AGREEMENT AND PLAN OF MERGER between F.N.B. CORPORATION and IRON & GLASS BANCORP, INC. DATED AS OF FEBRUARY 14, 2008
Exhibit 10.1.
AGREEMENT AND PLAN OF MERGER
between
F.N.B. CORPORATION
and
IRON & GLASS BANCORP, INC.
DATED AS OF FEBRUARY 14, 2008
TABLE OF CONTENTS
Page | ||||
ARTICLE I THE MERGER |
1 | |||
1.1 The Merger |
1 | |||
1.2 Effective Time |
2 | |||
1.3 Effects of the Merger |
2 | |||
1.4 Conversion of IRGB Capital Stock |
2 | |||
1.5 FNB Capital Stock |
4 | |||
1.6 IRGB Equity and Equity-Based Awards |
4 | |||
1.7 Articles of Incorporation and Bylaws of the Surviving Company |
5 | |||
1.8 Tax Consequences |
5 | |||
1.9 Dissenting Shares |
5 | |||
1.10 The Bank Merger |
5 | |||
ARTICLE II EXCHANGE OF SHARES |
6 | |||
2.1 Election and Proration Procedures |
6 | |||
2.2 FNB to Make Merger Consideration Available |
10 | |||
2.3 Exchange of Shares |
10 | |||
2.4 Adjustments for Dilution and Other Matters |
12 | |||
2.5 Withholding Rights |
12 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF IRGB |
12 | |||
3.1 Corporate Organization |
13 | |||
3.2 Capitalization |
14 | |||
3.3 Authority; No Violation |
15 | |||
3.4 Consents and Approvals |
16 | |||
3.5 Reports |
17 | |||
3.6 Financial Statements |
17 | |||
3.7 Broker’s Fees |
18 | |||
3.8 Absence of Certain Changes or Events |
18 | |||
3.9 Legal Proceedings |
18 | |||
3.10 Taxes and Tax Returns |
19 | |||
3.11 Employee Benefits |
21 | |||
3.12 Compliance with Applicable Law |
24 | |||
3.13 Contracts |
25 | |||
3.14 Agreements with Regulatory Agencies |
25 | |||
3.15 Undisclosed Liabilities |
25 | |||
3.16 Environmental Liability |
26 | |||
3.17 Real Property |
27 | |||
3.18 State Takeover Laws |
27 | |||
3.19 Reorganization |
28 | |||
3.20 Opinion |
28 |
(i)
Page | ||||
3.21 Insurance |
28 | |||
3.22 Investment Securities |
28 | |||
3.23 Intellectual Property |
28 | |||
3.24 Loans; Nonperforming and Classified Assets |
29 | |||
3.25 Fiduciary Accounts |
29 | |||
3.26 Allowance for Loan Losses |
29 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FNB |
30 | |||
4.1 Corporate Organization |
30 | |||
4.2 Capitalization |
30 | |||
4.3 Authority; No Violation |
31 | |||
4.4 Consents and Approvals |
32 | |||
4.5 Reports |
33 | |||
4.6 Financial Statements |
33 | |||
4.7 Broker’s Fees |
34 | |||
4.8 Absence of Certain Changes or Events |
34 | |||
4.9 Legal Proceedings |
34 | |||
4.10 Taxes and Tax Returns |
34 | |||
4.11 Employee Benefits |
36 | |||
4.12 SEC Reports |
39 | |||
4.13 Compliance with Applicable Law |
39 | |||
4.14 Contracts |
39 | |||
4.15 Agreements with Regulatory Agencies |
39 | |||
4.16 Undisclosed Liabilities |
40 | |||
4.17 Environmental Liability |
40 | |||
4.18 Reorganization |
41 | |||
4.19 Loans; Nonperforming and Classified Assets |
41 | |||
4.20 Fiduciary Accounts |
42 | |||
4.21 Allowance for Loan Losses |
42 | |||
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS |
42 | |||
5.1 Conduct of Businesses Prior to the Effective Time |
42 | |||
5.2 IRGB Forbearances |
42 | |||
5.3 FNB Forbearances |
47 | |||
5.4 Voting Agreements |
48 | |||
ARTICLE VI ADDITIONAL AGREEMENTS |
48 | |||
6.1 Regulatory Matters |
48 | |||
6.2 Access to Information |
50 | |||
6.3 IRGB Shareholder Approval |
51 | |||
6.4 Commercially Reasonable Efforts; Cooperation |
51 | |||
6.5 NYSE Approval |
51 | |||
6.6 Benefit Plans |
52 | |||
6.7 Indemnification; Directors’ and Officers’ Insurance |
53 | |||
6.8 Additional Agreements |
54 |
(ii)
Page | ||||
6.9 Advice of Changes |
55 | |||
6.10 Dividends |
55 | |||
6.11 Certain Actions |
55 | |||
6.12 Transition |
58 | |||
6.13 Certain Post-Closing Matters |
58 | |||
6.14 Tax Representation Letters |
59 | |||
ARTICLE VII CONDITIONS PRECEDENT |
59 | |||
7.1 Conditions to Each Party’s Obligation to Effect the Merger |
59 | |||
7.2 Conditions to Obligation of FNB to Effect the Merger |
60 | |||
7.3 Conditions to Obligation of IRGB to Effect the Merger |
61 | |||
ARTICLE VIII TERMINATION AND AMENDMENT |
62 | |||
8.1 Termination |
62 | |||
8.2 Effect of Termination |
65 | |||
8.3 Amendment |
65 | |||
8.4 Extension; Waiver |
66 | |||
ARTICLE IX GENERAL PROVISIONS |
66 | |||
9.1 Closing |
66 | |||
9.2 Nonsurvival of Representations, Warranties and Agreements |
66 | |||
9.3 Expenses |
66 | |||
9.4 Notices |
67 | |||
9.5 Interpretation |
68 | |||
9.6 Counterparts |
68 | |||
9.7 Entire Agreement |
68 | |||
9.8 Governing Law; Jurisdiction |
69 | |||
9.9 Severability |
69 | |||
9.10 Assignment; Third Party Beneficiaries |
70 | |||
EXHIBITS: |
||||
Exhibit A Form of Bank Merger Agreement |
A-1 | |||
Exhibit B Form of Voting Agreement |
B-1 |
(iii)
INDEX OF DEFINED TERMS
Section | ||||
Acquisition Proposal |
6.11(e) | |||
Adjusted Buyer Ratio |
8.1(h) | |||
Agreement |
Preamble | |||
Articles of Merger |
1.2 | |||
Assumed Stock Options |
1.6(a) | |||
Average Closing Price |
8.1(h) | |||
Bank Merger |
1.10 | |||
Bank Merger Agreement |
1.10 | |||
BHC Act |
3.1(b) | |||
Break-up Fee |
6.11(f) | |||
Cash Election |
2.1(a) | |||
Cash Proration Factor |
2.1(b) | |||
Certificates |
1.4(c) | |||
Change in IRGB Recommendation |
6.11(b) | |||
Claim |
6.7(a) | |||
Closing |
9.1 | |||
Closing Date |
9.1 | |||
Code |
Preamble | |||
Combination Cash Election |
2.1(a) | |||
Combination Stock Election |
2.1(a) | |||
Confidentiality Agreement |
6.2(b) | |||
Contracts |
5.2(j) | |||
Controlled Group Liability |
3.10 | |||
Credit Facilities |
5.2(f) | |||
Determination Date |
8.1(g) | |||
DRSP Plan |
1.4(d) | |||
Effective Date |
1.2 | |||
Effective Time |
1.2 | |||
Election Deadline |
2.1(b) | |||
Election Form |
2.1(a) | |||
Environmental Laws |
3.15(b) | |||
ERISA |
3.11 | |||
ERISA Affiliate |
3.11 | |||
Exchange Act |
2.1(a) | |||
Exchange Agent |
2.1 | |||
Exchange Fund |
2.2 | |||
Exchange Ratio |
1.4(a) | |||
FBCA |
1.1(a) |
(iv)
Section | ||||
FDIC |
3.4 | |||
Federal Reserve Board |
3.4 | |||
FNB |
Preamble | |||
FNB 2006 10-K |
4.6 | |||
FNB 10-Q |
4.16 | |||
FNB Bank |
1.10 | |||
FNB Bank Board |
1.10 | |||
FNB Benefit Plan |
4.11 | |||
FNB Bylaws |
4.1(b) | |||
FNB Charter |
4.1(b) | |||
FNB Closing Price |
1.6(a) | |||
FNB Common Stock |
1.4(a) | |||
FNB Disclosure Schedule |
Art. IV Preamble | |||
FNB Employment Agreement |
4.11 | |||
FNB Loan Property |
4.17 | |||
FNB Plans |
6.7(a) | |||
FNB Preferred Stock |
4.2(a) | |||
FNB Qualified Plans |
4.11(d) | |||
FNB Regulatory Agreement |
4.15 | |||
FNB Reports |
4.12 | |||
FNB Stock Plans |
4.2(a) | |||
GAAP |
3.1(c) | |||
Governmental Entity |
3.4 | |||
Hazardous Substance |
3.16(b) | |||
HSR Act |
3.4 | |||
Indemnified Parties |
6.7(a) | |||
Index Price |
8.1(h) | |||
Injunction |
7.1(e) | |||
Insurance Amount |
6.7(c) | |||
Intellectual Property |
3.23 | |||
IRGB |
Preamble | |||
IRGB Articles |
3.1(b) | |||
IRGB Bank |
1.10 | |||
IRGB Bank Designees |
1.10 | |||
IRGB Benefit Plan |
3.11 | |||
IRGB Bylaws |
3.1(b) | |||
IRGB Closing Price |
1.6(a) | |||
IRGB Common Stock |
1.4(a) | |||
IRGB Disclosure Schedule |
Art. III Preamble | |||
IRGB Employment Agreement |
3.11 | |||
IRGB’s Knowledge |
3.16(b) | |||
IRGB Loan Property |
3.16(a) |
(v)
Section | ||||
IRGB Plan |
3.11 | |||
IRGB Qualified Plans |
3.11(d) | |||
IRGB Recommendation |
6.3(e) | |||
IRGB Regulatory Agreement |
3.14 | |||
IRGB Representatives |
6.13(a) | |||
IRGB RSU |
1.6(b) | |||
IRGB Shareholder Meeting |
6.3 | |||
IRGB Stock Option |
1.6(a) | |||
IRGB Stock Plans |
1.6(a) | |||
IRGB Subsidiary |
3.1(c) | |||
IRS |
3.10(a) | |||
Proxy Statement |
3.4 | |||
Leased Properties |
3.17(c) | |||
Leases |
3.17(b) | |||
Liens |
3.2(b) | |||
Loan(s) |
5.2(s) | |||
Material Adverse Effect |
3.1(c) | |||
Materially Burdensome Regulatory Condition |
6.1(d) | |||
Merger |
Preamble | |||
Merger Consideration |
1.4(a) | |||
Multiemployer Plan |
3.11 | |||
Multiple Employer Plan |
3.11 | |||
NASDAQ |
3.1(c) | |||
NYSE |
3.1(c) | |||
OCC |
3.4 | |||
OREO |
3.24(b) | |||
Option Ratio |
1.6(a) | |||
Other Regulatory Approvals |
3.4 | |||
Owned Properties |
3.17(a) | |||
PA DOB |
3.4 | |||
Payment Event |
6.11(g) | |||
PBCL |
1.1(a) | |||
PBGC |
3.11(e) | |||
Per Share Consideration |
8.1(h) | |||
Person |
3.9(a) | |||
Registration Statement |
3.4 | |||
Regulatory Agencies |
3.5 | |||
Requisite Regulatory Approvals |
7.1(c) | |||
SEC |
3.4 | |||
Securities Act |
1.6(d) | |||
SRO |
3.4 | |||
Starting Date |
8.1(h) |
(vi)
Section | ||||
Starting Price |
8.1(h) | |||
Stock Amount |
2.1(c)(v) | |||
Stock Election |
2.1(a) | |||
Stock Proration Factor |
2.1(b) | |||
Subsidiary |
3.1(c) | |||
Superior Proposal |
6.11(e) | |||
Surviving Company |
Preamble | |||
Undesignated Shares |
2.1(c) | |||
Tax Returns |
3.10(c) | |||
Tax(es) |
3.10(b) | |||
Third Party |
3.17(d) | |||
Third Party Leases |
3.17(d) | |||
Treasury Shares |
1.4(b) | |||
Voting Agreement |
Preamble | |||
Withdrawal Liability |
3.11 |
(vii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 14, 2008 (this “Agreement”), between F.N.B.
CORPORATION, a Florida corporation (“FNB “) and IRON & GLASS BANCORP, INC., a Pennsylvania
corporation (“IRGB”).
W I T N E S S E T H:
WHEREAS, the Boards of Directors of IRGB and FNB have determined that it is in the best
interests of their respective companies and their shareholders to consummate the strategic business
combination transaction provided for in this Agreement in which IRGB will, on the terms and subject
to the conditions set forth in this Agreement, merge with and into FNB (the “ Merger “), so that
FNB is the surviving company in the Merger (sometimes referred to in such capacity as the
“Surviving Company”); and
WHEREAS, for federal income Tax (as defined in Section 3.10(b)) purposes, it is intended that
the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the “Code”);
WHEREAS, the members of the IRGB Board of Directors will execute a voting agreement in the
form of Exhibit B (the “Voting Agreement”); and
WHEREAS, the parties desire to make certain representations, warranties and agreements in
connection with the Merger and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and
agreements contained in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, in accordance with the Pennsylvania
Business Corporation Law (the “PBCL”) and the Florida Business Corporation Act (the “FBCA”), at the
Effective Time (as defined in Section 1.2), IRGB shall merge with and into FNB. FNB shall be the
Surviving Company in the Merger, and shall continue its corporate existence under the laws of the
State of Florida. As of the Effective Time, the separate corporate existence of IRGB shall cease.
-1-
(b) FNB may at any time change the method of effecting the combination and IRGB shall
cooperate in such efforts, including by entering into an appropriate amendment to this Agreement
(to the extent such amendment only changes the method of effecting the business combination and
does not substantively affect this Agreement or the rights and obligations of the parties or their
respective shareholders hereunder); provided, however, that no such change shall (i) alter or
change the amount or kind of the Merger Consideration (as defined in Section 1.4(a)) provided for
in this Agreement, (ii) adversely affect the Tax treatment of IRGB’s shareholders as a result of
receiving the Merger Consideration or the Tax treatment of either party pursuant to this Agreement
or (iii) materially impede or delay consummation of the transactions contemplated by this
Agreement.
1.2 Effective Time. The Merger shall become effective as set forth in the articles of
merger (the “Articles of Merger”) that shall be filed with the Secretary of State of the
Commonwealth of Pennsylvania and the Secretary of State of the State of Florida on or before the
Closing Date (as defined in Section 9.1). The term “Effective Time” shall mean the date and time
when the Merger becomes effective as set forth in the Articles of Merger. “Effective Date” shall
mean the date on which the Effective Time occurs.
1.3 Effects of the Merger.
(a) Effects Under PBCL. At and after the Effective Time, the Merger shall have the
effects set forth in Sections 1921 through 1932 of the PBCL and Sections 607.1101 through 607.11101
of the FBCA.
(b) Directors and Executive Officers of the Surviving Company. The directors of the
Surviving Company immediately after the Merger shall be the directors of FNB immediately prior to
the Merger. The executive officers of the Surviving Company immediately after the Merger shall be
the executive officers of FNB immediately prior to the Merger.
1.4 Conversion of IRGB Capital Stock.
(a) Subject to the provisions of this Agreement, each share of common stock, no par value, of
IRGB (“IRGB Common Stock”) issued and outstanding immediately prior to the Effective Time, other
than Dissenting Shares (as defined in Section 1.9) and Treasury Shares (as defined in Section
1.4(b)) shall, by virtue of the Merger, no longer be outstanding and shall as of the Effective Time
automatically be converted into and shall thereafter represent the right to receive as merger
consideration (the “Merger Consideration”) either (i) 5.0 shares (the “Exchange Ratio”) of common
stock, $.01 par value, of FNB (“FNB Common Stock”), (ii) an amount in cash equal to $75.00, without
interest, or (iii) a combination of FNB Common Stock and cash as set forth in this Section 1.4, as
the holders of IRGB common stock may elect, provided that all elections shall be made as to whole
shares only.
-2-
(b) At and after the Effective Time, each Treasury Share shall be cancelled and retired and no
shares of FNB Common Stock or other consideration shall be issued in exchange therefor. “Treasury
Shares” means shares of IRGB Common Stock held by IRGB or any of its Subsidiaries (as defined in
Section 3.1(c)) or by FNB or any of its Subsidiaries, and in each case, other than in a fiduciary,
including custodial or agency, capacity or as a result of debts previously contracted in good
faith. At and after the Effective Time, Dissenting Shares shall have such rights as provided by
Section 1930 of the PBCL and otherwise shall have no rights to receive the Merger Consideration.
(c) At the Effective Time, the stock transfer books of IRGB shall be closed as to holders of
IRGB Common Stock immediately prior to the Effective Time and no transfer of IRGB Common Stock by
any such holder shall thereafter be made or recognized. If, after the Effective Time, certificates
representing IRGB Common Stock (“Certificates”) are properly presented in accordance with Section
2.1 of this Agreement to the Exchange Agent (as defined in Section 2.1(a)), such Certificates shall
be canceled and converted into the right to receive the Merger Consideration, plus any payment for
any fractional share of FNB Common Stock without any interest thereon and any dividends or
distributions to which the holder of such Certificates is entitled pursuant to Section 2.3(b).
(d) Each holder of IRGB Common Stock shall have the option of enrolling the whole shares of
FNB Common Stock issuable to such shareholder upon the consummation of the Merger in FNB’s
Dividend Reinvestment and Stock Purchase Plan (the “DRSP Plan”). Each IRGB shareholder electing to
enroll in the DRSP Plan shall be issued a certificate representing the number of whole shares of
FNB Common Stock received in the Merger, and any future dividends will be reinvested in accordance
with the DRSP Plan.
(e) Notwithstanding any other provision of this Agreement, each holder of IRGB Common Stock
who would otherwise be entitled to receive a fractional share of FNB Common Stock, after taking
into account all Certificates delivered by such holder, shall receive an amount in cash, without
interest, rounded to the nearest cent, equal to the product obtained by multiplying (a) the Average
Closing Price (as defined below) as of the Closing Date by (b) the fraction of a share (calculated
to the nearest ten-thousandth when expressed in decimal form) of FNB Common Stock, to which such
holder would otherwise be entitled. No such holder shall be entitled to dividends or other rights
in respect of any such fractional shares. “Average Closing Price” means, as of any specified date,
the average composite closing price of FNB Common Stock on the NYSE as reported in New York Stock
Exchange Composite Transactions in The Wall Street Journal (Eastern Edition) or, if not reported
therein, in another mutually agreed upon authoritative source, for each of the 20 consecutive
trading days ending on and including the fifth such trading day prior to the specified date rounded
to the nearest ten-thousandth.
-3-
1.5 FNB Capital Stock. At and after the Effective Time, each share of FNB capital
stock issued and outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall not be affected by the Merger.
1.6 IRGB Equity and Equity-Based Awards.
(a) IRGB Stock Options. Effective as of the Effective Time, each then outstanding
option to purchase shares of IRGB Common Stock (each an “IRGB Stock Option”), pursuant to the
equity-based compensation plans identified on Section 3.11(a) of the IRGB Disclosure Schedule (as
defined in Article III) (the “IRGB Stock Plans”) and the award agreements evidencing the grants
thereunder, granted to any current or former employee or director of, or consultant to, IRGB or any
of its Subsidiaries (as defined in Section 3.1(c)) shall at the Effective Time cease to represent a
right to acquire shares of IRGB Common Stock and shall be converted automatically into an option to
acquire shares of FNB Common Stock and each option to acquire shares of IRGB Common Stock that
prior to the Effective Time is fully vested and exercisable, shall continue as a fully vested and
exercisable option of FNB on the terms hereinafter set forth. FNB shall assume each such IRGB
Stock Option in accordance with the terms of the relevant IRGB Stock Plan and stock option or other
agreement by which it is evidenced, except that from and after the Effective Time: (i) FNB and the
Compensation Committee of its Board of Directors shall be substituted for IRGB and the committee of
the Board of Directors of IRGB, including, if applicable, the entire Board of Directors of IRGB,
administering such IRGB Stock Plan, (ii) each IRGB Stock Option assumed by FNB may be exercised
solely for shares of FNB Common Stock, (iii) the number of shares of FNB Common Stock subject to
such IRGB Stock Option shall be equal to the number of shares of IRGB Common Stock subject to such
IRGB Stock Option immediately prior to the Effective Time multiplied by the Option Ratio, provided
that any fractional shares of FNB Common Stock resulting from such multiplication shall be rounded
down to the nearest share, and (iv) the exercise price per share of FNB Common Stock under each
such option shall be the amount (rounded up to the nearest whole cent) equal to the per share
exercise price under each such IRGB Stock Option prior to the Effective Time divided by the Option
Ratio, provided, however, that in the case of any IRGB Stock Option, the exercise price and the
number of shares shall be determined in a manner consistent with Section 409A of the Code so that
no Tax is triggered under Section 409A of the Code; provided, further, that each IRGB Stock Option
that is an “incentive stock option” shall be adjusted as required by Section 424 of the Code, and
the regulations promulgated thereunder, so as not to constitute a modification, extension or
renewal of the option within the meaning of Section 424(h) of the Code. FNB and IRGB agree to take
all necessary steps to effect the provisions of this Section 1.6(a). As of the Effective Time, FNB
shall issue to each holder of each outstanding IRGB Stock Option that has been assumed by FNB (the
“Assumed Stock Options”) a document evidencing the conversion and assumption of such IRGB Stock
Option by FNB pursuant to this Section 1.6(a).
