EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 21, 2005, is
made by and between Tower Bancorp, Inc., a Pennsylvania corporation ("Tower"),
and FNB Financial Corporation, a Pennsylvania corporation ("FNB").
BACKGROUND
1. FNB owns directly all of the outstanding capital stock of The First
National Bank of McConnellsburg, a national banking association ("Bank").
2. Tower owns directly all of the outstanding capital stock of First
National Bank of Greencastle, a national banking association ("Greencastle").
3. Tower and FNB desire for FNB to merge with and into Tower, with
Tower surviving the merger, in accordance with the applicable laws of the
Commonwealth of Pennsylvania and this Agreement.
4. As a condition and inducement to Tower to enter into this Agreement,
the directors, certain officers, and shareholders with ownership interests in
excess of ten percent (10%) of FNB are each concurrently executing a Voting
Agreement in the form attached hereto as Exhibit A (the "Voting Agreement").
5. Each of the parties, by signing this Agreement, adopts it as a plan
of reorganization as defined in IRC Section 368(a), and intends the Merger to be
a reorganization as defined in IRC Section 368(a).
6. Tower and FNB desire to provide for certain undertakings,
conditions, representations, warranties, and covenants in connection with the
transactions contemplated hereby and governing the transactions contemplated
herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
parties, intending to be legally bound hereby, agree as follows:
ARTICLE I - GENERAL
Section 1.01 - Definitions.
As used in this Agreement, the following terms shall have the indicated
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
Acquisition Proposal has the meaning given to the term in Section 5.06
of this Agreement.
Affiliate means, with respect to any corporation, any person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the corporation and, without
limiting the generality of the foregoing, includes any executive officer,
director or 10% equity owner of the corporation.
Aggregate Cash Consideration means the number of shares of FNB Common
Stock to be converted into the right to receive the Cash Consideration on the
Effective Date.
Aggregate Common Stock Consideration means the number of shares of FNB
Common Stock to be converted into the right to receive the Common Stock
Consideration on the Effective Date.
Aggregate Merger Consideration means the sum of the Aggregate Cash
Consideration and the Aggregate Common Stock Consideration.
Agreement means this Agreement and Plan of Merger, including any
amendment or supplement hereto.
Application means an application for regulatory approval, which is
required by the Contemplated Transactions.
Articles of Merger mean the articles of merger to be executed by Tower
and FNB and to be filed with the PDS, in accordance with the provisions of the
BCL.
Average Closing Price means the arithmetic average of the per share
last prices for Tower Common Stock as quoted on the OTC Bulletin Board,
calculated to four decimal places, for each trading day during the Determination
Period immediately preceding the Determination Date. For the purposes of this
Agreement, the last price for each day shall be the last price as quoted as of
the end of a trading day on xxx.xxxxx.xxx.
Bank has the meaning given to such term in the Background Section of
this Agreement.
BCL means the Pennsylvania Business Corporation Law of 1988, as
amended.
BHC Act means the Bank Holding Company Act of 1956, as amended.
Business Day means any day other than (i) a Saturday or Sunday or (ii)
a day on which Greencastle or Bank is authorized or obligated by law or
executive order to close.
Cash Consideration has the meaning given to the term in Section
2.02(a)(ii) of this Agreement.
Cash Election means an Election to receive the Cash Consideration with
respect to all or a portion of a holder's shares of FNB Common Stock.
Cash Election Shares has the meaning given to the term in Section
2.02(b)(ii) of this Agreement.
CERCLA means the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended.
Closing has the meaning given to the term in Section 1.02(a) of this
Agreement.
Closing Date means the date on which the last condition precedent
provided in this Agreement (other than those conditions which are to be
fulfilled at the closing) has been fulfilled or waived, or as soon as
practicable thereafter.
Common Stock Consideration has the meaning given to the term in Section
2.02(a)(i) of this Agreement.
Common Stock Election means an Election to receive the Common Stock
Consideration with respect to all or a portion of a holder's shares of FNB
Common Stock.
Common Stock Election Shares has the meaning given to the term in
Section 2.02(b)(i) of this Agreement.
Contemplated Transactions means all of the transactions contemplated by
this Agreement, including: (a) the merger of FNB with and into Tower, with Tower
surviving such merger; and (b) the performance by Tower and FNB of their
respective covenants and obligations under this Agreement.
Costs has the meaning given to the term in Section 5.08(c)(iv)(A) of
this Agreement.
CRA means the Community Reinvestment Act of 1977, as amended, and the
rules and regulations promulgated from time to time thereunder.
Determination Date means the Business Day which is three (3) Business
Days immediately prior to the Closing Date.
Determination Period means the fifteen (15) trading days ending on the
Determination Date.
Dissenting FNB Shares has the meaning given to the term in Section
2.05(a) of this Agreement.
Dissenting Tower Shares has the meaning given the term in Section 2.06
of this Agreement.
Effective Date means the date upon which the Articles of Merger shall
be filed in the PDS and shall be the same as the Closing Date or as soon
thereafter as is practicable.
Election means either a Common Stock Election, a Cash Election or a
Mixed Election.
Election Deadline means 5:00 p.m., prevailing Eastern Time, on the day
that is five (5) Business Days prior to the Closing Date.
Election Form means a form, in such form as Tower and FNB shall
mutually agree, on which holders of FNB Common Stock shall make an Election.
Environmental Law means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any Regulatory
Authority relating to (i) the protection, preservation or restoration of the
environment, including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource, and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated for the protection of human health, safety or the
environment, whether by type or by quantity, including any material containing
any such substance as a component.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended and the regulations promulgated thereunder.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated from time to time thereunder.
Exchange Agent means the agent designated by Tower (as soon as
practicable following execution of this Agreement) to act as the exchange agent
for purposes of conducting the election procedures described in Section 2.02(b)
and the exchange procedure described in Section 2.07.
Exchange Fund has the meaning given to the term in Section 2.07(a).
Exchange Ratio means the exchange ratio set forth in Section
2.02(a)(i), as it may be adjusted pursuant to Section 2.08.
FDIC means the Federal Deposit Insurance Corporation.
FNB has the meaning given to the term in the preamble section of this
Agreement.
FNB Benefit Plans means any employee pension benefit plans within the
meaning of ERISA Section 3(2), profit sharing plans, stock purchase plans,
deferred compensation and supplemental income plans, supplemental executive
retirement plans, annual incentive plans, group insurance plans, and all other
employee welfare benefit plans within the meaning of ERISA Section 3(1)
(including vacation pay, sick leave, short-term disability, long-term
disability, and medical plans) and all other employee benefit plans, policies,
agreements and arrangements currently maintained or contributed to for the
benefit of the employees or former employees (including retired employees) and
any beneficiaries thereof or directors or former directors of FNB or any other
entity that, together with FNB, is treated as a single employer under IRC
Sections 414(b),(c),(m) or (o).
FNB Certificate means a certificate that immediately prior to the
Effective Date represented issued and outstanding shares of FNB Common Stock.
FNB Common Stock has the meaning given to the term in Section 3.02(a)
of this Agreement.
FNB Disclosure Schedule means, collectively, the disclosure schedules
delivered by FNB to Tower at or prior to the execution and delivery of this
Agreement.
FNB ERISA Affiliate means any entity that, together with FNB, is
treated as a single employer under IRC Sections 414(b), (c), (m) or (o).
FNB Financials means (a) the consolidated balance sheets of FNB at
December 31, 2004 and 2003 and consolidated statements of income, statements of
stockholders' equity, and consolidated statements of cash flows for FNB for the
years ended December 31, 2004, 2003 and 2002 as audited by Xxxxx Xxxxxxx Xxxxxx
& Company, LLC and as set forth in its annual report on Form 10-K; and (b) the
quarterly call reports of FNB and material representations attached to the call
report of FNB and FNB's quarterly report on Form 10-Q for each calendar quarter
commencing with the quarter ended June 30, 2005, to be delivered within 45 days
after the end of the respective quarter; and (c) unaudited consolidated
financial statements for each month end, commencing with month ended July 31,
2005 to be delivered within 15 days after the end of the respective month.
FNB Nominees has the meaning given to the term in Section 1.02(d)(i) of
this Agreement.
FNB Regulatory Agreement has the meaning given to the term in Section
3.11(d)(iv).
FNB Shareholders Meeting means the meeting of the holders of FNB Common
Stock concerning the Merger pursuant to the Prospectus/Proxy Statement.
FRB means Board of Governors of the Federal Reserve Board.
GAAP means accounting principles generally accepted in the United
States.
Greencastle has such meaning given to such term in the Background
Section of this Agreement.
Indemnified Party has the meaning given to such term in Section
5.08(c)(iv)(A) of this Agreement.
IRC means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
IRS means the Internal Revenue Service.
Knowledge of Tower means the knowledge of Tower's executive officers
and directors.
Knowledge of FNB means the knowledge of FNB's executive officers and
directors.
Material Adverse Effect means a material adverse effect on the assets,
financial condition, or results of operations of FNB on a consolidated basis
(when the term is used in Article III hereof) or Tower on a consolidated basis
(when the term is used in Article IV hereof) other than, in each case, any
change, circumstance or effect relating to (i) any change in the value of the
respective investment portfolios of Tower or FNB resulting from a change in
interest rates generally, (ii) any change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP or applicable regulatory
accounting principles, which change affects banking institutions generally,
including any change affecting the Bank Insurance Fund, (iii) changes in general
economic (except in the context of determining a Material Adverse Effect for
purposes of asset quality), legal, regulatory or political conditions affecting
banking institutions generally, (iv) reasonable expenses incurred in connection
with this Agreement and the transactions contemplated hereby, (v) actions or
omissions of a party (or any of its Subsidiaries) taken pursuant to the terms of
this Agreement with the prior written consent of the other party in
contemplation of the transactions contemplated hereby (including without
limitation any actions taken by FNB pursuant to Section 5.08 of this Agreement),
and (vi) any effect with respect to a party hereto caused, in whole or in
substantial part, by the other party.
Merger means the merger of FNB with and into Tower, pursuant to the
provisions of the BCL, whereupon (i) the separate existence of FNB shall cease
and Tower shall be the surviving corporation and (ii) all of the outstanding
shares of FNB Common Stock will be converted into the right to receive the
Merger Consideration as contemplated by this Agreement.
Merger Consideration has the meaning given to such term in Section
2.02(a)(ii) of this Agreement.
Mixed Election has the meaning given the term in Section 2.02(c) of
this Agreement.
No-Election Shares has the meaning given to such term in Section
2.02(b) of this Agreement.
OCC means the Office of the Comptroller of the Currency.
PDB means the Department of Banking of the Commonwealth of
Pennsylvania.
PDS means the Department of State of the Commonwealth of Pennsylvania.
Prospectus/Proxy Statement means the prospectus/proxy statement,
together with any supplements thereto, to be sent to holders of FNB Common Stock
and holders of Tower Common Stock in connection with the Contemplated
Transactions.
Reallocated Common Stock Shares has the meaning given to the term in
Section 2.02(e)(ii)(C) of this Agreement.
Registration Statement means the registration statement on Form S-4,
including any pre-effective or post-effective amendments or supplements thereto,
as filed with the SEC under the Securities Act with respect to the Tower Common
Stock to be issued in connection with the Contemplated Transactions.
Regulatory Authority means any agency or department of any federal,
state or local government or of any self-regulatory organization, including
without limitation the SEC, the OCC, the PDB, the FRB, the FDIC, and the
respective staffs thereof.
Rights means warrants, options, rights, convertible securities and
other capital stock equivalents which obligate an entity to issue its
securities.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time thereunder.
Securities Documents means all registration statements, schedules,
statements, forms, reports, proxy material, and other documents required to be
filed under the Securities Laws.
Securities Laws means the Securities Act and the Exchange Act and the
rules and regulations promulgated from time to time thereunder.
Subsidiary means any entity, 50% or more of the equity interest of
which is owned, either directly or indirectly, by another entity, except any
entity, the interest in which is held in the ordinary course of the lending or
fiduciary activities of a bank.
Superior Proposal has the meaning given to the term in Section
5.08(a)(i) of this Agreement.
Tower has the meaning given to the term in the preamble section of this
Agreement.
Tower Benefit Plan means any employee pension benefit plans within the
meaning of ERISA Section 3(2), profit sharing plans, stock purchase plans,
deferred compensation and supplemental income plans, supplemental executive
retirement plans, annual incentive plans, group insurance plans, and all other
employee welfare benefit plans within the meaning of ERISA Section 3(1)
(including vacation pay, sick leave, short-term disability, long-term
disability, and medical plans) and all other material employee benefit plans,
policies, agreements and arrangements currently maintained or contributed to for
the benefit of the employees or former employees (including retired employees)
and any beneficiaries thereof or directors or former directors of Tower or any
other entity that, together with Tower, is treated as a single employer under
IRC Sections 414(b),(c),(m) or (o).
Tower Certificate has the meaning given to the term in Section 2.07(d)
of this Agreement.
Tower Common Stock has the meaning given to the term in Section 4.02(a)
of this Agreement.
Tower Disclosure Schedule means, collectively, the disclosure schedules
delivered by Tower to FNB at or prior to the execution and delivery of this
Agreement.
Tower ERISA Affiliate means any entity that, together with Tower, is
treated as a single employer under IRC Sections 414(b),(c),(m) or (o).
Tower Financials means (a) the consolidated balance sheets of Tower at
December 31, 2004 and 2003 and consolidated statements of income, statements of
stockholders' equity, and consolidated statements of cash flows for Tower for
the years ended December 31, 2004, 2003 and 2002 as audited by Xxxxx Xxxxxxx
Xxxxxx & Company, LLC and as set forth in its annual report on Form 10-K; and
(b) the quarterly call reports of Tower and material representations attached to
the call report of Tower and Tower's quarterly report on Form 10-Q for each
calendar quarter commencing with the quarter ended June 30, 2005, to be
delivered within 45 days after the end of the respective quarter; and (c)
unaudited consolidated financial statements for each month end, commencing with
month ended July 31, 2005 to be delivered within 15 days after the end of the
respective month.
Tower Regulatory Agreement has the meaning given to the term in Section
4.12(d)(iv).
. Tower Shareholders Meeting means the meeting of the holders of Tower
Common Stock concerning the Merger pursuant to the Prospectus/Proxy Statement.
Voting Agreement has the meaning given to the term in the Background
Section of this Agreement.
Section 1.02 - The Merger.
(a) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place on the Closing Date at a
time and place to be agreed upon by the parties hereto; provided,
in any case, that all conditions to closing set forth in Article
VI of this Agreement (other than the delivery of certificates,
opinions, and other instruments and documents to be delivered at
the Closing) have been satisfied or waived at or prior to the
Closing Date.
(b) The Merger. Subject to the terms and conditions of this Agreement
and in accordance with the BCL, on the Effective Date:
(i) FNB shall merge with and into Tower;
(ii) The separate existence of FNB shall cease;
(iii) Tower shall be the surviving corporation in the Merger;
(iv) Each share of FNB Common Stock issued and outstanding prior
to the Effective Date shall be converted into the right to
receive either Common Stock Consideration or Cash
Consideration as provided in Article II of this Agreement;
and
(v) All of the property (real, personal and mixed), rights,
powers, duties, obligations and liabilities of FNB shall be
taken and deemed to be transferred to and vested in Tower,
as the surviving corporation in the Merger, without further
act or deed;
all in accordance with the applicable laws of the Commonwealth of
Pennsylvania.
(c) Tower's Articles of Incorporation and Bylaws. On and after the
Effective Date, the articles of incorporation and bylaws of Tower,
as in effect immediately prior to the Effective Date, shall
automatically be and remain the articles of incorporation and
bylaws of Tower, as the surviving corporation in the Merger, until
thereafter altered, amended or repealed.
(d) Tower's Board of Directors and Officers.
(i) On and after the Effective Date, (A) the directors of Tower
duly elected and holding office immediately prior to the
Effective Date, and (B) three (3) persons (the "FNB
Nominees") selected by FNB's Board of Directors and subject
to:
(1) compliance with the Tower bylaws,
(2) two (2) of the FNB Nominees meeting the board of
director and audit committee standards for
"independence" as defined by SEC Rule 10A-3 and Nasdaq
Rules 4200 and 4350 and any successor thereto,
(3) the FNB Nominees meeting the eligibility requirements
for a director of Tower of any Regulatory Authority
relating to Tower, and
(4) approval of the FNB Nominees by Tower which shall not
be unreasonably withheld,
shall be the directors of Tower, with the same compensation
as the Tower board of directors, as the surviving corporation
in the Merger, each to hold office until his successor is
elected and qualified or otherwise in accordance with
applicable law, the articles of incorporation and bylaws of
Tower. Tower shall designate, with FNB's consent which shall
not be unreasonably withheld, one (1) of the FNB Nominees as
a Class A director with a term of office through the 2006
Annual Meeting of Shareholders of Tower, one (1) of the FNB
Nominees as a Class B director with a term of office through
the 2007 Annual Meeting of Shareholders of Tower, and one (1)
of the FNB Nominees as a Class C director with a term of
office through the 2008 Annual Meeting of Shareholders of
Tower.
(ii) On the Effective Date, the officers of Tower duly elected
and holding office immediately prior to the Effective Date
shall be the officers of Tower, as the surviving corporation
in the Merger, with the addition of Xxxx X. Xxxxxx as Senior
Vice President, provided he accepts the offer of employment
from Tower, each to hold office until his or her successor
is elected and qualified or otherwise in accordance with
applicable law, the articles of incorporation and bylaws of
Tower. If he accepts the offer of employment, Xxxx X. Xxxxxx
shall serve as President of Bank until such time as Bank is
merged with and into Greencastle and thereafter as Executive
Vice President of Greencastle in accordance with his
employment agreement and the articles of incorporation,
articles of association, and bylaws of Tower and
Greencastle, respectively.
(e) As a result of the Merger, Bank shall be a wholly-owned operating
subsidiary of Tower subject to the provisions of this Section 1.02
(e). Tower shall continue the separate corporate existence of Bank
as an operating bank subsidiary until such time as the Tower board
of directors determines otherwise.
(f) Bank Board of Directors.
(i) Immediately following the Effective Date, and for so long as
Bank is maintained as a separate subsidiary of Tower the
board of directors of Bank shall consist of the members of
the board immediately preceding the Effective Date, with the
addition of Xxxxxxx X. Xxxxx.
(ii) Immediately following the Effective Date and for so long as
Bank is maintained as a separate subsidiary of Tower, the
non-employee members of the Bank board of directors who
remain members of the Bank board of directors after the
Effective Date, shall receive compensation for services as a
member of the Bank board of directors in the amounts listed
on Schedule 1 to this Agreement.
