
issuable upon exercise of the Option, and shall continue to reserve such shares
until the Option is exercised or until this Agreement is terminated as provided
herein.
(c) The shares of Home Savings Common Stock to be issued upon due
exercise, in whole or in part, of the Option, when paid for as provided herein,
will be duly authorized, validly issued, fully paid and nonassessable and shall
be delivered free and clear of all liens, claims, charges and encumbrances of
any kind or nature whatsoever, including any preemptive rights of any
shareholder of Home Savings, but subject to restrictions on transfer imposed by
applicable securities laws.
(d) The execution and delivery of this Option Agreement does not, and
the consummation of the transactions contemplated hereby will not, conflict with
or result in any violation of any provision of the Articles of Incorporation or
Bylaws of Home Savings or, subject to obtaining any approvals or consents
contemplated hereby, result in any violation of any loan or credit agreement,
note, mortgage, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Home Savings or its
properties or assets.
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6. Adjustment upon Changes in Capitalization, etc. In the event of any
change in the outstanding Home Savings Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, exchanges of
shares or the like, the number of shares subject to the Option and the exercise
price per share shall be adjusted appropriately so that the Option will entitle
the holder thereof to acquire, at a price economically equivalent to the
Exercise Price, all of the shares or other securities, property, or rights to
which ownership of the underlying shares of Home Savings Common Stock would have
entitled the holder had they been outstanding immediately prior to such change.
In the event that any shares of Home Savings Common Stock are issued after the
date of this Agreement other than in a transaction described in the first
sentence of this Section 6 or upon the exercise of the Option, the number of
shares subject to the Option shall be adjusted so that, immediately after such
issuance, the number of shares subject to the Option (together with the number
of shares previously issued under the Option) equals 19.9 percent of the number
of the then-outstanding shares of Home Savings Common Stock. Nothing contained
in this Section 6 shall be deemed to authorize Home Savings to breach any
provision of the Merger Agreement.
7. Registration Rights. Home Savings shall, upon request by FNB at any
time and from time to time within two years of the first exercise of the Option,
as expeditiously as possible, prepare and file an offering circular under the
applicable regulations of the Office of Thrift Supervision or Federal Deposit
Insurance Corporation or, if Home Savings is then subject to the registration
provisions of the Securities Act, prepare and file a registration statement
under the Securities Act, in order to permit the sale or other disposition of
any or all shares or securities that have been acquired by or are issuable to
FNB upon exercise of the Option in accordance with the intended method of sale
or other disposition stated by FNB, including a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision. Home Savings
shall use its best efforts to qualify such shares or other securities under any
applicable state securities laws, to cause any such offering circular or
registration statement to become effective, to obtain all consents or waivers of
other parties which are required for such offering circular or registration
statement, and to keep any such offering circular or registration statement
updated and effective for such period not to exceed of 360 days from the day
such offering circular or registration statement first becomes effective as may
be reasonably necessary to effect such sale or other disposition. The
obligations of Home Savings hereunder may be suspended for one or more periods
of time not exceeding 60 days in the aggregate if the Board of Directors of Home
Savings shall have determined that the distribution of such offering circular or
the filing of such registration statement or the maintenance of its
effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Home Savings. Any offering circular or
registration statement prepared under this Section 7, and any sale covered
thereby, shall be at Home Savings' expense except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of FNB's counsel
related thereto. FNB shall provide all information reasonably requested by Home
Savings for inclusion in any offering circular or registration statement to be
prepared hereunder. If during the time periods referred to in the first sentence
of this Section 7 Home Savings distributes an offering circular or effects a
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registration under the Securities Act of Home Savings Common Stock for its own
account or for any other shareholders of Home Savings (other than on Form S-4 or
Form S-8, or any successor form), it shall first allow FNB the right to
participate in such offering, and such participation shall not affect the
obligation of Home Savings to effect the offering circulars or registration
statements for FNB under this Section 7; provided that, if the managing
underwriters of such offering advise Home Savings in writing that in their
opinion the number of shares of Home Savings Common Stock requested to be
included in such offering circular or registration statement exceeds the number
which can be sold in such offering, Home Savings shall include the shares
requested to be included therein by FNB only to the maximum extent such managing
underwriter determines to be feasible. In connection with any offering circular
or registration statement pursuant to this Section 7, Home Savings and FNB shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution in
connection therewith.
8. Listing. If Home Savings Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NASDAQ National
Market or any other national market or exchange, Home Savings, upon the request
of FNB, will promptly file an application to list the shares of Home Savings
Common Stock or other securities to be acquired upon exercise of the Option on
the NASDAQ National Market or such other market or exchange and will use its
best efforts to obtain approval of such listing as soon as practicable.
9. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of FNB, upon presentation and
surrender of this Option Agreement at the principal office of Home Savings for
other Agreements providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Home
Savings Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by Home
Savings of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Home Savings will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement executed
and delivered shall constitute an additional contractual obligation on the part
of Home Savings, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by anyone.
10. Severability If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Option will not permit the holder to acquire the full
number of shares of
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Home Savings Common Stock provided in Section 2 hereof (as adjusted pursuant to
Section 6 hereof), it is the express intention of Home Savings to allow the
holder to acquire such lesser number of shares as may be permissible, without
any amendment or modification hereof.
11. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transaction contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein,
this Agreement contains the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party other than the parties hereto, and
their respective successor and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
(c) Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement to any other person, without the
express written consent of the other party, except that FNB may assign in whole
or in part the Option and other benefits and obligations hereunder without
limitation to any of its wholly owned subsidiaries and FNB may assign in whole
or in part the Option and other benefits and obligations hereunder without
limitation if a Purchase Event has occurred and FNB shall have delivered to Home
Savings a copy of a letter from the staff of the Commission, or an opinion of
counsel, in form and substance reasonably satisfactory to Home Savings, to the
effect that such assignment will not violate the requirements of the Securities
Act; provided, that prior to any such assignment, FNB shall give written notice
of the proposed assignment to Home Savings, and within 24 hours of receipt of
such notice of a bona fide proposed assignment, Home Savings may purchase the
Option at a price and on other terms at least as favorable to FNB as that set
forth in the notice of assignment.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally recognized overnight express or by facsimile transmission,
addressed or directed as follows:
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If to Home Savings:
Home Savings Bank of Siler City, Inc., SSB
P.O. Box 316
300 East Raleigh Street
Siler City, North Carolina 27344
Attention: Edwin E. Bridges, President
Fax No.: (919) 742-2342
With a required copy to:
Moore & Van Allen, PLLC
One Hanover Square
Suite 1700
P.O. Box 26507
Raleigh, North Carolina 27611
Attention: Anthony Gaeta, Jr.
Fax No.: (919) 828-4252
If to FNB:
FNB Corp.
P.O. Box 1328 (27204)
101 Sunset Avenue
Asheboro, North Carolina 27203
Attention: Michael C. Miller, President
Fax No.: (910) 625-2452 & 626-8338
With a required copy to:
Schell Bray Aycock Abel & Livingston P.L.L.C
230 North Elm Street, Suite 1500
Greensboro, North Carolina 27401
Attention: Kenneth N. Shelton
Fax No.: 910-370-8830
Any party may by notice change the address to which notice or other
communications to it are to be delivered or mailed.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
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(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Agreement by Home
Savings and that this Agreement may be enforced by FNB through injunctive or
other equitable relief.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, each of the parities hereto has executed
this Agreement as of the day and year first above written.
FNB CORP.
By: /s/ Michael C. Miller
Michael C. Miller
President
HOME SAVINGS BANK OF SILER CITY, INC., SSB
By: /s/ Edwin E. Bridges
Edwin E. Bridges
President
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FOR IMMEDIATE RELEASE For Additional Information,
See Contacts Below
June 3, 1997
FNB CORP. AND HOME SAVINGS BANK OF SILER CITY ANNOUNCE
ACQUISITION AGREEMENT
ASHEBORO, N.C. - FNB CORP. (NASDAQ:FNBN) has agreed to acquire HOME
SAVINGS BANK OF SILER CITY, INC., SSB (OTC:HSSC), according to a joint
announcement made today by Michael C. Miller, President of FNB Corp., and Edwin
E. Bridges, President of Home Savings. FNB Corp., based in Asheboro, is the
holding company for First National Bank and Trust Company.
Terms of the definitive agreement, which was entered into on June 3 and
unanimously approved by boards of directors of both companies, provide for the
merger of Home Savings into First National Bank and Trust. The acquisition will
be accounted for as a purchase transaction and is subject to several
conditions, including affirmative vote of the majority of Home Savings'
shareholders and approval from applicable regulatory agencies. Completion of the
transaction is expected in the first quarter of 1998.
To effect the acquisition, FNB intends to issue common stock and cash
representing $15.50 per share to shareholders of Home Savings. Home Savings
shareholders will be able to elect stock or cash or a combination thereof,
subject to the limitation that FNB common stock issued in the merger will be no
more than 60% and not less than 50% of the total consideration. The merger is
intended to be tax-free with respect to the FNB stock issued and taxable with
respect to the cash paid in the transaction.
Concurrently with the execution of the merger agreement, FNB received
an option to purchase 19.9% of Home Savings' Common Stock. The option is
exercisable only under certain specified conditions.
According to Miller, the proposed affiliation would enhance First
National's operations in Chatham County, and the combined operation will carry
the number two deposit market share ranking in Siler City. "Since we opened an
office in Siler City, we have admired the way Home Savings has helped meet the
financial needs of the local community. This merger will strengthen our growth
opportunities, and we hope to build on Home Savings' record of success in this
market." First National Bank will continue to operate its Siler City office
located at Siler Crossing Shopping Center. "In addition to the business
opportunity, we believe that this transaction should improve the liquidity of
our stock and enhance its long-term value for our shareholders," said Miller.
Bridges said that Home Savings customers would benefit from association
with FNB. "First National is a locally managed financial institution. Our
customers will continue to see the
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same faces in our office, and the added products and services available through
FNB will be a real plus." Home Savings shareholders will see benefits, according
to Bridges. "This combination of cash and stock with this transaction provides
flexibility for our shareholders and a significant premium over our current
stock price. We are very pleased that we will become a part of the future of the
FNB organization."
HOME SAVINGS BANK, founded in 1950, operates one office in Siler City
and has assets of approximately $53.4 million and deposits of approximately
$42.6 million.
FNB CORP. has assets of approximately $310 million and deposits of
approximately $272 million. Founded in 1907, it is a full service community
banking organization offering a full line of banking, trust and investment
products through 11 community offices in Randolph, Chatham and Montgomery
Counties in central North Carolina.
CONTACTS:
HOME SAVINGS BANK OF SILER CITY, INC., SSB
Edwin E. Bridges, President
(910) 742-4186
FNB CORP. (NC)/FIRST NATIONAL BANK AND TRUST COMPANY
Michael C. Miller, President
(910) 626-8300
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