-4-
“Option Ratio” shall mean the quotient obtained by dividing the IRGB Closing Price by the FNB
Closing Price.
“FNB Closing Price” shall mean the average, rounded to the nearest one ten thousandth, of the
closing sale price of FNB Common Stock on the New York Stock Exchange (including any successor
exchange, the “NYSE”) as reported by The Wall Street Journal for the trading day immediately
preceding the date of the Effective Time.
“IRGB Closing Price” shall mean the average, rounded to the nearest one ten thousandth, of the
closing sale price of IRGB Common Stock on the Over-the-Counter Trading Board for the trading day
immediately preceding the date of the Effective Time.
(b) IRGB 401(k) Plan. Not later than the Closing Date, IRGB agrees to terminate its
Section 401(k) Plan.
(c) Reservation of Shares. FNB has taken all corporate action necessary to reserve
for issuance a sufficient number of shares of FNB Common Stock issuable upon the exercise of the
Assumed Stock Options. As soon as practicable and not later than 30 days following the Closing (as
defined in Section 9.1), FNB shall file a registration statement on an appropriate form or a
post-effective amendment to a previously filed registration statement under the Securities Act of
1933, as amended (the “Securities Act”) with respect to the issuance of the shares of FNB Common
Stock subject to the Assumed Stock Options and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such equity awards
remain outstanding.
1.7 Articles of Incorporation and Bylaws of the Surviving Company. FNB’s Charter (as
defined in Section 4.1(b)) as in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Company until thereafter amended in accordance with
applicable law. FNB’s Bylaws (as defined in Section 4.1(b)) as in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Company until thereafter amended in accordance
with applicable law.
1.8 Tax Consequences. It is intended that the Merger shall constitute a
“reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.
1.9 Dissenting Shares. IRGB shareholders shall be entitled to dissenters rights as
provided under Section 1930 of the PBCL. Any IRGB shareholder who desires to assert dissenters
rights (“Dissenting Shares”) must comply with the provisions and procedures set forth in Subchapter
D of Chapter 15 of the PBCL, Sections 1571 through 1580.
1.10 The Bank Merger. As soon as practicable after the execution of this Agreement,
IRGB and FNB shall cause Iron & Glass Bank (“IRGB Bank”) and First National Bank of
-5-
Pennsylvania (“FNB Bank”) to enter into a bank merger agreement, the form of which is attached
hereto as Exhibit A (the “Bank Merger Agreement”), that provides for the merger of IRGB Bank with
and into FNB Bank (the “Bank Merger”), in accordance with applicable laws and regulations and the
terms of the Bank Merger Agreement and as soon as practicable after consummation of the Merger.
The Bank Merger Agreement provides that the directors of FNB Bank (the “FNB Bank Board”) upon
consummation of the Bank Merger shall be the directors of FNB Bank immediately prior to the Bank
Merger plus one IRGB Bank Designee (as defined in Section 6.13(a)).
ARTICLE 2
EXCHANGE OF SHARES
2.1 Election and Proration Procedures.
(a) An election form and other appropriate and customary transmittal materials, which shall
specify that delivery shall be effected, and risk of loss and title to the Certificates theretofore
representing shares of IRGB Common Stock shall pass, only upon proper delivery of such Certificates
to the Registrar and Transfer Company (the “Exchange Agent”) in such form as FNB shall determine
(“Election Form”) shall be mailed by or on behalf of FNB no less than 40 days prior to the
anticipated Effective Time of the Merger, as jointly determined by FNB and IRGB (“Mailing Date”) to
each holder of record of IRGB Common Stock as of the close of business on the fifth business day
prior to the mailing date (the “Election Form Record Date”). FNB shall make available one or more
Election Forms as may be reasonably requested by all persons who become holders (or beneficial
owners) (the term “beneficial owner” and “beneficial ownership” for purposes of this Agreement
shall have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934 (the
“Exchange Act”) of IRGB Common Stock after the Election Form Record Date and prior to the Election
Deadline, and IRGB shall provide to the Exchange Agent all information reasonably necessary for it
to perform its obligations as specified herein. Each Election Form shall permit the holder or the
beneficial owner through appropriate and customary documentation and instructions to elect (an
“Election”) to receive (i) FNB Common Stock (a “Stock Election”) with respect to all of such
holder’s IRGB Common Stock, or (ii) cash (a “Cash Election”) with respect to all of such holder’s
IRGB Common Stock, or (iii) FNB Common Stock for a specified number of shares of IRGB Common Stock
(a “Combination Stock Election”) and cash for the remaining number of shares of IRGB Common Stock
held by such holder (a “Combination Cash Election”). Any IRGB Common Stock other than Dissenting
Shares and Treasury Shares with respect to which the Exchange Agent has not received an effective,
properly completed Election Form prior to the Election Deadline shall be deemed to be “Undesignated
Shares” hereunder.
(b) Any Election shall have been properly made and effective only if the Exchange Agent shall
have actually received a properly completed Election Form that has not
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been revoked by 5:00 p.m., prevailing time, by the 30th day following the Mailing Date or such
other time and date as FNB shall determine (the “Election Deadline”). An Election Form shall be
deemed properly completed only if an Election is indicated for each share of IRGB Common Stock
covered by such Election Form and if accompanied by one or more Certificates, or customary
affidavits and indemnification regarding the loss or destruction of such Certificates or the
guaranteed delivery of such Certificates, representing all shares of IRGB Common Stock covered by
such Election Form, together with duly executed transmittal materials included in or required by
the Election Form. Any Election Form may be revoked by the person submitting such Election Form at
or prior to the Election Deadline, provided that the Exchange Agent shall have actually received
prior to the Election Deadline a written notice revoking such Election Form and specifying the
shares of IRGB Common Stock covered by such revoked Election Form. In the event an Election Form
is revoked prior to the Election Deadline, the shares of IRGB Common Stock represented by such
Election Form shall automatically become Undesignated Shares unless and until a new Election is
properly made with respect to such shares on or before the Election Deadline, and FNB shall cause
the Certificates representing such shares of IRGB Common Stock to be promptly returned without
charge to the person submitting the revoked Election Form upon written request to that effect from
the holder who submitted such Election Form. Subject to the terms of this Agreement and of the
Election Form, the Exchange Agent shall have reasonable discretion to determine whether any
Election or revocation has been properly or timely made and to disregard immaterial defects in the
Election Forms, and any decisions of IRGB and FNB required by the Exchange Agent and made in good
faith in determining such matters shall be binding and conclusive. FNB shall use reasonable
efforts to cause the Exchange Agent to notify any person of any defect in an Election Form.
(c) As promptly as practicable but not later than the fifth business day prior to the
Effective Time of the Merger, FNB shall inform IRGB of the allocation and shall cause the Exchange
Agent to effect the allocation among the holders of IRGB Common Stock of rights to receive FNB
Common Stock or cash in the Merger in accordance with the Election Forms as follows:
(i) if the aggregate number of shares of IRGB Common Stock as to which Stock Elections and
Combination Stock Elections shall have effectively been made times the Exchange Ratio is
approximately equal to the Stock Amount (as defined in Section 2.1(c)(v) below), then:
(A) Each holder of IRGB Common Stock who made an effective Stock Election or
Combination Stock Election shall receive the number of shares of FNB Common Stock
that is equal to the product of the Exchange Ratio multiplied by the number of shares
of IRGB Common Stock covered by such Stock Election or Combination Stock Election;
and
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(B) Each holder of IRGB Common Stock who made an effective Cash Election or
Combination Cash Election, and each holder of Undesignated Shares shall receive the
Price Per Share in cash for each such share of IRGB Common Stock or Undesignated
Share.
(ii) if the aggregate number of shares of IRGB Common Stock as to which Stock Elections and
Combination Stock Elections shall have effectively been made times the Exchange Ratio exceeds, and
is not approximately equal to, the Stock Amount, then FNB shall have the option to issue FNB Common
Stock in accordance with such elections. If FNB chooses not to exercise such option, then:
(A) Each holder of IRGB Common Stock who made an effective Cash Election or
Combination Cash Election shall receive the Price Per Share in cash for each such
share of IRGB Common Stock;
(B) Each holder of Undesignated Shares shall be deemed to have made Cash
Elections and shall receive the Price Per Share in cash for each such Undesignated
Share; and
(C) A stock proration factor (the “Stock Proration Factor”) shall be determined
by dividing (1) the Stock Amount by (2) the product of the Exchange Ratio and the
number of shares of IRGB Common Stock with respect to which effective Stock Elections
and Combination Stock Elections were made. Each holder of IRGB Common Stock who made
an effective Stock Election or Combination Stock Election shall be entitled to:
(1) the number of shares of FNB Common Stock equal to the product of (x)
the Exchange Ratio, multiplied by (y) the number of shares of IRGB Common
Stock covered by such Stock Election or Combination Stock Election, multiplied
by (z) the Stock Proration Factor, and
(2) cash in an amount equal to the product of (x) the Price Per Share,
multiplied by (y) the number of shares of IRGB Common Stock covered by such
Stock Election or Combination Stock Election, multiplied by (z) one minus the
Stock Proration Factor.
(iii) if the aggregate number of shares of IRGB Common Stock as to which Stock Elections and
Combination Stock Elections shall have effectively been made times the Exchange Ratio is less than,
and is not approximately equal to, the Stock Amount, then:
(A) Each holder of IRGB Common Stock who made an effective Stock Election or
Combination Stock Election shall receive the number of shares of FNB Common Stock
equal to the product of the Exchange Ratio multiplied by
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the number of shares of IRGB Common Stock covered by such Stock Election or
Combination Stock Election;
(B) The Exchange Agent shall select, by pro rata allocation according to the
number of IRGB shares held, among those holders of Undesignated Shares, such number
of shares of FNB Common Stock as shall be necessary so that the shares of FNB Common
Stock to be received by those holders, when combined with the number of shares for
which a Stock Election or Combination Stock Election has been made, multiplied by the
Exchange Ratio shall be approximately equal to the Stock Amount. If all of said
Undesignated Shares plus all shares as to which Stock Elections and Combination Stock
Elections have been made together multiplied by the Exchange Ratio are less than, and
not approximately equal to, the Stock Amount, then:
(C) A cash proration factor (the “Cash Proration Factor”) shall be determined by
dividing (1) the amount which is the difference between (x) the number obtained by
dividing the Stock Amount by the Exchange Ratio and (y) the sum of the number of
shares of IRGB Common Stock with respect to which effective Stock Elections and
Combination Stock Elections were made and the number of Undesignated Shares selected
pursuant to subparagraph (iii)(B) above by (2) the number of shares of IRGB Common
Stock with respect to which effective Cash Elections and Combination Cash Elections
were made. Each holder of IRGB Common Stock who made an effective Cash Election or
Combination Cash Election shall be entitled to:
(1) cash equal to the product of (x) the Price Per Share, multiplied by
(y) the number of shares of IRGB Common Stock covered by such Cash Election or
Combination Cash Election, multiplied by (z) one minus the Cash Proration
Factor, and
(2) the number of shares of FNB Common Stock equal to the product of (x)
the Exchange Ratio, multiplied by (y) the number of shares of IRGB Common
Stock covered by such Cash Election or Combination Cash Election, multiplied
by (z) the Cash Proration Factor.
(iv) The prorata allocation process to be used by the Exchange Agent shall consist of such
procedures as FNB shall determine.
(v) “Stock Amount” means 3,070,856.25 shares of FNB Common Stock plus such number of
additional shares of FNB Common Stock as is equal to the Exchange Ratio times the number of shares
of IRGB Common Stock issued between the date hereof and the Election Deadline, to the extent
permitted by this Agreement and subject to adjustment pursuant to Sections 2.1 and 2.4.
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(d) For purposes of this Section 2.1, the shares of FNB Common Stock to be issued as
consideration in the Merger shall be deemed to be “approximately equal” to the Stock Amount if such
number is within 10,000 shares of FNB Common Stock of such amount.
2.2 FNB to Make Merger Consideration Available. Within four business days following
the Effective Time, FNB shall deposit, or shall cause to be deposited, with the Exchange Agent, for
the benefit of the former shareholders of IRGB Common Stock (other than with respect to Treasury
Shares and Dissenting Shares), for exchange in accordance with this Article II, (i) certificates or
book entries with Depository Trust Company representing the shares of FNB Common Stock sufficient
to deliver the aggregate Stock Amount, (ii) immediately available funds equal to any dividends or
distributions payable in accordance with Section 2.3(b), (iii) immediately available funds equal to
the aggregate Cash Amount and (iv) cash in lieu of any fractional shares (such cash and
certificates for shares of FNB Common Stock, collectively being referred to as the “Exchange
Fund”), to be issued pursuant to Section 1.4(a) and paid pursuant to Section 1.4(a) in exchange for
outstanding shares of IRGB Common Stock.
2.3 Exchange of Shares.
(a) After the Effective Time of the Merger, each holder of a Certificate formerly representing
IRGB Common Stock, other than Treasury Shares and Dissenters Shares, who surrenders or has
surrendered such Certificate or customary affidavits and indemnification regarding the loss or
destruction of such Certificate, together with duly executed transmittal materials included in or
required by the Election Form to the Exchange Agent, shall, upon acceptance thereof, be entitled to
(i) a certificate representing the FNB Common Stock and/or (ii) cash into which the shares of IRGB
Common Stock shall have been converted pursuant to Section 1.4, as well as cash in lieu of any
fractional share of FNB Common Stock to which such holder would otherwise be entitled, if
applicable. The Exchange Agent shall accept such Certificate upon compliance with such reasonable
and customary terms and conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal practices. Until surrendered as contemplated by this Section
2.3, each Certificate representing IRGB Common Stock shall be deemed from and after the Effective
Time of the Merger to evidence only the right to receive the Merger Consideration to which it is
entitled hereunder upon such surrender. FNB shall not be obligated to deliver the Merger
Consideration to which any former holder of IRGB Common Stock is entitled as a result of the Merger
until such holder surrenders his Certificate or Certificates for exchange as provided in this
Section 2.3. If any certificate for shares of FNB Common Stock, or any check representing cash and/or declared but unpaid dividends, is to be
issued in a name other than that in which a Certificate surrendered for exchange is issued, the
Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and
the person requesting such exchange shall affix any requisite stock transfer tax
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stamp, if any, to
the Certificate surrendered or provide funds for their purchase or establish to the satisfaction of
the Exchange Agent that such taxes are not payable.
(b) No dividends or other distributions declared or made after the Effective Time of the
Merger with respect to FNB Common Stock with a record date after the Effective Time of the Merger
shall be paid to the holder of any unsurrendered Certificate with respect to the shares of FNB
Common Stock represented thereby, and no cash payment in lieu of a fractional share shall be paid
to any such holder pursuant to Section 1.4, until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws, following surrender of any
such Certificate, there shall be paid to the record holder of the certificates representing whole
shares of FNB Common Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of FNB Common Stock to
which such holder is entitled pursuant to Section 1.4 and the amount of dividends or other
distributions with a record date on or after the Effective Time of the Merger theretofore paid with
respect to such whole shares of FNB Common Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the Effective Time of the
Merger but prior to surrender and a payment date subsequent to surrender payable with respect to
such whole shares of FNB Common Stock.
(c) All cash and shares of FNB Common Stock issued upon the surrender for exchange of shares
of IRGB Common Stock or the provision of customary affidavits and indemnification for lost or
mutilated Certificates in accordance with the terms hereof and the Election Form, including any
cash paid pursuant to Section 1.4, shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of IRGB Common Stock, and there shall be no further registration
of transfers on the stock transfer books of FNB, after the Merger, of the shares of IRGB Common
Stock that were outstanding immediately prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, Certificates are presented to FNB for any reason, they shall be
canceled and exchanged as provided in this Agreement.
(d) Any portion of the Exchange Fund, including any interest thereon, that remains
undistributed to the stockholders of IRGB following the passage of 12 months after the Effective
Time of the Merger shall be delivered to FNB, upon demand, and any stockholders of IRGB who have
not theretofore complied with this Section 2.3 shall thereafter look only to FNB for payment of
their claim for cash and for FNB Common Stock, any cash in lieu of fractional shares of FNB Common
Stock and any dividends or distributions with respect to FNB Common Stock.
(e) Neither IRGB nor FNB shall be liable to any holder of shares of IRGB Common Stock or FNB
Common Stock, as the case may be, for such shares, or dividends or distributions with respect
thereto, or cash from the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
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(f) The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with
respect to the shares of FNB Common Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed with respect to
such shares of FNB Common Stock for the account of the Persons entitled thereto.
2.4 Adjustments for Dilution and Other Matters. If prior to the Effective Time of the
Merger, (a) FNB shall declare a stock dividend or distribution on FNB Common Stock with a record
date prior to the Effective Time of the Merger, or subdivide, split up, reclassify or combine FNB
Common Stock, or make a distribution other than a regular quarterly cash dividend not in excess of
$.30 per share, on FNB Common Stock in any security convertible into FNB Common Stock, in each case
with a record date prior to the Effective Time of the Merger, or (b) the outstanding shares of FNB
Common Stock shall have been increased, decreased, changed into or exchanged for a different number
or kind of shares or securities, in each case as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other similar change in FNB’s
capitalization other than a business combination transaction with another bank holding company or
financial services company, then a proportionate adjustment or adjustments will be made to the
Exchange Ratio, which adjustment may include, as appropriate, the issuance of securities, property
or cash on the same basis as that on which any of the foregoing shall have been issued or issuable
to, distributed or distributable to or paid or payable to holders of FNB Common Stock generally.
2.5 Withholding Rights. The Exchange Agent or, subsequent to the first anniversary of
the Effective Time, FNB, shall be entitled to deduct and withhold from any cash portion of the
Merger Consideration, any cash in lieu of fractional shares of FNB Common Stock, cash dividends or
distributions payable pursuant to Section 2.3(b) and any other cash amounts otherwise payable
pursuant to this Agreement to any holder of IRGB Common Stock such amounts as the Exchange Agent or
FNB, as the case may be, is required to deduct and withhold under the Code, or any provision of
state, local or foreign Tax law, with respect to the making of such payment. To the extent the
amounts are so withheld by the Exchange Agent or FNB, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the holder of shares of
IRGB Common Stock in respect of whom such deduction and withholding was made by the Exchange Agent
or FNB, as the case may be.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF IRGB
Except as disclosed in the disclosure schedule delivered by IRGB to FNB (the “IRGB Disclosure
Schedule”), IRGB hereby represents and warrants to FNB as follows:
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3.1 Corporate Organization.
(a) IRGB is a corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. IRGB has the corporate power and authority and has all
licenses, permits and authorizations of applicable Governmental Entities required to own or lease
all of its properties and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where such failure to be licensed or
qualified does not have a Material Adverse Effect upon IRGB.
(b) IRGB is duly registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the “BHC Act”). True and complete copies of the Articles of Incorporation of
IRGB (the “IRGB Articles”) and the Bylaws of IRGB (the “IRGB Bylaws”), as in effect as of the date
of this Agreement, have previously been made available to FNB.