ARTICLE II - CONSIDERATION; ELECTION
AND EXCHANGE PROCEDURES
Section 2.01 - Tower Common Stock.
(a) Outstanding Shares. Each share of Tower Common Stock issued and
outstanding immediately prior to the Effective Date shall, on and
after the Effective Date, continue to be issued and outstanding as
an identical share of Tower Common Stock.
(b) Treasury Stock. Each share of Tower Common Stock issued and held
in the treasury of Tower immediately prior to the Effective Date,
if any, shall, on and after the Effective Date, continue to be
issued and held in the treasury of Tower.
Section 2.02 - FNB Common Stock.
(a) Conversion Alternatives. Subject to Sections 2.02(f), 2.03, 2.04
and 2.05 below with respect to Tower owned stock, treasury stock,
fractional shares, and dissenting shares of FNB Common Stock, each
share of FNB Common Stock issued and outstanding immediately prior
to the Effective Date, shall, on the Effective Date, by reason of
the Merger and without any action on the part of the holder
thereof, cease to be outstanding and be converted into the right
to receive, at the election of the holder thereof:
(i) 0.8663 Shares of Tower Common Stock (the "Exchange Ratio"),
subject to adjustment as provided in Section 2.08 below (the
"Common Stock Consideration"); or
(ii) $39.00 in cash (the "Cash Consideration," and, collectively,
with the Common Stock Consideration, the "Merger
Consideration").
(b) Election Procedures. Tower and FNB will include a copy of an
Election Form with each copy of the Prospectus/Proxy Statement
mailed to holders of FNB Common Stock in connection with the FNB
Shareholders Meeting:
(i) To elect to receive the Common Stock Consideration with
respect to all or a portion of their shares of FNB Common
Stock (the "Common Stock Election Shares"); or
(ii) To elect to receive the Cash Consideration with respect to
all or a portion of their shares of FNB Common Stock (the
"Cash Election Shares").
Tower and FNB shall each use its reasonable efforts to make the
Election Form available to all persons who become holders of FNB
Common Stock during the period between the record date for the FNB
Shareholders Meeting and the Election Deadline. Any holder's
Election shall have been properly made only if the Exchange Agent
shall have received at its designated office, by the Election
Deadline, a properly completed and signed Election Form
accompanied by the FNB Certificates to which such Election Form
relates, in form acceptable for transfer (or by an appropriate
guarantee of delivery of such FNB Certificates as set forth in
such Election Form from a firm which is an "eligible guarantor
institution" (as defined in Rule 17Ad-15 under the Exchange Act)
provided that such FNB Certificates are in fact delivered to the
Exchange Agent by the time set forth in such guarantee of
delivery). If a holder of FNB Common Stock: (i) does not submit a
properly completed Election Form before the Election Deadline;
(ii) revokes an Election Form prior to the Election Deadline and
does not resubmit a properly completed Election Form prior to the
Election Deadline; or (iii) fails to perfect his, her or its
dissenters' rights pursuant to Section 2.05(b) of this Agreement,
the shares of FNB Common Stock held by such holder shall be
designated "No-Election Shares." Nominee record holders who hold
FNB Common Stock on behalf of multiple beneficial owners shall be
required to indicate how many of the shares held by them are
Common Stock Election Shares, Cash Election Shares and No-Election
Shares.
For purposes of this Section 2.02, any Dissenting FNB Shares shall
be deemed to be Cash Election Shares and, with respect to such
shares, the holders thereof shall in no event be classified as
holders of Reallocated Common Stock Shares as defined herein.
(c) Mixed Election. Subject to the immediately following sentence,
each record holder of shares of FNB Common Stock immediately prior
to the Effective Date shall be entitled to elect to receive shares
of Tower Common Stock for a portion of such holder's shares of FNB
Common Stock and cash for the remaining portion of such holder's
shares of FNB Common Stock (the "Mixed Election"). With respect to
each holder of FNB Common Stock who makes a Mixed Election and
subject to the allocation rules set forth in Section 2.02(e)
below, the shares of FNB Common Stock that such holder elects to
be converted into the right to receive the Common Stock
Consideration shall be treated as Common Stock Election Shares and
the shares such holder elects to be converted into the right to
receive the Cash Consideration shall be treated as Cash Election
Shares.
(d) Effective Election. Any Election shall be properly made only if
the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. Any Election
Form may be revoked or changed by the person submitting such
Election Form to the Exchange Agent by written notice to the
Exchange Agent only if such written notice is actually received by
the Exchange Agent at or prior to the Election Deadline. The
Exchange Agent shall have reasonable discretion to (i) determine
whether any Election, modification or revocation is received, (ii)
determine whether any Election, modification or revocation has
been properly made, and (iii) disregard immaterial defects in any
Election Form. Good faith determinations made by the Exchange
Agent regarding such matters shall be binding and conclusive.
Neither Tower, FNB, nor the Exchange Agent shall be under any
obligation to notify any person of any defect in an Election Form.
(e) Allocation. Subject and after giving effect to Section 2.02(b),
the Exchange Agent shall effect the allocation of the Aggregate
Merger Consideration among the holders of FNB Common Stock in
accordance with their respective Election Forms and the following
allocation rules:
(i) Aggregate Common Stock Consideration Equal to or more than
Eighty-Five Percent. If the number of Common Stock Election
Shares is equal to or more than eighty-five percent (85%) of
the total number of shares of FNB Common Stock issued and
outstanding on the Effective Date, then:
(A) All Cash Election Shares (subject to Section 2.05 with
respect to FNB Dissenting Shares) shall be converted
into the right to receive the Cash Consideration; and
(B) All Common Stock Election Shares and all No-Election
Shares shall be converted into the right to receive the
Common Stock Consideration;
such that the Aggregate Common Stock Consideration is at least
eighty-five percent (85%), and the Aggregate Cash Consideration
is no more than fifteen percent (15%) of the total number of
shares of FNB Common Stock issued and outstanding on the Effective
Date.
(ii) Aggregate Common Stock Consideration Undersubscribed. If the
number of Common Stock Election Shares is less than
eighty-five percent (85%) of the total number of shares of
FNB Common Stock issued and outstanding on the Effective
Date, then:
(A) All No-Election Shares shall be converted into the right
to receive Common Stock Election Shares;
(B) All Common Stock Election Shares shall be converted into
the right to receive the Common Stock Consideration;
(C) If all of the No-Election Shares are converted to Common
Stock Election Shares under Section 2.02(e)(ii)(A) and
the number of Common Stock Election Shares then remains
less than eighty-five percent (85%) of the total number
of shares of FNB Common Stock issued and outstanding on
the Effective Date, then the Exchange Agent shall
convert, on a pro rata basis described in subsection
2.02(e)(iii) below, a sufficient number of Cash Election
Shares (excluding Dissenting FNB Shares) into Common
Stock Election Shares ("Reallocated Common Stock
Shares") such that the number of Common Stock Election
Shares (including No-Election Shares and Reallocated
Common Stock Shares) equals eighty-five percent (85%) of
the total number of shares of FNB Common Stock issued
and outstanding on the Effective Date, and such
Reallocated Common Stock Shares shall be converted into
the right to receive the Common Stock Consideration; and
(D) All Cash Election Shares (subject to Section 2.05 with
respect to FNB Dissenting Shares) which are not
Reallocated Common Stock Shares shall be converted into
the right to receive the Cash Consideration;
such that the Aggregate Common Stock Consideration is at least
eighty-five percent (85%), and the Aggregate Cash Consideration
is no more than fifteen percent (15%), of the total number of
shares of FNB Common Stock issued and outstanding on the Effective
Date.
(iii) Pro Rata Reallocations. If the Exchange Agent is required
pursuant to subsection 2.02(e)(ii)(C) to convert some Cash
Election Shares into Reallocated Common Stock Shares, each
holder of Cash Election Shares shall be allocated a pro rata
portion of the total Reallocated Common Stock Election
Shares.
(f) Cancellation of Certain Common Stock. Notwithstanding any other
provision of this Section 2.02, on the Effective Date, each share
of FNB Common Stock, which is owned, directly or indirectly, by
Tower or any of its Subsidiaries (other than shares that are held
in trust, managed, custodial or nominee accounts and the like and
which are beneficially owned by third parties or held for debts
previously contracted) shall be cancelled and no cash, stock or
other property shall be delivered in exchange therefor.
Section 2.03 - Treasury Stock.
Each share of FNB Common Stock issued and held in the treasury of FNB
as of the Effective Date, if any, shall be cancelled, and no cash, stock or
other property shall be delivered in exchange therefor.
Section 2.04 - Fractional Shares.
No fractional shares of Tower Common Stock and no scrip or certificates
therefor shall be issued in connection with the Merger. Any former holder of FNB
Common Stock who would otherwise be entitled to receive a fraction of a share of
Tower Common Stock shall receive, in lieu thereof, cash in an amount equal to
such fraction of a share multiplied by the Average Closing Price.
Section 2.05 - Dissenting FNB Shareholders.
(a) The outstanding shares of FNB Common Stock, the holders of which
have timely filed written notices of an intention to demand
appraisal for their shares ("Dissenting FNB Shares") pursuant to
Subchapter D of Chapter 15 of the BCL and have not effectively
withdrawn or lost their dissenters' rights under the BCL, shall
not be converted into or represent a right to receive the Merger
Consideration under this Agreement, and the holders thereof shall
be entitled only to such rights as are granted by Subchapter D of
Chapter 15 of the BCL.
(b) If any such holder of FNB Common Stock shall have failed to
perfect or effectively shall have withdrawn or lost such right,
and if such holder shall have delivered a properly completed
Election Form to the Exchange Agent by the Election Deadline, the
Dissenting FNB Shares held by such holder shall be converted into
a right to receive the Common Stock Consideration or the Cash
Consideration in accordance with the applicable provisions of this
Agreement. If any such holder of FNB Common Stock shall have
failed to perfect or effectively shall have withdrawn or lost such
right, and if such holder shall not have delivered a properly
completed Election Form to the Exchange Agent by the Election
Deadline, the Dissenting FNB Shares held by such holder shall be
designated No-Election Shares and shall be converted on a share by
share basis into either the right to receive the Common Stock
Consideration or the Cash Consideration in accordance with the
applicable provisions of this Agreement.
(c) All payments in respect of Dissenting FNB Shares, if any, will be
made by Tower.
Section 2.06 - Dissenting Tower Shareholders.
The outstanding shares of Tower Common Stock, the holders of which have
timely filed written notices of an intention to demand appraisal for their
shares ("Dissenting Tower Shares") pursuant to Subchapter D of Chapter 15 of the
BCL and have not effectively withdrawn or lost their dissenters' rights under
the BCL shall be entitled only to such rights as are granted by Subchapter D of
Chapter 15 of the BCL.
Section 2.07 - Surrender and Exchange of FNB Stock Certificates.
(a) Exchange Fund. On or prior to the Effective Date, Tower shall
deposit with the Exchange Agent, in trust for the benefit of
holders of shares of FNB Common Stock, sufficient cash and
certificates representing shares of Tower Common Stock to make all
payments and deliveries to shareholders of FNB pursuant to this
Article II. Any cash and certificates for Tower Common Stock
deposited with the Exchange Agent shall hereinafter be referred to
as the "Exchange Fund." All costs and expenses associated with the
surrender and exchange procedures of this Section 2.07 shall be
borne by Tower.
(b) Exchange Procedures for Effective Election Forms Submitted by
Election Deadline. As soon as reasonably practicable after the
Effective Date, Tower shall cause the Exchange Agent to mail the
Merger Consideration to shareholders of FNB who have submitted
effective Election Forms prior to the Election Deadline.
(c) Exchange Procedures in Absence of Effective Election Forms
Submitted by Effective Deadline. As soon as reasonably practicable
after the Effective Date, Tower shall cause the Exchange Agent to
mail to each record holder of FNB Common Stock immediately prior
to the Effective Date who has not surrendered FNB Certificates
representing all of the shares of FNB Common Stock owned by such
holder pursuant to Section 2.02(b), a letter of transmittal which
shall specify that delivery of the FNB Certificates shall be
effected, and risk of loss and title to the FNB Certificates shall
pass, only upon delivery of the FNB Certificates to the Exchange
Agent, and which letter shall be in customary form and have such
other provisions as Tower and FNB may reasonably specify and
instructions for effecting the surrender of such FNB Certificates
in exchange for the Cash Consideration and/or the Common Stock
Consideration, as the case may be. Upon surrender of a FNB
Certificate to the Exchange Agent together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may reasonably
be required by the Exchange Agent, the holder of such FNB
Certificate shall be entitled to receive as soon as reasonably
practicable and in exchange therefor (i) a certificate
representing, in the aggregate, the whole number of shares of
Tower Common Stock that such holder has the right to receive
pursuant to this Article II and/or (ii) a check in the amount
equal to the cash that such holder has the right to receive
pursuant to this Article II. No interest will be paid or will
accrue on any cash payment pursuant to this Section 2.07.
(d) Each certificate for shares of Tower Common Stock (each, a "Tower
Certificate") issued in exchange for FNB Certificates pursuant to
this Section 2.07 shall be dated the Effective Date and be
entitled to dividends, distributions, and all other rights and
privileges pertaining to such shares of Tower Common Stock from
the Effective Date. Until surrendered, each FNB Certificate shall,
from and after the Effective Date, evidence solely the right to
receive the Merger Consideration.
(e) If an FNB Certificate is exchanged on a date following one or more
record dates after the Effective Date for the payment of dividends
or any other distribution on shares of Tower Common Stock, Tower
shall pay to the holder of such FNB Certificate cash in an amount
equal to dividends payable on the shares of Tower Common Stock
issued in exchange therefore and pay or deliver any other
distribution to which such shareholder is entitled. No interest
shall accrue or be payable with respect to dividends or any other
distribution otherwise payable under this Section 2.07(e) upon
surrender of FNB Certificates. Notwithstanding the foregoing, no
party hereto shall be liable to any holder of FNB Common Stock for
any amount paid in good faith to a public official or agency
pursuant to any applicable abandoned property, escheat or similar
law. Until such time as FNB Certificates are surrendered to Tower
for exchange, Tower shall have the right to withhold dividends or
any other distributions on the shares of Tower Common Stock
issuable to such shareholder.
(f) Upon the Effective Date, the stock transfer books for FNB Common
Stock will be closed and no further transfers of FNB Common Stock
will thereafter be made or recognized. All FNB Certificates
surrendered pursuant to this Section 2.07 will be cancelled.
(g) If there is a transfer of ownership of FNB Common Stock that is
not registered in the transfer records of FNB, one or more Tower
Certificates evidencing, in the aggregate, the proper number of
shares of Tower Common Stock, a check in the proper amount of cash
in lieu of any fractional shares, the per share Cash
Consideration, and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.07(e), as applicable
and appropriate, may be issued with respect to such FNB Common
Stock to such a transferee if the FNB Certificate representing
such shares of FNB Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and
effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(h) If any FNB Certificate shall have been lost, stolen or destroyed,
the Exchange Agent shall deliver in exchange for such lost, stolen
or destroyed FNB Certificate, upon the making of a sworn affidavit
of that fact by the holder thereof in form satisfactory to the
Exchange Agent, the Merger Consideration, and any dividends or
other distributions to which such holder is entitled pursuant to
this Section 2.07 as may be required pursuant to this Agreement;
provided, however, that the Exchange Agent may, in its sole
discretion and as a condition precedent to the delivery of the
Merger Consideration to which the holder of such FNB Certificate
is entitled as a result of the Merger, require the owner of such
lost, stolen or destroyed FNB Certificate to deliver a bond in
such amount as it may direct as indemnity against any claim that
may be made against FNB, Tower or the Exchange Agent or any other
party with respect to the FNB Certificate alleged to have been
lost, stolen or destroyed.
Section 2.08 - Anti-Dilution Provisions.
If Tower shall, at any time before the Effective Date:
(a) declare a dividend in shares of Tower Common Stock with a record
date on or prior to the Closing Date;
(b) combine the outstanding shares of Tower Common Stock into a
smaller number of shares;
(c) resolve to effect a split or subdivide the outstanding shares of
Tower Common Stock with a record date on or prior to the Closing
Date; or
(d) reclassify the shares of Tower Common Stock;
then, in any such event, the number of shares of Tower Common Stock to
be delivered to FNB shareholders who are entitled to receive shares of
Tower Common Stock in exchange for shares of FNB Common Stock shall be
adjusted so that each FNB shareholder shall be entitled to receive such
number of shares of Tower Common Stock as such shareholder would have
been entitled to receive if the Effective Date had occurred prior to
the happening of such event. (By way of illustration, if Tower shall
declare a stock dividend of 3% payable with respect to a record date on
or prior to the Effective Date, the Exchange Ratio shall be adjusted
upward by 3%.)
Section 2.09 - Other Matters.
Nothing set forth in this Agreement or any exhibit or schedule to this
Agreement shall be construed to:
(a) Preclude Tower or any Tower Affiliate from acquiring or assuming,
or to limit in any way the right of Tower or any Tower Affiliate
to acquire or assume, prior to or following the Effective Date,
the stock, assets or liabilities of any other financial services
institution or other corporation or entity, whether by issuance or
exchange of Tower Common Stock or any securities convertible into
shares of Tower Common Stock, unless such transaction would result
in a Material Adverse Effect. Provided, however, that Tower shall
obtain written approval from FNB prior to the acquisition of any
stock, assets or liabilities of any other financial services
institution or other corporation or entity if such acquisition
would require or result in Tower issuing Tower Common Stock or
securities convertible into Tower Common Stock with a market value
in excess of $5,000,000;
(b) Preclude Tower from issuing, or to limit any way the right of
Tower to issue, prior to or following the Effective Date, Tower
Common Stock, or other securities. Provided, however, Tower shall
obtain approval from FNB prior to the issuance of shares (not
associated with the Merger, the exercise of options, or employee
or director benefit plan) of Tower Common Stock with a market
value in excess of $5,000,000;
(c) Preclude Tower from granting employee, director, or compensatory
options at any time with respect to Tower Common Stock or other
securities in the ordinary course of business;
(d) Preclude option holders or plan participants of Tower from
exercising options at any time with respect to Tower Common Stock
or other securities; or
(e) Preclude Tower or any Tower Affiliate from taking, or to limit in
any way the right of either of them to take, any other action not
expressly and specifically prohibited by the terms of this
Agreement.
ARTICLE III - REPRESENTATIONS AND
WARRANTIES OF FNB
Except as otherwise disclosed in one or more schedules numbered to
correspond to the following Sections of Article III and delivered concurrently
with this Agreement, FNB hereby represents and warrants to Tower as follows:
Section 3.01 - Organization.
