EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
SWVA BANCSHARES, INC.
AND
FNB CORPORATION
--------------------
August 7, 2000
TABLE OF CONTENTS
ARTICLE 1
The Merger and Related Matters
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1.1 Definitions................................................................... 2
1.2 The Merger.................................................................... 2
1.3 Name and Continuing Operations................................................ 2
1.4 Management of FNB and the Banks............................................... 3
1.5 The Closing and Effective Date................................................ 3
ARTICLE 2
Basis and Manner of Conversion
2.1 Conversion of SWVA Stock...................................................... 3
2.2 Allocation.................................................................... 4
2.3 Election...................................................................... 5
2.4 Allocation of Cash Election Shares............................................ 5
2.5 Allocation of Stock Election Shares........................................... 6
2.6 No Allocation................................................................. 6
2.7 Computations.................................................................. 6
2.8 Cancellation of Shares........................................................ 6
ARTICLE 3
Manner of Exchange
3.1 Exchange Procedures........................................................... 7
3.2 Distributions with Respect to Unexchanged Shares.............................. 8
3.3 No Fractional Securities...................................................... 8
3.4 Certain Adjustments........................................................... 8
3.5 Rights of Dissenting Shareholders............................................. 9
ARTICLE 4
Representations and Warranties
4.1 Representations and Warranties of SWVA........................................ 9
(a) Organization, Standing and Power........................................ 9
(b) Authority............................................................... 9
(c) Capital Structure....................................................... 10
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(d) Ownership Capital Structure and
Organization of SVSB.................................................... 10
(e) Financial Statements.................................................... 11
(f) Absence of Undisclosed Liabilities...................................... 11
(g) Legal Proceedings; Compliance with Laws................................. 12
(h) Regulatory Approvals.................................................... 12
(i) Labor Relations......................................................... 12
(j) Tax Matters............................................................. 13
(k) Property................................................................ 13
(l) Reports................................................................. 13
(m) Employee Benefit Plans.................................................. 13
(n) Investment Securities................................................... 14
(o) Certain Contracts....................................................... 14
(p) Insurance............................................................... 15
(q) Loans, OREO and Allowance for Loan Losses............................... 15
(r) Absence of Material Changes and Events.................................. 16
(s) Statements True and Correct............................................. 16
(t) Brokers and Finders..................................................... 17
(u) Repurchase Agreements................................................... 17
(v) Trust Accounts.......................................................... 17
(w) Environmental Matters................................................... 17
4.2 Representations and Warranties of FNB......................................... 18
(a) Organization, Standing and Power........................................ 18
(b) Authority............................................................... 19
(c) Capital Structure....................................................... 19
(d) Ownership of the FNB Subsidiaries; Capital Structure
of the FNB Subsidiaries; and Organization of the FNB
Subsidiaries.......................................................... 20
(e) Financial Statements.................................................... 20
(f) Absence of Undisclosed Liabilities...................................... 21
(g) Legal Proceedings; Compliance with Laws................................. 21
(h) Regulatory Approvals.................................................... 22
(i) Labor Relations......................................................... 22
(j) Tax Matters............................................................. 22
(k) Property................................................................ 22
(l) Reports................................................................. 23
(m) Employee Benefit Plans.................................................. 23
(n) Investment Securities................................................... 24
(o) Certain Contracts....................................................... 24
(p) Insurance............................................................... 24
(q) Loans, OREO, and Allowance for Loan Losses.............................. 25
(r) Absence of Material Changes and Events.................................. 26
(s) Statements True and Correct............................................. 26
(t) Brokers and Finders..................................................... 26
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(u) Repurchase Agreements................................................... 26
(v) Administration of Trust Accounts........................................ 27
(w) Environmental Matters................................................... 27
ARTICLE 5
Conduct Prior to the Effective Date
5.1 Access to Records and Properties............................................... 28
5.2 Confidentiality................................................................ 29
5.3 Registration Statement, Proxy Statement and
Shareholder Approval........................................................... 29
5.4 Operation of the Business of FNB and SWVA...................................... 30
5.5 Dividends...................................................................... 31
5.6 No Solicitation................................................................ 31
5.7 Regulatory Filings............................................................. 31
5.8 Public Announcements........................................................... 32
5.9 Notice of Breach............................................................... 32
5.10 Accounting Treatment........................................................... 32
5.11 Merger Consummation............................................................ 32
5.12 FNB Acquisition Transaction.................................................... 32
5.13 Affiliate Agreements........................................................... 32
ARTICLE 6
Additional Agreements
6.1 Conversion of Stock Options.................................................... 32
6.2 Benefit Plans.................................................................. 33
6.3 Indemnification................................................................ 35
ARTICLE 7
Conditions to the Merger
7.1 Conditions to Each Party's Obligations to Effect the
Merger......................................................................... 35
(a) Shareholder Approval.................................................... 35
(b) Regulatory Approvals.................................................... 36
(c) Registration Statement.................................................. 36
(d) Tax Opinion............................................................. 36
(e) Opinions of Counsel..................................................... 36
(f) Legal Proceedings....................................................... 36
(g) Amendment of SVSB ESOP.................................................. 36
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7.2 Conditions to Obligations of FNB............................................... 36
(a) Representations and Warranties.......................................... 36
(b) Performance of Obligations.............................................. 37
7.3 Conditions to Obligations of SWVA.............................................. 37
(a) Representations and Warranties.......................................... 37
(b) Performance of Obligations.............................................. 37
(c) Investment Banking Letter............................................... 37
ARTICLE 8
Termination
8.1 Termination.................................................................... 37
8.2 Effect of Termination.......................................................... 38
8.3 Non-Survival of Representations, Warranties and Covenants...................... 39
8.4 Expenses....................................................................... 39
ARTICLE 9
General Provisions
9.1 Entire Agreement............................................................... 40
9.2 Waiver and Amendment........................................................... 40
9.3 Descriptive Headings........................................................... 41
9.4 Governing Law.................................................................. 41
9.5 Notices........................................................................ 41
9.6 Counterparts................................................................... 42
9.7 Severability................................................................... 42
9.8 Subsidiaries................................................................... 42
Exhibit 1.4 - Addendum to Employment Agreements
Exhibit A - Plan of Merger between SWVA Bancshares, Inc. and FNB Corporation
Exhibit B - Exchange Agent Agreement
Exhibit C - Affiliate Agreement
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of August 7, 2000 by and between FNB Corporation, a Virginia corporation
with its principal office located in Christiansburg, Virginia ("FNB"), and SWVA
Bancshares, Inc., a Virginia corporation with its principal office located in
Roanoke, Virginia ("SWVA").