(c) Each of IRGB’s Subsidiaries (i) is duly organized and validly existing under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of property
or the conduct of its business requires it to be so qualified and (iii) has all requisite corporate
power and authority, and has all licenses, permits and authorizations of applicable Governmental
Entities required, to own or lease its properties and assets and to carry on its business as now
conducted, except in each of (i) – (iii) as would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on IRGB. As used in this Agreement,
(i) the word “Subsidiary” when used with respect to either party, means any corporation,
partnership, joint venture, limited liability company or any other entity (A) of which such party
or a subsidiary of such party is a general partner or (B) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a majority of the
board of directors or persons performing similar functions with respect to such entity is directly
or indirectly owned by such party and/or one or more subsidiaries thereof, and the terms “IRGB
Subsidiary” and “FNB Subsidiary” shall mean any direct or indirect Subsidiary of IRGB or FNB,
respectively, and (ii) the term “Material Adverse Effect” means, with respect to FNB, IRGB or the
Surviving Company, as the case may be, any event, circumstance, development, change or effect that
alone or in the aggregate with other events, circumstances, developments, changes or effects (A) is materially adverse to the business, results of operations or financial condition of
such party and its Subsidiaries taken as a whole (provided, however, that, with respect to this
clause (A), Material Adverse Effect shall not be deemed to include effects to the extent resulting
from (1) changes, after the date hereof, in U.S. generally accepted accounting principles (“GAAP”)
or regulatory accounting requirements applicable to banks or savings
-13-
associations and their holding
companies generally; (2) changes, after the date hereof, in laws, rules or regulations of general
applicability or interpretations thereof by courts or Governmental Entities (as defined in Section
3.4); (3) actions or omissions of (a) FNB, or (b) IRGB, taken at the request of, or with the prior
written consent of the other or required hereunder; (4) changes, events or developments, after the
date hereof, in the national or world economy or financial or securities markets generally or
changes, events or developments, after the date hereof in general economic conditions or other
changes, events or developments, after the date hereof that affect banks or their holding companies
generally except to the extent that such changes have a materially disproportionate adverse effect
on such party relative to other similarly situated participants in the markets or industries in
which they operate; (5) consummation or public disclosure of the transactions contemplated hereby
(including the resignation of employment of employees or any impact on such party’s business,
customer relations, condition or results of operations, in each case as a result therefrom); (6)
any outbreak or escalation of war or hostilities, any occurrence or threats of terrorist acts or
any armed hostilities associated therewith and any national or international calamity, disaster or
emergency or any escalation thereof; (7) any changes in interest rates or foreign currency rates;
(8) any claim, suit, action, audit, arbitration, investigation, inquiry or other proceeding or
order which in any manner challenges, seeks to prevent, enjoin, alter or delay, or seeks damages as
a result of or in connection with, the transactions contemplated hereby; (9) any failure by such
party to meet any published (whether by such party or a third party research analyst) or internally
prepared estimates of revenues or earnings; (10) a decline in the price, or a change in the trading
volume of, such party’s common stock on the Nasdaq Global Select Market (including any successor
exchange, “NASDAQ”) or the New York Stock Exchange (including any successor exchange, “NYSE”), as
applicable; and (11) any matter to the extent that (i) it is disclosed in reasonable detail in the
party’s disclosure schedules delivered to the other party pursuant to this Agreement or in such
party’s SEC reports referenced in Section 4.12, as applicable, and (ii) such disclosed matter does
not worsen in a materially adverse manner); or (B) materially delays or impairs the ability of such
party to timely consummate the transactions contemplated by this Agreement.
3.2 Capitalization.
(a) The authorized capital stock of IRGB consists of 5,000,000 shares of IRGB Common Stock, of
which, as of December 31, 2007, 1,116,675 shares were issued and outstanding. As of December 31,
2007, no shares of IRGB Common Stock were reserved for issuance except for 61,804 shares of IRGB
Common Stock reserved for issuance upon the exercise of IRGB Stock Options issued pursuant to the
IRGB Stock Plans. All of the issued and outstanding shares of IRGB Common Stock have been, and all shares of IRGB Common Stock
that may be issued upon the exercise of the IRGB Stock Options will be, when issued in accordance
with the terms thereof, duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights. Except pursuant to this Agreement and the IRGB Stock Plans, IRGB does
not have and is not bound by any outstanding subscriptions,
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options, warrants, calls, commitments
or agreements of any character calling for the purchase or issuance of any shares of IRGB Common
Stock or any other equity securities of IRGB or any securities representing the right to purchase
or otherwise receive any shares of IRGB Common Stock. Set forth in Section 3.2 of the IRGB
Disclosure Schedule is a true, correct and complete list of each IRGB Stock Option (such list to
include the IRGB Stock Plan under which such options were issued, the number of shares of IRGB
Common Stock subject thereto, the vesting schedule thereof and the exercise prices thereof)
outstanding under the IRGB Stock Plans as of December 31, 2007. Since December 31, 2007 through
the date hereof, IRGB has not issued or awarded, or authorized the issuance or award of, any
options, restricted stock units or other equity-based awards under the IRGB Stock Plans.
(b) All of the issued and outstanding shares of capital stock or other equity ownership
interests of each Subsidiary of IRGB are owned by IRGB, directly or indirectly, free and clear of
any material liens, pledges, charges and security interests and similar encumbrances (other than
liens for property Taxes not yet due and payable, “Liens”), and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, except as provided in 12 U.S.C. 55 or similar laws in the case of
depository institutions. No such Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of capital stock or
any other equity security of such Subsidiary.
3.3 Authority; No Violation.
(a) IRGB has full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, subject to the receipt of necessary IRGB
Shareholder and Regulatory Approvals. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of IRGB. Except for the approval and adoption of this Agreement and the
transactions contemplated by this Agreement by the affirmative vote of a majority of the votes cast
by all holders of shares of IRGB Common Stock at such meeting at which a quorum is present, no
other corporate approvals on the part of IRGB are necessary to approve this Agreement. This
Agreement has been duly and validly executed and delivered by IRGB and, assuming due authorization,
execution and delivery by FNB, constitutes the valid and binding obligation of IRGB, enforceable
against IRGB in accordance with its terms, except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors generally and the
availability of equitable remedies.
(b) Neither the execution and delivery of this Agreement by IRGB nor the consummation by IRGB
of the transactions contemplated hereby, nor compliance by IRGB with any of the terms or provisions
of this Agreement, will (i) violate any provision of the
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IRGB Articles or the IRGB Bylaws or (ii) assuming that the consents, approvals and filings
referred to in Section 3.4 are duly obtained and/or made and are in full force and effect, (A)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or Injunction
(as defined in Section 7.1(e)) applicable to IRGB, any of its Subsidiaries or any of their
respective properties or assets, or (B) violate, conflict with, result in a breach of any provision
of, constitute a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any Lien upon any of
the respective properties or assets of IRGB or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which IRGB or any of its Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound or affected, except for
such violations, conflicts, breaches or defaults with respect to clause (ii) that are not
reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect on
IRGB.
3.4 Consents and Approvals. Except for (i) the filing by FNB of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve System (the “Federal
Reserve Board”) under the BHC Act and the Federal Reserve Act, as amended, and approval of such
applications and notices, and, in connection with the merger of IRGB Bank with and into FNB Bank,
the filing by FNB of applications and notices, as applicable, with the Federal Deposit Insurance
Corporation (the “FDIC”), the Office of the Comptroller of the Currency (the “OCC”) or the
Pennsylvania Department of Banking (the “PA DOB”) and the Federal Reserve Board, and approval of
such applications and notice, (ii) the filing by FNB of any required applications or notices with
any foreign or state banking, insurance or other regulatory or self-regulatory authorities and
approval of such applications and notices (the “Other Regulatory Approvals”), (iii) the filing by
FNB with the Securities and Exchange Commission (the “SEC”) of a proxy statement in definitive form
relating to the meetings of IRGB shareholders to be held in connection with this Agreement (the “
Proxy Statement”) and the transactions contemplated by this Agreement and of a registration
statement by FNB on Form S-4 that is declared effective (the “Registration Statement”) in which the
Proxy Statement will be included as a prospectus, and declaration of effectiveness of the
Registration Statement, (iv) the filing by FNB of the Articles of Merger with and the acceptance
for record by the Secretary of State of the Commonwealth of Pennsylvania pursuant to the PBCL and
the filing of the Articles of Merger with and the acceptance for record by the Secretary of State
of the State of Florida pursuant to the FBCA, (v) any notices or filings by IRGB and FNB required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (vi)
any consents, authorizations, approvals, filings or exemptions by FNB in connection with compliance
with the applicable provisions of federal and state securities laws relating to the regulation of
broker-dealers, investment advisers or transfer agents and the rules and regulations thereunder and
of any applicable industry self-regulatory organization (“SRO”), and the rules of NASDAQ or the
NYSE, or that
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are required under consumer finance, insurance mortgage banking and other similar laws, (vii)
approval of the listing of such FNB Common Stock issuable in the Merger or as a result of FNB’s
assumption of the IRGB Stock Plans on the NYSE, (viii) the adoption of this Agreement by the
requisite vote of shareholders of IRGB and (ix) filings, if any, required by FNB as a result of the
particular status of FNB, no consents or approvals of or filings or registrations by FNB with any
court, administrative agency or commission or other governmental authority or instrumentality or
SRO (each a “Governmental Entity”) are necessary in connection with (A) the execution and delivery
by IRGB of this Agreement and (B) the consummation by IRGB of the Merger and the other transactions
contemplated by this Agreement. Nothing in this Section 3.4 is intended or shall be construed as
requiring IRGB to take any of the actions described herein, or relieving FNB of its obligations to
make such filings or obtain approvals or consents necessary to the consummation of this Agreement
and the transactions contemplated herein.
3.5 Reports. IRGB and each of its Subsidiaries have in all material respects timely
filed all reports, registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 2005 with (i) the Federal
Reserve Board, (ii) the FDIC, (iii) any state regulatory authority, (iv) any foreign regulatory
authority and (v) any SRO (collectively, “Regulatory Agencies”) and with each other applicable
Governmental Entity, and all other reports and statements required to be filed by them since
January 1, 2005, including any report or statement required to be filed pursuant to the laws, rules
or regulations of the United States, any state, any foreign entity, or any Regulatory Agency, and
have paid all fees and assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the ordinary course of the business of IRGB and
its Subsidiaries, no Regulatory Agency has initiated or has pending any proceeding or, to the
knowledge of IRGB, investigation into the business or operations of IRGB or any of its Subsidiaries
since January 1, 2005. There (i) is no unresolved violation, criticism or exception by any
Regulatory Agency with respect to any report or statement relating to any examinations or
inspections of IRGB or any of its Subsidiaries and (ii) has been no formal or informal inquiries
by, or disagreements or disputes with, any Regulatory Agency with respect to the business,
operations, policies or procedures of IRGB since January 1, 2005.
3.6 Financial Statements.
(a) (i) IRGB has previously made available to FNB copies of the consolidated balance sheets of
IRGB and its Subsidiaries as of December 31, 2004, 2005 and 2006, and the related consolidated
statements of income, shareholders’ equity and cash flows for the years then ended, accompanied by
the audit reports of S.R. Xxxxxxxxx XX, independent registered public accountants with respect to
IRGB for the years ended December 31, 2004, 2005 and 2006. The December 31, 2006 consolidated
balance sheet of IRGB (including the related notes, where applicable) fairly presents in all
material respects the consolidated financial position of
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IRGB and its Subsidiaries as of the date thereof, and the other financial statements referred
to in this Section 3.6 (including the related notes, where applicable) fairly present in all
material respects the results of the consolidated operations, cash flows and changes in
shareholders equity and consolidated financial position of IRGB and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth, subject to normal
year-end audit adjustments in amounts consistent with past experience in the case of unaudited
statements; each of such statements (including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and with the published rules with respect
thereto and each of such statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with GAAP consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes thereto. The books
and records of IRGB and its Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting requirements and
reflect only actual transactions.
(b) No agreement pursuant to which any loans or other assets have been or shall be sold by
IRGB or its Subsidiaries entitled the buyer of such loans or other assets, unless there is material
breach of a representation or covenant by IRGB or its Subsidiaries, to cause IRGB or its
Subsidiaries to repurchase such loan or other asset or the buyer to pursue any other form of
recourse against IRGB or its Subsidiaries. To the knowledge of IRGB, there has been no material
breach of a representation or covenant by IRGB or its Subsidiaries in any such agreement. Since
January 1, 2005, no cash, stock or other dividend or any other distribution with respect to the
capital stock of IRGB or any of its Subsidiaries has been declared, set aside or paid other than
regular quarterly cash dividends. Except as disclosed in Section 3.6 of the IRGB Disclosure
Schedule, no shares of capital stock of IRGB have been purchased, redeemed or otherwise acquired,
directly or indirectly, by IRGB since January 1, 2005, and no agreements have been made to do the
foregoing.
3.7 Broker’s Fees. Neither IRGB nor any IRGB Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred any liability for any broker’s
fees, commissions or finder’s fees in connection with the Merger or related transactions
contemplated by this Agreement, other than Xxxxx, Xxxxxxxx & Xxxxx, Inc.
3.8 Absence of Certain Changes or Events. Since December 31, 2006, (i) IRGB and its
Subsidiaries have (except in connection with the negotiation and execution and delivery of this
Agreement) carried on their respective businesses in all material respects in the ordinary course
consistent with past practice and (ii) there has not been any Material Adverse Effect with respect
to IRGB.
3.9 Legal Proceedings.
(a) There is no pending, or, to IRGB’s knowledge, threatened, litigation, action, suit,
proceeding, investigation or arbitration by any individual, partnership,
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corporation, trust, joint venture, organization or other entity (each, a “Person”) or
Governmental Entity that has had, or is reasonably likely to have a Material Adverse Effect on IRGB
and its Subsidiaries, taken as a whole, in each case with respect to IRGB or any of its
Subsidiaries or any of their respective properties or permits, licenses or authorizations.
(b) There is no judgment, or regulatory restriction (other than those of general application
that apply to similarly situated financial or bank holding companies or their Subsidiaries) that
has been imposed upon IRGB, any of its Subsidiaries or the assets of IRGB or any of its
Subsidiaries, that has had, or is reasonably likely to have, a Material Adverse Effect on IRGB and
its Subsidiaries, taken as a whole.
3.10 Taxes and Tax Returns.
(a) Each of IRGB and its Subsidiaries has duly and timely filed (including all applicable
extensions) all Tax Returns (as defined in subsection (c), below) required to be filed by it on or
prior to the date of this Agreement (all such Tax Returns being accurate and complete in all
material respects), has timely paid or withheld and timely remitted all Taxes shown thereon as
arising and has duly and timely paid or withheld and timely remitted all Taxes (whether or not
shown on any Tax Return) that are due and payable or claimed to be due from it by a Governmental
Entity other than Taxes that (i) are being contested in good faith, which have not been finally
determined, and (ii) have been adequately reserved against in accordance with GAAP on IRGB’s most
recent consolidated financial statements. All required estimated Tax payments sufficient to avoid
any underpayment penalties or interest have been made by or on behalf of each of IRGB and its
Subsidiaries. Neither IRGB nor any of its Subsidiaries has granted any extension or waiver of the
limitation period for the assessment or collection of Tax that remains in effect. Except as set
forth in Section 3.10 of the IRGB Disclosure Schedule, there are no disputes, audits, examinations
or proceedings in progress or pending (including any notice received of an intent to conduct an
audit or examination), or claims asserted, for Taxes upon IRGB or any of its Subsidiaries. No
claim has been made by a Governmental Entity in a jurisdiction where IRGB or any of its
Subsidiaries has not filed Tax Returns such that IRGB or any of its Subsidiaries is or may be
subject to taxation by that jurisdiction. All deficiencies asserted or assessments made as a
result of any examinations by any Governmental Entity of the Tax Returns of, or including, IRGB or
any of its Subsidiaries have been fully paid. No issue has been raised by a Governmental Entity in
any prior examination or audit of each of IRGB and its Subsidiaries which, by application of the
same or similar principles, could reasonably be expected to result in a proposed deficiency in
respect of such Governmental Entity for any subsequent taxable period. There are no Liens for
Taxes (other than statutory liens for Taxes not yet due and payable) upon any of the assets of IRGB
or any of its Subsidiaries. Neither IRGB nor any of its Subsidiaries is a party to or is bound by
any Tax sharing, allocation or indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among IRGB and its Subsidiaries). Neither IRGB nor
any of its Subsidiaries (A)
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has been a member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was IRGB) or (B) has any liability for the Taxes of
any Person (other than IRGB or any of its Subsidiaries) under Treas. Reg. §1.1502-6 (or any similar
provision of state, local or foreign law), or as a transferee or successor, by contract or
otherwise. Neither IRGB nor any of its Subsidiaries has been, within the past two years or
otherwise as part of a “plan (or series of related transactions)” (within the meaning of Section
355(e) of the Code) of which the Merger is also a part, or a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution
of stock intended to qualify for tax-free treatment under Section 355 of the Code. No share of
IRGB Common Stock is owned by a Subsidiary of IRGB. IRGB is not and has not been a “United States
real property holding company” within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Neither IRGB, its
Subsidiaries nor any other Person on their behalf has executed or entered into any written
agreement with, or obtained or applied for any written consents or written clearances or any other
Tax rulings from, nor has there been any written agreement executed or entered into on behalf of
any of them with any Governmental Entity, relating to Taxes, including any private letter rulings
of the U.S. Internal Revenue Service (“IRS”) or comparable rulings of any Governmental Entity and
closing agreements pursuant to Section 7121 of the Code or any predecessor provision thereof or any
similar provision of any applicable law, which rulings or agreements would have a continuing effect
after the Effective Time. Neither IRGB nor any of its Subsidiaries has engaged in a “reportable
transaction,” as set forth in Treas. Reg. § 1.6011-4(b), or any transaction that is the same as
or substantially similar to one of the types of transactions that the IRS has determined to be a
tax avoidance transaction and identified by notice, regulation or other form of published guidance
as a “listed transaction,” as set forth in Treas. Reg. § 1.6011-4(b)(2). FNB has received
complete copies of (i) all federal, state, local and foreign income or franchise Tax Returns of
IRGB and its Subsidiaries relating to the taxable periods beginning January 1, 2004 or later and
(ii) any audit report issued within the last three years relating to any Taxes due from or with
respect to IRGB or its Subsidiaries. Neither IRGB, any of its Subsidiaries nor FNB (as a successor
to IRGB) will be required to include any item of material income in, or exclude any material item
of deduction from, taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of any (i) change in method of accounting for a taxable period ending on
or prior to the Closing Date, (ii) installment sale or open transaction disposition made on or
prior to the Effective Time, (iii) prepaid amount received on or prior to the Closing Date or (iv)
deferred intercompany gain or any excess loss account of IRGB or any of its Subsidiaries for
periods or portions of periods described in Treasury Regulations under Section 1502 of the Code (or
any corresponding or similar provision of state, local or foreign law) for periods (or portions
thereof) ending on or before the Closing Date.
(b) As used in this Agreement, the term “Tax” or “Taxes” means (i) all federal, state, local,
and foreign income, excise, gross receipts, gross income, ad valorem, profits, gains, property,
capital, sales, transfer, use, payroll, bank shares tax, employment,
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severance, withholding, duties, intangibles, franchise, backup withholding, inventory, capital
stock, license, employment, social security, unemployment, excise, stamp, occupation, and estimated
taxes, and other taxes, charges, levies or like assessments (ii) all interest, penalties, fines,
additions to tax or additional amounts imposed by any Governmental Entity in connection with any
item described in clause (i) and (iii) any transferee liability in respect of any items described
in clauses (i) or (ii) payable by reason of Contract, assumption, transferee liability, operation
of Law, Treas. Reg §1.1502-6(a) or any predecessor or successor thereof of any analogous or similar
provision under law or otherwise.
(c) As used in this Agreement, the term “Tax Return” means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, supplied or required to be supplied to a
Governmental Entity and any amendment thereof including, where permitted or required, combined,
consolidated or unitary returns for any group of entities.
3.11 Employee Benefits. For purposes of this Agreement, the following terms shall
have the following meaning:
“Controlled Group Liability” means any and all liabilities (i) under Title IV of ERISA, (ii)
under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, and (iv) as a result of
a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA
and Section 4980B of the Code other than such liabilities that arise solely out of, or relate
solely to, the IRGB Benefit Plans.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity,
trade or business that is, or was at the relevant time, a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the
first entity, trade or business, or that is, or was at the relevant time, a member of the same
“controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“Multiemployer Plan” means any “multiemployer plan” within the meaning of Section 4001(a)(3)
of ERISA.
“IRGB Benefit Plan” means any material employee benefit plan, program, policy, practice, or
other arrangement providing benefits to any current or former employee, officer or director of IRGB
or any of its Subsidiaries or any beneficiary or dependent thereof that is sponsored or maintained
by IRGB or any of its Subsidiaries or to which IRGB or any of its Subsidiaries contributes or is
obligated to contribute, whether or not written, including
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without limitation any employee welfare benefit plan within the meaning of Section 3(1) of
ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or
not such plan is subject to ERISA), and any bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control or fringe benefit plan,
program or policy.
“IRGB Employment Agreement” means a written contract, offer letter or agreement of IRGB or any
of its Subsidiaries with or addressed to any individual who is rendering or has rendered services
thereto as an employee pursuant to which IRGB or any of its Subsidiaries has any actual or
contingent liability or obligation to provide compensation and/or benefits in consideration for
past, present or future services.
“IRGB Plan” means any IRGB Benefit Plan other than a Multiemployer Plan.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as those terms are defined in Part I of Subtitle E
of Title IV of ERISA.
(a) Section 3.11(a) of the IRGB Disclosure Schedule includes a complete list of all material
IRGB Benefit Plans and all material IRGB Employment Agreements.
(b) With respect to each IRGB Plan, IRGB has delivered or made available to FNB a true,
correct and complete copy of: (i) each writing constituting a part of such IRGB Plan, including
without limitation all plan documents, current employee communications, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most recent Annual Report
(Form 5500 Series) and accompanying schedule, if any; (iii) the current summary plan description
and any material modifications thereto, if any (in each case, whether or not required to be
furnished under ERISA); (iv) the most recent annual financial report, if any; (v) the most recent
actuarial report, if any; and (vi) the most recent determination letter from the Internal Revenue
Service (“the IRS”), if any. IRGB has delivered or made available to FNB a true, correct and
complete copy of each material IRGB Employment Agreement.