(a) FNB is a corporation duly incorporated, validly existing, and in
good standing under the laws of the Commonwealth of Pennsylvania.
FNB is a bank holding company duly registered under the BHC Act.
FNB has the full corporate power and lawful authority to carry on
its businesses and operations as now being conducted and to own
and operate the properties and assets now owned and being operated
by it. FNB is duly licensed, registered 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, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have a Material
Adverse Effect, and all such licenses, registrations and
qualifications are in full force and effect in all material
respects.
(b) Bank is a bank duly organized, validly existing and in good
standing under the laws of the United States of America. Bank has
the corporate power and authority to carry on its business and
operations as now being conducted and to own and operate the
properties and assets now owned and being operated by it. Bank is
duly licensed, registered 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, registration or qualification
necessary, except where the failure to be so licensed, registered
or qualified would not have a Material Adverse Effect, and all
such licenses, registrations and qualifications are in full force
and effect in all material respects.
(c) The deposits of Bank are insured by the FDIC to the extent
provided in the Federal Deposit Insurance Act.
(d) FNB has no Subsidiaries other than Bank and FNB Mortgage Brokers,
Inc.
(e) The respective minute books of FNB and each FNB Subsidiary
accurately record, in all material respects, all material
corporate actions of their respective shareholders and boards of
directors, including committees, in each case in accordance with
normal business practice of FNB or any FNB Subsidiary.
(f) FNB has delivered to Tower true and correct copies of the articles
of incorporation and bylaws of FNB and the articles of association
and bylaws of Bank, each as in effect on the date hereof.
Section 3.02 - Capitalization.
(a) The authorized capital stock of FNB consists of 12,000,000 shares
of common stock, $0.315 par value ("FNB Common Stock"), of which
at the date hereof 800,000 shares are validly issued and
outstanding, fully paid and nonassessable, and free of preemptive
rights. FNB has not issued nor is FNB bound by any subscription,
option, warrant, call, commitment, agreement or other Right of any
character relating to the purchase, sale, or issuance of, or right
to receive dividends or other distributions on, any shares of FNB
Common Stock or any other security of FNB or any securities
representing the right to vote, purchase or otherwise receive any
shares of FNB Common Stock or any other security of FNB.
Accordingly, immediately prior to the Effective Date, there will
be not more than 800,000 shares of FNB Common Stock issued and
outstanding on a fully diluted basis.
(b) Except as set forth in FNB Disclosure Schedule 3.02(b), FNB owns,
directly or indirectly, all of the capital stock of Bank free and
clear of any liens, security interests, pledges, charges,
encumbrances, agreements, and restrictions of any kind or nature.
There are no subscriptions, options, warrants, calls, commitments,
agreements, or other Rights outstanding with respect to the
capital stock of Bank. Except for Bank, FNB does not possess,
directly or indirectly, any material equity interest in any
corporation, except for (i) equity interests in Bank's investment
portfolio, (ii) equity interests held in connection with Bank's
commercial loan activities and (iii) as set forth on FNB
Disclosure Schedule 3.02(b).
(c) To the Knowledge of FNB, except as set forth on FNB Disclosure
Schedule 3.02(c) or as disclosed in FNB's proxy materials used in
connection with its 2005 annual meeting of shareholders, no person
or group is the beneficial owner of 5% or more of the outstanding
shares of FNB Common Stock (the terms "person," "group" and
"beneficial owner" are as defined in Section 13(d) of the Exchange
Act, and the rules and regulations thereunder).
Section 3.03 - Authority; No Violation.
(a) FNB has full corporate power and authority to execute and deliver
this Agreement and to consummate the Contemplated Transactions,
subject to receipt of all necessary approvals of Regulatory
Authorities and the approval of this Agreement. The execution and
delivery of this Agreement by FNB and the consummation by FNB of
the Contemplated Transactions have been duly and validly approved
by the Board of Directors of FNB and, except for approval by the
shareholders of FNB as required by the BCL and FNB's articles of
incorporation, no other corporate proceedings on the part of FNB
are necessary to consummate the Merger. This Agreement has been
duly and validly executed and delivered by FNB and, subject to
approval by the shareholders of FNB and subject to receipt of the
required approvals of Regulatory Authorities described in Section
4.04 hereof, constitutes the valid and binding obligation of FNB,
enforceable against FNB in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity.
(b) The execution and delivery of this Agreement by FNB, (i) subject
to receipt of approvals from the FNB shareholders and the
Regulatory Authorities referred to in Section 4.04 hereof and
FNB's and Tower's compliance with any conditions contained
therein, the consummation of the Merger, and (ii) compliance by
FNB or any FNB Subsidiary with any of the terms or provisions
hereof, do not and will not:
(A) conflict with or result in a breach of any provision of
the respective articles of incorporation, articles of
association, or bylaws of FNB or any FNB Subsidiary;
(B) violate any statute, rule, regulation, judgment, order,
writ, decree or injunction applicable to FNB or any FNB
Subsidiary or any of their respective properties or
assets; or
(C) except as described in FNB Disclosure Schedule 3.03,
violate, conflict with, result in a breach of any
provisions 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
acceleration of, the performance required by, or result
in a right of termination or acceleration or the
creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of FNB
or any FNB Subsidiary under any of the terms or
conditions of any note, bond, mortgage, indenture,
license, lease, agreement, commitment or other
instrument or obligation to which FNB or any FNB
Subsidiary is a party, or by which they or any of their
respective properties or assets may be bound or
affected, except where such termination, acceleration or
creation would not have a Material Adverse Effect on
FNB.
Section 3.04 - Consents.
No consents or approvals of, or filings or registrations with, any
public body or authority are necessary, and except as described in FNB
Disclosure Schedule 3.04, no consents or approvals of any third parties are
necessary, in connection with the execution and delivery of this Agreement by
FNB or, subject to the consents, approvals, filings and registrations from or
with the Regulatory Authorities, referred to in Section 4.04, hereof and
compliance with any conditions contained therein and subject to the approval of
this Agreement by the shareholders of FNB, as required under the BCL, the
consummation by FNB of the Contemplated Transactions.
Section 3.05 - Financial Statements.
(a) FNB has previously delivered the FNB Financials to Tower, except
those pertaining to quarterly and monthly periods commencing after
September 30, 2005, which it will deliver by each respective
delivery date. The delivered FNB Financials fairly present, in all
material respects, the consolidated financial position, results of
operations and cash flows of FNB as of and for the periods ended
on the dates thereof, and have been prepared in accordance with
GAAP consistently applied, except for (i) omission of the notes
from the financial statements, applicable to any interim period
and (ii), with respect to any interim period, normal year-end
adjustments and footnotes thereto.
(b) To the Knowledge of FNB, FNB did not, as of the date of the FNB
Financials or any subsequent date, have any liabilities or
obligations of any nature, whether absolute, accrued, contingent
or otherwise, which are not fully reflected or reserved against in
the balance sheets included in the FNB Financials at the date of
such balance sheets which would have been required to be reflected
therein in accordance with GAAP consistently applied or disclosed
in a footnote thereto, except for liabilities, obligations and
loss contingencies which are not material in the aggregate and
which are incurred in the ordinary course of business, consistent
with past practice, and except for liabilities and obligations
which are within the subject matter of a specific representation
and warranty herein or which have not had a Material Adverse
Effect and subject, in the case of any unaudited statements to
normal recurring audit adjustments and the absence of footnotes.
Section 3.06 - No Material Adverse Change.
Neither FNB nor any FNB Subsidiary has suffered any adverse change in
their respective assets (including loan portfolios), liabilities (whether
absolute, accrued, contingent or otherwise), liquidity, net worth, property,
financial condition results of operations or any damage destruction or loss,
whether or not covered by insurance, since December 31, 2004, which change has
had a Material Adverse Effect.
Section 3.07 - Taxes.
(a) FNB and FNB Subsidiaries are members of the same affiliated group
within the meaning of IRC Section 1504(a) of which FNB is the
common parent. All federal, state and local tax returns required
to be filed by or on behalf of FNB or any FNB Subsidiary have been
timely filed, or FNB or any applicable FNB Subsidiary has received
an appropriate extension therefore. All tax returns filed are, and
the information contained therein is, complete and accurate in all
material respects. All tax obligations reflected in such returns
have been timely paid. Neither FNB nor any FNB Subsidiary is
currently the beneficiary of any extension of time within which to
file any tax return. As of the date of this Agreement, there is no
audit examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that might reasonably be
expected to result in a determination materially adverse to FNB or
any FNB Subsidiary except as fully reserved for in the FNB
Financials. All taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded
litigation have been paid;
(b) Neither FNB nor any FNB Subsidiary has executed an extension or
waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect;
(c) Deferred taxes of FNB and each FNB Subsidiary have been and
will be provided for in accordance with GAAP;
(d) Neither the IRS nor any state, local, or other taxing authority is
now asserting or threatening to assert against FNB or any FNB
Subsidiary any deficiency or claim for additional taxes, or
interest thereon or penalties in connection therewith. To the
Knowledge of FNB, all income, payroll, withholding, property,
excise, sales, use, franchise, and transfer taxes, and all other
taxes, charges, fees, levies, or other assessments, imposed upon
FNB or any FNB Subsidiary by the United States or by any state,
municipality, subdivision, or instrumentality of the Untied States
or by any other taxing authority, including all interest,
penalties or additions attributable thereto, which are due and
payable by FNB or any FNB Subsidiary, either have been paid in
full or have been properly accrued and reflected in the FNB
Financials.
(e) Neither FNB nor any FNB Subsidiary has made any material payments,
is obligated to make any material payments, or is a party to any
agreement that under certain circumstances could obligate it to
make any material payments that will not be deductible under
Section 280G of the IRC; and
(f) Neither FNB nor any FNB Subsidiary (i) is a party to any tax
allocation or sharing agreement, (ii) 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 (iii)
has any tax liability for any person (other than FNB or any FNB
Subsidiary) under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee
or successor, by contract, or otherwise.
Section 3.08 - Contracts.
(a) Except as described in FNB Disclosure Schedule 3.08(a) or 3.12,
neither FNB nor any FNB Subsidiary is a party to or subject to:
(i) any employment, consulting, severance, "change-in-control",
or termination contract or arrangement with any officer,
director, employee, independent contractor, agent, or other
person, except for "at will" arrangements;
(ii) any plan, arrangement or contract providing for bonuses,
pensions, options, deferred compensation, retirement
payments, profit sharing, or similar arrangements for or
with any officer, director, employee, independent
contractor, agent, or other person;
(iii) any collective bargaining agreement with any labor union
relating to employees;
(iv) any agreement which by its terms limits the payment of
dividends by FNB or any FNB Subsidiary;
(v) except in the ordinary course of business, any material
instrument evidencing or related to indebtedness for
borrowed money, whether directly or indirectly, by way of
purchase money obligation, conditional sale, lease purchase,
guaranty or otherwise, in respect of which FNB or any FNB
Subsidiary is an obligor to any person, other than deposits,
repurchase agreements, bankers acceptances and "treasury tax
and loan" accounts established in the ordinary course of
business, instruments relating to transactions entered into
in the customary course of the banking business of Bank, and
transactions in "federal funds," or which contains financial
covenants or other restrictions, other than those relating
to the payment of principal and interest when due, which
would be applicable on or after the Closing Date;
(vi) any contract, other than this Agreement, which restricts or
prohibits FNB or Bank from engaging in any type of business
permissible under applicable law;
(vii) any contract, plan or arrangement which provides for
payments or benefits in certain circumstances which,
together with other payments or benefits payable to any
participant therein or party thereto, might render any
portion of any such payments or benefits subject to
disallowance of deduction therefor as a result of the
application of Section 280G of the IRC;
(viii) except in the ordinary course of business, any lease for
real property;
(ix) any contract or arrangement with any broker-dealer or
investment adviser;
(x) any investment advisory contract with any investment company
registered under the Investment Company Act of 1940; or
(xi) any contract or arrangement with, or membership in, any
local clearing house or self-regulatory organization.
(b) All the contracts, plans, arrangements and instruments listed in
FNB Disclosure Schedule 3.08(a) or 3.12 are in full force and
effect on the date hereof, and neither FNB, any FNB Subsidiary
nor, to the Knowledge of FNB, any other party to any such
contract, plan, arrangement or instrument, has breached any
provision of, or is in default under any term of, any such
contract, plan, arrangement or instrument and no party to any such
contract, plan, arrangement or instrument will have the right to
terminate any or all of the provisions thereof as a result of the
transactions contemplated by this Agreement.
(c) Except as otherwise described in FNB Disclosure Schedule 3.08(a)
or 3.12, no plan, employment agreement, termination agreement or
similar agreement or arrangement to which FNB or any FNB
Subsidiary is a party or by which FNB or any FNB Subsidiary may be
bound:
(i) contains provisions which permit an employee or an
independent contractor to terminate it without cause and
continue to accrue future benefits thereunder;
(ii) provides for acceleration in the vesting of benefits
thereunder upon the occurrence of a change in ownership or
control or merger or other acquisition of FNB or any FNB
Subsidiary; or
(iii) requires FNB or any FNB Subsidiary to provide a benefit in
the form of FNB Common Stock or determined by reference to
the value of FNB Common Stock.
Section 3.09 - Ownership of Property; Insurance Coverage.
(a) FNB and each FNB Subsidiary has, or will have as to property
acquired after the date hereof, good, and as to real property,
marketable, title to all material assets and properties owned by
FNB or such FNB Subsidiary, whether real or personal, tangible or
intangible, including securities, assets and properties reflected
in the balance sheets contained in the FNB Financials or acquired
subsequent thereto (except to the extent that such securities are
held in any fiduciary or agency capacity and except to the extent
that such assets and properties have been disposed of for fair
value, in the ordinary course of business, or have been disposed
of as obsolete since the date of such balance sheets), subject to
no encumbrances, liens, mortgages, security interests or pledges,
except:
(i) Those items that secure liabilities for borrowed money and
that are described in FNB Disclosure Schedule 3.09(a) or
permitted under Article V hereof;
(ii) Statutory liens for amounts not yet delinquent or which are
being contested in good faith;
(iii) Liens for current taxes not yet due and payable;
(iv) Pledges to secure deposits and other liens incurred in the
ordinary course of banking business;
(v) The imperfections of title, easements and encumbrances, if
any, as are not material in character, amount, or extent;
(vi) Dispositions and encumbrances for adequate consideration in
the ordinary course of business. FNB and each FNB Subsidiary
have the right under leases of material properties used by
FNB or such FNB Subsidiary in the conduct of their
respective businesses to occupy and use all such properties
in all material respects as presently occupied and used by
them; and
(vii) As reflected as a liability in the FNB Financials or the footnotes
thereto.
(b) With respect to all agreements pursuant to which FNB or any FNB
Subsidiary has purchased securities subject to an agreement to
resell, if any, FNB or such FNB Subsidiary has a valid, perfected
first lien or security interest in the securities or other
collateral securing the repurchase agreement, and the value of
such collateral equals or exceeds the amount of the debt secured
thereby.
(c) FNB and each FNB Subsidiary maintain insurance in amounts
considered by FNB to be reasonable for their respective
operations, and such insurance is similar in scope and coverage in
all material respects to that maintained by other businesses
similarly situated. Neither FNB nor any FNB Subsidiary has
received notice from any insurance carrier that:
(i) The insurance will be cancelled or that coverage thereunder
will be reduced or eliminated; or
(ii) Premium costs with respect to such insurance will be
substantially increased.
(d) FNB and each FNB Subsidiary maintain such fidelity bonds and
errors and omissions insurance as may be customary or required
under applicable laws or regulations.
Section 3.10 - Legal Proceedings.
Except as set forth in FNB Disclosure Schedule 3.10, neither FNB nor
any FNB Subsidiary is a party to any, and there are no pending or, to the
Knowledge of FNB, threatened, legal, administrative, arbitration, or other
proceedings, claims, actions, customer complaints, or governmental
investigations or inquiries of any nature:
(a) Against FNB or any FNB Subsidiary;
(b) To which the assets of FNB or any FNB Subsidiary are subject;
(c) Challenging the validity or propriety of any of the Contemplated
Transactions; or
(d) Which could materially adversely affect the ability of FNB, Bank
or any other FNB Subsidiary to perform their respective
obligations under this Agreement;
except for any proceedings, claims, actions, investigations or inquiries
referred to in clauses (a) or (b) which, if adversely determined individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on FNB.
Section 3.11 - Compliance with Applicable Law.
(a) FNB and each FNB Subsidiary hold all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their
respective businesses under, and have complied in all material
respects with, applicable laws, statutes, orders, rules or
regulations of any Regulatory Authority relating to them
(including, but not limited to, the Xxxxxxxx-Xxxxx Act of 2002,
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 Terrorism (USA PATRIOT ACT) Act
of 2001, the Bank Secrecy Act, fair lending laws or other laws
relating to discrimination, consumer disclosure and currency
transaction reporting).
(b) FNB and each FNB Subsidiary have filed all reports, registrations
and statements, together with any amendments required to be made
with respect thereto, that they were required to file with any
Regulatory Authority, and have filed all other reports and
statements required to be filed by them, including without
limitation any report or statement required to be filed pursuant
to the laws, rules or regulations of the United States, any state
or any Regulatory Authority, and have paid all fees and
assessments due and payable in connection therewith.
(c) No Regulatory Authority has initiated any proceeding or, to the
Knowledge of FNB, investigation into the business or operations of
FNB or any FNB Subsidiary.
(d) Neither FNB nor any FNB Subsidiary has received any notification
or communication from any Regulatory Authority:
(i) Asserting that FNB or any FNB Subsidiary is not in
substantial compliance with any of the statutes, regulations
or ordinances which such Regulatory Authority enforces,
unless such assertion has been waived, withdrawn or
otherwise resolved;
(ii) Threatening to revoke any license, franchise, permit or
governmental authorization which is material to FNB or any
FNB Subsidiary;
(iii) Requiring or threatening to require FNB or any FNB
Subsidiary, or indicating that FNB or any FNB Subsidiary may
be required, to enter into a cease and desist order,
agreement or memorandum of understanding, or any other
agreement restricting or limiting, or purporting to restrict
or limit, in any manner the operations of FNB or any FNB
Subsidiary, including without limitation any restriction on
the payment of dividends; or
(iv) Directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of FNB or
any FNB Subsidiary (any such notice, communication,
memorandum, agreement or order described in this sentence
and addressed specifically to FNB or Bank, herein referred
to as a "FNB Regulatory Agreement");
(e) Neither FNB nor any FNB Subsidiary has received, consented to, or
entered into any FNB Regulatory Agreement.