(c) All material contributions required to be made to any IRGB Plan by applicable law or
regulation or by any plan document or other contractual undertaking, and all material premiums due
or payable with respect to insurance policies funding any IRGB Plan, for any period through the
date hereof have been timely made or paid in full or, to the extent not required to be made or paid
on or before the date hereof, have been fully reflected on the financial statements to the extent
required by GAAP. Each IRGB Benefit Plan that is an employee welfare benefit plan under Section
3(1) of ERISA either (i) is funded through an insurance company contract and is not a “welfare
benefit fund” within the meaning of Section 419 of the Code or (ii) is unfunded.
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(d) With respect to each IRGB Plan, IRGB and its Subsidiaries have complied, and are now in
compliance, in all material respects, with all provisions of ERISA, the Code and all laws and
regulations applicable to such IRGB Plans. Each IRGB Plan has been administered in all material
respects in accordance with its terms. There is not now, nor do any circumstances exist that would
reasonably be expected to give rise to, any requirement for the posting of security with respect to
an IRGB Plan or the imposition of any material lien on the assets of IRGB or any of its
Subsidiaries under ERISA or the Code. Section 3.11(d) of the IRGB Disclosure Schedule identifies
each IRGB Plan that is intended to be a “qualified plan” within the meaning of Section 401(a) of
the Code (“IRGB Qualified Plans”). The IRS has issued a favorable determination letter with
respect to each IRGB Qualified Plan and the related trust that has not been revoked or IRGB is
entitled to rely on a favorable opinion issued by the IRS, and, to the knowledge of IRGB, there are
no existing circumstances and no events have occurred that would reasonably be expected to
adversely affect the qualified status of any IRGB Qualified Plan or the related trust. No trust
funding any IRGB Plan is intended to meet the requirements of Code Section 501(c)(9). To the
knowledge of IRGB, none of IRGB and its Subsidiaries nor any other person, including any fiduciary,
has engaged in any “prohibited transaction” (as defined in Section 4975 of the Code or Section 406
of ERISA), which would reasonably be expected to subject any of the IRGB Plans or their related
trusts, IRGB, any of its Subsidiaries or any person that IRGB or any of its Subsidiaries has an
obligation to indemnify, to any material Tax or penalty imposed under Section 4975 of the Code or
Section 502 of ERISA.
(e) Except as set forth in Section 3.11(e) of the IRGB Disclosure Schedule with respect to
each IRGB Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the
Code, (i) there does not exist any accumulated funding deficiency within the meaning of Section 412
of the Code or Section 302 of ERISA, whether or not waived, and, (ii) (A) the fair market value of
the assets of such IRGB Plan equals or exceeds the actuarial present value of all accrued benefits
under such IRGB Plan (whether or not vested) on a termination basis; (B) no reportable event within
the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived
has occurred; (C) all premiums, if any, to the Pension Benefit Guaranty Corporation (the “PBGC”)
have been timely paid in full; (D) no liability (other than for premiums to the PBGC) under Title
IV of ERISA has been or would reasonably be expected to be incurred by IRGB or any of its
Subsidiaries; and (E) the PBGC has not instituted proceedings to terminate any such IRGB Plan and,
to IRGB’s knowledge, no condition exists that makes it reasonably likely that such proceedings will
be instituted or which would reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any such IRGB Plan,
except as would not have a Material Adverse Effect, individually or in the aggregate, in the case
of clauses (A), (B), (C), (D) and (E).
(f) (i) No IRGB Benefit Plan is a Multiemployer Plan or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
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the meaning of Section 4063 of ERISA (a “Multiple Employer Plan”); (ii) none of IRGB and its
Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the last six
years, contributed to or been obligated to contribute to any Multiemployer Plan or Multiple
Employer Plan; and (iii) none of IRGB and its Subsidiaries nor any of their respective ERISA
Affiliates has incurred, during the last six years, any Withdrawal Liability that has not been
satisfied in full. There does not now exist, nor do any circumstances exist that would reasonably
be likely to result in, any Controlled Group Liability that would be a liability of IRGB or any of
its Subsidiaries following the Effective Time, other than such liabilities that arise solely out
of, or relate solely to, the IRGB Benefit Plans. Without limiting the generality of the foregoing,
neither IRGB nor any of its Subsidiaries, nor, to IRGB’s knowledge, any of their respective ERISA
Affiliates, has engaged in any transaction described in Section 4069 or Section 4204 or 4212 of
ERISA.
(g) Except as set forth in Section 3.11(g) of the IRGB Disclosure Schedule, IRGB and its
Subsidiaries have no liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code, Part 6 of Title I of ERISA or applicable law and at no
expense to IRGB and its Subsidiaries.
(h) Except as set forth on Section 3.11(h) of the IRGB Disclosure Schedule, neither the
execution nor the delivery of this Agreement nor the consummation of the transactions contemplated
by this Agreement will, either alone or in conjunction with any other event (whether contingent or
otherwise), (i) result in any payment or benefit becoming due or payable, or required to be
provided, to any director, employee or independent contractor of IRGB or any of its Subsidiaries,
(ii) increase the amount or value of any benefit or compensation otherwise payable or required to
be provided to any such director, employee or independent contractor, (iii) result in the
acceleration of the time of payment, vesting or funding of any such benefit or compensation or (iv)
result in any amount failing to be deductible by reason of Section 280G of the Code or would be
subject to an excise tax under Section 4999 of the Code or Section 409A of the Code.
(i) No labor organization or group of employees of IRGB or any of its Subsidiaries has made a
pending demand for recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending or, to IRGB’s
knowledge, threatened to be brought or filed, with the National Labor Relations Board. Each of
IRGB and its Subsidiaries is in material compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment, wages and hours and occupational
safety and health.
3.12 Compliance with Applicable Law. IRGB and each of its Subsidiaries are not in
default in any material respect under any, applicable law, statute, order, rule, regulation, policy
or guideline of any Governmental Entity applicable to IRGB or any of its Subsidiaries (including
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
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Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorist (USA Patriot) Act of 2001,
the Bank Secrecy Act and applicable limits on loans to one borrower), except where such
noncompliance or default is not reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect on IRGB and its Subsidiaries taken as a whole.
3.13 Contracts. Except for matters that have not had and would not reasonably be
likely to have, individually or in the aggregate, a Material Adverse Effect on IRGB and its
Subsidiaries taken as a whole, (i) none of IRGB nor any of its Subsidiaries is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any material respect under
any material contract, lease, license or other agreement or instrument, (ii) to the knowledge of
IRGB, none of the other parties to any such material contract, lease, license or other agreement or
instrument is (with or without the lapse of time or the giving of notice, or both) in breach or
default in any material respect thereunder and (iii) neither IRGB nor any of its Subsidiaries has
received any written notice of the intention of any party to terminate or cancel any such material
contract, lease, license or other agreement or instrument whether as a termination or cancellation
for convenience or for default of IRGB or any of its Subsidiaries.
3.14 Agreements with Regulatory Agencies. Except to the extent disclosure hereunder
is precluded by applicable law, neither IRGB nor any of its Subsidiaries is subject to any
cease-and-desist or other order or enforcement action issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or has been ordered
to pay any civil money penalty by, or has been since January 1, 2005, a recipient of any
supervisory letter from, or since January 1, 2005, has adopted any policies, procedures or board
resolutions at the request or suggestion of any Regulatory Agency or other Governmental Entity that
currently restricts in any material respect the conduct of its business or that in any material
manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management
policies, its management or its business, other than those of general application that apply to
similarly situated financial holding companies or their Subsidiaries (each item in this sentence,
whether or not set forth in Section 3.11 of the IRGB Disclosure Schedule, an “IRGB Regulatory
Agreement”), nor has IRGB or any of its Subsidiaries been advised since January 1, 2005 by any
Regulatory Agency or other Governmental Entity that it is considering issuing, initiating,
ordering, or requesting any such IRGB Regulatory Agreement.
3.15 Undisclosed Liabilities. Except for (i) those liabilities that are reflected or
reserved against on the consolidated balance sheet of IRGB as of December 31, 2006 (including any
notes thereto) (ii) liabilities incurred in connection with this Agreement and the transactions
contemplated hereby and (iii) liabilities incurred in the ordinary course of business consistent
with past practice since December 31, 2006, since December 31, 2006,
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neither IRGB nor any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become due) that has had
or is reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect
on IRGB.
3.16 Environmental Liability.
(a) To IRGB’s Knowledge, (A) IRGB and its Subsidiaries are in material compliance with
applicable Environmental Laws; (B) no Contamination exceeding applicable cleanup standards or
remediation thresholds exists at real property, including buildings or other structures, currently
or formerly owned or operated by IRGB or any of its Subsidiaries, that reasonably could result in a
material Environmental Liability for IRGB or its Subsidiaries; (C) no Contamination exists at any
real property currently owned by a third party that reasonably could result in a material
Environmental Liability for IRGB or its Subsidiaries; (D) neither IRGB nor any of its Subsidiaries
has received any written notice, demand letter, or claim alleging any material violation of, or
liability under, any Environmental Law; (E) neither IRGB nor any of its Subsidiaries is subject to
any order, decree, injunction or other agreement with any Governmental Entity or any third party
under any Environmental Law that reasonably could result in a material Environmental Liability of
IRGB or its Subsidiaries; and (F) IRGB has set forth in Section 3.16 of the IRGB Disclosure
Schedule and made available to FNB copies of all environmental reports or studies, sampling data,
correspondence and filings in its possession relating to IRGB, its Subsidiaries and any currently
owned or operated real property of IRGB which were prepared in the last five years.
(b) As used herein, (A) the term “Environmental Laws” means collectively, any and all laws,
ordinances, rules, regulations, directives, orders, authorizations, decrees, permits, or other
mandates, of a Governmental Entity relating to any Hazardous Substance, Contamination, protection
of the Environment or protection of human health and safety, including, without limitation, those
relating to emissions, discharges or releases or threatened emissions, discharges or releases to,
on, onto or into the environment of any Hazardous Substance; (B) the term “Hazardous Substance”
means any element, substance, compound or mixture whether solid, liquid or gaseous that is subject
to regulation by any Governmental Entity under any Environmental Law; or the presence or existence
of which gives rise to any Environmental Liability; (C) the term “Contamination” means the
emission, discharge or release of any Hazardous Substance to, on, onto or into the environment and
the effects of such emission, discharge or release, including the presence or existence of any such
Hazardous Substance; and (D) the term “Environmental Liability” means liabilities for response,
remedial or investigation costs, and any other expenses (including reasonable attorney an
consultant fees, laboratory costs and litigation costs) required under, or necessary to attain or
maintain compliance with, applicable Environmental Laws or relating to or arising from
Contamination or Hazardous Substances.
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3.17 Real Property.
(a) Each of IRGB and its Subsidiaries has good title free and clear of all Liens to all real
property owned by such entities (the “Owned Properties”), except for Liens that do not materially
detract from the present use of such real property.
(b) A true and complete copy of each agreement pursuant to which IRGB or any of its
Subsidiaries leases any real property (such agreements, together with any amendments, modifications
and other supplements thereto, collectively, the “Leases”) has heretofore been made available to
FNB. Each Lease is valid, binding and enforceable against IRGB or its applicable Subsidiary in
accordance with its terms and is in full force and effect (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally
and the availability of equitable remedies). There is not under any such Lease any material
existing default by IRGB or any of its Subsidiaries or, to the knowledge of IRGB, any other party
thereto, or any event which with notice or lapse of time or both would constitute such a default.
The consummation of the transactions contemplated by this Agreement will not cause defaults under
the Leases, provided necessary consents disclosed in the IRGB Disclosure Schedule have been
obtained and are in effect, except for any such default which would not, individually or in the
aggregate, have a Material Adverse Effect on IRGB and its Subsidiaries taken as a whole.
(c) The Owned Properties and the properties leased pursuant to the Leases (the “Leased
Properties”) constitute all of the real estate on which IRGB and its Subsidiaries maintain their
facilities or conduct their business as of the date of this Agreement, except for locations the
loss of which would not result in a Material Adverse Effect on IRGB and its Subsidiaries taken as a
whole.
(d) A true and complete copy of each agreement pursuant to which IRGB or any of its
Subsidiaries leases real property to a third party (such agreements, together with any amendments,
modifications and other supplements thereto, collectively, the “Third Party Leases”) has heretofore
been made available to FNB. Each Third Party Lease is valid, binding and enforceable in accordance
with its terms and is in full force and effect (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors generally and the
availability of equitable remedies). To the knowledge of IRGB, there are no existing defaults by
the tenant under any Third Party Lease, or any event which with notice or lapse of time or both
which would constitute such a default and which individually or in the aggregate would have a
Material Adverse Effect on IRGB and its Subsidiaries taken as a whole.
3.18 State Takeover Laws. IRGB has previously taken any and all action necessary to
render the provisions of the Pennsylvania anti-takeover statutes in Sections 2538 through 2588
inclusive of the PBCL that may be applicable to the Merger and the other transactions contemplated
by this Agreement inapplicable to FNB and its respective affiliates, and to the
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Merger, this Agreement and the transactions contemplated hereby. The Board of Directors of
IRGB has approved this Agreement and the transactions contemplated hereby as required to render
inapplicable to such Agreement and the transactions contemplated hereby any restrictive provisions,
including the provisions of Paragraph 9, of the IRGB Articles.
3.19 Reorganization. As of the date of this Agreement, IRGB is not aware of any fact
or circumstance that could reasonably be expected to prevent the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code.
3.20 Opinion. Prior to the execution of this Agreement, IRGB has received an opinion
from Xxxxx, Xxxxxxxx & Xxxxx, Inc. to the effect that as of the date thereof and based upon and
subject to the matters set forth therein, the Merger Consideration is fair to the shareholders of
IRGB from a financial point of view. Such opinion has not been amended or rescinded as of the date
of this Agreement.
3.21 Insurance. IRGB and its Subsidiaries are insured with reputable insurers against
such risks and in such amounts as are set forth in Section 3.21 of the IRGB Disclosure Schedule and
as its management reasonably has determined to be prudent in accordance with industry practices.
3.22 Investment Securities. Except where failure to be true would not reasonably be
expected to have a Material Adverse Effect on IRGB, (a) each of IRGB and its Subsidiaries has good
title to all securities owned by it (except those securities sold under repurchase agreements
securing deposits, borrowings of federal funds or borrowings from the Federal Reserve Banks or the
Federal Home Loan Banks or held in any fiduciary or agency capacity), free and clear of any Liens,
except to the extent such securities are pledged in the ordinary course of business to secure
obligations of IRGB or its Subsidiaries, and such securities are valued on the books of IRGB in
accordance with GAAP in all material respects.
3.23 Intellectual Property. IRGB and each of its Subsidiaries owns, or is licensed to
use (in each case, free and clear of any Liens), all Intellectual Property used in the conduct of
its business as currently conducted that is material to IRGB and its Subsidiaries, taken as a
whole. Except as would not reasonably be likely to have a Material Adverse Effect on IRGB, (i)
Intellectual Property used in the conduct of its business as currently conducted that is material
to IRGB and its Subsidiaries does not, to the knowledge of IRGB, infringe on or otherwise violate
the rights of any person and is in accordance with any applicable license pursuant to which IRGB or
any Subsidiary acquired the right to use any Intellectual Property; and (ii) neither IRGB nor any
of its Subsidiaries has received any written notice of any pending claim with respect to any
Intellectual Property used by IRGB and its Subsidiaries. For purposes of this Agreement,
“Intellectual Property” means registered trademarks, service marks, brand names, certification
marks, trade dress and other indications of origin, the goodwill associated with the foregoing and
registrations in the United States Patent and
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Trademark Office or in any similar office or agency of the United States or any state thereof;
all letters patent of the United States and all reissues and extensions thereof.
3.24 Loans; Nonperforming and Classified Assets.
(a) Except as set forth in Section 3.24 of the IRGB Disclosure Schedule, each Loan on the
books and records of IRGB and its Subsidiaries was made and has been serviced in all material
respects in accordance with their customary lending standards in the ordinary course of business,
is evidenced in all material respects by appropriate and sufficient documentation and, to the
knowledge of IRGB, constitutes the legal, valid and binding obligation of the obligor named
therein, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditor’s rights or by general
equity principles.
(b) IRGB has set forth in Section 3.24 of the IRGB Disclosure Schedule as to IRGB and each
IRGB Subsidiary as of the latest practicable date prior to the date of this Agreement: (A) any
written or, to IRGB’s knowledge, oral Loan under the terms of which the obligor is 90 or more days
delinquent in payment of principal or interest, or to IRGB’s knowledge, in default of any other
material provision thereof; (B) each Loan that has been classified as “substandard,” “doubtful,”
“loss” or “special mention” or words of similar import by IRGB, a IRGB Subsidiary or an applicable
regulatory authority; (C) a listing of the Other Real Estate Owned (“OREO”) acquired by foreclosure
or by deed-in-lieu thereof, including the book value thereof and (D) each Loan with any director,
executive officer or five percent or greater shareholder of IRGB or a IRGB Subsidiary, or to the
knowledge of IRGB, any Person controlling, controlled by or under common control with any of the
foregoing.
(c) Except as set forth in Section 3.24 of the IRGB Disclosure Schedules, each Loan was on the
books and records of IRGB and its Subsidiaries prior to December 15, 2007.
3.25 Fiduciary Accounts. IRGB and each of its Subsidiaries has properly administered
all accounts for which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment
advisor, in accordance with the terms of the governing documents and applicable laws and
regulations. Neither IRGB nor any of its Subsidiaries, nor any of their respective directors,
officers or employees, has committed any breach of trust to IRGB’s knowledge with respect to any
fiduciary account and the records for each such fiduciary account are true and correct and
accurately reflect the assets of such fiduciary account.
3.26 Allowance For Loan Losses. IRGB Bank’s allowance for loan losses is sufficient
at the date of this Agreement for its reasonably anticipated loan losses, is in compliance with the
standards established by applicable Governmental Entities and GAAP and, to the knowledge of IRGB,
is adequate.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FNB
Except as disclosed in the disclosure schedule delivered by FNB to IRGB (the “FNB Disclosure
Schedule”), FNB hereby represents and warrants to IRGB as follows:
4.1 Corporate Organization.
(a) FNB is a corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. FNB has the corporate power and authority and has all licenses, permits
and authorizations of applicable Governmental Entities required to own or lease all of its
properties and assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where such failure to be licensed or
qualified does not have a Material Adverse Effect upon FNB.
(b) FNB is duly registered as a bank holding company and is a financial holding company under
the BHC Act. True and complete copies of the Articles of Incorporation (the “FNB Charter”) and
Bylaws of FNB (the “FNB Bylaws”), as in effect as of the date of this Agreement, have previously
been made available to IRGB.
(c) Each FNB Subsidiary (i) is duly organized and validly existing under the laws of its
jurisdiction of organization, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of property
or the conduct of its business requires it to be so qualified, and (iii) has all requisite
corporate power and authority, and has all licenses, permits and authorizations of applicable
Governmental Entities required, to own or lease its properties and assets and to carry on its
business as now conducted, except in each of (i) — (iii) as would not be reasonably likely to
have, either individually or in the aggregate, a Material Adverse Effect on FNB.
4.2 Capitalization.
(a) The authorized capital stock of FNB consists of 500,000,000 shares of FNB Common Stock, of
which, as of December 31, 2007 60,554,248 shares were issued and outstanding, and 20,000,000 shares
of preferred stock, $.01 par value (the “FNB Preferred Stock”), of which, as of the date hereof, no
shares were issued and outstanding. As of December 31, 2007 47,970 shares of FNB Common Stock were
held in FNB’s treasury. As of the date hereof, no shares of FNB Common Stock or FNB Preferred
Stock were reserved for issuance, except for 2,155,597 shares of FNB Common Stock reserved for
issuance upon exercise of options issued or available for issuance pursuant to employee and
director stock plans of FNB in effect as of the date of this Agreement (the “FNB Stock Plans”) and
53,000 shares of FNB Common Stock available for issuance upon conversion of outstanding
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convertible notes assumed by FNB from Legacy Bank. All of the issued and outstanding shares
of FNB Common Stock have been, and all shares of FNB Common Stock that may be issued pursuant to
the FNB Stock Plans will be, when issued in accordance with the terms thereof, duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except pursuant to this Agreement and the FNB Stock
Plans, FNB is not bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares of FNB Common Stock
or any other equity securities of FNB or any securities representing the right to purchase or
otherwise receive any shares of FNB Common Stock. The shares of FNB Common Stock to be issued
pursuant to the Merger have been duly authorized and, when issued and delivered in accordance with
the terms of this Agreement, will have been validly issued, fully paid, nonassessable and free of
preemptive rights.
(b) All of the issued and outstanding shares of capital stock or other equity ownership
interests of each Subsidiary of FNB are owned by FNB, directly or indirectly, free and clear of any
Liens, and all of such shares or equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights. No such Subsidiary has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such Subsidiary.
4.3 Authority; No Violation.
(a) FNB has full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of FNB. Except for the approval of this Agreement and the transactions
contemplated by this Agreement by the affirmative vote of a majority of the votes cast by all
holders of shares of FNB Common Stock at such meeting at which a quorum is present, and provided
that the total votes cast on the proposal represents over 50% of the shares of FNB Common Stock
entitled to vote on the proposal, no other corporate approvals on the part of FNB are necessary to
approve this Agreement. This Agreement has been duly and validly executed and delivered by FNB
and, assuming due authorization, execution and delivery by IRGB, constitutes the valid and binding
obligation of FNB, enforceable against FNB in accordance with its terms, except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies.
(b) Neither the execution and delivery of this Agreement by FNB, nor the consummation by FNB
of the transactions contemplated hereby, nor compliance by FNB
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with any of the terms or provisions of this Agreement, will (i) violate any provision of the
FNB Charter or the FNB Bylaws or (ii) assuming that the consents, approvals and filings referred to
in Section 4.4 are duly obtained and/or made and are in full force and effect, (A) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or Injunction applicable
to FNB, any of its Subsidiaries or any of their respective properties or assets or (B) violate,
conflict with, result in a breach of any provision of, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or assets of FNB or any of
its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or obligation to which FNB
or any of its Subsidiaries is a party, or by which they or any of their respective properties or
assets may be bound or affected, except for such violations, conflicts, breaches or defaults with
respect to clause (iii) that are not reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect on FNB.
4.4 Consents and Approvals. Except for (i) the filing of applications and notices, as
applicable, with the Federal Reserve Board under the BHC Act and the Federal Reserve Act, as
amended, and approval of such applications and notices, and, in connection with the acquisition of
the Bank by FNB, the filing of applications and notices, as applicable, with the FDIC, the OCC or
the PA DOB and the Federal Reserve Board and approval of such applications and notice, (ii) the
Other Regulatory Approvals, (iii) the filing with the SEC of the Proxy Statement and the filing and
declaration of effectiveness of the Registration Statement, (iv) the filing of the Articles of
Merger with and the acceptance for record by the Secretary of State of the Commonwealth of
Pennsylvania pursuant to the PBCL and the filing of the Articles of Merger with and the acceptance
for record by the Secretary of State of the State of Florida pursuant to the FBCA, (v) any notices
or filings under the HSR Act, (vi) any consents, authorizations, approvals, filings or exemptions
in connection with compliance with the applicable provisions of federal and state securities laws
relating to the regulation of broker-dealers, investment advisers or transfer agents and the rules
and regulations thereunder and of any applicable industry SRO, and the rules of NASDAQ or the NYSE,
or that are required under consumer finance, mortgage banking and other similar laws, (vii) such
filings and approvals as are required to be made or obtained under the securities or “Blue Sky”
laws of various states in connection with the issuance of the shares of FNB Common Stock pursuant
to this Agreement and approval of listing such FNB Common Stock on the NYSE, (viii) the approval of
the issuance of FNB Common Stock in connection with the Merger and the transactions contemplated by
this Agreement by the requisite vote of the shareholders of FNB and (ix) filings, if any, required
as a result of the particular status of IRGB, no consents or approvals of or filings or
registrations with any Governmental Entity are necessary in connection with (A) the execution and
delivery by FNB of this Agreement and (B) the consummation by FNB of the Merger and the other
transactions contemplated by this Agreement.
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4.5 Reports. FNB and each of its Subsidiaries have in all material respects timely
filed all reports, registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 2005 with the Regulatory
Agencies and with each other applicable Governmental Entity, including the SEC, and all other
reports and statements required to be filed by them since January 1, 2005, including any report or
statement required to be filed pursuant to the laws, rules or regulations of the United States, any
state, any foreign entity, or any Regulatory Agency, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted by a Regulatory Agency
in the ordinary course of the business of FNB and its Subsidiaries, no Regulatory Agency has
initiated or has pending any proceeding or, to the knowledge of FNB, investigation into the
business or operations of FNB or any of its Subsidiaries since January 1, 2005. There (i) is no
unresolved violation, criticism or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations or inspections of FNB or any of its Subsidiaries, and (ii)
has been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory
Agency with respect to the business, operations, policies or procedures of FNB since January 1,
2005.
4.6 Financial Statements. FNB has previously made available to IRGB copies of the
consolidated balance sheet of FNB and its Subsidiaries as of December 31, 2004, 2005 and 2006, and
the related consolidated statements of income, changes in shareholders’ equity and cash flows for
the years then ended as reported in FNB’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 (as amended prior to the date hereof, the “FNB 2006 10-K”) filed with the SEC
under the Exchange Act, accompanied by the audit report of Ernst & Young LLP, independent
registered public accountants with respect to FNB for the years ended December 31, 2004, 2005 and
2006. The December 31, 2006 consolidated balance sheet of FNB (including the related notes, where
applicable) fairly presents in all material respects the consolidated financial position of FNB and
its Subsidiaries as of the date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present in all material respects
the results of the consolidated operations, cash flows and changes in shareholders’ equity and
consolidated financial position of FNB and its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth, subject to normal year-end audit adjustments in amounts
consistent with past experience in the case of unaudited statements; each of such statements
(including the related notes, where applicable) complies in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC with respect
thereto; and each of such statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with GAAP consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes thereto. The books
and records of FNB and its Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting requirements and
reflect only actual transactions.
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4.7 Broker’s Fees. Neither FNB nor any FNB Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred any liability for any brokers
fees, commissions or finder’s fees in connection with the Merger or related transactions
contemplated by this Agreement, other than Sandler X’Xxxxx & Partners, L.P., all of the fees and
expenses of which shall be the sole responsibility of FNB.
4.8 Absence of Certain Changes or Events. Since December 31, 2006, except as publicly
disclosed in the Forms 10-K, 10-Q and 8-K comprising the FNB Reports (as defined in Section 4.12)
filed prior to the date of this Agreement (i) FNB and the FNB Subsidiaries have (except in
connection with the negotiation and execution and delivery of this Agreement) carried on their
respective businesses in all material respects in the ordinary course consistent with past practice
and (ii) there has not been any Material Adverse Effect with respect to FNB.
4.9 Legal Proceedings.
(a) There is no pending, or, to FNB’s knowledge, threatened, litigation, action, suit,
proceeding, investigation or arbitration by any Person or Governmental Entity that has had, or is
reasonably likely to have, a Material Adverse Effect on FNB and its Subsidiaries, taken as a whole,
in each case with respect to FNB or any of its Subsidiaries or any of their respective properties
or permits, licenses or authorizations.
(b) There is no judgment, or regulatory restriction (other than those of general application
that apply to similarly situated financial or bank holding companies or their Subsidiaries) that
has been imposed upon FNB, any of its Subsidiaries or the assets of FNB or any of its Subsidiaries
that has had or is reasonably likely to have, a Material Adverse Effect on FNB or its Subsidiaries,
taken as a whole.
4.10 Taxes and Tax Returns. Each of FNB and its Subsidiaries has duly and timely
filed (including all applicable extensions) all Tax Returns required to be filed by it on or prior
to the date of this Agreement (all such Tax Returns being accurate and complete in all material
respects), has timely paid or withheld and timely remitted all Taxes shown thereon as arising and
has duly and timely paid or withheld and timely remitted all Taxes (whether or not shown on any Tax
Return) that are due and payable or claimed to be due from it by a Governmental Entity other than
Taxes that (i) are being contested in good faith, which have not been finally determined, and (ii)
have been adequately reserved against in accordance with GAAP on FNB’s most recent consolidated
financial statements. All required estimated Tax payments sufficient to avoid any underpayment
penalties or interest have been made by or on behalf of each of FNB and its Subsidiaries. Neither
FNB nor any of its Subsidiaries has granted any extension or waiver of the limitation period for
the assessment or collection of Tax that remains in effect. There are no disputes, audits,
examinations or proceedings in progress or pending (including any notice received of an intent to
conduct an audit or examination), or claims asserted, for Taxes upon FNB or any of its
Subsidiaries. No claim has
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been made by a Governmental Entity in a jurisdiction where the FNB or any of its Subsidiaries
has not filed Tax Returns such that FNB or any of its Subsidiaries is or may be subject to taxation
by that jurisdiction. All deficiencies asserted or assessments made as a result of any
examinations by any Governmental Entity of the Tax Returns of, or including, FNB or any of its
Subsidiaries have been fully paid. No issue has been raised by a Governmental Entity in any prior
examination or audit of each of FNB and its Subsidiaries which, by application of the same or
similar principles, could reasonably be expected to result in a proposed deficiency in respect of
such Governmental Entity for any subsequent taxable period. There are no Liens for Taxes (other
than statutory liens for Taxes not yet due and payable) upon any of the assets of FNB or any of its
Subsidiaries. Neither FNB nor any of its Subsidiaries is a party to or is bound by any Tax
sharing, allocation or indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among FNB and its Subsidiaries). Neither FNB nor any of its
Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was FNB) or (B) has any liability for the
Taxes of any Person (other than FNB or any of its Subsidiaries) under Treas. Reg. §1.1502-6 (or any
similar provision of state, local or foreign law), or as a transferee or successor, by contract or
otherwise. Neither FNB nor any of its Subsidiaries has been, within the past two years or
otherwise as part of a “plan (or series of related transactions)” (within the meaning of Section
355(e) of the Code) of which the Merger is also a part, or a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution
of stock intended to qualify for tax-free treatment under Section 355 of the Code. No share of FNB
Common Stock is owned by a Subsidiary of FNB. FNB is not and has not been a “United States real
property holding company” within the meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. Neither FNB, its Subsidiaries nor any
other Person on their behalf has executed or entered into any written agreement with, or obtained
or applied for any written consents or written clearances or any other Tax rulings from, nor has
there been any written agreement executed or entered into on behalf of any of them with any Taxing
Authority, relating to Taxes, including any IRS private letter rulings or comparable rulings of any
Taxing Authority and closing agreements pursuant to Section 7121 of the Code or any predecessor
provision thereof or any similar provision of any applicable law, which rulings or agreements would
have a continuing effect after the Effective Time. Neither FNB nor any of its Subsidiaries has
engaged in a “reportable transaction,” as set forth in Treas. Reg. §1.6011-4(b), or any transaction
that is the same as or substantially similar to one of the types of transactions that the IRS has
determined to be a tax avoidance transaction and identified by notice, regulation or other form of
published guidance as a “listed transaction,” as set forth in Treas. Reg. §1.6011-4(b)(2). IRGB
has received complete copies of (i) all federal, state, local and foreign income or franchise Tax
Returns of FNB and its Subsidiaries relating to the taxable periods beginning January 1, 2005 or
later and (ii) any audit report issued within the last three years relating to any Taxes due from
or with respect to FNB or its Subsidiaries. Neither FNB, nor any of its Subsidiaries will be
required to include any item of material income in, or exclude
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any material item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a
taxable period ending on or prior to the Closing Date, (ii) installment sale or open transaction
disposition made on or prior to the Effective Time, (iii) prepaid amount received on or prior to
the Closing Date or (iv) deferred intercompany gain or any excess loss account of FNB or any of its
Subsidiaries for periods or portions of periods described in Treasury Regulations under Section
1502 of the Code (or any corresponding or similar provision of state, local or foreign law) for
periods (or portions thereof) ending on or before the Closing Date.
4.11 Employee Benefits. For purposes hereof, the following terms shall have the
following meaning:
“FNB Benefit Plan” means any material employee benefit plan, program, policy, practice, or
other arrangement providing benefits to any current or former employee, officer or director of FNB
or any of its Subsidiaries or any beneficiary or dependent thereof that is sponsored or maintained
by FNB or any of its Subsidiaries or to which FNB or any of its Subsidiaries contributes or is
obligated to contribute, whether or not written, including without limitation any employee welfare
benefit plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within
the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program or policy.
“FNB Employment Agreement” means a written contract, offer letter or agreement of FNB or any
of its Subsidiaries with or addressed to any individual who is rendering or has rendered services
thereto as an employee pursuant to which FNB or any of its Subsidiaries has any actual or
contingent liability or obligation to provide compensation and/or benefits in consideration for
past, present or future services.
“FNB Plan” means any FNB Benefit Plan other than a Multiemployer Plan.
(a) Section 4.11(a) of the FNB Disclosure Schedule includes a complete list of all material
FNB Benefit Plans and all material FNB Employment Agreements.
(b) With respect to each FNB Plan, FNB has delivered or made available to IRGB a true, correct
and complete copy of: (i) each writing constituting a part of such FNB Plan, including without
limitation all plan documents, employee communications, benefit schedules, trust agreements, and
insurance contracts and other funding vehicles; (ii) the most recent Annual Report (Form 5500
Series) and accompanying schedule, if any; (iii) the current summary plan description and any
material modifications thereto, if any (in each case, whether or not required to be furnished under
ERISA); (iv) the most recent annual financial report, if any; (v) the most recent actuarial report,
if any; and (vi) the most recent
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determination letter from the IRS, if any. FNB has delivered or made available to IRGB a
true, correct and complete copy of each material FNB Employment Agreement.
(c) All material contributions required to be made to any FNB Plan by applicable law or
regulation or by any plan document or other contractual undertaking, and all material premiums due
or payable with respect to insurance policies funding any FNB Plan, for any period through the date
hereof have been timely made or paid in full or, to the extent not required to be made or paid on
or before the date hereof, have been fully reflected on the financial statements to the extent
required by GAAP. Each FNB Benefit Plan that is an employee welfare benefit plan under Section
3(1) of ERISA either (i) is funded through an insurance company contract and is not a “welfare
benefit fund” within the meaning of Section 419 of the Code or (ii) is unfunded.
(d) With respect to each FNB Plan, FNB and its Subsidiaries have complied, and are now in
compliance, in all material respects, with all provisions of ERISA, the Code and all laws and
regulations applicable to such FNB Plans. Each FNB Plan has been administered in all material
respects in accordance with its terms. There is not now, nor do any circumstances exist that would
reasonably be expected to give rise to, any requirement for the posting of security with respect to
a FNB Plan or the imposition of any material lien on the assets of FNB or any of its Subsidiaries
under ERISA or the Code. Section 4.11(d) of the FNB Disclosure Schedule identifies each FNB Plan
that is intended to be a “qualified plan” within the meaning of Section 401(a) of the Code (“FNB
Qualified Plans”). The IRS has issued a favorable determination letter with respect to each
Qualified Plan and the related trust that has not been revoked or FNB is entitled to rely on a
favorable opinion issued by the IRS, and, to the knowledge of FNB, there are no existing
circumstances and no events have occurred that would reasonably be expected to adversely affect the
qualified status of any FNB Qualified Plan or the related trust. No trust funding any FNB Plan is
intended to meet the requirements of Code Section 501(c)(9). To the knowledge of FNB, none of FNB
and its Subsidiaries nor any other person, including any fiduciary, has engaged in any “prohibited
transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA), which would
reasonably be expected to subject any of the FNB Plans or their related trusts, FNB, any of its
Subsidiaries or any person that FNB or any of its Subsidiaries has an obligation to indemnify, to
any material Tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
(e) With respect to each FNB Plan that is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code, (i) there does not exist any accumulated funding deficiency within
the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived, and, (ii)
except as would not have, individually or in the aggregate, a Material Adverse Effect: (A) the fair
market value of the assets of such FNB Plan equals or exceeds the actuarial present value of all
accrued benefits under such FNB Plan (whether or not vested) on a termination basis; (B) no
reportable event within the meaning of Section 4043(c) of
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ERISA for which the 30-day notice requirement has not been waived has occurred; (C) all
premiums to the PBGC have been timely paid in full; (D) no liability (other than for premiums to
the PBGC) under Title IV of ERISA has been or would reasonably be expected to be incurred by FNB or
any of its Subsidiaries; and (E) the PBGC has not instituted proceedings to terminate any such FNB
Plan and, to FNB’s knowledge, no condition exists that presents a risk that such proceedings will
be instituted or which would reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any such FNB Plan.
(f) (i) No FNB Benefit Plan is a Multiemployer Plan or a Multiple Employer Plan; (ii) none of
FNB and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the
last six years, contributed to or been obligated to contribute to any Multiemployer Plan or
Multiple Employer Plan; and (iii) none of FNB and its Subsidiaries nor any of their respective
ERISA Affiliates has incurred, during the last six years, any Withdrawal Liability that has not
been satisfied in full. There does not now exist, nor do any circumstances exist that would
reasonably be expected to result in, any Controlled Group Liability that would be a liability of
FNB or any of its Subsidiaries following the Effective Time, other than such liabilities that arise
solely out of, or relate solely to, the FNB Benefit Plans. Without limiting the generality of the
foregoing, neither FNB nor any of its Subsidiaries, nor, to FNB’s knowledge, any of their
respective ERISA Affiliates, has engaged in any transaction described in Section 4069 or Section
4204 or 4212 of ERISA.
(g) FNB and its Subsidiaries have no liability for life, health, medical or other welfare
benefits to former employees or beneficiaries or dependents thereof, except for health continuation
coverage as required by Section 4980B of the Code, Part 6 of Title I of ERISA or applicable law and
at no expense to FNB and its Subsidiaries.
(h) Neither the execution nor the delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement will, either alone or in conjunction with any other
event (whether contingent or otherwise), (i) result in any payment or benefit becoming due or
payable, or required to be provided, to any director, employee or independent contractor of FNB or
any of its Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise
payable or required to be provided to any such director, employee or independent contractor, (iii)
result in the acceleration of the time of payment, vesting or funding of any such benefit or
compensation or (iv) result in any amount failing to be deductible by reason of Section 280G of the
Code or would be subject to an excise tax under Section 4999 of the Code or Section 409A of the
Code.
(i) No labor organization or group of employees of FNB or any of its Subsidiaries has made a
pending demand for recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending or, to FNB’s
knowledge, threatened to be brought or filed, with the National Labor Relations Board or any other
labor relations tribunal or authority. Each of
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FNB and its Subsidiaries is in material compliance with all applicable laws and collective
bargaining agreements respecting employment and employment practices, terms and conditions of
employment, wages and hours and occupational safety and health.
4.12 SEC Reports. FNB has previously made available to IRGB an accurate and complete
copy of each final registration statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 2005 by FNB with the SEC pursuant to the Securities Act or the
Exchange Act (the “FNB Reports”) and prior to the date of this Agreement, as of the date of such
FNB Report, contained any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements made therein, in light
of the circumstances in which they were made, not misleading, except that information as of a later
date (but before the date of this Agreement) shall be deemed to modify information as of an earlier
date. Since January 1, 2005, as of their respective dates, all FNB Reports filed under the
Securities Act and the Exchange Act complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. FNB and each of its Subsidiaries are not in
default in any material respect under any applicable law, statute, order, rule, regulation, policy
or guideline of any Governmental Entity applicable to FNB or any of its Subsidiaries (including the
Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act, the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorist (USA Patriot) Act of 2001, the Bank Secrecy Act and
applicable limits on loans to one borrower), except where such noncompliance or default is not
reasonably likely to, either individually or in the aggregate, have a Material Adverse Effect on
FNB and its Subsidiaries, taken as a whole.
4.14 Contracts. Except for matters that have not had and would not reasonably be
likely to have, individually or in the aggregate, a Material Adverse Effect on FNB and its
Subsidiaries taken as a whole, (i) none of FNB nor any of its Subsidiaries is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any material respect under
any material contract, lease, license or other agreement or instrument, (ii) to the knowledge of
FNB, none of the other parties to any such material contract, lease, license or other agreement or
instrument is (with or without the lapse of time or the giving of notice, or both) in breach or
default in any material respect thereunder and (iii) neither FNB nor any of its Subsidiaries has
received any written notice of the intention of any party to terminate or cancel any such material
contract, lease, license or other agreement or instrument whether as a termination or cancellation
for convenience or for default of FNB or any of its Subsidiaries.
4.15 Agreements with Regulatory Agencies. Neither FNB nor any of its Subsidiaries is
subject to any cease-and-desist or other order or enforcement action issued by, or is a party to
any written agreement, consent agreement or memorandum of understanding with, or is a
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party to any commitment letter or similar undertaking to, or is subject to any order or
directive by, or has been since January 1, 2005, a recipient of any supervisory letter from, or has
been ordered to pay any civil money penalty by, or since January 1, 2005, has adopted any policies,
procedures or board resolutions at the request or suggestion of any Regulatory Agency or other
Governmental Entity that currently restricts in any material respect the conduct of its business or
that in any material manner relates to its capital adequacy, its ability to pay dividends, its
credit or risk management policies, its management or its business, other than those of general
application that apply to similarly situated financial holding companies or their Subsidiaries
(each item in this sentence, whether or not set forth in the FNB Disclosure Schedule, a “FNB
Regulatory Agreement”), nor has FNB or any of its Subsidiaries been advised since January 1, 2005,
by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating,
ordering or requesting any such FNB Regulatory Agreement. Each bank Subsidiary of FNB has at least
a “satisfactory” rating under the U.S. Community Reinvestment Act.
4.16 Undisclosed Liabilities. Except for (i) those liabilities that are reflected or
reserved against on the consolidated balance sheet of FNB included in FNB’s Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 2007 (the “FNB 10-Q”) (including any notes
thereto), (ii) liabilities incurred in connection with this Agreement and the transactions
contemplated thereby and (iii) liabilities incurred in the ordinary course of business consistent
with past practice since September 30, 2007, since September 30, 2007, neither FNB nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due) that, either individually or in the
aggregate, has had or is reasonably likely to have, a Material Adverse Effect on FNB.