(f) There is no unresolved violation, criticism, or exception by any
Regulatory Authority with respect to any FNB Regulatory Agreement.
(g) There is no injunction, order, judgment or decree imposed upon FNB
or any FNB Subsidiary or the assets of FNB or any FNB Subsidiary.
Section 3.12 - ERISA.
(a) FNB has delivered to Tower true and complete copies of the FNB
Benefit Plans, all of which are identified in FNB Disclosure
Schedule 3.12, together with:
(i) The most recent actuarial reports (if any) and financial
reports relating to those FNB Benefit Plans which constitute
"qualified plans" under IRC Section 401(a);
(ii) The most recent Form 5500, together with schedules and
attachments, as required (if any) relating to such FNB
Benefit Plans filed with the Department of Labor;
(iii) The most recent IRS notices, rulings, or determination
letters which pertain to any such FNB Benefit Plans; and
(iv) Summary plan descriptions and any amendments thereto and any
insurance, third party administrator or administrative
services only contracts related to the FNB Benefit Plans.
(b) To the Knowledge of FNB, neither FNB nor any FNB ERISA Affiliate,
and no pension plan (within the meaning of ERISA Section 3(2))
maintained or contributed to by FNB or any FNB ERISA Affiliate,
has incurred any liability to the Pension Benefit Guaranty
Corporation, the Department of Labor or to the IRS with respect to
any pension plan qualified under IRC Section 401(a) which
liability has resulted or will result in a Material Adverse Effect
with respect to FNB, nor has any reportable event under ERISA
Section 4043(b) (with respect to which the 30 day notice
requirement has not been waived) occurred with respect to any such
pension plan which could result in a Material Adverse Effect.
(c) Neither FNB nor any FNB ERISA Affiliate has ever contributed to or
otherwise incurred any liability with respect to a multi-employer
plan (within the meaning of ERISA Section 3(37)).
(d) Each FNB Benefit Plan complies in all material respects with the
applicable requirements of ERISA, the IRC, the Securities Act, the
Exchange Act and any other applicable laws governing the FNB
Benefit Plan, and each FNB Benefit Plan has at all times been
administered in all material respects in accordance with all
requirements of the law and all regulations issued thereunder, and
in accordance with its terms and the terms of any applicable
collective bargaining agreement to the extent consistent with all
requirements of law. Each pension plan which is intended to be
qualified under Section 401(a) of the IRC is so qualified, and
each trust established by each pension plan is exempt from federal
income tax under Section 501(a) of the IRC. Each pension plan is,
and from its establishment has been, the subject of a favorable
determination letter from the IRS stating that the pension plan
meets the requirements of Section 401(a) of the IRC and that the
trust associated with the pension plan is tax-exempt under Section
501(a) of the IRC. No event has occurred since the date of each
pension plan's last determination letter that would jeopardize the
qualified status of the plan or the tax-exempt status of any trust
under Sections 401(a) and 501(a) of the IRC, respectively. No
lawsuits, claims (other than routine claims for benefits) or
complaints to, or by, any person, governmental entity, regulatory
body or arbiter have been filed, are pending or are threatened
with respect to any FNB Benefit Plan and there is no fact or
contemplated event that would give rise to any lawsuit, claim
(other than routine claims for benefits) or complaint with respect
to any FNB Benefit Plan. Without limiting the foregoing, the
following are true with respect to each FNB Benefit Plan:
(i) With respect to each FNB Benefit Plan, there has not
occurred, and no person is contractually bound to enter
into, any "prohibited transaction" within the meaning of
Section 4975(c) of the IRC or Section 406 of ERISA, which
transaction is not exempt under Section 4975(d) of the IRC
or Section 408 of ERISA.
(ii) No FNB Benefit Plan is a Defined Benefit Plan as defined in
Section 3(35) of ERISA and no FNB ERISA Affiliate has ever
maintained or been obligated to contribute to any Defined
Benefit Plan.
(iii) No FNB Benefit Plan is an Employee Stock Ownership Plan as
defined in Section 4975(e)(7) of the IRC.
(iv) No FNB Benefit Plan is a Qualified Foreign Plan as the term
is defined in Section 404A of the IRC and no FNB Benefit
Plan is subject to the laws or regulations of any
jurisdiction other than the United States of America or one
of its political subdivisions.
(v) No Welfare Plan is a Voluntary Employees' Beneficiary
Association as defined in Section 501(c)(9) of the IRC.
(vi) All Welfare Plans and their related trusts comply in all
material respects with and have been administered in
compliance with (a) Section 4980B of the IRC and Sections
601 through 609 of ERISA and all Department of Treasury and
Department of Labor regulations issued thereunder,
respectively, and (b) the Health Insurance Portability and
Accountability Act of 1996 and all Department of Labor
regulations issued thereunder.
(vii) With respect to each FNB Benefit Plan maintained by FNB or
any FNB ERISA Affiliate, each FNB Benefit Plan provides the
plan sponsor the authority to amend or terminate the FNB
Benefit Plan at any time, subject to the applicable
requirements of ERISA and the IRC and the provisions of the
FNB Benefit Plan.
(e) There is no existing, or, to the Knowledge of FNB, contemplated,
audit of any FNB Benefit Plan by the IRS, the U.S. Department of
Labor, the Pension Benefit Guaranty Corporation or any other
governmental authority. In addition, to the Knowledge of FNB,
there are no pending or threatened claims by, on behalf of or with
respect to any FNB Benefit Plan, or by or on behalf of any
individual participant or beneficiary of any FNB Benefit Plan,
alleging any violation of ERISA or any other applicable laws, or
claiming benefits (other than claims for benefits not in dispute
and expected to be granted promptly in the ordinary course of
business), nor to the Knowledge of FNB, is there any basis for
such claim.
(f) With respect to any services which FNB or any FNB Subsidiary may
provide as a record-keeper, administrator, custodian, fiduciary,
trustee or otherwise for any plan, program, or arrangement subject
to ERISA (other than any FNB Benefit Plan), to the Knowledge of
FNB, FNB and each FNB Subsidiary:
(i) Have correctly computed all contributions, payments or other
amounts for which it is responsible;
(ii) Have not engaged in any prohibited transactions (as defined
in IRC Section 4975(c) or ERISA Section 406 for which an
exemption does not exist);
(iii) Have not breached any duty imposed by ERISA; and
(iv) Have not otherwise incurred any liability to the IRS, the
Department of Labor, the Pension Benefit Guaranty
Corporation, or to any participant, beneficiary, fiduciary
or sponsor of any ERISA plan in the performance (or
non-performance) of services.
Section 3.13 - Brokers and Finders.
Neither FNB, any FNB Subsidiary, nor any of their respective officers,
directors, employees, independent contractors or agents, has employed any
broker, finder, investment banker or financial advisor, or incurred any
liability for any fees or commissions to any such person, in connection with the
transactions contemplated by this Agreement, except for RP Financial, L.C.,
whose engagement letter with FNB is included in FNB Disclosure Schedule 3.13.
Section 3.14 - Environmental Matters.
(a) Except as set forth on FNB Disclosure Schedule 3.14(a), to the
Knowledge of FNB, neither FNB nor any FNB Subsidiary, nor any
property owned or operated by FNB or any FNB Subsidiary, has been
or is in violation of or liable under any Environmental Law.
Except as set forth on FNB Disclosure Schedule 3.14(a), there are
no actions, suits or proceedings, or demands, claims or notices,
including without limitation notices, demand letters or requests
for information from any Regulatory Authority, instituted or
pending, or to the Knowledge of FNB, threatened, or any
investigation pending, relating to the liability of FNB or any FNB
Subsidiary with respect to any property owned or operated by FNB
or any FNB Subsidiary under any Environmental Law.
(b) Except as set forth on FNB Disclosure Schedule 3.14(b), to the
Knowledge of FNB, no property, now or formerly owned or operated
by FNB or any FNB Subsidiary or on which FNB or any FNB Subsidiary
holds or held a mortgage or other security interest or has
foreclosed or taken a deed in lieu of foreclosure, has been listed
or proposed for listing on the National Priority List under
CERCLA, on the Comprehensive Environmental Response Compensation
and Liabilities Information System, or any similar state list, or
which is the subject of federal, state or local enforcement
actions or other investigations which may lead to claims against
FNB or any FNB Subsidiary for response costs, remedial work,
investigation, damage to natural resources or for personal injury
or property damage claim, including, but not limited to, claims
under CERCLA.
Section 3.15 - CRA Compliance.
FNB and Bank are in material compliance with the applicable provisions
of the CRA, and, as of the date hereof, Bank has received a CRA rating of
"satisfactory" or better from the OCC. To the Knowledge of FNB, there is no fact
or circumstance or set of facts or circumstances which would cause FNB or Bank
to fail to comply with such provisions.
Section 3.16 - Information to be Supplied.
(a) The information supplied by FNB for inclusion in the Registration
Statement (including the Prospectus/Proxy Statement) will not, at
the time the Registration Statement is declared effective pursuant
to the Securities Act, and as of the date the Prospectus/Proxy
Statement is mailed to shareholders of FNB and Tower, and up to
and including the date of the FNB and Tower Shareholders Meetings,
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in the light of the circumstances in which they were
made, not misleading.
(b) The information supplied by FNB for inclusion in the Applications
will, at the time each such document is filed with any Regulatory
Authority and up to and including the dates of any required
regulatory approvals or consents, as such Applications may be
amended by subsequent filings, be accurate in all material
respects.
Section 3.17 - Related Party Transactions.
(a) Except as set forth on FNB Disclosure Schedule 3.17, or as is
disclosed in the footnotes to the FNB Financials, as of the date
hereof, neither FNB nor any FNB Subsidiary is a party to any
transaction (including any loan or other credit accommodation but
excluding deposits in the ordinary course of business) with any
Affiliate of FNB or any FNB Subsidiary, and all such transactions
were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with other "persons" (as defined in
Section 13(d) of the Exchange Act, and the rules and regulations
thereunder).
(b) Except as set forth in FNB Disclosure Schedule 3.17, as of the
date hereof, no loan or credit accommodation to any FNB Affiliate
is presently in default or, during the three-year period prior to
the date of this Agreement, has been in material default or has
been restructured, modified, or extended in order to avoid or cure
a default. To the Knowledge of FNB, as of the date hereof,
principal and interest with respect to any such loan or other
credit accommodation will be paid when due and the loan grade
classification accorded such loan or credit accommodation is
appropriate.
Section 3.18 - Loans.
Except as set forth on the FNB Disclosure Schedule 3.18, all loans
reflected as assets in the FNB Financials are being transferred with good and
marketable title, free and clear of any and all encumbrances, liens, pledges,
equities, claims, charges, rights of first refusal or similar rights or security
interests of any nature encumbering such loan and are evidenced by notes,
agreements or other evidences of indebtedness which are true, genuine and
correct, and to the extent secured, are secured by valid liens and security
interests that are legal, valid and binding obligations of the maker thereof,
enforceable in accordance with the respective terms thereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
similar laws or equitable principles affecting the enforcement of creditors'
rights, which have been perfected.
Section 3.19 - Allowance for Loan Losses.
The allowance for loan losses reflected in FNB's and Bank's reports to
Regulatory Authorities has been and will be established in compliance with the
requirements of all regulatory criteria, and the allowance for loan losses shown
in the FNB Financials has been and will be established and maintained in
accordance with GAAP. FNB has disclosed to Tower on FNB Disclosure Schedule 3.19
the amounts of all loans, leases, advances, credit enhancements, other
extensions of credit, commitments and interest-bearing assets of FNB that FNB
has classified internally as "Other Loans Specially Mentioned," "Special
Mention," "Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit
Risk Assets," "Concerned Loans" or words of similar import, and FNB shall
disclose promptly to Tower after the end of each month after the date hereof and
on the business day prior to the Closing Date the amount of each such
classification on an updated FNB Disclosure Schedule 3.19. FNB has disclosed to
Tower on FNB Disclosure Schedule 3.19 the amounts of all overdrafts occurring
since January 1, 2005 and FNB shall disclose promptly to Tower after the end of
each month after the date hereof and on the business day before the Effective
Date the amount of such overdrafts. The OREO and in-substance foreclosures
included in any of FNB's non-performing assets are carried net of reserves at
the lower of cost or market value based on current independent appraisals or
current management appraisals. Furthermore, true, complete and materially
correct copies of reports containing the amounts of all loans, leases, advances,
credit enhancements, other extensions of credit, commitments and
interest-bearing assets of FNB that FNB has classified internally as "Other
Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful,"
"Loss," "Classified," "Criticized," "Credit Risk Assets," "Concerned Loans" or
words of similar import and the amounts of all overdrafts occurring since
January 1, 2005 are attached hereto on the FNB Disclosure Schedule 3.19 of this
Agreement.
Section 3.20 - Investment Securities.
None of the investments reflected in the FNB Financials under the
headings "Securities Available for Sale" and "Securities Held to Maturity" and
none of the investments made since December 31, 2004, are subject to any
restrictions, whether contractual or statutory, that materially impairs the
ability of FNB to freely dispose of the investments at any time, and all of the
investments comply with applicable laws, rules and regulations.
Section 3.21 - Reorganization.
As of the date hereof, FNB does not have any reason to believe that the
Merger will fail to qualify as a reorganization under Section 368(a) of the IRC.
FNB shall not take any action which would have the effect of causing the Merger
not to qualify as a tax-free reorganization within the meaning of Section 368 of
the IRC.
Section 3.22 - Fairness Opinion.
FNB's board of directors has received a written opinion from RP
Financial, L.C. to the effect that, as of the date hereof, the consideration to
be received by shareholders of FNB pursuant to this Agreement is fair, from a
financial point of view, to the shareholders of FNB.
Section 3.23 - Reporting Requirements.
FNB Common Stock is registered under Section 12 of the Exchange Act and
is subject to the periodic reporting requirements imposed by Section 13 or 15(d)
of the Exchange Act.
Section 3.24 - Securities Documents.
FNB has delivered to Tower copies of:
(a) FNB's annual reports on SEC Form 10-K for the years ended December
31, 2004 and 2003;
(b) All other reports, registration statements and filings of FNB
filed with the SEC since January 1, 2005; and
(c) FNB's proxy materials used, or to be used, in connection with its
meetings of shareholders held in 2005 and 2004.
The Securities Documents complied, in all material respects, and any
future Securities Documents will comply, in all material respects, with the
rules and regulations of the SEC to the extent applicable thereto. All such
Securities Documents did not and will not, at the time of their filing, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading.
Section 3.25 - Quality of Representations.
No representation made by FNB in this Agreement contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Section 3.26 - Absence of Certain Changes
Except as disclosed in FNB Disclosure Schedule 3.26 and provided for or
contemplated in this Agreement, since December 31, 2004 there has not been:
(a) any material transaction by FNB or any FNB Subsidiary other than
in the ordinary course of business and in conformity with past
practices;
(b) any acquisition or disposition of property by FNB or any FNB
Subsidiary of any property or asset, whether real or personal,
having a fair market value, singularly or in the aggregate, in an
amount greater than $40,000.00, other than acquisitions or
dispositions made in the ordinary course of business;
(c) any mortgage, pledge, or subjection to lien, charge, or
encumbrance of any kind on any of the respective properties or
assets of FNB or any FNB Subsidiary, except to secure extensions
of credit in the ordinary course of business and in conformity
with past practice (pledges of and liens on assets to secure
Federal Home Loan Bank or Federal Reserve Bank advances being
deemed both in the ordinary course of business and consistent with
past practices);
(d) any increase in, or commitment to increase, the compensation
payable or to become payable to any officer, director, employee,
or agent of FNB or any FNB Subsidiary, or any bonus payment, stock
option award, restricted stock award or similar arrangement made
to or with any of such officers, directors, employees or agents,
other than routine increases made in the ordinary course of
business and consistent with past practices or as permitted in
Section 5.01(d);
(e) any incurring of, assumption of, or taking of, by FNB or any FNB
Subsidiary, any property subject to, any liability in excess of
$40,000.00, except for liabilities incurred or assumed or property
taken subsequent to December 31, 2004 in the ordinary course of
business and in conformity with past practices;
(f) any material alteration in the manner of keeping the books,
accounts, or records of FNB or any FNB Subsidiary, or in the
accounting policies or practices therein reflected;
(g) any elimination of employee benefits;
(h) any deferred routine maintenance of real property or leased
premises;
(i) any elimination of a reserve where the liability related to such
reserve has remained;
(j) any failure to depreciate capital assets in accordance with past
practice or to eliminate capital assets which are no longer used
in its business; or
(k) any extraordinary reduction or deferral of ordinary or necessary
expenses.
Section 3.27 - Absence of Undisclosed Liabilities
To the Knowledge of FNB, neither FNB nor any FNB Subsidiary has any
obligation or liability that is material to the financial condition or
operations of any of them, or that, when combined with all similar obligations
or liabilities would be material to their financial condition or operations (i)
except as disclosed in the FNB Financials delivered to Tower prior to the date
of this Agreement, or (ii) except as contemplated under this Agreement. Except
as disclosed in FNB Disclosure Schedule 3.27, since December 31, 2004, neither
FNB nor any FNB Subsidiary has incurred or paid any obligation or liability
which would be material to the financial condition or operations of any of them,
except for obligations paid in connection with transactions made by them in the
ordinary course of their business consistent with past practice and applicable
law.
ARTICLE IV - REPRESENTATIONS AND
WARRANTIES OF TOWER
Except as otherwise disclosed in one or more schedules numbered to
correspond to the following Sections of Article IV and delivered concurrently
with this Agreement, Tower hereby represents and warrants to FNB as follows:
Section 4.01 - Organization.
(a) Tower is a corporation duly incorporated, validly existing, and in
good standing under the laws of the Commonwealth of Pennsylvania.
Tower is a bank holding company duly registered under the BHC Act.
Tower has the full corporate power and lawful authority to carry
on its businesses and operations as now being conducted and to own
and operate the properties and assets now owned and being operated
by it. Tower is duly licensed, registered, 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, registration or
qualification necessary, except where the failure to be so
licensed, registered, or qualified will not have a Material
Adverse Effect, and all the licenses, registrations and
qualifications are in full force and effect in all material
respects.
(b) Greencastle is a bank duly organized, validly existing and in good
standing under the laws of the United States of America.
Greencastle has the corporate power and authority to carry on its
business and operations as now being conducted and to own and
operate the properties and assets now owned and being operated by
it. Greencastle is duly licensed, registered 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, registration or
qualification necessary, except where the failure to be so
licensed, registered or qualified would not have Material Adverse
Effect, and all such licenses, registrations and qualifications
are in full force and effect in all material respects.