4.17 Environmental Liability.
(a) To FNB’s Knowledge, (A) FNB and its Subsidiaries are in material compliance with
applicable Environmental Laws; (B) no Contamination exceeding applicable cleanup standards or
remediation thresholds exists at real property, including buildings or other structures, currently
or formerly owned or operated by FNB or any of its Subsidiaries, that reasonably could result in a
material Environmental Liability for FNB or its Subsidiaries; (C) no Contamination exists at any
real property currently owned by a third party that reasonably could result in a material
Environmental Liability for FNB or its Subsidiaries; (D) neither FNB nor any of its Subsidiaries
has received any notice, demand letter, claim or request for information alleging any material
violation of, or liability under, any Environmental Law; (E) neither FNB nor any of its
Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental
Entity or any third party under any Environmental Law that reasonably could result in a material
Environmental Liability of FNB or its Subsidiaries; (F) FNB has set forth in the FNB Disclosure
Schedule and made available to IRGB copies of all environmental reports or studies, sampling data,
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correspondence and filings in its possession or relating to FNB, its Subsidiaries and any
currently owned or operated property of FNB which were prepared in the last five years.
(b) There are no legal, administrative, arbitral or other proceedings, claims, actions, causes
of action, private environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that are reasonably likely to result in the
imposition, on FNB of any liability or obligation arising under common law or under any local,
state or federal environmental statute, regulation or ordinance including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, pending or threatened
against FNB, which liability or obligation is reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect on FNB. To the knowledge of FNB, there is no reasonable
basis for any such proceeding, claim, action or governmental investigation that would impose any
liability or obligation that would be reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on FNB. FNB is not subject to any agreement, order, judgment, decree,
letter or memorandum by or with any Governmental Entity or third party imposing any liability or
obligation with respect to the foregoing that is reasonably likely to have, either individually or
in the aggregate, a Material Adverse Effect on FNB.
4.18 Reorganization. As of the date of this Agreement, FNB is not aware of any fact
or circumstance that could reasonably be expected to prevent the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code.
4.19 Loans; Nonperforming and Classified Assets.
(a) Except as set forth in Section 4.19 of the FNB Disclosure Schedule, each Loan on the books
and records of FNB and its Subsidiaries was made and has been serviced in all material respects in
accordance with their customary lending standards in the ordinary course of business, is evidenced
in all material respects by appropriate and sufficient documentation and, to the knowledge of FNB,
constitutes the legal, valid and binding obligation of the obligor named therein, subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditor’s rights or by general equity principles.
(b) FNB has set forth in Section 4.19 of the FNB Disclosure Schedule as to FNB and each FNB
Subsidiary as of the latest practicable date prior to the date of this Agreement: (A) any written
or, to FNB’s knowledge, oral Loan under the terms of which the obligor is 90 or more days
delinquent in payment of principal or interest, or to FNB’s knowledge, in default of any other
material provision thereof; (B) each Loan that has been classified as “substandard,” “doubtful,”
“loss” or “special mention” or words of similar import by FNB, a FNB Subsidiary or an applicable
regulatory authority; (C) a listing of the other real estate owned (“OREO”) acquired by foreclosure
or by deed-in-lieu thereof, including the book value thereof and (D) each Loan with any director,
executive officer or five percent or
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greater shareholder of FNB or a FNB Subsidiary, or to the knowledge of FNB, any Person
controlling, controlled by or under common control with any of the foregoing.
4.20 Fiduciary Accounts. FNB and each of its Subsidiaries has properly administered
all accounts for which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment
advisor, in accordance with the terms of the governing documents and applicable laws and
regulations. Neither FNB nor any of its Subsidiaries, nor any of their respective directors,
officers or employees, has committed any breach of trust to FNB’s knowledge with respect to any
fiduciary account and the records for each such fiduciary account are true and correct and
accurately reflect the assets of such fiduciary account.
4.21 Allowance for Loan Losses. FNB Bank’s allowance for loan losses is sufficient at
the date of this Agreement for its reasonably anticipated loan losses, is in compliance with the
standards established by applicable Governmental Entities and GAAP and, to the knowledge of FNB, is
adequate.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.
(a) During the period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement, each of FNB and IRGB shall, and shall cause
each of its respective Subsidiaries to, (i) conduct its business in the ordinary course in all
material respects, (ii) use reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the services of its key
officers and key employees and (iii) take no action that would reasonably be expected to prevent or
materially impede or delay the obtaining of, or materially adversely affect the ability of the
parties expeditiously to obtain, any necessary approvals of any Regulatory Agency, Governmental
Entity or any other person or entity required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement or to consummate the transactions
contemplated hereby or thereby.
(b) IRGB agrees that between the date hereof and the Effective Time, the materials presented
at the meetings of the Loan Committee of IRGB’s Board of Directors shall be provided to FNB within
three business days after each meeting and IRGB shall provide the minutes of each meeting to FNB
within five days after such meeting.
5.2 IRGB Forbearances. During the period from the date of this Agreement to the
Effective Time, except as set forth in Section 5.2 of the IRGB Disclosure Schedule and except as
expressly contemplated or permitted by this Agreement, IRGB shall not, and shall not
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permit any of its Subsidiaries to, without the prior written consent of FNB, which shall not
be unreasonably withheld:
(a) (i) other than dividends and distributions by a direct or indirect Subsidiary of IRGB to
IRGB or any direct or indirect wholly owned Subsidiary of IRGB, declare, set aside or pay any
dividends on, make any other distributions in respect of, or enter into any agreement with respect
to the voting of, any of its capital stock (except for regular quarterly cash dividends with
customary record dates and payment dates and not to exceed $0.30 per share on IRGB Common Stock),
(ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of, or in substitution for, shares of its capital
stock, except upon the exercise of IRGB Stock Options that are outstanding or are required by an
existing contract, plan, arrangement or policy, as of the date hereof in accordance with their
present terms or (iii) purchase, redeem or otherwise acquire any shares of capital stock or other
securities of IRGB or any of its Subsidiaries, or any rights, warrants or options to acquire any
such shares or other securities (other than the issuance of IRGB Common Stock upon the exercise of
IRGB Stock Options that are outstanding as of the date hereof in accordance with their present
terms, including the withholding of shares of IRGB Common Stock to satisfy the exercise price or
Tax withholding);
(b) grant any stock options, restricted stock units or other equity-based award with respect
to shares of IRGB Common Stock under any of the IRGB Stock Plans, or otherwise, except as required
by an existing contract, plan, arrangement or policy, or grant any individual, corporation or other
entity any right to acquire any shares of its capital stock; or issue any additional shares of
capital stock or other securities (other than the issuance of IRGB Common Stock upon the exercise
of IRGB Stock Options;
(c) amend the IRGB Articles, IRGB Bylaws or other comparable organizational documents;
(d) (i) acquire or agree to acquire by merging or consolidating with, or by purchasing any
assets or any equity securities of, or by any other manner, any business or any Person, or
otherwise acquire or agree to acquire any assets except inventory or other similar assets in the
ordinary course of business consistent with past practice or (ii) open, acquire, close or sell any
branches;
(e) sell, lease, license, mortgage or otherwise encumber or subject to any Lien, or otherwise
dispose of any of its properties or assets other than securitizations and other transactions in the
ordinary course of business consistent with past practice;
(f) except for borrowings having a maturity of not more than 30 days under existing credit
facilities (or renewals, extensions or replacements therefor that do not increase the aggregate
amount available thereunder and that do not provide for any termination fees
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or penalties, prohibit pre-payments or provide for any pre-payment penalties, or contain any
like provisions limiting or otherwise affecting the ability of IRGB or its applicable Subsidiaries
or successors from terminating or pre-paying such facilities, or contain financial terms less
advantageous than existing credit facilities, and as they may be so renewed, extended or replaced
(“Credit Facilities”) that are incurred in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for the obligations of any Person (other than
IRGB or any wholly owned Subsidiary thereof), or, other than in the ordinary course of business
consistent with past practice, make any loans, advances or capital contributions to, or investments
in, any Person other than its wholly owned Subsidiaries and as a result of ordinary advances and
reimbursements to employees and endorsements of banking instruments;
(g) change in any material respect its accounting methods, except as may be necessary and
appropriate to confirm the changes in tax laws requirements, changes in GAAP, regulatory accounting
principles or as required by IRGB’s independent auditors or its Regulatory Agencies;
(h) change in any material respects its underwriting, operating, investment or risk management
or other similar policies of IRGB or any of its Subsidiaries except as required by applicable law
or policies imposed by any Regulatory Agency or any Governmental Entity;
(i) make, change or revoke any material Tax election, file any material amended Tax Return,
enter into any closing agreement with respect to a material amount of Taxes, settle any material
Tax claim or assessment or surrender any right to claim a refund of a material amount of Taxes;
(j) other than in the ordinary course of business consistent with past practice, terminate or
waive any material provision of any material agreement, contract or obligation (collectively,
“Contracts”) other than normal renewals of Contracts without materially adverse changes, additions
or deletions of terms (provided that Contracts under Section 5.1(s) shall be subject to that
subsection rather than this clause), or enter into or renew any agreement or contract or other
binding obligation of IRGB or its Subsidiaries containing (i) any restriction on the ability of
IRGB and its Subsidiaries, or, after the Merger, FNB and its Subsidiaries, to conduct its business
as it is presently being conducted or currently contemplated to be conducted after the Merger or
(ii) any restriction on IRGB or its Subsidiaries, or, after the Merger, FNB and its Subsidiaries,
in engaging in any type of activity or business;
(k) incur any capital expenditures in excess of $20,000 individually or $50,000 in the
aggregate;
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(l) except as required by agreements or instruments in effect on the date hereof, alter in any
material respect, or enter into any commitment to alter in any material respect, any material
interest in any corporation, association, joint venture, partnership or business entity in which
IRGB directly or indirectly holds any equity or ownership interest on the date hereof (other than
any interest arising from any foreclosure, settlement in lieu of foreclosure or troubled loan or
debt restructuring in the ordinary course of business consistent with past practice);
(m) agree or consent to any material agreement or material modifications of existing
agreements with any Regulatory Authority or Governmental Entity in respect of the operations of its
business, except as required by law;
(n) pay, discharge, settle or compromise any claim, action, litigation, arbitration, suit,
investigation or proceeding, other than any such payment, discharge, settlement or compromise in
the ordinary course of business consistent with past practice that involves solely money damages in
an amount not in excess of $25,000 individually or $50,000 in the aggregate;
(o) issue any broadly distributed communication of a general nature to employees (including
general communications relating to benefits and compensation) or customers without the prior
approval of FNB (which will not be unreasonably delayed or withheld), except for communications in
the ordinary course of business that do not relate to the Merger or other transactions contemplated
hereby;
(p) take any action, or knowingly fail to take any action, which action or failure to act
would be reasonably expected to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code;
(q) take any action that would materially impede or delay the ability of the parties to obtain
any necessary approvals of any Regulatory Agency or other Governmental Entity required for the
transactions contemplated hereby;
(r) take any action that is intended or is reasonably likely to result in any of its
representations or warranties set forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision of this Agreement,
except, in every case, as may be required by applicable law;
(s) make, renew or otherwise modify any loan, loan commitment, letter of credit or other
extension of credit (individually, a “Loan” and collectively, “Loans”) to any Person if the Loan is
an existing credit on the books of IRGB and classified as “substandard,” “doubtful” or “loss” or
such Loan is in an amount in excess of $150,000 and classified as “special mention” without the
approval of FNB, or make, renew or otherwise modify any
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Loan or Loans if immediately after making an unsecured Loan or Loans, such Person would be
indebted to IRGB Bank in an aggregate amount in excess of $200,000 on an unsecured basis or
undersecured, or make any fully secured Loan or Loans to any Person (except for any Loan secured by
a first mortgage on single family owner-occupied real estate) if, immediately after making a
secured Loan, such Person would be indebted to IRGB Bank in an aggregate amount in excess of
$1,500,000 or, without approval of FNB, shall not make, renew or otherwise modify any Loan or Loans
secured by an owner-occupied 1-4 single-family residence with a principal balance in excess of
$500,000 or in any event if such Loan does not conform with IRGB Bank’s Credit Policy Manual if, in
the case of any of the foregoing types of Loan or Loans, FNB shall object thereto within three
business days after receipt of notice of such proposed Loan, and the failure to provide a written
objection within three business days after receipt of notice of such proposed Loan from IRGB Bank
shall be deemed as the approval of FNB to make such Loan or Loans;
(t) enter into or amend or renew any employment, consulting, severance or similar agreements
or arrangements with any director, officer or employee of IRGB or its Subsidiaries or grant any
salary or wage increase or increase any employee benefit, including discretionary or other
incentive or bonus payments, except in accordance with the terms of any applicable IRGB incentive
plan, make any grants of awards to newly hired employees or accelerate the vesting of any unvested
stock options, except:
(i) for normal increases in compensation and bonuses to employees in the ordinary course of
business consistent with past practice, provided that no such increases shall result in an annual
aggregate adjustment in compensation or bonus of more than 3.5%, provided, however, that no
increase for any individual shall result in an annual adjustment in compensation or bonus of more
than 5%, and provided, further, that such provisions shall not apply where required by contract or
applicable law or are agreed to by IRGB and FNB;
(ii) for other changes that are required by applicable law or are advisable in order to comply
with Section 409A of the Code, upon prior written notice to FNB;
(iii) to pay the amounts or to provide payments under plans and/or commitments set forth in
the IRGB Disclosure Schedule;
(iv) for retention bonuses to such persons and in such amounts as are mutually agreed by FNB
and IRGB, provided, however, that FNB shall provide a retention pool in the aggregate amount of
$150,000, which shall be allocated to employees of IRGB and IRGB Bank at the discretion of Xxxxx
Xxxxx after consultation with FNB; or
(v) severance payments pursuant to the severance agreements or employment agreements that are
set forth in Section 5.2 of the IRGB Disclosure Schedule.
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(u) Hire any person as an employee of IRGB or any of its Subsidiaries or promote any employee,
except (i) to satisfy contractual obligations existing as of the date hereof and set forth in
Section 5.2 of the IRGB Disclosure Schedule, or (ii) to fill any vacancies existing as of the date
hereof and described in Section 5.2 of the IRGB Disclosure Schedule or (iii) to fill any vacancies
arising after the date hereof at a comparable level of compensation with persons whose employment
is terminable at the will of IRGB or a Subsidiary of IRGB, as applicable, provided, however, that
such total compensation for any one employee may not exceed $40,000; or
(v) agree to take, make any commitment to take, or adopt any resolutions of its Board of
Directors in support of, any of the actions prohibited by this Section 5.2.
5.3 FNB Forbearances. During the period from the date of this Agreement to the
Effective Time, except as expressly contemplated or permitted by this Agreement, FNB shall not, and
shall not permit any of its Subsidiaries to, without the prior written consent of IRGB:
(a) amend, repeal or otherwise modify any provision of the FNB Charter or the FNB Bylaws other
than those that would not be adverse to IRGB or its shareholders or those that would not impede
FNB’s ability to consummate the transactions contemplated hereby;
(b) take any action, or knowingly fail to take any action, which action or failure to act
would be reasonably expected to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code;
(c) take any action that is intended or is reasonably likely to result in any of its
representations or warranties set forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision of this Agreement,
except, in every case, as may be required by applicable law;
(d) make any material investment either by purchase of stock or securities, contributions to
capital, property transfers or purchase of any property or assets of any other individual,
corporation or other entity, in any case to the extent such action would be reasonably expected to
prevent, or materially impede or delay, the consummation of the transactions contemplated by this
Agreement;
(e) take any action that would materially impede or delay the ability of the parties to obtain
any necessary approvals of any Regulatory Agency or other Governmental Entity required for the
transactions contemplated hereby; or
(f) agree to take, make any commitment to take, or adopt any resolutions of its board of
directors in support of, any of the actions prohibited by this Section 5.3.
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5.4 Voting Agreements. IRGB shall deliver within 30 days after the date of this
Agreement the executed Voting Agreement from each member of the IRGB Board of Directors.
ARTICLE
6
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
(a) FNB agrees to prepare and file, as soon as practicable, the Registration Statement with
the SEC in connection with the issuance of FNB Common Stock in the Merger including the Proxy
Statement and prospectus and other proxy solicitation materials of IRGB constituting a part thereof
and all related documents. IRGB shall prepare and furnish to FNB such information relating to it
and its directors, officers and shareholders as may be reasonably required in connection with the
above referenced documents based on its knowledge of and access to the information required for
said documents, and IRGB, and its legal, financial and accounting advisors, shall have the right to
review in advance and approve, which approval shall not be unreasonably withheld such Registration
Statement prior to its filing. IRGB agrees to cooperate with FNB and FNB’s counsel and accountants
in requesting and obtaining appropriate opinions, consents and letters from its financial advisor
and independent auditor in connection with the Registration Statement and the Proxy Statement. As
long as IRGB has cooperated as described above, FNB agrees to file, or cause to be filed, the
Registration Statement and the Proxy Statement with the SEC as promptly as reasonably practicable.
Each of IRGB and FNB agrees to use its commercially reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as reasonably practicable
after the filing thereof. FNB also agrees to use its reasonable best efforts to obtain all
necessary state securities law or “Blue Sky” permits and approvals required to carry out the
transactions contemplated by this Agreement. After the Registration Statement is declared
effective under the Securities Act, IRGB shall each promptly mail at its expense the Proxy
Statement to its shareholders.
(b) Each of IRGB and FNB agree that none of the respective information supplied or to be
supplied by it for inclusion or incorporation by reference in the Registration Statement shall, at
the time the Registration Statement and each amendment or supplement thereto, if any, becomes
effective under the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading. Each of IRGB and FNB agree that none of the respective information supplied or to
be supplied by it for inclusion or incorporation by reference in the Proxy Statement and any
amendment or supplement thereto shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading. Each of IRGB and FNB further agree that if such party shall become aware prior to
the Effective Time of any
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information furnished by such party that would cause any of the statements in the Registration
Statement or the Proxy Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not false or misleading,
to promptly inform the other parties thereof and an appropriate amendment or supplement describing
such information shall be filed promptly with the SEC and, to the extent required by law,
disseminated to the shareholders of IRGB and/or FNB.
(c) FNB agrees to advise IRGB, promptly after FNB receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment has been filed, of
the issuance of any stop order or the suspension of the qualification of FNB Common Stock for
offering or sale in any jurisdiction, of the initiation or, to the extent FNB is aware thereof,
threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional information.
(d) The parties shall cooperate with each other and use their respective reasonable best
efforts to promptly prepare and file all necessary documentation, to effect all applications,
notices, petitions and filings, to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties, Regulatory Agencies and Governmental Entities
that are necessary or advisable to consummate the transactions contemplated by this Agreement
(including the Merger), and to comply with the terms and conditions of all such permits, consents,
approvals and authorizations of all such Regulatory Agencies and Governmental Entities. IRGB and
FNB shall have the right to review in advance, and, to the extent practicable, each will consult
the other on, in each case subject to applicable laws relating to the exchange of information, all
the information relating to IRGB or FNB, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials submitted to, any third
party, Regulatory Agency or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the parties shall act
reasonably and as promptly as practicable. The parties shall consult with each other with respect
to the obtaining of all permits, consents, approvals and authorizations of all third parties,
Regulatory Agencies and Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated by this Agreement. Notwithstanding the
foregoing, nothing in this Agreement shall be deemed to require FNB to take any action, or commit
to take any action, or agree to any condition or restriction, in connection with obtaining the
foregoing permits, consents, approvals and authorizations of third parties, Regulatory Agencies or
Governmental Entities, that would reasonably be expected to have a Material Adverse Effect on FNB
and its Subsidiaries (including the Surviving Company after giving effect to the Merger) taken as a
whole after the Effective Time (a “Materially Burdensome Regulatory Condition”). In addition, IRGB
agrees to cooperate and use its reasonable best efforts to assist FNB in preparing and filing
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such petitions and filings, and in obtaining such permits, consents, approvals and
authorizations of third parties, Regulatory Agencies and Governmental Entities, that may be
necessary or advisable to effect any mergers and/or consolidations of Subsidiaries of IRGB and FNB
following consummation of the Merger.
(e) Each of FNB and IRGB shall, upon request, furnish to the other all information concerning
itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement, the Registration
Statement or any other statement, filing, notice or application made by or on behalf of FNB, IRGB
or any of their respective Subsidiaries to any Regulatory Agency or Governmental Entity in
connection with the Merger and the other transactions contemplated by this Agreement.
(f) Each of FNB and IRGB shall promptly advise the other upon receiving any communication from
any Regulatory Agency or Governmental Entity whose consent or approval is required for consummation
of the transactions contemplated by this Agreement that causes such party to believe that there is
a reasonable likelihood that any Requisite Regulatory Approval (as defined in Section 7.1(c)) will
not be obtained or that the receipt of any such approval may be materially delayed.
(g) IRGB and FNB shall consult with each other before issuing any press release with respect
to the Merger or this Agreement and shall not issue any such press release or make any such public
statements without the prior consent of the other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other party, but after such
consultation, to the extent practicable under the circumstances, issue such press release or make
such public statements as may upon the advice of outside counsel be required by law or the rules or
regulations of the SEC, the FDIC, the OCC, the NYSE or FINRA. In addition, the Chief Executive
Officers of IRGB and FNB shall be permitted to respond to appropriate questions about the Merger
from the press. IRGB and FNB shall cooperate to develop all public announcement materials and make
appropriate management available at presentations related to the Merger as reasonably requested by
the other party.
6.2 Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating to the exchange of
information, each of IRGB and FNB shall, and shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives of the other, reasonable
access, during normal business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records, and, during such period, the parties shall,
and shall cause its Subsidiaries to, make available to the other party all other information
concerning its business, properties and personnel as the other may reasonably request. IRGB shall,
and shall cause each of its Subsidiaries to, provide to
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FNB a copy of each report, schedule and other document filed or received by it during such
period pursuant to the requirements of federal or state banking laws other than reports or
documents that such party is not permitted to disclose under applicable law. Neither IRGB nor FNB
nor any of their Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would jeopardize the attorney-client privilege of such party or its
Subsidiaries or contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The parties shall make
appropriate substitute disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply to the extent possible in light of those restrictions.
(b) All information and materials provided pursuant to this Agreement shall be subject to the
provisions of the Confidentiality Agreement entered into between the parties (the “Confidentiality
Agreement”).
(c) No investigation by either of the parties or their respective representatives shall affect
the representations and warranties of the other set forth in this Agreement.
6.3 IRGB Shareholder Approval. IRGB shall call a meeting of its shareholders for the
purpose of obtaining the requisite shareholder approval required in connection with this Agreement
and the Merger (the “IRGB Shareholder Meeting”), and shall use its reasonable best efforts to call
such meeting as soon as reasonably practicable following the Registration Statement being declared
effective giving reasonable time for printing and mailing. Subject to Section 6.11, the Board of
Directors of IRGB shall recommend approval and adoption of this Agreement, the Merger and the other
transactions contemplated hereby, by IRGB’s shareholders and shall include such recommendation in
the Proxy Statement (the “IRGB Recommendation”). Without limiting the generality of the foregoing,
IRGB’s obligations pursuant to the first sentence of this Section 6.3(a) shall not be affected by
the commencement, public proposal, public disclosure or communication to IRGB of any Acquisition
Proposal (as defined in Section 6.11(e)). Notwithstanding the foregoing, if this Agreement is
terminated pursuant to Section 8.1, IRGB’s obligations pursuant to the first sentence of this
Section 6.3(a) shall terminate.
6.4 Commercially Reasonable Efforts; Cooperation. Each of IRGB and FNB agrees to
exercise good faith and use its commercially reasonable best efforts to satisfy the various
covenants and conditions to Closing in this Agreement, and to consummate the transactions
contemplated hereby as promptly as possible.
6.5 NYSE Approval. FNB shall cause the shares of FNB Common Stock to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time.
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6.6 Benefit Plans.
(a) As soon as administratively practicable after the Effective Time, FNB shall take all
reasonable action so that employees of IRGB and its Subsidiaries shall be entitled to participate
in each employee benefit plan, program or arrangement of FNB of general applicability with the
exception of FNB’s defined benefit pension plan (the “FNB Plans”) to the same extent as
similarly-situated employees of FNB and its Subsidiaries, it being understood that inclusion of the
employees of IRGB and its Subsidiaries in the FNB Plans may occur at different times with respect
to different plans, provided that coverage shall be continued under corresponding Benefit Plans of
IRGB and its Subsidiaries until such employees are permitted to participate in the FNB Plans and
provided further, however, that nothing contained herein shall require FNB or any of its
Subsidiaries to make any grants to any former employee of IRGB under any discretionary equity
compensation plan of FNB. FNB shall cause each FNB Plans in which employees of IRGB and its
Subsidiaries are eligible to participate to recognize, for purposes of determining eligibility to
participate in, the vesting of benefits under the FNB Plans, the service of such employees with
IRGB and its Subsidiaries to the same extent as such service was credited for such purpose by IRGB,
provided, however, that such service shall not be recognized to the extent that such recognition
would result in a duplication of benefits. Except for the commitment to continue those Benefit
Plans of IRGB and its Subsidiaries that correspond to FNB Plans until employees of IRGB and its
Subsidiaries are included in such FNB Plans, nothing herein shall limit the ability of FNB to amend
or terminate any of IRGB’s Benefit Plans in accordance with and to the extent permitted by their
terms at any time permitted by such terms.
(b) At and following the Effective Time, and except as otherwise provided in Section 6.6(d)
FNB shall honor, and the Surviving Company shall continue to be obligated to perform, in accordance
with their terms, all benefit obligations to, and contractual rights of, current and former
employees of IRGB and its Subsidiaries and current and former directors of IRGB and its
Subsidiaries existing as of the Effective Date, as well as all employment, executive severance or
“change-in-control” or similar agreements, plans or policies of IRGB that are set forth on Schedule
6.6(b) of the IRGB Disclosure Schedule, subject to the receipt of any necessary approval from any
Governmental Entity. The severance or termination payments that are payable pursuant to such
agreements, plans or policies of IRGB are set forth on Schedule 6.6(b) of the IRGB Disclosure
Schedule. Following the consummation of the Merger and for one year thereafter, FNB shall, to the
extent not duplicative of other severance benefits, pay employees of IRGB or its Subsidiaries who
are terminated for other than cause, severance as set forth on Schedule 6.6(b) of the FNB
Disclosure Schedule. Following the expiration of the foregoing severance policy, any years of
service recognized for purposes of this Section 6.6(b) will be taken into account under the terms
of any applicable severance policy of FNB or its Subsidiaries.
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(c) At such time as employees of IRGB and its Subsidiaries become eligible to participate in a
medical, dental or health plan of FNB or its Subsidiaries, FNB shall cause each such plan to (i)
waive any preexisting condition limitations to the extent such conditions are covered under the
applicable medical, health or dental plans of FNB and (ii) waive any waiting period limitation or
evidence of insurability requirement that would otherwise be applicable to such employee or
dependent on or after the Effective Time to the extent such employee or dependent had satisfied any
similar limitation or requirement under an analogous Benefit Plan prior to the Effective Time.
(d) Immediately prior to the Effective Time, IRGB shall, at the written request of FNB, freeze
or terminate such of the IRGB Benefit Plans as is requested by FNB.
6.7 Indemnification; Directors’ and Officers’ Insurance.
(a) In the event of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including any such claim, action, suit, proceeding or
investigation (each a “Claim”) in which any individual who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a director or officer of
IRGB or any of its Subsidiaries or who is or was serving at the request of IRGB or any of its
Subsidiaries as a director, officer, employee, member or otherwise of another Person (the
“Indemnified Parties”), is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he is or was a director or
officer of IRGB or any of its Subsidiaries or was serving at the request of IRGB or any of its
Subsidiaries as a director or officer of another Person or (ii) this Agreement or any of the
transactions contemplated by this Agreement, whether asserted or arising before or after the
Effective Time, the parties shall cooperate and use their best efforts to defend against and
respond thereto. From and after the Effective Time, FNB shall, and shall cause the Surviving
Company to, indemnify, defend and hold harmless, as and to the fullest extent currently provided
under applicable law, the IRGB Articles, the IRGB Bylaws and any agreement set forth in Section 6.7
of the IRGB Disclosure Schedule, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reimbursement for reasonable fees and expenses, including
fees and expenses of legal counsel (including local counsel), incurred in advance of the final
disposition of any claim, suit, proceeding or investigation upon receipt of any undertaking
required by applicable law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation.
(b) FNB and the Surviving Company agree that all rights to indemnification of liabilities
(including advancement of expenses), and all limitations with respect thereto, existing in favor of
any Indemnified Person, as provided in the IRGB Articles or the IRGB Bylaws, shall survive the
Merger and shall continue in full force and effect, without any amendment thereto; provided,
however, that in the event any Claim is asserted or made, any determination required to be made
with respect to whether an Indemnified Person’s conduct
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complies with the standards set forth under the PBCL, the IRGB Articles or the IRGB Bylaws, as
the case may be, shall be made by independent legal counsel (whose fees and expenses shall be paid
by FNB and the Surviving Company) selected by such Indemnified Person and reasonably acceptable to
FNB; and provided further that nothing in this Section 6.7 shall impair any rights or obligations
of any current or former director or officer of IRGB or its Subsidiaries, including pursuant to the
respective organizational documents of IRGB, or their respective Subsidiaries, under the PBCL or
otherwise.
(c) Prior to the Effective Time, FNB shall obtain at the expense of IRGB, and FNB shall
maintain for a period of six years following the Effective Time, directors’ and officers’ liability
insurance and fiduciary liability insurance policies in respect of acts or omissions occurring at
or prior to the Effective Time, including the transactions contemplated hereby, covering the
Indemnified Persons who as of the Effective Time are covered by IRGB’s directors’ and officers’
liability insurance or fiduciary liability insurance policies, provided that FNB may substitute
therefor policies of at least the same coverage and amounts containing terms and conditions that
are not less advantageous than such policies of IRGB or single premium tail coverage with policy
limits equal to IRGB’s existing coverage limits, provided that in no event shall FNB be required to
expend for any one year an amount in excess of 150% of the annual premium currently paid by IRGB
for such insurance (the “Insurance Amount”), and further provided that if FNB is unable to maintain
or obtain the insurance called for by this Section 6.7(c) as a result of the preceding provision,
FNB shall use its commercially reasonable best efforts to obtain the most advantageous coverage as
is available for the maximum Insurance Amount. The provisions of the immediately preceding
sentence shall be deemed to have been satisfied if prepaid policies have been obtained prior to the
Effective Time from an insurer or insurers selected by FNB that have an insurer financial strength
rating by A.M. Best Co. of at least “A,” which policies provide the Indemnified Persons with
coverage, from the Effective Time to the sixth anniversary of the Effective Time, including in
respect of the transactions contemplated hereby, on terms that are no less advantageous to
Indemnified Persons than IRGB’s D&O Insurance existing immediately prior to the date hereof. If
such prepaid policies have been obtained prior to the Effective Time, then the FNB shall maintain
such policies in full force and effect and continue the obligations thereunder.
(d) The provisions of this Section 6.7 shall survive the Effective Time and are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.8 Additional Agreements. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement (including any merger
between a Subsidiary of FNB, on the one hand, and a Subsidiary of IRGB, on the other) or to vest
the Surviving Company with full title to all properties, assets, rights, approvals, immunities and
franchises of either party to the Merger, the proper officers and
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directors of each party and their respective Subsidiaries shall take all such necessary action as
may be reasonably requested by, and at the sole expense of, FNB.
6.9 Advice of Changes. Each of FNB and IRGB shall promptly advise the other of any
change or event (i) having or reasonably likely to have a Material Adverse Effect on it or (ii)
that it believes would or would be reasonably likely to cause or constitute a material breach of
any of its representations, warranties or covenants contained in this Agreement; provided, however,
that no such notification shall affect the representations, warranties, covenants or agreements of
the parties (or remedies with respect thereto) or the conditions to the obligations of the parties
under this Agreement; provided, further, that a failure to comply with this Section 6.9 shall not
constitute the failure of any condition set forth in Article VII to be satisfied unless the
underlying Material Adverse Effect or material breach would independently result in the failure of
a condition set forth in Article VII to be satisfied.
6.10 Dividends. After the date of this Agreement, IRGB shall coordinate with FNB the
declaration of any dividends in respect of IRGB Common Stock and the record dates and payment dates
relating thereto such that holders of IRGB Common Stock shall not receive two dividends, or fail to
receive one dividend, for any quarter with respect to their shares of IRGB Common Stock and any
shares of FNB Common Stock any such holder receives in exchange therefor in the Merger.
6.11 Certain Actions.
(a) From the date of this Agreement through the Effective Time, except as otherwise permitted
by this Section 6.11, IRGB will not, and will not authorize or permit any of its directors,
officers, agents, employees, investment bankers, attorneys, accountants, advisors, agents,
affiliates or representatives (collectively, “IRGB Representatives”) to, directly or indirectly,
(i) initiate, solicit, encourage or take any action to facilitate, including by way of furnishing
information, any Acquisition Proposal (as defined in Section 6.11(e)(i)) or any inquiries with
respect to or the making of any Acquisition Proposal, (ii) enter into or participate in any
discussions or negotiations with, furnish any information relating to IRGB or any of its
Subsidiaries or afford access to the business, properties, assets, books or records of IRGB or any
of its Subsidiaries to, otherwise cooperate in any way with, or knowingly assist, participate in,
facilitate or encourage any effort by any third party that is seeking to make, or has made, an
Acquisition Proposal or (iii) except in accordance with Section 8.1(g), approve, endorse or
recommend or enter into any letter of intent or similar document or any contract, agreement or
commitment contemplating or otherwise relating to an Acquisition Proposal.
(b) Notwithstanding anything herein to the contrary, IRGB and its Board of Directors shall be
permitted (i) to comply with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal provided that the Board of Directors of IRGB shall not withdraw
or modify in a manner adverse to FNB the IRGB
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Recommendation except as set forth in subsection (iii) below; (ii) to engage in any
discussions or negotiations with, and provide any information to, any third party in response to a
Superior Proposal (as defined in Section 6.11(e)(ii)) by any such third party, if and only to the
extent that (x) IRGB’s Board of Directors concludes in good faith, after consultation with outside
counsel, that failure to do so could reasonably be expected to breach its fiduciary duties under
applicable law, (y) prior to providing any information or data to any third party in connection
with a Superior Proposal by any such third party, IRGB’s Board of Directors receives from such
third party an executed confidentiality agreement, which confidentiality terms shall be no less
favorable to IRGB than those contained in the Confidentiality Agreement between IRGB and FNB, a
copy of which executed confidentiality agreement shall have been provided to FNB for informational
purposes and (z) at least 72 hours prior to providing any information or data to any third party or
entering into discussions or negotiations with any third party, IRGB promptly notifies FNB in
writing of the name of such third party and the material terms and conditions of any such Superior
Proposal and (iii) to withdraw, modify, qualify in a manner adverse to FNB, condition or refuse to
make the IRGB Recommendation (the “Change in IRGB Recommendation”) if IRGB’s Board of Directors
concludes in good faith, after consultation with outside counsel and financial advisors, that
failure to do so could reasonably be expected to breach its fiduciary duties under applicable law.
(c) IRGB will promptly, and in any event within 24 hours, notify FNB in writing of the receipt
of any Acquisition Proposal or any information related thereto, which notification shall describe
the Acquisition Proposal and identify the third party making the same.
(d) IRGB agrees that it will, and will cause the IRGB Representatives to, immediately cease
and cause to be terminated any activities, discussions or negotiations existing as of the date of
this Agreement with any parties conducted heretofore with respect to any Acquisition Proposal.
(e) For purposes of this Agreement:
(i) The term “Acquisition Proposal” means any inquiry, proposal or offer, filing of any
regulatory application or notice, whether in draft or final form, or disclosure of an intention to
do any of the foregoing from any person relating to any (w) direct or indirect acquisition or
purchase of a business that constitutes a substantial (i.e., 20% or more) portion of the net
revenues, net income or net assets of IRGB and its Subsidiaries, taken as a whole, (x) direct or
indirect acquisition or purchase of IRGB Common Stock after the date of this Agreement by a Person
who on the date of this Agreement does not own 10% or more of IRGB Common Stock and such Person by
reason of such purchase or acquisition first becomes the owner of 10% or more of IRGB Common Stock
after the date of this Agreement or the direct or indirect acquisition or purchase of 5% or more of
IRGB Common Stock after the date of this Agreement by a Person who on the date of this Agreement
owns
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10% or more of IRGB Common Stock, (y) tender offer or exchange offer that if consummated would
result in any Person beneficially owning 10% or more of any class of equity securities of IRGB or
(z) merger, consolidation, business combination, recapitalization, liquidation, dissolution or
similar transaction involving IRGB other than the transactions contemplated by this Agreement.
(ii) The term “Superior Proposal” means any bona fide, unsolicited written Acquisition
Proposal made by a Third Party to acquire more than 50% of the combined voting power of the shares
of IRGB Common Stock then outstanding or all or substantially all of IRGB’s consolidated assets for
consideration consisting of cash and/or securities that is on terms that the Board of Directors of
IRGB in good faith concludes, after consultation with its financial advisors and outside counsel,
taking into account, among other things, all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation, (A) is on terms that the Board of Directors of IRGB in
its good faith judgment believes to be more favorable to IRGB than the Merger; (B) for which
financing, to the extent required, is then fully committed or reasonably determined to be available
by the Board of Directors of IRGB and (C) is reasonably capable of being completed.
(f) If a Payment Event (as defined in Section 6.11(g)) occurs, IRGB shall pay to FNB by wire
transfer of immediately available funds, within two business days following such Payment Event, a
fee of $3,750,000 (the “Break-up Fee”), provided, however, that if a Payment Event occurs, IRGB
shall have no obligation to pay FNB’s expenses under Section 9.3(b).
(g) The term “Payment Event” means any of the following:
(i) the termination of this Agreement by FNB pursuant to Section 8.1(f)(i);
(ii) the termination of this Agreement by IRGB pursuant to Section 8.1(g);
(iii) the termination of this Agreement pursuant to any other Section following the
commencement of a tender offer or exchange offer for 25% or more of the outstanding shares of IRGB
Common Stock and IRGB shall not have sent to its shareholders, within 10 business days after the
commencement of such tender offer or exchange offer, a statement that the Board of Directors of
IRGB recommends rejection of such tender offer or exchange offer; or
(iv) the occurrence of any of the following events within 18 months of the termination of this
Agreement pursuant to Section 8.1(f)(i), provided that an Acquisition Proposal shall have been made
by a Third Party after the date hereof and prior to such
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termination that shall not have been withdrawn in good faith prior to such termination: (A)
IRGB enters into an agreement to merge with or into, or be acquired, directly or indirectly, by
merger or otherwise by, such Third Party; (B) such Third Party, directly or indirectly, acquires
substantially all of the total assets of IRGB and its Subsidiaries, taken as a whole; or (C) such
Third Party, directly or indirectly, acquires more than 50% of the outstanding shares of IRGB
Common Stock. As used herein, “Third Party” means any person as defined in Section 13(d) of the
Exchange Act other than FNB or its affiliates.
(h) IRGB acknowledges that the agreements contained in Section 6.11(e) are an integral part of
the transactions contemplated in this Agreement and that without these agreements FNB would not
enter into this Agreement. Accordingly, in the event IRGB fails to pay to FNB the Break-up Fee,
promptly when due, IRGB shall, in addition thereto, pay to FNB all costs and expenses, including
attorneys’ fees and disbursements, incurred in collecting such Break-up Fee together with interest
on the amount of the Break-up Fee or any unpaid portion thereof, from the date such payment was due
until the date such payment is received by FNB, accrued at the fluctuating prime rate as quoted in
The Wall Street Journal as in effect from time to time during the period.
6.12 Transition. Commencing following the date hereof, FNB and IRGB shall, and shall
cause their respective Subsidiaries to, use their reasonable best efforts to facilitate the
integration, from and after the Closing, of IRGB and its Subsidiaries with the businesses of FNB
and its Subsidiaries, without taking action that would, in effect, give FNB control over the
management or policies of IRGB or any of its Subsidiaries. Without limiting the generality of the
foregoing, from the date hereof through the Closing Date and consistent with the performance of
their day-to-day operations, the continuous operation of IRGB and its Subsidiaries in the ordinary
course of business and applicable law, IRGB shall cause the employees and officers of IRGB and its
Subsidiaries, including the Bank, to cooperate with FNB in performing tasks reasonably required in
connection with such integration.
6.13 Certain Post-Closing Matters.
(a) FNB agrees to take all action necessary to appoint or elect, effective as of the Effective
Time, as a director of FNB Bank one current member of the Board of Directors of IRGB Bank (the
“IRGB Bank Designee”) as is mutually agreed by FNB and IRGB. The IRGB Bank Designee shall serve
until the election of his or her successor. FNB agrees to cause the FNB Bank Board to recommend
and FNB shall vote all of the shares of voting stock held by FNB for the annual reelection of the
IRGB Bank Designee through FNB Bank’s annual meeting of shareholders in 2010.
(b) Effective as of the Closing Date, FNB shall take all action necessary to appoint as
members of the FNB Bank Pittsburgh Advisory Board for at least one full two-year term, three
current members of the Board of Directors of IRGB Bank as are mutually agreed by FNB and IRGB.
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(c) FNB shall use reasonable best efforts to reference or identify IRGB Bank in all
correspondence, communications and information delivered to IRGB Bank customers from the date of
this Agreement through the Closing Date of the Bank Merger.
(d) The commitments set forth in this Section 6.13 shall survive the Effective Time as
reflected in a formal resolution of the FNB Board and the FNB Bank Board to be reflected in the
minutes of FNB as the Surviving Company of the Merger and FNB Bank as the Surviving Bank in the
Bank Merger.