(c) The deposits of Greencastle are insured by the FDIC to the extent
provided in the Federal Deposit Insurance Act.
(d) Tower has no Subsidiaries other than Greencastle and those
identified in Tower Disclosure Schedule 4.01(d).
(e) The respective minute books of Tower and each Tower Subsidiary
accurately record, in all material respects, all material
corporate actions of their respective shareholders and boards of
directors, including committees, in each case in accordance with
the normal business practice of Tower and the Tower Subsidiary.
(f) Tower has delivered to FNB true and correct copies of the articles
of incorporation and bylaws of Tower and the articles of
association and bylaws of Greencastle, each as in effect on the
date hereof.
Section 4.02 - Capitalization.
(a) The authorized capital stock of Tower consists of (a) five million
(5,000,000) shares of common stock, no par value ("Tower Common
Stock"), of which, as of June 30, 2005: 52,808 shares are validly
issued and held by Tower as treasury stock and 1,780,100 shares
are validly issued and outstanding, fully paid and nonassessable
and free of preemptive rights, except as may be defined in Tower's
articles of incorporation, and (b) five hundred thousand (500,000)
shares of preferred stock, of which none are issued and
outstanding. Tower has not issued nor is Tower bound by any
subscription, option, warrant, call, commitment, agreement or
other Right of any character relating to the purchase, sale, or
issuance of, or right to receive dividends or other distributions
on, any shares of Tower Common Stock or any other security of
Tower or any securities representing the right to vote, purchase
or otherwise receive any shares of Tower Common Stock or any other
security of Tower, except (i) for options to acquire shares of
Tower Common Stock issued under Tower's various stock option
plans, (ii) pursuant to Tower's employee stock purchase plan, and
(iii) this Agreement.
(b) As of the date of this Agreement, Tower owns, directly or
indirectly, all of the capital stock of the Tower Subsidiaries,
free and clear of any liens, security interests, pledges, charges,
encumbrances, agreements and restrictions of any kind or nature,
except for those subsidiaries identified in Tower Disclosure
Schedule 4.02(b). There are no subscriptions, options, warrants,
calls, commitments, agreements or other Rights outstanding with
respect to the capital of any Tower Subsidiary, except for those
subsidiaries identified in Tower Disclosure Schedule 4.02(b).
Section 4.03 - Authority; No Violation.
(a) Tower has full corporate power and authority to execute and
deliver this Agreement and to consummate the Contemplated
Transactions, subject to receipt of all necessary approvals of
Regulatory Authorities and the approval of this Agreement by
Tower's shareholders. The execution and delivery of this Agreement
by Tower and the consummation by Tower of the Contemplated
Transactions have been duly and validly approved by the Board of
Directors of Tower and, except for approval by the shareholders of
Tower as required by the BCL and articles of incorporation of
Tower, no other corporate proceedings on the part of Tower are
necessary to consummate the Merger. This Agreement has been duly
and validly executed and delivered by Tower and, subject to
approval by the shareholders of Tower and subject to receipt of
the required approvals of Regulatory Authorities, described in
Section 4.04 hereof, constitutes the valid and binding obligation
of Tower, enforceable against Tower in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity.
(b) The execution and delivery of this Agreement by Tower, subject to
receipt of approvals from the Tower shareholders and the
Regulatory Authorities referred to in Section 4.04 hereof and
Tower's and FNB's compliance with any conditions contained
therein, the consummation of the Contemplated Transactions, and
compliance by Tower or any Tower Subsidiary with any of the terms
or provisions hereof, do not and will not:
(i) conflict with or result in a breach of any provision of the
respective articles of incorporation, articles of
association or bylaws of Tower or any Tower Subsidiary;
(ii) violate any statute, rule, regulation, judgment, order,
writ, decree or injunction applicable to Tower or any Tower
Subsidiary or any of their respective properties or assets;
or
(iii) violate, conflict with, result in a breach of any provisions
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 acceleration of the
performance required by, or result in a right of termination
or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the
properties or assets of Tower or any Tower Subsidiary under,
any of the terms or conditions of any note, bond, mortgage,
indenture, license, lease, agreement, commitment or other
instrument or obligation to which Tower or any Tower
Subsidiary is a party, or by which they or any of their
respective properties or assets may be bound or affected;
except to the extent that the failure to comply, in the aggregate,
would not have a Material Adverse Effect.
Section 4.04 - Consents.
Except for consents and approvals of, or filings with, Regulatory
Authorities and state securities or "blue sky" authorities, no consents or
approvals of, or filings or registrations with, any public body or authority are
necessary in connection with the execution and delivery of this Agreement by
Tower or the consummation of the Contemplated Transactions.
Section 4.05 - Financial Statements.
(a) Tower has previously delivered the Tower Financials to FNB, except
those pertaining to quarterly periods commencing after September
30, 2005, which it will deliver by each respective delivery date.
The delivered Tower Financials fairly present, in all material
respects, the consolidated financial position, results of
operations and cash flows of Tower as of and for the periods ended
on the dates thereof, and have been prepared in accordance with
GAAP consistently applied, except for (i) omission of the notes
from the financial statements, applicable to any interim period
and (ii), with respect to any interim period, normal year-end
adjustments and footnotes thereto.
(b) To the Knowledge of Tower, Tower did not as of the date of the
Tower Financials or any subsequent date, have any liabilities or
obligations of any nature, whether absolute, accrued, contingent
or otherwise, which are not fully reflected or reserved against in
the balance sheets included in the Tower Financials at the date of
such balance sheets which would have been required to be reflected
therein in accordance with GAAP consistently applied or disclosed
in a footnote thereto, except for liabilities, obligations and
loss contingencies which are not material in the aggregate and
which were incurred in the ordinary course of business consistent
with past practice, and except for liabilities and obligations
which are within the subject matter of a specific representation
and warranty herein or which otherwise have not had a Material
Adverse Effect and subject, in the case of any unaudited
statements to normal recurring audit adjustments and the absence
of footnotes.
Section 4.06 - No Material Adverse Change.
Neither Tower nor any Tower Subsidiary has suffered any adverse change
in their respective assets (including loan portfolios), liabilities (whether
absolute, accrued, contingent or otherwise), liquidity, net worth, property,
financial condition, or results of operations or any damage, destruction or loss
since December 31, 2004, which change has had a Material Adverse Effect.
Section 4.07 - Taxes.
(a) Tower and Tower Subsidiaries are members of the same affiliated
group within the meaning of IRC Section 1504(a) of which Tower is
the common parent. All federal, state and local tax returns
required to be filed by or on behalf of Tower or any Tower
Subsidiary have been timely filed, or Tower or any applicable
Tower Subsidiary has received an appropriate extension therefore.
All tax returns filed are, and the information contained therein
is, complete and accurate in all material respects. All tax
obligations reflected in such returns have been timely paid.
Neither Tower nor any Tower Subsidiary is currently the
beneficiary of any extension of time within which to file any tax
return. As of the date of this Agreement, there is no audit
examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that might reasonably be
expected to result in a determination materially adverse to Tower
or any Tower Subsidiary except as fully reserved for in the Tower
Financials. All taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded
litigation have been paid;
(b) Neither Tower nor any Tower Subsidiary has executed an extension
or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect;
(c) Deferred taxes of Tower and each Tower Subsidiary have been and
will be provided for in accordance with GAAP;
(d) Neither the IRS nor any state, local, or other taxing authority is
now asserting or threatening to assert against Tower or any Tower
Subsidiary any deficiency or claim for additional taxes, or
interest thereon or penalties in connection therewith. To the
Knowledge of Tower, all income, payroll, withholding, property,
excise, sales, use, franchise, and transfer taxes, and all other
taxes, charges, fees, levies, or other assessments, imposed upon
Tower or any Tower Subsidiary by the United States or by any
state, municipality, subdivision, or instrumentality of the Untied
States or by any other taxing authority, including all interest,
penalties or additions attributable thereto, which are due and
payable by Tower or any Tower Subsidiary, either have been paid in
full or have been properly accrued and reflected in the Tower
Financials;
(e) Neither Tower nor any Tower Subsidiary has made any material
payments, is obligated to make any material payments, or is a
party to any agreement that under certain circumstances could
obligate it to make any material payments that will not be
deductible under Section 280G of the IRC; and
(f) Neither Tower nor any Tower Subsidiary (i) is a party to any tax
allocation or sharing agreement, (ii) 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 Tower), or
(iii) has any tax liability for any person (other than Tower or
any Tower Subsidiary) under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
Section 4.08 - Contracts.
(a) Each of the material contracts, to which Tower is a party that
relates to or affects the assets or operations of Tower is a valid
and binding obligation of Tower and is in full force and effect,
except for where the failure to be in full force and effect would
not, individually or in the aggregate, have a Material Adverse
Effect.
(b) Except as described in Tower's Disclosure Schedule 4.08(b) or
4.13, neither Tower nor any Tower Subsidiary is a party to or
subject to:
(i) any employment, severance, or "change-in-control" contract
or arrangement with any officer, director, employee,
independent contractor, agent, or other person, except for
"at will" arrangements;
(ii) any plan, arrangement or contract providing for bonuses,
pensions, options, deferred compensation, retirement
payments, profit sharing, or similar arrangements for or
with any officer, director, employee, independent
contractor, agent, or other person; or
(iii) any agreement which by its terms limits the payment of
dividends by Tower or any Tower Subsidiary.
Section 4.09 - Ownership of Property
(a) Tower and each Tower Subsidiary has good and marketable title to
Tower properties and assets (other than property as to which Tower
is lessee), except for (i) such items shown in the Tower
consolidated financial statements or notes thereto; (ii) liens on
real property for current real estate taxes not yet delinquent, or
(iii) such defects in title which would not, individually or in
the aggregate, have a Material Adverse Effect on Tower.
(b) With respect to all agreements pursuant to which Tower or any
Tower Subsidiary has purchased securities subject to an agreement
to resell, if any, Tower or such Tower Subsidiary has a valid,
perfected first lien or security interest in the securities or
other collateral securing the repurchase agreement, and the value
of such collateral equals or exceeds the amount of the debt
secured thereby.
(c) Tower and each Tower Subsidiary maintain insurance in amounts
considered by Tower to be reasonable for their respective
operations, and such insurance is similar in scope and coverage in
all material respects to that maintained by other businesses
similarly situated. Neither Tower nor any Tower Subsidiary has
received notice from any insurance carrier that:
(i) The insurance will be cancelled or that coverage thereunder
will be reduced or eliminated; or
(ii) Premium costs with respect to such insurance will be
substantially increased.
(d) Tower and each Tower Subsidiary maintain such fidelity bonds and
errors and omissions insurance as may be customary or required
under applicable laws or regulations.
Section 4.10 - Financing.
At the Effective Date, Tower will have available cash sufficient to pay
the amounts required to be paid to FNB shareholders pursuant to this Agreement
and shares available and reserved to pay the Common Stock Consideration, upon
consummation of the Merger.
Section 4.11 - Legal Proceedings.
Neither Tower nor any Tower Subsidiary is a party to any, and there are
no pending or, to the Knowledge of Tower, threatened, legal, administrative,
arbitration or other proceedings, claims, actions, customer complaints, or
governmental investigations or inquiries of any nature:
(a) Against Tower or any Tower Subsidiary;
(b) To which the assets of Tower or any Tower Subsidiary are subject;
(c) Challenging the validity or propriety of any of the Contemplated
Transactions; or
(d) Which could materially adversely affect the ability of Tower or
any other Tower Subsidiary to perform their respective obligations
under this Agreement;
except for any proceedings, claims, actions, investigations, or inquiries
referred to in clauses (a) or (b) which, individually or in the aggregate, would
not have a Material Adverse Effect.
Section 4.12 - Compliance with Applicable Law.
Except as disclosed on Tower Disclosure Schedule 4.12 or where
noncompliance would not have a Material Adverse Effect:
(a) Tower and each Tower Subsidiary hold all licenses, franchises,
permits and authorizations necessary for the lawful conduct of
their respective businesses under, and have complied in all
material respects with, applicable laws, statutes, orders, rules
or regulations of any Regulatory Authority relating to them
(including, but not limited to, the Xxxxxxxx-Xxxxx Act of 2002,
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 Terrorism (USA PATRIOT ACT) Act
of 2001, the Bank Secrecy Act, fair lending laws or other laws
relating to discrimination, consumer disclosure and currency
transaction reporting).
(b) Tower and each Tower Subsidiary have filed all reports,
registrations and statements, together with any amendments
required to be made with respect thereto, that they were required
to file with any Regulatory Authority, and have filed all other
reports and statements required to be filed by them, including
without limitation any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States,
any state or Regulatory Authority, and have paid all fees and
assessments due and payable in connection therewith.
(c) No Regulatory Authority has initiated any proceeding or, to the
Knowledge of Tower, investigation into the business operations of
Tower or any Tower Subsidiary.
(d) Neither Tower nor any Tower Subsidiary has received any
notification or communication from any Regulatory Authority:
(i) Asserting that Tower or any Tower Subsidiary is not in
substantial compliance with any of the statutes, regulations
or ordinances which such Regulatory Authority enforces,
unless such assertion has been waived, withdrawn or
otherwise resolved;
(ii) Threatening to revoke any license, franchise, permit or
governmental authorization which is material to Tower or any
Tower Subsidiary;
(iii) Requiring or threatening to require Tower or any Tower
Subsidiary, or indicating that Tower or any Tower Subsidiary
may be required, to enter into a cease and desist order,
agreement or memorandum of understanding, or any other
agreement restricting or limiting, or purporting to restrict
or limit, in any manner the operations of Tower or any Tower
Subsidiary, including without limitation any restriction on
the payment of dividends; or
(iv) Directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of Tower or
any Tower Subsidiary (any such notice, communication,
memorandum, agreement or order described in this sentence
and addressed specifically to Tower or Greencastle, herein
referred to as a "Tower Regulatory Agreement");
(e) Neither Tower nor any Tower Subsidiary has received, consented to,
or entered into any Tower Regulatory Agreement.
(f) There is no unresolved violation, criticism, or exception by any
Regulatory Authority with respect to any Tower Regulatory
Agreement.
(g) There is no injunction, order, judgment or decree imposed upon
Tower or any Tower Subsidiary or the assets of Tower or any Tower
Subsidiary.
Section 4.13 - ERISA
(a) Tower has delivered or made available to FNB true and complete
copies of the Tower Benefit Plans, all of which are set forth in
Tower Disclosure Schedule 4.13, together with:
(i) The most recent actuarial reports (if any) and financial
reports relating to those Tower Benefit Plans which
constitute "qualified plans" under IRC Section 401(a);
(ii) The most recent Form 5500, together with schedules and
attachments, as required (if any) relating to such Tower
Benefit Plans filed with the Department of Labor;
(iii) The most recent IRS notices, rulings, or determination
letters which pertain to any such Tower Benefit Plans; and
(iv) Summary plan descriptions and amendments thereto and any
insurance, third party administrator, or administrative
services only contracts related to the Tower Benefit Plans.
(b) To the Knowledge of Tower, neither Tower nor any Tower ERISA
Affiliate, and no pension plan (within the meaning of ERISA
Section 3(2)) maintained or contributed to by Tower or any Tower
ERISA Affiliate, has incurred any liability to the Pension Benefit
Guaranty Corporation, the Department of Labor or to the IRS with
respect to any pension plan qualified under IRC Section 401(a)
which liability has resulted or will result in a Material Adverse
Effect with respect to Tower, except liabilities to the Pension
Benefit Guaranty Corporation pursuant to ERISA Section 4007, all
of which have been fully paid, nor has any reportable event under
ERISA Section 4043(b) (with respect to which the 30 day notice
requirement has not been waived) occurred with respect to any such
pension plan which could result in a Material Adverse Effect.
(c) Neither Tower nor any Tower ERISA Affiliate has ever contributed
to or otherwise incurred any liability with respect to a
multi-employer plan (within the meaning of ERISA Section 3(37)).
(d) Each Tower Benefit Plan complies in all material respects with the
applicable requirements of ERISA, the IRC, the Securities Act, the
Exchange Act and any other applicable laws governing the Tower
Benefit Plan, and each Tower Benefit Plan has at all times been
administered in all material respects in accordance with all
requirements of the law and all regulations issued thereunder, and
in accordance with its terms and the terms of any applicable
collective bargaining agreement to the extent consistent with all
requirements of law. Each pension plan which is intended to be
qualified under Section 401(a) of the IRC is so qualified, and
each trust established by each pension plan is exempt from federal
income tax under Section 501(a) of the IRC. Each pension plan is,
and from its establishment has been, the subject of a favorable
determination letter from the IRS stating that the pension plan
meets the requirements of Section 401(a) of the IRC and that the
trust associated with the pension plan is tax-exempt under Section
501(a) of the IRC. No event has occurred since the date of each
pension plan's last determination letter that would jeopardize the
qualified status of the plan or the tax-exempt status of any trust
under Sections 401(a) and 501(a) of the IRC, respectively. No
lawsuits, claims (other than routine claims for benefits) or
complaints to, or by, any person, governmental entity, regulatory
body or arbiter have been filed, are pending or are threatened
with respect to any Tower Benefit Plan and there is no fact or
contemplated event that would give rise to any lawsuit, claim
(other than routine claims for benefits) or complaint with respect
to any Tower Benefit Plan. Without limiting the foregoing, the
following are true with respect to each Tower Benefit Plan:
(i) With respect to each Tower Benefit Plan, there has not
occurred, and no person is contractually bound to enter
into, any "prohibited transaction" within the meaning of
Section 4975(c) of the IRC or Section 406 of ERISA, which
transaction is not exempt under Section 4975(d) of the IRC
or Section 408 of ERISA.
(ii) No Tower Benefit Plan is a Defined Benefit Plan as defined
in Section 3(35) of ERISA and no Tower ERISA Affiliate has
ever maintained or been obligated to contribute to any
Defined Benefit Plan.
(iii) No Tower Benefit Plan is a Multiemployer Plan as defined in
Section 3(37) of ERISA.
(iv) No Tower Benefit Plan is a Qualified Foreign Plan as the
term is defined in Section 404A of the IRC and no Tower
Benefit Plan is subject to the laws or regulations of any
jurisdiction other than the United States of America or one
of its political subdivisions.
(v) No Welfare Plan is a Voluntary Employees' Beneficiary
Association as defined in Section 501(c)(9) of the IRC.