6.14 Tax Representation Letters. Officers of FNB and IRGB shall execute and deliver
to Xxxxx Xxxxxx LLP, tax counsel to FNB, and Xxxxx Day, tax counsel to IRGB, “Tax Representation
Letters” substantially in the form agreed to by the parties and such law firms at such time or
times as may be reasonably requested by such law firms, including at the time the Proxy Statement
and Registration Statement are declared effective by the SEC and at the Effective Time, in
connection with such tax counsel’s delivery of opinions pursuant to Section 7.2(c) and Section
7.3(c) hereof.
ARTICLE
7
CONDITIONS PRECEDENT
7.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective
obligations of the parties to effect the Merger shall be subject to the satisfaction or waiver,
where permitted by applicable law, at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement and the Merger contemplated hereby shall
have been approved and adopted by the requisite affirmative vote of the holders of IRGB Common
Stock entitled to vote thereon.
(b) NYSE Listing. The shares of FNB Common Stock to be issued to the holders of IRGB
Common Stock upon consummation of the Merger shall have been authorized for listing on the NYSE,
subject to official notice of issuance, provided FNB shall have used its reasonable best efforts to
cause such authorization of listing on the NYSE.
(c) Regulatory Approvals. All regulatory approvals set forth in Sections 3.4 and 4.4
required to consummate the transactions contemplated by this Agreement, including the Merger, shall
have been obtained and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all such waiting
periods being referred as the “Requisite Regulatory Approvals”).
(d) Registration Statement. The Registration Statement shall have become effective
under the Securities Act and no stop order suspending the effectiveness of the
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Registration Statement shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or decree issued
by any court or agency of competent jurisdiction or other legal restraint or prohibition (an
“Injunction”) preventing the consummation of the Merger or any of the other transactions
contemplated by this Agreement shall be in effect, provided FNB shall have used its reasonable best
efforts to have removed, lifted or resolved such legal restraint or prohibition. No statute, rule,
regulation, order, Injunction or decree shall have been enacted, entered, promulgated or enforced
by any Governmental Entity that prohibits or makes illegal consummation of the Merger.
7.2 Conditions to Obligation of FNB to Effect the Merger. The obligation of FNB to
effect the Merger is also subject to the satisfaction or waiver by FNB, where permitted by
applicable law, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and warranties of IRGB
contained in this Agreement that are qualified by materiality or contained in Section 3.2 shall be
true and correct as of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date and the representations and warranties of IRGB contained in this Agreement
that are not so qualified shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing Date (except in each
case to the extent any such representation or warranty expressly speaks as of an earlier specified
date, in which case, as of such date), except in each case where the failure of the representations
and warranties (other than the representations and warranties set forth in Section 3.2) to be so
true and correct (without giving effect to any qualification as to “material,” “materiality,”
“material adverse effect” or similar qualifications) are not, individually or in the aggregate,
reasonably likely to result in a Material Adverse Effect on IRGB; and FNB shall have received a
certificate signed on behalf of IRGB by the Chief Executive Officer or the Chief Financial Officer
of IRGB to the foregoing effect.
(b) Performance of Obligations of IRGB. IRGB shall have performed in all material
respects all obligations required to be performed by it under this Agreement at or prior to the
Closing Date; and FNB shall have received a certificate signed on behalf of IRGB by the Chief
Executive Officer or the Chief Financial Officer of IRGB to such effect.
(c) Federal Tax Opinion. FNB shall have received the opinion of its counsel, Xxxxx
Xxxxxx LLP, in form and substance reasonably satisfactory to FNB, dated the Closing Date, to the
effect that, on the basis of facts, representations and assumptions set forth in such opinion, the
Merger will be treated as a reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, counsel may require and rely upon representations contained in certificates
of officers of IRGB and FNB, reasonably satisfactory in form and substance to it.
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(d) Environmental Reports. At the request of FNB, IRGB shall have furnished FNB with
a Phase I environmental study with respect to all real property owned by IRGB or any of its
Subsidiaries (which Phase I environmental study shall be at the sole cost and expense of FNB), the
findings of which shall be commercially acceptable to FNB who shall not unreasonably withhold such
acceptance.
(e) No Materially Burdensome Regulatory Condition. None of the Requisite Regulatory
Approvals shall have resulted in the imposition of a Materially Burdensome Regulatory Condition.
7.3 Conditions to Obligation of IRGB to Effect the Merger. The obligation of IRGB to
effect the Merger is also subject to the satisfaction or waiver by IRGB, where permitted by
applicable law, at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of FNB
contained in this Agreement that are qualified by materiality shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as of the Closing Date and
the representations and warranties of FNB contained in this Agreement that are not so qualified
shall be true and correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except in each case to the extent any
such representation or warranty expressly speaks as of an earlier specified date, in which case, as
of such date), except in each case where the failure of the representations and warranties to be so
true and correct (without giving effect to any qualification as to “material,” “materiality,”
“material adverse effect” or similar qualifications) are not, individually or in the aggregate,
reasonably likely to result in a Material Adverse Effect on FNB; and IRGB shall have received a
certificate signed on behalf of FNB by the Chief Executive Officer or the Chief Financial Officer
of FNB to the foregoing effect.
(b) Performance of Obligations of FNB. FNB shall have performed in all material
respects all obligations required to be performed by it under this Agreement at or prior to the
Closing Date, and IRGB shall have received a certificate signed on behalf of FNB by the Chief
Executive Officer or the Chief Financial Officer of FNB to such effect.
(c) Federal Tax Opinion. IRGB shall have received the opinion of its counsel, Xxxxx
Day, in form and substance reasonably satisfactory to IRGB, dated the Closing Date, to the effect
that, on the basis of facts, representations and assumptions set forth in such opinion, the Merger
will be treated as a reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, counsel may require and rely upon representations contained in certificates of
officers of IRGB and FNB, reasonably satisfactory in form and substance to it.
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ARTICLE
8
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to the Effective
Date, and the Merger may be abandoned:
(a) Mutual Consent. By the mutual consent in writing of FNB and IRGB if the Board of
Directors of each so determines by vote of a majority of the members of its entire Board.
(b) Breach.
(i) By FNB, if (A) any of the representations and warranties of IRGB contained in this
Agreement shall fail to be true and correct such that the condition set forth in Section 7.2(a)
would not be satisfied or (B) IRGB shall have breached or failed to comply with any of its
obligations under this Agreement such that the conditions set forth in Sections 7.1 or 7.2(b) would
not be satisfied, in either case other than as a result of a material breach by FNB of any of its
obligations under this Agreement and such failure or breach with respect to any such
representation, warranty or obligation cannot be cured, or, if curable, shall continue unremedied
for a period of 30 days after IRGB has received written notice from FNB of the occurrence of such
failure or breach, but in no event shall such 30-day period extend beyond November 30, 2008.
(ii) By IRGB, if (A) any of the representations and warranties of FNB contained in this
Agreement shall fail to be true and correct such that the condition set forth in Section 7.3(a)
would not be satisfied or (B) FNB shall have breached or failed to comply with any of its
obligations under this Agreement such that the conditions set forth in Sections 7.1 or 7.3(b) would
not be satisfied, in either case other than as a result of a material breach by IRGB of any of its
obligations under this Agreement and such failure or breach with respect to any such
representation, warranty or obligation cannot be cured, or, if curable, shall continue unremedied
for a period of 30 days after FNB has received written notice from IRGB of the occurrence of such
failure or breach, but in no event shall such 30-day period extend beyond November 30, 2008.
(c) Delay. By FNB or IRGB, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event that the Merger is not consummated on or
before 5:00 p.m., Eastern Daylight Time on November 30, 2008, except to the extent that the failure
of the Merger then to be consummated by such date shall be due to the failure of the party seeking
to terminate pursuant to this Section 8.1(c) to perform or observe the covenants and agreements of
such party set forth in this Agreement.
(d) No Regulatory Approval. By FNB or IRGB, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, in the event the
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approval of any Governmental Entity required for consummation of the Merger contemplated by
this Agreement shall have been denied by final nonappealable action of such Governmental Entity or
an application therefor shall have been permanently withdrawn at the request of a Governmental
Entity, provided, however, that no party shall have the right to terminate this Agreement pursuant
to this Section 8.1(d) if such denial shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants of such party set forth herein.
(e) No IRGB Shareholder Approval. By FNB, or by IRGB provided that IRGB shall not be
in material breach of any of its obligations under Section 6.3, if any approval of the shareholders
of IRGB contemplated by this Agreement shall not have been obtained by reason of the failure to
obtain the required vote at the IRGB Shareholder Meeting or at any adjournment or postponement
thereof.
(f) Failure to Recommend. At any time prior to the IRGB Shareholder Meeting, by FNB
if (i) IRGB shall have breached Section 6.3 in any respect materially adverse to FNB, (ii) the IRGB
Board of Directors shall have failed to make the IRGB Recommendation or shall have effected a
Change in IRGB Recommendation, (iii) the IRGB Board shall have recommended approval of an
Acquisition Proposal or (iv) IRGB shall have materially breached its obligations under Section 6.3
by failing to call, give notice of, convene and hold the IRGB Shareholder Meeting.
(g) Superior Proposal. At any time prior to the date of mailing of the Proxy
Statement, by IRGB in order to enter concurrently into an Acquisition Proposal that has been
received by IRGB and the IRGB Board of Directors in compliance with Sections 6.11(a) and (b) and
that IRGB’s Board of Directors concludes in good faith, in consultation with its financial and
legal advisors, that such Acquisition Proposal is a Superior Proposal; provided, however, that this
Agreement may be terminated by IRGB pursuant to this Section 8.1(g) only after the fifth business
day following IRGB’s provision of written notice to FNB advising FNB, that the IRGB Board of
Directors is prepared to accept a Superior Proposal (it being agreed that the delivery of such
notice shall not entitle FNB to terminate this Agreement pursuant to Section 8.1(g)) and only if
(i) during such five-business day period, IRGB has caused its financial and legal advisors to
negotiate with FNB in good faith to make such adjustments in the terms and conditions of this
Agreement such that such Acquisition Proposal would no longer constitute a Superior Proposal, (ii)
IRGB’s Board of Directors has considered such adjustments in the terms and conditions of this
Agreement resulting from such negotiations and has concluded in good faith, based upon consultation
with its financial and legal advisers, that such Acquisition Proposal remains a Superior Proposal
even after giving effect to the adjustments proposed by FNB and further provided that such
termination shall not be effective until IRGB has paid the Break-up Fee to FNB.
(h) By IRGB at any time during the two-day period following the Determination Date, if both of
the following conditions (i) and (ii) are satisfied:
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(i) the Average Closing Price (as defined below) shall be less than the product of 0.800 and
the Starting Price; and
(ii) (A) the number obtained by dividing the Average Closing Price by the Starting Price (such
number being referred to herein as the “Buyer Ratio”) shall be less than (B) the number obtained by
dividing the Index Price on the Determination Date by the Index Price on the Starting Date (as
defined below) and subtracting 0.200 from such quotient (such number being referred to herein as
the “Index Ratio”);
subject to the following. If IRGB elects to exercise its termination right pursuant to the
immediately preceding sentence, it shall give prompt written notice to FNB; provided that such
notice of election to terminate may be withdrawn at any time within the aforementioned two-day
period. During the period commencing with its receipt of such notice and ending at the Effective
Time, FNB shall have the option of increasing the Exchange Ratio and/or the Cash Consideration in a
manner such, and to the extent required, so that the condition set forth in either clause (i) or
(ii) above shall be deemed not to exist.
For purposes hereof, the condition set forth in clause (i) above shall be deemed not to exist
if:
• | the Exchange Ratio and/or the Cash Consideration is increased so that the Per Share Consideration (calculated by using the Average Closing Price, as provided in the definition of “Per Share Consideration”) after such increase is not less than 89% of the Per Share Consideration calculated by using the Starting Price in lieu of the Average Closing Price. |
For purposes hereof, the condition set forth in clause (ii) above shall be deemed not to exist
if:
• | the Exchange Ratio and/or the Cash Consideration is increased so that the Adjusted Buyer Ratio is not less than the Index Ratio. |
if FNB makes this election, within such period, it shall give prompt written notice to IRGB of such
election and the revised Exchange Ratio and/or Cash Consideration, whereupon no termination shall
have occurred pursuant to this Section 8.1(h) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio and/or Cash Consideration, and derivatively
the Stock Consideration and/or Total Cash Amount, shall have been so modified), and any references
in this Agreement to “Exchange Ratio,” “Cash Consideration,” “Stock Consideration” and “Total Cash
Amount” shall thereafter be deemed to refer to the Exchange Ratio, Cash Consideration, Stock
Consideration and Total Cash Amount after giving effect to any adjustment made pursuant to this
Section 8.1(h). For purposes of this Section 8.1(h), the following terms shall have the
meanings indicated:
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“Adjusted Buyer Ratio” means the number obtained by dividing (x) the sum of (A) the
Average Closing Price plus (B) the quotient obtained by dividing the aggregate increase in
transaction value resulting from an increase in the Exchange Ratio and/or the Cash Consideration by
the total number of shares of Seller Common Stock outstanding multiplied by the initial Exchange
Ratio and the percentage offered as stock (55%), on the Determination Date, by (y) the Starting
Price. For purposes of calculating the increase in transaction value, the price per share of Buyer
Common Stock shall be deemed to be the Average Closing Price.
“Average Closing Price” means the average of the last reported sale prices per share
of Buyer Common Stock as reported on the NYSE (as reported in The Wall Street Journal or, if not
reported therein, in another mutually agreed upon authoritative source) for the twenty consecutive
trading days immediately preceding the Determination Date, rounded to the nearest cent.
“Determination Date” shall mean the fifth calendar day immediately prior to the
Effective Time, or if such calendar day is not a trading day on the NYSE, then the trading day
immediately preceding such calendar day.
“Index Price” on a given date means the closing price of the NASDAQ Bank Index.
“Per Share Consideration” means the sum of (i) 55% of the product of Stock
Consideration times the Average Closing Price plus (ii) 45% of the Cash Consideration.
“Starting Date” means the trading day on the NYSE preceding the day on which the
parties publicly announce the signing of this Agreement.
“Starting Price” means $14.92.
If FNB declares or effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of FNB shall be appropriately adjusted for the
purposes of applying this Section 8.1(h).
8.2 Effect of Termination. In the event of termination of this Agreement by either
FNB or IRGB as provided in Section 8.1, this Agreement shall forthwith become void and have no
effect except (i) Sections 6.1(g), 6.2(b), 6.11(f)-(h), 8.2, 8.3, 9.3 and 9.8 shall survive any
termination of this Agreement and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liability or damages arising out of its
willful breach of any of the provisions of this Agreement.
8.3 Amendment. Subject to compliance with applicable law and Section 1.1(b), this
Agreement may be amended by the parties, by action taken or authorized by their respective Boards
of Directors at any time before or after approval of the matters presented in connection with
Merger by the shareholders of IRGB or the shareholders of FNB; provided,
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however, that after any approval of the transactions contemplated by this Agreement by the
shareholders of IRGB and FNB, there may not be, without further approval of their shareholders, any
amendment of this Agreement that requires such further approval under applicable law. This
Agreement may not be amended except by an instrument in writing signed on behalf of each of the
parties.
8.4 Extension; Waiver. At any time prior to the Effective Time, the parties, by
action taken or authorized by their respective Board of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties contained in this
Agreement and (iii) waive compliance with any of the agreements or conditions contained in this
Agreement; provided, however, that after any approval of the transactions contemplated by this
Agreement by the shareholders of IRGB, there may not be, without further approval of their
shareholders, any extension or waiver of this Agreement or any portion hereof that changes the
amount or form of the consideration to be delivered to the holders of IRGB Common Stock and the
holders of FNB Common Stock under this Agreement, other than as contemplated by this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE 9
GENERAL PROVISIONS
9.1 Closing. On the terms and subject to conditions set forth in this Agreement, the
closing of the Merger (the “Closing”) shall take place at 10:00 a.m. on a date and at a place to
be specified by the parties, which date shall be no later than five business days after the
satisfaction or waiver (subject to applicable law) of the latest to occur of the conditions set
forth in Article VII (other than those conditions that by their nature are to be satisfied or
waived at the Closing), unless extended by mutual written agreement of the parties (the “Closing
Date”).
9.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements set forth in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective Time, except for
Articles I , II and IX and Sections 6.6, 6.7, 6.8 and 6.13.
9.3 Expenses.
(a) Each party hereto will bear all expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby, including fees and expenses of its
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own financial consultants, accountants and counsel, except that expenses of printing the Proxy
Statement and the registration fee to be paid to the SEC in connection with the Registration
Statement shall be shared equally between IRGB and FNB, and provided further that nothing contained
herein shall limit either party’s rights to recover any liabilities or damages arising out of the
other party’s willful breach of any provision of this Agreement.
(b) In the event that this Agreement is terminated by:
(i) FNB pursuant to Section 8.1(b)(i);
(ii) IRGB pursuant to Section 8.1(b)(ii); or
(iii) FNB pursuant to Section 8.1(e),
then the non-terminating party shall pay to the terminating party by wire transfer of immediately
available funds, within two business days following delivery of a statement of such expenses, all
out-of-pocket costs and expenses, up to a maximum of $500,000, including without limitation,
professional fees of legal counsel, financial advisors and accountants, and their expenses,
actually incurred by the terminating party in connection with the Merger and this Agreement.
9.4 Notices. All notices and other communications in connection with this Agreement
shall be in writing and shall be deemed given if delivered personally, sent via facsimile, with
confirmation, mailed by registered or certified mail, return receipt requested, or delivered by an
express courier, with confirmation, to the parties at the following addresses or at such other
address for a party as shall be specified by like notice:
(a) if to IRGB, to:
Iron & Glass Bancorp, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxx
Facsimile:
Facsimile:
with a copy to:
Xxxxx Day
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx Xxxxx
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
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(b) if to FNB, to:
F.N.B. Corporation
Xxx X.X.X. Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile (000) 000-0000
Xxx X.X.X. Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile (000) 000-0000
with a copy to:
Xxxxx Xxxxxx LLP
00 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
00 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
9.5 Interpretation. When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule
to this Agreement unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without limitation.” The IRGB
Disclosure Schedule and the FNB Disclosure Schedule, as well as all other schedules and all
exhibits hereto, shall be deemed part of this Agreement and included in any reference to this
Agreement. This Agreement shall not be interpreted or construed to require any person to take any
action, or fail to take any action, if to do so would violate any applicable law. Herein,
“knowledge” or “Knowledge” means the knowledge as of the date referenced of executive officers of
the applicable party following inquiry of persons within their organization and its Subsidiaries
who would be reasonably expected to be knowledgeable about the relevant subject matter.
9.6 Counterparts. This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective when counterparts
have been signed by each of the parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
9.7 Entire Agreement. This Agreement, including the documents and the instruments
referred to in this Agreement, together with the Confidentiality Agreement, constitutes the entire
agreement and supersedes all prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter of this Agreement, other than the Confidentiality
Agreement.
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9.8 Governing Law; Jurisdiction.
(a) This Agreement, the Merger and all claims arising hereunder or relating hereto, shall be
governed and construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the principles of conflicts of law thereof.
(b) Each of the parties hereto irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any Pennsylvania state court or the United States
District Court for the Western District of Pennsylvania, in any action or proceeding arising out of
or relating to this Agreement. Each of the parties hereto agrees that, subject to rights with
respect to post-trial motions and rights of appeal or other avenues of review, a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Each of the parties hereto
irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so,
any objection that it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any Pennsylvania state court or the
United States District Court for the Western District of Pennsylvania. Each of the parties hereto
irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so,
the defense of an inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II)
EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES
THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.8.
9.9 Severability. Except to the extent that application of this Section 9.9 would
have a Material Adverse Effect on IRGB or FNB, any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or enforceability
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of any of the terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable. In all such cases, the parties shall use their reasonable
best efforts to substitute a valid, legal and enforceable provision that, insofar as practicable,
implements the original purposes and intents of this Agreement.
9.10 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned by either of the parties
(whether by operation of law or otherwise) without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by each of the parties and their respective successors and assigns. Except as
otherwise specifically provided in Section 6.7 and 6.13, this Agreement (including the documents
and instruments referred to in this Agreement) is not intended to and does not confer upon any
person other than the parties hereto any rights or remedies under this Agreement.
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IN WITNESS WHEREOF, the duly authorized officers of F.N.B. Corporation and Iron & Glass
Bancorp, Inc. have executed this Agreement as of the date first above written.
F.N.B. CORPORATION |
||||
By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
Xxxxxxx X. Xxxxxxxxx, | ||||
Chairman and Chief Executive Officer | ||||
IRON & GLASS BANCORP, INC. |
||||
By: | /s/ Xxxxxxx X. Xxxxx | |||
Xxxxxxx X. Xxxxx, | ||||
President and Chief Executive Officer | ||||
By: | /s/ Xxxxxx X. Xxxxx | |||
Xxxxxx X. Xxxxx, | ||||
Chairman of the Board | ||||
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