(vi) All Welfare Plans and their related trusts comply in all
material respects with and have been administered in
compliance with (a) Section 4980B of the IRC and Sections
601 through 609 of ERISA and all Department of Treasury and
Department of Labor regulations issued thereunder,
respectively, and (b) the Health Insurance Portability and
Accountability Act of 1996 and all Department of Labor
regulations issued thereunder.
(vii) With respect to each Tower Benefit Plan maintained by Tower
or any Tower ERISA Affiliate, each Tower Benefit Plan
provides the plan sponsor the authority to amend or
terminate the Tower Benefit Plan at any time, subject to the
applicable requirements of ERISA and the IRC and the
provisions of the Tower Benefit Plan.
(e) There is no existing, or, to the Knowledge of Tower, contemplated,
audit of any Tower Benefit Plan by the IRS, the U.S. Department of
Labor, the Pension Benefit Guaranty Corporation or any other
governmental authority. In addition, to the Knowledge of Tower,
there are no pending or threatened claims by, on behalf of or with
respect to any Tower Benefit Plan, or by or on behalf of any
individual participant or beneficiary of any Tower Benefit Plan,
alleging any violation of ERISA or any other applicable laws, or
claiming benefits (other than claims for benefits not in dispute
and expected to be granted promptly in the ordinary course of
business), nor to the Knowledge of Tower, is there any basis for
such claim.
(f) With respect to any services which Tower or any Tower Subsidiary
may provide as a record-keeper, administrator, custodian,
fiduciary, trustee or otherwise for any plan, program, or
arrangement subject to ERISA (other than any Tower Benefit Plan),
to the Knowledge of Tower, Tower and each Tower Subsidiary:
(i) Have correctly computed all contributions, payments or other
amounts for which it is responsible;
(ii) Have not engaged in any prohibited transactions (as defined
in IRC Section 4975(c) or ERISA Section 406 for which an
exemption does not exist);
(iii) Have not breached any duty imposed by ERISA; and
(iv) Have not otherwise incurred any liability to the IRS, the
Department of Labor, the Pension Benefit Guaranty
Corporation, or to any participant, beneficiary, fiduciary
or sponsor of any ERISA plan in the performance (or
non-performance) of services.
Section 4.14 - Brokers and Finders.
Neither Tower, any Tower Subsidiary, nor any of their respective
officers, directors, employees, independent contractors or agents, has employed
any broker, finder, investment banker or financial advisor, or incurred any
liability for any fees or commissions to any such person, in connection with the
Contemplated Transactions, except for Cedar Hill Advisors, LLC whose engagement
with Tower is disclosed in Tower Disclosure Schedule 4.14.
Section 4.15 - Related Party Transactions.
Except as set forth on Tower Disclosure Schedule 4.15, or as is
disclosed in the footnotes to the Tower Financials, as of the date hereof,
neither Tower nor any Tower Subsidiary is a party to any transaction (including
any loan or other credit accommodation but excluding deposits in the ordinary
course of business) with any Affiliate of Tower or any Tower Subsidiary, and all
such transactions were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other "persons" (as defined in Section 13(d) of the Exchange
Act, and the rules and regulations thereunder).
Section 4.16 - Environmental Matters.
(a) Except as set forth on Tower Disclosure Schedule 4.16, to the
Knowledge of Tower, neither Tower, any Tower Subsidiary, nor any
property owned or operated by Tower or any Tower Subsidiary, has
been or is in violation of or liable under any Environmental Law.
Except as set forth on Tower Disclosure Schedule 4.16, there are
no actions, suits or proceedings, or demands, claims or notices,
including without limitation notices, demand letters or requests
for information from any Regulatory Authority, instituted or
pending, or to the Knowledge of Tower, threatened, or any
investigation pending, relating to the liability of Tower or any
Tower Subsidiary with respect to any property owned or operated by
Tower or any Tower Subsidiary under any Environmental Law, except
as to any such actions or other matters which would not result in
a Material Adverse Effect.
(b) Except as set forth on tower Disclosure Schedule 4.16(b), to the
Knowledge of Tower, no property, now owned or operated by Tower or
any Tower Subsidiary or on which Tower or any Tower Subsidiary
holds a mortgage or other security interest or has foreclosed or
taken a deed in lieu of foreclosure, has been listed or proposed
for listing on the National Priority List under CERCLA, on the
Comprehensive Environmental Response Compensation and Liabilities
Information System, or any similar state list, or which is the
subject of federal, state or local enforcement actions or other
investigations which may lead to claims against Tower or any Tower
Subsidiary for response costs, remedial work, investigation,
damage to natural resources or for personal injury or property
damage claim, including, but not limited to, claims under CERCLA.
Section 4.17 - CRA Compliance.
Tower and Greencastle are in material compliance with the applicable
provisions of the CRA, and, as of the date hereof, Greencastle has received a
CRA rating of "satisfactory" or better from the OCC. To the Knowledge of Tower,
there is no fact or circumstance or set of facts or the circumstances which
would cause Tower or Greencastle to fail to comply with such provisions.
Section 4.18 - Loans.
Except as set forth on the Tower Disclosure Schedule 4.18, all loans
reflected as assets in the Tower Financials have good and marketable title, free
and clear of any and all encumbrances, liens, pledges, equities, claims, charge,
rights of first refusal or similar rights or security interests of any nature
encumbering such loans and are evidenced by notes, agreements or other evidences
of indebtedness with are true, genuine and correct, and to the extent secured,
are secured by valid liens and security interests that are legal, valid and
binding obligations of the maker thereof, enforceable in accordance with the
respective terms thereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles affecting the enforcement of creditors' rights, which have been
perfected.
Section 4.19 - Allowance for Loan Losses.
The allowance for loan losses reflected in Tower's reports to
Regulatory Authorities has been and will be established in accordance with and
in compliance with the requirements of all regulatory criteria and the allowance
for loan losses shown on the Tower Financials has been and will be established
in accordance with GAAP.
Section 4.20 - Information to be Supplied.
(a) The information supplied by Tower for inclusion in the
Registration Statement (including the Prospectus/Proxy Statement)
will not, as of the date the Registration Statement is declared
effective pursuant to the Securities Act, and as of the date the
Prospectus/Proxy Statement is mailed to shareholders of Tower and
FNB, and up to and including the date of the Tower and FNB
Shareholders Meetings, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances in
which they were made, not misleading.
(b) The information supplied by Tower for inclusion in the
Applications will, at the time each such document is filed with
any Regulatory Authority and up to and including the dates of any
required regulatory approvals or consents, as such Applications
may be amended by subsequent filings, be accurate in all material
respects.
Section 4.21 - Reporting Requirements
Tower Common Stock is registered under Section 12 of the Exchange Act
and is subject to the periodic reporting requirements imposed by Section 13 or
15(d) of the Exchange Act.
Section 4.22 - Reorganization.
As of the date hereof, Tower does not have any reason to believe that
the Merger will fail to qualify as a reorganization under Section 368(a) of the
IRC. Tower shall not take any action which would have the effect of causing the
Merger not to qualify as a tax-free reorganization within the meaning of Section
368 of the IRC.
Section 4.23 - Fairness Opinion.
Tower's board of directors has received a written opinion from Cedar
Hill Advisors, LLC to the effect that, as of the date hereof, the consideration
to be paid by Tower pursuant to this Agreement is fair, from a financial point
of view, to the Tower Shareholders.
Section 4.24 - Tower Common Stock.
The shares of Tower Common Stock to be issued and delivered to FNB
shareholders in accordance with this Agreement, when so issued and delivered,
will be validly authorized and issued and fully paid and non-assessable, and no
shareholder of Tower shall have any pre-emptive right with respect thereto.
Section 4.25 - Investment Securities.
None of the investments reflected in the Tower Financials under the
headings "Securities Available for Sale" and "Securities Held to Maturity" and
none of the investments made since December 31, 2004, are subject to any
restrictions, whether contractual or statutory, that materially impairs the
ability of Tower to freely dispose of the investments at any time, and all of
the investments comply with applicable laws, rules and regulations.
Section 4.26 - Securities Documents.
Tower has delivered to FNB copies of:
(a) Tower's annual reports on SEC Form 10-K for the years ended
December 31, 2004 and 2003;
(b) All other reports, registration statements and filings of Tower
filed with the SEC since January 1, 2005; and
(c) Tower's proxy materials used, or to be used, in connection with
its meetings of shareholders held in 2005 and 2004.
The Securities Documents complied, in all material respects, and any
future Securities Documents will comply, in all material respects, with the
rules and regulations of the SEC to the extent applicable thereto. All such
Securities Documents did not and will not, at the time of their filing, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading.
Section 4.27 - Quality of Representations.
To the Knowledge of Tower, no representation made by Tower in this
Agreement contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
Section 4.28 - Absence of Certain Changes.
Except as disclosed in Tower Disclosure Schedule 4.28 and provided for
or contemplated in this Agreement, since December 31, 2004 has not been:
(a) any material transaction by Tower or any Tower Subsidiary other
than in the ordinary course of business and in conformity with
past practices;
(b) any material alteration in the manner of keeping the books,
accounts, or records of Tower or any Tower Subsidiary, or in the
accounting policies or practices therein reflected;
(c) any elimination of a reserve where the liability related to such
reserve has remained; or
(d) any extraordinary reduction or deferral of ordinary or necessary
expenses.
Section 4.29 - Absence of Undisclosed Liabilities.
To the Knowledge of Tower, neither Tower nor any Tower Subsidiary has
any obligations or liability that is material to the financial condition or
operations of any of them, or that, when combined with all similar obligations
or liabilities would be material to their financial condition or operations (i)
except as disclosed in the Tower Financials delivered to FNB prior to the date
of this Agreement, or (ii) except as contemplated under this Agreement. Except
as disclosed in Tower Disclosure Schedule 4.29, since December 31, 2004, neither
Tower nor any Tower Subsidiary has incurred or paid any obligation or liability
which would be material to the financial condition or operations of any of them,
except for obligations paid in connection with transactions made by them in the
ordinary course of their business consistent with past practices and applicable
law.
ARTICLE V - COVENANTS OF THE PARTIES
Section 5.01 - Conduct of FNB's Business.
Through the Closing Date, FNB shall, and shall cause each FNB
Subsidiary to, in all material respects, conduct its businesses and engage in
transactions only in the ordinary course and consistent with past practice,
except as otherwise required or contemplated by this Agreement or with the
written consent of Tower. FNB shall, and shall cause each FNB Subsidiary to, use
its reasonable good faith efforts to preserve its business organization intact,
maintain good relationships with employees, and preserve the good will of
customers of FNB or the FNB Subsidiaries and others with whom business
relationships exist, provided that job vacancies that occur prior to the
Effective Date through attrition shall not be filled or any new employees hired,
in each case without the prior written consent of Tower, which consent shall not
be unreasonably withheld, delayed or conditioned; provided that FNB shall have
the right to replace customer contact employees in the ordinary course of
business without Tower's consent provided the salary of any employee does not
exceed $40,000.00 Through the Closing Date, except as otherwise consented to in
writing by Tower or as permitted by this Agreement, FNB shall not, and shall not
permit any FNB Subsidiary to:
(a) Change any provision of its articles of incorporation or of its
bylaws;
(b) Change the number of authorized or issued shares of its capital
stock; repurchase any shares of capital stock; or issue or grant
any option, warrant, call, commitment, subscription, Right or
agreement of any character relating to its authorized or issued
capital stock or any securities convertible into shares of capital
stock; declare, set aside or pay any dividend except quarterly
cash dividends not to exceed $0.21 per share for the fourth
quarter of 2005, $0.36 per share for the first quarter of 2006
(including any special dividends), $0.19 per share for the second
quarter of 2006 or other distribution in respect of capital stock;
or redeem or otherwise acquire any shares of FNB capital stock.
Nothing contained in this Section 5.01(b) or in any other section
of this Agreement shall be construed to permit FNB shareholders to
receive a dividend from both FNB and Tower in any quarter or to
deny or prohibit them from receiving one dividend from FNB and
Tower in any quarter and FNB shall cooperate with Tower to
coordinate dividend payment dates and record dates in the quarter
in which the closing is anticipated to occur to achieve such
results; subject to applicable regulatory restrictions, if any,
Bank may pay a cash dividend, in the aggregate, sufficient to fund
any dividend by FNB permitted hereunder;
(c) Grant any severance or termination pay, other than pursuant to
policies or agreements of FNB or any FNB Subsidiary in effect on
the date hereof, to, or enter into or amend any employment,
consulting, severance, compensation, "change-in-control", or
termination contract or arrangement with, any officer, director,
employee, independent contractor, agent, or other person
associated with FNB or any FNB Subsidiary;
(d) Grant job promotions or increase the rate of compensation of, or
pay any bonus to, any director, officer, employee, independent
contractor, agent or other person associated with FNB or any FNB
Subsidiary, except for routine periodic pay increases, selective
merit pay increases and pay-raises in connection with promotions
during the period beginning on the date of this Agreement and
ending on the Effective Date, in an aggregate amount for all
employees of no greater than Seventy Thousand Dollars
($70,000.00);
(e) Sell or otherwise dispose of any material asset, other than in the
ordinary course of business, consistent with past practice;
subject any asset to a lien, pledge, security interest or other
encumbrance, other than in the ordinary course of business
consistent with past practice; modify in any material manner the
manner in which it has heretofore conducted its business or enter
into any new line of business; incur any indebtedness for borrowed
money, except in the ordinary course of business, consistent with
past practice;
(f) Take any action which would result in any of the conditions set
forth in Article VI hereof not being satisfied, except as may be
required by applicable law and after written notification to
Tower;
(g) Change any method, practice, or principle of accounting, except as
may be required from time to time by law or changes in GAAP or by
any Regulatory Authority except as required by Section 5.08(a)(iv)
of this Agreement;
(h) Waive, release, grant, or transfer any rights of material value or
modify or change in any material respect any existing material
agreement to which it is a party, other than in the ordinary
course of business, consistent with past practice;
(i) Implement any pension, retirement, profit-sharing, bonus, welfare
benefit, or similar plan or arrangement that was not in effect on
the date of this Agreement, or amend any existing plan or
arrangement;
(j) Amend or otherwise modify its underwriting and other lending
guidelines and policies in effect as of the date hereof or
otherwise fail to conduct its lending activities in the ordinary
course of business consistent with past practice;
(k) Enter into, renew, extend, or modify any other transaction with
any Affiliate, other than deposit and loan transactions in the
ordinary course of business and which are in compliance with the
requirements of applicable laws and regulations;
(l) Enter into any interest rate swap, floor or cap, or similar
commitment, agreement, or arrangement;
(m) Take any action that would give rise to a right of payment to any
individual under any employment agreement except for contractually
required compensation;
(n) Purchase any security for its investment portfolio (i) rated less
than "baa" by either Standard & Poor's Corporation or Xxxxx'x
Investor Services, Inc., or (ii) with a remaining maturity more
than five (5) years;
(o) Except as set forth on FNB Disclosure Schedule 5.01(o), make any
capital expenditure of $25,000.00 or more; or undertake or enter
into any lease, contract or other commitment for its account;
(p) Take any action that would preclude the Merger from qualifying as
a reorganization within the meaning of Section 368 of the IRC;
(q) Not liquidate, merge with or into, or consolidate with, or be
purchased or acquired by, any other corporation, financial
institution, entity or person (or agree to any merger,
consolidation, affiliation, purchase, or acquisition) or permit
(or agree to permit) any other corporation, financial institution,
entity, or person to be merged with it or consolidate or affiliate
with any other corporation, financial institution, entity, or
person; acquire control over any other firm, financial
institution, corporation or organization; or create any
subsidiary; or acquire, lease, sell, convey, transfer or dispose
(or agree to acquire, lease, sell, convey, transfer, or dispose)
in any way any assets or any rights thereof of FNB to any party
other than Tower or an affiliate of Tower unless the failure to do
so shall, in the good faith judgment of the FNB board of
directors, after receipt of written advice of counsel, constitute
a breach of fiduciary duty by FNB's directors under the laws of
the Commonwealth of Pennsylvania;
(r) Enter into, grant, approve or extend any loan, credit facility,
line of credit, or letter of credit in excess of $1,000,000.00 for
an owner occupied residential first mortgage loan not with an
Affiliate of FNB or $700,000.00 for all other transactions; or
(s) Agree to do any of the foregoing.
Section 5.02 - Conduct of Tower's Business.
Tower shall, and shall cause each Tower Subsidiary to, use its
reasonable good faith efforts to preserve its business organization intact,
maintain good relationships with employees, and preserve the good will of
customers of Tower or the Tower Subsidiaries and others with whom business
relationships exist. Through the Closing Date, except as otherwise consented to
in writing by FNB or as permitted by this Agreement, Tower shall not, and shall
not permit any Tower Subsidiary to:
(a) Change any provision of its articles of incorporation or of its
bylaws during the period commencing on the date of this Agreement
and ending on the Effective Date except as required by law, this
Agreement or to effectuate the Contemplated Transactions;
(b) Declare, set aside or pay any cash dividends to Tower Shareholders
except quarterly cash dividends in amounts not to exceed $0.30 per
share for the third and fourth quarters of 2005 and for the first
and second quarters of 2006, or other cash distribution in respect
of capital stock;
(c) Take any action which would result in any of the conditions set
forth in Article VI hereof not being satisfied, except as may be
required by applicable law and after written notification to FNB;
(d) Change any method, practice, or principle of accounting, except as
may be required from time to time by law or changes in GAAP or by
any Regulatory Authority;
(e) Take any action that would preclude the Merger from qualifying as
a reorganization within the meaning of Section 368 of the IRC;
(f) Neither Tower nor any Tower Subsidiary, nor any executive officer
or director of Tower or any Tower Subsidiary, nor any shareholder
of Tower who may be deemed to be an "affiliate" (as that term is
defined for the purposes of Rules 145 and 405 promulgated by the
SEC under the Securities Act) of Tower, shall purchase or sell, or
submit a bid to purchase or an offer to sell, directly or
indirectly, any shares of Tower Common Stock or FNB Common Stock
or any options, rights or other securities convertible into shares
of Tower Common Stock or FNB Common Stock during the Determination
Period; provided, however, that Tower may purchase shares of Tower
Common Stock in the ordinary course of business of Tower during
the Determination Period for the benefit of a Tower Benefit Plan;
or
(g) Agree to any of the foregoing.
Section 5.03 - Access; Confidentiality.
(a) Through the Closing Date, each party hereto shall afford to the
other, including its authorized agents and representatives,
reasonable access to its and its Subsidiaries' businesses,
properties, assets, books and records, and personnel, at
reasonable hours and after reasonable notice; and the officers of
each party shall furnish the other party making such
investigation, including its authorized agents and
representatives, with such financial and operating data and other
information with respect to such businesses, properties, assets,
books and records, and personnel as the party making such
investigation, or its authorized agents and representatives, shall
from time to time reasonably request.
(b) Each party hereto agrees that it, and its authorized agents and
representatives, will conduct such investigation and discussions
hereunder in a confidential manner and otherwise in a manner so as
not to interfere unreasonably with the other party's normal
operations and customer and employee relationships. Neither FNB,
Tower, nor any of their respective subsidiaries, shall be required
to provide access to or disclose information where such access or
disclosure would violate or prejudice the rights of customers,
jeopardize attorney-client privilege or similar privilege with
respect to such information or contravene any law, rule,
regulation, decree, order, fiduciary duty or agreement entered
into prior to the date hereof.
Section 5.04 - Regulatory Matters.
Through the Closing Date:
(a) Tower and FNB shall cooperate with one another in the preparation
of the Registration Statement (including the Prospectus/Proxy
Statement) and all Applications and the making of all filings for,
and shall use their reasonable best efforts to obtain, as promptly
as practicable, all necessary permits, consents, approvals,
waivers and authorizations of all Regulatory Authorities necessary
or advisable to consummate the Contemplated Transactions. Tower
and FNB shall each give the other reasonable time to review any
Application to be filed by it prior to the filing of such
Application with the relevant Regulatory Authority, and each shall
consult the other with respect to the substance and status of such
filings.
(b) FNB and Tower shall each promptly furnish the other with copies of
written communications to, or received by them from, any
Regulatory Authority with respect to the Contemplated
Transactions.
(c) FNB and Tower shall cooperate with each other in the foregoing
matters and shall furnish the other with all information
concerning itself as may be necessary or advisable in connection
with any Application or filing, including any report filed with
the SEC, made by or on behalf of such party to or with any
Regulatory Authority in connection with the Contemplated
Transactions, and in each such case, the information shall be
accurate and complete in all material respects. In connection
therewith, FNB and Tower shall use their reasonable good faith
efforts to provide each other certificates, "comfort" letters and
other documents reasonably requested by the other.
Section 5.05 - Taking of Necessary Actions.
Through the Closing Date, in addition to the specific agreements
contained herein, each party hereto shall use reasonable best efforts to take,
or cause to be taken by each of its Subsidiaries, all actions, and to do, or
cause to be done by each of its Subsidiaries, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the Contemplated Transactions including, if necessary, appealing any adverse
ruling in respect of any Application.
Section 5.06 - No Solicitation.
FNB shall not, nor shall it authorize or permit any of its officers,
directors, shareholders, or employees or any investment banker, financial
advisor, attorney, accountant, or other representative retained by it to:
(a) Initiate, solicit, encourage (including by way of furnishing
information), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes any
Acquisition Proposal (as defined herein);
(b) Enter into or maintain or continue discussions or negotiate with
any person in furtherance of an Acquisition Proposal; or
(c) Agree to or endorse any Acquisition Proposal;
unless the failure to do so shall, in the good faith judgment of the
FNB board of directors, after receipt of written advice of counsel,
shall constitute a breach of fiduciary duty of the directors under the
laws of the Commonwealth of Pennsylvania. FNB shall notify Tower as
promptly as practicable (but in no event later than 2 Business Days),
in reasonable detail, as to any inquiries and proposals which it or any
of its representatives or agents may receive.
As used herein, the term "Acquisition Proposal" means a bona fide
written proposal for: (A) a merger, consolidation or acquisition of all
or substantially all the assets or liabilities of FNB, any FNB
Subsidiary, or any other business combination involving FNB or any FNB
Subsidiary; or (B) a transaction involving the transfer of beneficial
ownership of securities representing, or the right to acquire
beneficial ownership or to vote securities representing, 10% or more of
the then outstanding shares of FNB Common Stock or the then outstanding
shares of common stock of any FNB Subsidiary.
Section 5.07 - Update of Disclosure Schedules.
Through the Closing Date, FNB shall update the FNB Disclosure Schedule,
and Tower shall update the Tower Disclosure Schedule, as promptly as practicable
after the occurrence of any event which, if such event had occurred prior to the
date hereof, would have been disclosed on such schedule.
Section 5.08 - Other Undertakings by Tower and FNB.
(a) Undertakings of FNB.
(i) Shareholder Approval. As promptly as practicable after the
Registration Statement becomes effective under the
Securities Act, in accordance with the Exchange Act,
applicable law, and this Agreement, FNB shall submit this
Agreement to its shareholders for approval at the FNB
Shareholders Meeting with the recommendation that its
shareholders approve this Agreement and the Merger.
Notwithstanding the foregoing, the board of directors of FNB
may withhold its recommendation or withdraw its
recommendation to its shareholders only if (1) the board of
directors shall be in receipt of a Superior Proposal, as
defined below, and (2) the board of directors of FNB shall
have determined that the failure to do so, after receipt of
written advice of counsel, would constitute a breach of the
FNB directors' fiduciary duty under Pennsylvania Law. FNB
agrees that if the FNB board of directors fails to recommend
or withdraws its recommendation to its shareholders
regarding the Merger, and the shareholders subsequently fail
to approve the Merger, the fee and provisions of Section
8.01(b) hereof will be applicable.
"Superior Proposal" means a bona fide written proposal or
written offer (other than by another party hereto) for an
Acquisition Proposal on terms which the board of directors
of FNB concludes in good faith, based upon the advice of its
financial advisors and after written advice from outside
legal counsel, taking into account all the terms and
conditions of the Acquisition Proposal (including any
break-up fees, expense reimbursement provisions and
conditions to consummation), the legal, financial and
regulatory aspects of the proposal, FNB's responsibilities
under the BCL and the person making the proposal, are in the
aggregate more favorable to all the shareholders of FNB than
the Merger.
(ii) Phase I Environmental Audit. FNB shall permit Tower, if
Tower elects to do so, at its own cost and expense, to cause
a "phase I environmental audit" to be performed at any
physical location owned or occupied by FNB or any FNB
Subsidiary. Tower must commence a "phase I environmental
audit" within sixty (60) days of the date of this Agreement
or Tower's right to perform such an audit shall be waived.
Tower shall provide written notice to FNB of its intention
to conduct such an audit prior to commencing such audit.
(iii) Director Fee Continuation Agreements. Prior to Closing, FNB
and Bank shall have taken any and all actions required to
fully accrue and account for all liabilities and obligations
incurred as of the Effective Date for all director fee
continuation agreements in effect on the date of this
Agreement.
(iv) Prior to the Effective Date, each of FNB and its
Subsidiaries shall, consistent with GAAP and applicable
banking laws and regulations, modify or change its loan,
OREO, accrual, reserve, tax, litigation and real estate
valuation policies and practices, including loan
classifications and levels of reserves, so as to be applied
on a basis that is consistent with that of Tower; provided,
however, that no such modifications or changes need be made
prior to the satisfactions of the conditions set forth in
Sections 6.01(c) and 6.01(i); and further provided that in
any event, no accrual or reserve made by FNB or any of its
Subsidiaries pursuant to this Section 5.08(a)(iv) shall
constitute or be deemed to be a breach, violation of or
failure to satisfy any representation, warranty, covenant,
agreement, condition or other provision of this Agreement or
otherwise be considered in determining whether any such
breach, violation or failure to satisfy shall have occurred.
The recording of any such adjustments shall not be deemed to
imply any misstatement of previously furnished financial
statements or information and shall not be construed as a
concurrence of FNB or its management with any such
adjustments.
(b) Undertakings of Tower and FNB.
(i) Filings and Approvals. Tower and FNB shall cooperate with
each other in the preparation and filing, as soon as
practicable, of:
(A) The Applications;
(B) The Registration Statement (including the
Prospectus/Proxy Statement) and related filings, if any,
under state securities laws relating to the Merger; and
(C) All other documents necessary to obtain any other
approvals and consents required to effect consummation
of the Contemplated Transactions.
(ii) Public Announcements. Tower and FNB shall consult upon the
form and substance of any press release related to this
Agreement and the Contemplated Transactions, but nothing
contained herein shall prohibit either party, following
notification to the other party, from making any disclosure
which its counsel deems necessary under applicable law.
(iii) Maintenance of Insurance. Tower and each Tower Subsidiary,
and FNB and each FNB Subsidiary, shall maintain insurance in
such amounts as Tower and FNB, respectively, believe are
reasonable to cover such risks as are customary in relation
to the character and location of its and their respective
Subsidiaries' properties and the nature of its and their
respective Subsidiaries' businesses.
(iv) Maintenance of Books and Records. Tower and each Tower
Subsidiary, and FNB and each FNB Subsidiary, shall maintain
books of account and records on a basis consistent with past
practice.
(v) Taxes. Tower and each Tower Subsidiary, and FNB and each FNB
Subsidiary, shall file all federal, state, and local tax
returns required to be filed by it on or before the date
such returns are due, including any extensions, and pay all
taxes shown to be due on such returns on or before the dates
such payments are due, except those being contested in good
faith.
(vi) In-House Operations. After the Effective Date but no later
than ninety (90) days after the Effective Date, Tower and
FNB shall, subject to applicable legal requirements,
cooperate with each other, and in the interest of an
orderly, cost-effective consolidation of operations and in
the sole determination of Tower, terminate any in-house back
office, support, processing or other operational activities
or services of FNB or any FNB Subsidiary, including without
limitation accounting, loan processing and deposit services,
and substitute a contract or arrangement between Tower or
any Tower Subsidiary (as Tower shall select) and FNB for the
provision of similar services to FNB or any FNB Subsidiary.
(vii) Delivery of Financial Statements. FNB shall deliver to
Tower, the FNB Financials by each respective delivery date,
which financial statements shall fairly present, in all
material respects, its consolidated financial condition,
results of operations for the periods then ended in
accordance with GAAP, subject to year-end audit adjustments
and footnotes.
(viii) Delivery of SEC or Regulatory Filings and Documents. Tower
and FNB shall each deliver to the other copies of all
Securities Documents filed with the SEC or reports filed
with Regulatory Authorities promptly upon the filing
thereof.
(c) Undertakings of Tower.
(i) Shareholder Approval. As promptly as practicable after the
Registration Statement becomes effective under the
Securities Act, in accordance with the Exchange Act,
applicable law, and this Agreement, Tower shall submit this
Agreement to its shareholders for approval at the Tower
Shareholders Meeting with the recommendation that its
shareholders approve this Agreement and the Merger.
(ii) Subject to Tower's articles of incorporation, bylaws,
eligibility requirements of any Regulatory Authority
relating to Tower and continuing fiduciary duties of the
Tower board of directors, Tower shall renominate one (1) FNB
Nominee whose term expires at the 2006 Annual Meeting of
Shareholders of Tower for one additional three (3) year
term.
(iii) Employees, Severance Policy.
(A) Subject to Tower's usual personnel and qualification
policies, Tower will endeavor to continue the employment
of all current FNB employees in positions that will
contribute to the successful performance of the combined
organization. If that is impracticable or if Tower
elects to eliminate a position or does not offer the
employee comparable employment (i.e., a position of
substantially similar job descriptions or
responsibilities at substantially the same salary
level), then Tower will make severance payments to the
displaced employee as set forth in this Section
5.08(c)(iii).
(B) Tower will grant an eligible exempt employee two weeks
of severance pay for each year of service with a minimum
of four (4) weeks up to a maximum of twenty-six (26)
weeks of severance pay. Tower will grant an eligible
non-exempt employee one week of severance pay for each
year of service with a minimum of four (4) weeks up to a
maximum of twenty-six (26) weeks of severance pay.
(C) All employees of FNB or of any FNB Subsidiary on the
date hereof will be eligible for severance benefits as
set forth in this Section 5.08(c)(iii), except that no
employee of FNB or of any FNB Subsidiary who shall
receive any severance benefits as provided hereunder
shall also be eligible for any payment or benefit
pursuant to any "change in control" agreement,
employment agreement, salary continuation agreement or
similar plan or right.
(D) Each person eligible for severance benefits as set forth
in this Section 5.08(c)(iii) will remain eligible for
such benefits if his or her employment is terminated,
other than for "cause," or voluntarily terminates his or
her employment after being offered a position that is
not "comparable employment" as defined in Section
5.08(c)(iii)(A) above, within twelve months after the
Effective Date. Any person whose employment with Tower
or any Tower Subsidiary is terminated without "cause"
after twelve months from the Effective Date shall
receive such severance benefit from Tower or such Tower
Subsidiary as is provided for in Tower's general
severance policy for such terminations (with full credit
being given for each year of service with FNB or any FNB
Subsidiary).
(E) For purposes of this Section 5.08(c)(iii), "cause" means
the employer's good faith reasonable belief that the
employee (1) committed fraud, theft or embezzlement; (2)
falsified corporate records; (3) disseminated
confidential information concerning customers, Tower,
any Tower Subsidiary or any of its or their employees in
violation of any applicable confidentiality agreement or
policy; or (4) failed to adequately perform their duties
as an employee.
(iii) Employee Benefits.
(A) As of the Effective Date, each employee of FNB or of any
FNB Subsidiary who becomes an employee of Tower or of
any Tower Subsidiary shall be entitled to full credit
for each year of service with FNB or any FNB Subsidiary
for purposes of determining eligibility for
participation and vesting, but not benefit accrual, in
Tower's, or as appropriate, in the Tower Subsidiary's,
employee benefit plans, programs and policies. Tower
shall use the original date of hire by FNB or a FNB
Subsidiary in making these determinations.
(B) Subject to the other provisions of this Section
5.07(c)(iii) after the Effective Date, Tower may
discontinue, amend, convert to, or merge with, a Tower
or Tower Subsidiary plan any FNB Benefit Plan, subject
to the plan's provisions and applicable law.
(iv) Indemnification, Insurance.
(A) For six (6) years after the Effective Date (except as
described below), Tower shall indemnify, defend and hold
harmless the present and former directors and officers
of FNB and Bank (each, an "Indemnified Party") against
all costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative
or investigative, arising out of actions or omissions
occurring at or prior to the Effective Date (and also
advance expenses incurred) to the extent permitted by
Tower's articles of incorporation, and bylaws, and
applicable law, excepting liability for fraud,
deception, intentional misrepresentation, intentional
action, or self dealing; provided, however, that Tower
shall not have an obligation hereunder to any
Indemnified Party when and if a court of competent
jurisdiction or Regulatory Authority shall ultimately
determine, and such determination shall become final and
non-appealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is
prohibited by applicable law or the Regulatory
Authority.
(B) For a period of three (3) years following the Effective
Date, Tower shall pay the premiums for a director and
officer liability insurance tail policy for the
directors and officers of FNB and Bank as of the
Effective Date and for all former directors and officers
of FNB and Bank, if insurable by an insurance carrier
within the financial limitations of this Section
5.07(c)(iv), with conditions and terms substantially
comparable to the director and officer liability policy
of FNB as of the date of this Agreement, so long as the
policy can be obtained at a cost not in excess of 150%
of the rate for such director and officer liability
insurance tail policy, in effect as of the date of this
Agreement. In the event Tower is unable to obtain a
director and officer liability insurance tail policy at
a cost not in excess of 150% of such rate, Tower shall
obtain a director and officer liability insurance tail
policy with the maximum coverage reasonably available
for a cost that is equal to 150% of the rate.
(v) Reorganization. Through the Closing Date, Tower shall not
take any action that would preclude the Merger from
qualifying as a reorganization within the meaning of IRC
Section 368.
(vi) Conduct of Tower's and Greencastle's Business. Through the
Closing Date, Tower and Greencastle shall use their
reasonable good faith efforts to preserve their business
organizations intact, maintain good relationships with
employees, and preserve the good will of their customers and
others with whom business relationships exist.
ARTICLE VI - CONDITIONS
Section 6.01 - Conditions to FNB's Obligations under this Agreement.
The obligations of FNB hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions, unless waived by
FNB pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Tower to authorize the execution, delivery and
performance of this Agreement, and the consummation of the
Contemplated Transactions, shall have been duly and validly taken
by Tower, and FNB shall have received certified copies of the
resolutions evidencing such authorizations.
(b) Covenants; Representations. The obligations of Tower and
Greencastle required by this Agreement to be performed by Tower
and Greencastle at or prior to the Closing Date shall have been
duly performed and complied with in all material respects; and the
representations and warranties of Tower set forth in this
Agreement 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 as to any
representation or warranty which specifically relates to an
earlier date and except as to any representation or warranty to
the extent the breach of such representation or warranty does not
have a Material Adverse Effect.
(c) Approvals of Regulatory Authorities. Procurement by FNB and Tower
of all requisite approvals and consents of Regulatory Authorities
and the expiration of the statutory waiting period or periods
relating thereto for the Contemplated Transactions.
(d) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the Contemplated
Transactions.
(e) Officer's Certificate. Tower shall have delivered to FNB a
certificate, dated the Closing Date and signed, without personal
liability, by its Chairman or President, to the effect that the
conditions set forth in subsections (a) through (d) and (h) of
this Section 6.01 have been satisfied.
(f) Registration Statement. The Registration Statement shall be
effective under the Securities Act, and no proceedings shall be
pending or threatened by the SEC to suspend the effectiveness of
the Registration Statement; and all approvals deemed necessary by
Tower's counsel from state securities or "blue sky" authorities
with respect to the transactions contemplated by this Agreement
shall have been obtained.
(g) Tax Opinion. FNB shall have received an opinion of Xxxx|Xxxxx,
special counsel to FNB, or Xxxxx Xxxxxxx Xxxxxx and Company, LLC,
FNB's independent certified public accountants, dated the Closing
Date, to the effect that (a) the Merger constitutes a
reorganization under Section 368(a) of the IRC, and (b) any gain
realized in the Merger will be recognized only to the extent of
cash or other property (other than Tower Common Stock) received in
the Merger, including cash received in lieu of fractional share
interests; in rendering their opinion, such counsel may require
and rely upon representations and reasonable assumptions,
including those contained in certificates of officers of FNB,
Tower, and others.
(h) Approval by Tower's Shareholders. This Agreement shall have been
approved by the shareholders of Tower by such vote as is required
by the BCL and the articles of incorporation and bylaws of Tower.
(i) Approval by FNB's Shareholders. This Agreement shall have been
approved by the shareholders of FNB by such vote as is required by
the BCL and the articles of incorporation and bylaws of FNB.
(j) Other Documents. FNB shall have received such other certificates,
documents or instruments from Tower or its officers or others as
FNB shall have reasonably requested in connection with accounting
or income tax treatment of the Contemplated Transactions, or
related securities law compliance.
(k) Illegality. No statute, rule, or regulation shall have been
enacted, entered, promulgated or enforced by any governmental
authority that prohibits, restricts or makes illegal the
consummation of the Contemplated Transactions.
(l) Legal Opinion. FNB shall have been furnished with an opinion of
Tower's legal counsel, dated the Closing Date, addressed to FNB,
substantially to the effect set forth in Exhibit B. Such opinion
may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of Tower or any Tower Subsidiary
or appropriate governmental authorities; and (ii) in the case of
matters of law governed by the laws of the state in which they are
not licensed, reasonably rely upon the opinions of legal counsel
duly licensed in such states and may be limited, in any event, to
United States federal law, and the laws of the Commonwealth of
Pennsylvania.
(m) No Material Adverse Effect. No change in the business, property,
assets (including loan portfolios), liabilities (whether absolute,
contingent or otherwise), operations, liquidity, income, or
financial condition of Tower or any of the Tower Subsidiaries
shall have occurred since the date of this Agreement, which has
had, or would reasonably be likely to have, a Material Adverse
Effect.
Section 6.02 - Conditions to Tower's Obligations under this Agreement.
The obligations of Tower hereunder shall be subject to satisfaction at
or prior to the Closing Date of each of the following conditions, unless waived
by Tower pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, FNB and Bank to authorize the execution, delivery and
performance of this Agreement, and the consummation of the
Contemplated Transactions, shall have been duly and validly taken
by FNB and Bank, respectively, and Tower shall have received
certified copies of the resolutions evidencing such
authorizations.
(b) Covenants; Representations. The obligations of FNB and Bank
required by this Agreement to be performed by FNB and Bank at or
prior to the Closing Date shall have been duly performed and
complied with in all material respects; and the representations
and warranties of FNB set forth in this Agreement 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 as to any representation or warranty
which specifically relates to an earlier date and except as to any
representation or warranty to the extent the breach of such
representation or warranty does not have a Material Adverse
Effect.
(c) Approvals of Regulatory Authorities. Procurement by Tower and FNB
of all requisite approvals and consents of Regulatory Authorities
and the expiration of the statutory waiting period or periods
relating thereto for the Contemplated Transactions; and no such
approval or consent shall have imposed any condition or
requirement that, in the reasonable opinion of the Board of
Directors of Tower, would so materially and adversely impact the
economic or business benefits to Tower of the Contemplated
Transactions and render consummation of the Merger inadvisable.
(d) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the Contemplated
Transactions.
(e) Officer's Certificate. FNB shall have delivered to Tower a
certificate, dated the Closing Date and signed, without personal
liability, by its Chairman or President, to the effect that the
conditions set forth in subsections (a) through (d) and (h) of
this Section 6.02 have been satisfied.
(f) Registration Statement. The Registration Statement shall be
effective under the Securities Act, and no proceedings shall be
pending or threatened by the SEC to suspend the effectiveness of
the Registration Statement; and all approvals deemed necessary by
Tower's counsel from state securities or "blue sky" authorities
with respect to the transactions contemplated by this Agreement
shall have been obtained.
(g) Tax Opinion or Letter. Tower shall have received an opinion of
Xxxxxxxx Xxxxxxxx, P.C., special counsel to Tower, or a letter
from Xxxxx Xxxxxxx Xxxxxx and Company, LLC, Tower's independent
certified public accountants, dated the Closing Date, to the
effect that (a) the Merger constitutes a reorganization under
Section 368(a) of the IRC, and (b) any gain realized in the Merger
will be recognized only to the extent of cash or other property
(other than Tower Common Stock) received in the Merger, including
cash received in lieu of fractional share interests; in rendering
their opinion, such counsel or firm may require and rely upon
representations and reasonable assumptions, including those
contained in certificates of officers of FNB, Tower and others.
(h) Approval by FNB's Shareholders. This Agreement shall have been
approved by the shareholders of FNB by such vote as is required by
the BCL and the articles of incorporation and bylaws of FNB.
(i) Approval by Tower's Shareholders. This Agreement shall have been
approved by the Shareholders of Tower by such vote as is required
by the BCL and the articles of incorporation and bylaws of Tower.
(j) Dissenters' Rights. Holders of no more than ten percent (10%) of
the issued and outstanding shares of FNB Common Stock shall have
exercised their statutory appraisal or Dissenters' Rights and
holders of no more than five percent (5%) of the issued and
outstanding shares of Tower Common Stock shall have exercised
their statutory appraisal or Dissenters' Rights.
(k) Other Documents. Tower shall have received such other
certificates, documents or instruments from FNB or its officers or
others as Tower shall have reasonably requested in connection with
accounting or income tax treatment of the Contemplated
Transactions, or related securities law compliance.
(l) Phase I Environmental Audit Results. The results of any Phase I
environmental audit conducted pursuant to Section 5.08(a)(ii)
hereof shall not result in a Material Adverse Effect on FNB;
provided, however that (i) any such environmental audit must be
initiated within sixty (60) days of the date of this Agreement and
(ii) Tower must terminate or irrevocably waive its right to
terminate the Agreement for failure of the condition set forth in
this Section 6.02(m) within thirty (30) days of receiving the
results of such environmental audit.
(m) Director Fee Continuation Agreements. FNB and Bank shall have
completed and fully satisfied their obligations as set forth in
Section 5.08(a)(iii) of this Agreement.
(n) No Material Adverse Effect. No change in the business, property,
assets (including loan portfolios), liabilities (whether absolute,
contingent or otherwise), operations, business prospects,
liquidity, income, or financial condition of FNB or any of the FNB
Subsidiaries shall have occurred since the date of this Agreement,
which has had, or would reasonably be likely to have, a Material
Adverse Effect.
(o) Voting Agreement. In connection with the execution of this
Agreement, each director, executive officer and shareholder owning
ten percent (10%) or more of FNB Common Stock or any FNB
Subsidiary shall have delivered to Tower an executed Voting
Agreement in the form attached hereto as Exhibit A.
(p) Affiliates Letter. Tower shall have received from each director
and executive officer of FNB an executed counterpart of an
affiliate's letter, in the form attached hereto as Exhibit C.
(q) Landlord Consent. Tower shall have received all consents and
authorizations of landlords and other persons that are necessary
to permit the Merger to be consummated without the violation of
any lease or other material agreement to which FNB is a party or
by which any of its properties are bound, except where failure to
obtain such consent or authorization would be reasonably expected
not to have a Material Adverse Effect.
(r) Illegality. No statute, rule or regulation shall have been
enacted, entered, promulgated or enforced by any governmental
authority that prohibits, restricts or makes illegal the
consummation of the Contemplated Transactions.
(s) Legal Opinion. Tower shall have been furnished with an opinion of
FNB's legal counsel, dated the Closing Date, addressed to Tower,
substantially to the effect set forth in Exhibit D. Such opinion
may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of FNB or any FNB Subsidiary or
appropriate governmental authorities; and (ii) in the case of
matters of law governed by the laws of the state in which they are
not licensed, reasonably rely upon the opinions of legal counsel
duly licensed in such states and may be limited, in any event, to
United States federal law, and the laws of the State of Maryland.
ARTICLE VII - TERMINATION
Section 7.01 - Termination.
This Agreement may be terminated on or at any time prior to the Closing
Date:
(a) By the mutual written consent of the Board of Directors of Tower
and the Board of Directors of FNB;
(b) By Tower or FNB:
(i) If there shall have been any breach of any representation,
warranty, or obligation of the other party hereto (subject
to the same standards as set forth in Sections 6.01(b) or
6.02(b), as the case may be) and such breach cannot be, or
shall not have been, remedied within 30 days after receipt
by such party of written notice specifying the nature of
such breach and requesting that it be remedied; provided,
that, if such breach cannot reasonably be cured within such
30-day period but may reasonably be cured within 60 days,
and such cure is being diligently pursued, no such
termination shall occur prior to the expiration of such
60-day period;
(ii) If the Closing Date shall not have occurred prior to May 31,
2006 (except that if the Closing Date shall not have
occurred by such date because of a breach of this Agreement
by a party hereto, such breaching party shall not be
entitled to terminate this Agreement in accordance with this
provision);
(iii) If any Regulatory Authority whose approval or consent is
required for consummation of the Contemplated Transactions
shall issue a definitive written denial of such approval or
consent and the time period for appeals and requests for
reconsideration has run; or
(iv) If the Tower shareholders or FNB shareholders vote but fail
to approve the Merger at the Tower Shareholders Meeting or
FNB Shareholders Meeting.
(c) By FNB no later than 5:00 p.m. prevailing Eastern Time on the
Business Day immediately preceding the Closing Date, following a
determination that the conditions described in subsection (a) of
Exhibit 7.01(c) attached hereto have been met.
(d) By Tower if FNB or any FNB Subsidiary enters into any definitive
term sheet, letter of intent, agreement or similar type agreement
with a view to being acquired by, or effecting a business
combination with, any other person other than Tower; or any
agreement to merge, consolidate, to combine or to sell a material
portion of its assets or to be acquired in any other manner by any
other person or to acquire a material amount of assets or a
material equity position in any other person, whether financial or
otherwise.
(e) By FNB if FNB or any FNB Subsidiary enters into any transaction
described in (d) above after receipt of written advice of counsel
that failure to do so shall constitute a breach of fiduciary duty
by FNB's directors under the laws of the Commonwealth of
Pennsylvania.
(f) By FNB if Tower or any Tower Subsidiary enters into any definitive
term sheet, letter of intent, agreement or similar type of
agreement with a view to being acquired by, or effecting a
business combination, as a result of which Tower is not the
surviving entity or Tower's directors as of the date of this
Agreement do not comprise the majority of the surviving entity's
board of directors, with any person other than FNB and the FNB
board of directors determines that, with written advice of
counsel, such transaction is not in the best interests of the FNB
Shareholders. Provided, however, FNB must exercise the termination
option under this subsection 7.01(f) within thirty (30) calendar
days after Tower files a Form 8-K regarding events triggering the
termination option.
(g) By Tower if the FNB board of directors withdraws, changes, or
modifies its recommendation to its shareholders in any manner
adverse to Tower regarding this Agreement or the Merger.
Section 7.02 - Effect of Termination.
If this Agreement is terminated pursuant to Section 7.01 hereof or
otherwise, this Agreement shall forthwith become void, other than Sections 8.01
hereof which shall remain in full force and effect, and there shall be no
further liability on the part of Tower or FNB to the other, except for any
liability of Tower or FNB under such sections of this Agreement and except for
any liability arising out of a willful breach of this Agreement giving rise to
such termination.
ARTICLE VIII - MISCELLANEOUS
Section 8.01 - Expenses and Other Fees.
(a) Except as set forth in Section 8.01(b), each party hereto shall
bear and pay all costs and expenses incurred by it in connection
with the Contemplated Transactions, including fees and expenses of
its own financial consultants, accountants and counsel. For the
purpose of this Section, the costs of printing and distribution of
the Prospectus/Proxy Statement shall be proportionally borne by
the parties.
(b) If within 300 days after FNB fails to complete the Merger or fails
to obtain approval of the Merger at the FNB Shareholders' Meeting,
whichever occurs first, after the occurrence of one of the
following events and Tower shall not be in material breach of this
Agreement, FNB shall immediately pay Tower a fee of one million
three hundred fifty thousand dollars ($1,350,000.00):
(i) A person or group (as those terms are defined in Section
13(d) of the Exchange Act and the rules and regulations
thereunder), other than Tower or an Affiliate of Tower:
(A) Acquires beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of 25% or more of the
then outstanding shares of FNB Common Stock; or
(B) Enters into an agreement, letter of intent or memorandum
of understanding with FNB pursuant to which such person
or group or any affiliate of such person or group would:
(1) Merge or consolidate, or enter into any similar
transaction, with FNB;
(2) Acquire all or substantially all of the assets or
liabilities of FNB; or
(3) Acquire beneficial ownership of securities
representing, or the right to acquire beneficial
ownership or to vote securities representing, 25%
or more of the then outstanding shares of FNB
Common Stock; or
(ii) FNB authorizes, recommends or publicly proposes, or publicly
announces an intention to authorize, recommend or propose,
an agreement, letter of intent, or memorandum of
understanding described in subsection (b)(i)(B) above; or
(iii) The FNB shareholders vote but fail to approve the Merger at
the FNB Shareholders Meeting, or the FNB Shareholders
Meeting is cancelled, if prior to the shareholder vote or
cancellation:
(A) The FNB Board of Directors shall have withdrawn or
modified its recommendation that FNB shareholders
approve and adopt this Agreement;
(B) There has been an announcement by a person or group (as
those terms are defined in Section 13(d) of the Exchange
Act and the rules and regulations thereunder), other
than Tower or an Affiliate of Tower, of an offer or
proposal to acquire 25% or more of the FNB Common Stock
then outstanding, or to acquire, merge, or consolidate
with FNB, or to purchase all or substantially all of
FNB's assets and, within eighteen (18) months of such
announcement, FNB enters into an agreement with any
person or group (or those terms as defined in Section
13(d) of the Exchange Act and the rules and regulations
thereunder) to acquire, merge, or consolidate with FNB
or to purchase all or substantially all of FNB's assets;
(C) Any one or more directors or executive officers of FNB
or other persons who have signed a Voting Agreement have
failed to maintain continued ownership of less than 90%
of the shares of FNB Common Stock over which he, she or
they exercise sole or shared voting power (as identified
on his, her or their signed Voting Agreements), as
required by such signed Voting Agreements, as of the
date of the Voting Agreement; or
(D) Any director or executive officer of FNB or other person
who has signed a Voting Agreement shall have failed to
vote at the FNB Shareholders Meeting the shares of FNB
Common Stock over which he or she exercises sole or
shared voting power (as identified on his or her signed
Voting Agreement), as required by such signed Voting
Agreement.
(iv) This Agreement is terminated pursuant to Section 7.01 (d) or
(e).
Section 8.02 - Non-Survival of Representations and Warranties; Disclosure
Schedules.
All representations, warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants shall terminate on the
Closing Date. Without limiting the foregoing, Sections 1.02(d), (e) and (f),
2.07, 2.08, and 5.08(c)(ii), (iii), (iv), and (v) shall survive the Closing.
Section 8.03 - Amendment, Extension and Waiver.
Subject to applicable law, at any time prior to the Closing Date, the
parties may:
(a) Amend this Agreement;
(b) Extend the time for the performance of any of the obligations or
other acts of either party hereto;
(c) Waive any term or condition of this Agreement, any inaccuracies in
the representations and warranties contained herein or in any
document delivered pursuant hereto; or
(d) To the extent permitted by law, waive compliance with any of the
agreements or conditions contained in Articles V and VI hereof or
otherwise.
This Agreement may not be amended except by an instrument in writing
signed, by authorized officers, on behalf of the parties hereto. Any agreement
on the part of a party hereto to any extension or waiver shall be valid only if
set forth in an instrument in writing signed by a duly authorized officer on
behalf of such party, but such waiver or failure to insist on strict compliance
with such obligation, covenant, agreement, or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Section 8.04 - Entire Agreement.
(a) This Agreement, including the documents referred to herein or
delivered pursuant hereto, contains the entire agreement and
understanding of the parties with respect to its subject matter.
This Agreement supersedes all prior arrangements and
understandings between the parties, both written and oral, with
respect to its subject matter other than the Confidentiality
Agreement, dated August 30, 2005.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and its successors; provided, however, that
nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto and their
respective successors, any rights, remedies, obligations or
liabilities.
Section 8.05 - No Assignment.
Neither party hereto may assign any of its rights or obligations
hereunder to any other person, without the prior written consent of the other
party hereto.
Section 8.06 - Notices.
All notices or other communications hereunder shall be in writing and
shall be deemed given upon delivery if delivered personally, two business days
after mailing if mailed by prepaid registered or certified mail, return receipt
requested, or upon confirmation of good transmission if sent by telecopy,
addressed as follows:
(a) If to Tower, to:
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Tower Bancorp, Inc.
00 Xxxxxx Xxxxxx
X.X. Xxx 0 Xxxxxxxxxxx, XX 00000 Fax: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxx, Xx., Esquire
Xxxxxxxx Xxxxxxxx, P.C.
0000 Xxxxxxx Xxxxx Xxxx
Xxxx Xxxx, XX 00000
Fax: (000) 000-0000
(b) If to FNB, to:
Xxxx X. Xxxxxx
President and Chief Executive Officer
FNB Financial Corporation
000 Xxxxxxx Xxx Xxxx
XxXxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxxxxx, Xx., Esquire
Xxxx|Xxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Section 8.07 - Disclosure Schedules.
Information contained on either the FNB Disclosure Schedule or the
Tower Disclosure Schedule shall be deemed to cover the express disclosure
requirement contained in a representation or warranty of this Agreement and any
other representation or warranty of this Agreement of such party where it is
readily apparent it applies to such provision. The mere inclusion of an item in
a Disclosure Schedule as an exception to a representation or warranty shall not
be deemed an admission by a party that such item represents a material exception
or fact, event or circumstance or that such item is or could result in a
Material Adverse Effect.
Section 8.08 - Tax Disclosure.
Notwithstanding anything else in this Agreement to the contrary, each
party hereto (and each employee, representative or other agent of any party) may
disclose to any and all persons, without limitation of any kind, the federal
income tax treatment and federal income tax structure of any and all
transaction(s) contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are or have been provided to any party (or
to any employee, representative, or other agent of any party) relating to such
tax treatment or tax structure; provided, however, that this authorization of
disclosure shall not apply to restrictions reasonably necessary to comply with
Securities Laws. This authorization of disclosure is not effective until the
earlier of (i) the date of the public announcement of discussions relating to
the Contemplated Transactions, (ii) the date of the public announcement of the
Contemplated Transactions, or (iii) the date of execution of an agreement (with
or without conditions) to enter into the Contemplated Transactions.
Section 8.09 - Captions.
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement.
Section 8.10 - Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
Section 8.11 - Severability.
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
Section 8.12 - Governing Law.
This Agreement shall be governed by and construed in accordance with
the domestic internal law of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
TOWER BANCORP, INC.
ATTEST:
/s/ By /s/ Xxxxxxx X. Xxxxx
--------------------------------- ----------------------------------
_________________, Secretary Xxxxxxx X. Xxxxx
President and Chief Executive
Officer
ATTEST: FNB FINANCIAL CORPORATION
/s/ Xxxxxxxx X. Xxxxx By /s/ Xxxx X. Xxxxxx
--------------------------------- ----------------------------------
Xxxxxxxx X. Xxxxx, Secretary Xxxx X. Xxxxxx
President and Chief Executive
Officer