WITNESSETH:
WHEREAS, FNB and SWVA (together, the "Companies") desire to affiliate, so
that First National Bank ("First National") and Southwest Virginia Savings Bank,
FSB ("SVSB") (together, the "Banks") will be under the common control of FNB;
and
WHEREAS, FNB and SWVA have agreed to the affiliation of their two companies
through a merger under Virginia law, as a result of which SWVA would merge with
and into FNB and the shareholders of SWVA would become shareholders of FNB, all
as more specifically provided in this Agreement and the Plan of Merger in the
form attached hereto as Exhibit A (the "Plan"); and
WHEREAS, the Boards of Directors of the Companies each believe it is in the
best interests of their respective corporations and their shareholders to
affiliate as provided herein and that the respective shareholder values of FNB
and SWVA can be maximized over time through this affiliation; and
WHEREAS, the Boards of Directors of the Companies each believe that the
transaction contemplated in this Agreement is in the best interests of the
communities they serve and of their respective employees; and
WHEREAS, the Boards of Directors of the Companies each believe that after
the affiliation the holding company structure should provide management and
technical assistance and support for recruitment, training and retention of
skilled officers and employees to the Banks in order to enable the combined
organization to operate more efficiently; and
WHEREAS, the respective Boards of Directors of the Companies have resolved
that the transactions described herein are in the best interests of the parties
and their respective shareholders and have authorized and approved the execution
and delivery of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
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ARTICLE 1
The Merger and Related Matters
1.1 Definitions. Any term defined anywhere in this Agreement shall
have the meaning ascribed to it for all purposes of this Agreement (unless
expressly noted to the contrary). In addition:
(a) the term "knowledge" when used with respect to a party shall
mean the knowledge of any "Executive Officer" of such party, as such term is
defined in Regulation O, (12 C.F.R. 215);
(b) the term "Material Adverse Effect", when applied to a party,
shall mean an event, occurrence or circumstance (including without limitation
(i) the making of any provisions for possible loan and lease losses, write-downs
or other real estate and taxes and (ii) any breach of a representation or
warranty by such party) which (a) has or is reasonably likely to have a material
adverse effect on the financial position, results of operations or business of
the party and its subsidiaries, taken as a whole, or (b) would materially impair
the party's ability to perform its obligations under this Agreement or the
consummation of the Merger and the other transactions contemplated by this
Agreement; provided, however, that solely for purposes of measuring whether an
event, occurrence or circumstance has a material adverse effect on such party's
results of operations, the term "results of operations" shall mean net interest
income plus non-interest income (less securities gains) less gross expenses
(excluding provisions for possible loan and lease losses, write-downs of other
real estate and taxes); and provided further, that material adverse effect and
material impairment shall not be deemed to include the impact of (i) changes in
banking and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, (ii) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and bank holding companies generally, and (iii) the Merger and related expenses
associated with the transactions contemplated by this Agreement on the operating
performance of the parties to this Agreement; and
(c) the term "Previously Disclosed" by a party shall mean
information set forth in a written disclosure letter that is delivered by that
party to the other party prior to or contemporaneously with the execution of
this Agreement and specifically designated as information "Previously Disclosed"
pursuant to this Agreement.
1.2 The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Date as defined in Section 1.5 hereof, SWVA will be merged with
and into FNB (the "Merger"). At the Effective Date, the Merger shall have the
effect as provided in Section 13.1-721 of the Virginia Stock Corporation Act.
1.3 Name and Continuing Operations. The respective names and
banking offices of the Banks will not change as a result of the Merger. After
the Effective Date, FNB shall continue to be headquartered in Christiansburg,
Virginia.
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1.4 Management of FNB and the Banks. The directors, officers and
employees of the Banks will not change as a result of the Merger except that
Xxxxxx X. Xxxxx, Xx. shall be appointed to the Board of SVSB. On the Effective
Date, the number of Directors of FNB shall be increased by two members by adding
one member in Class I whose terms expire at the 2003 annual meeting of
shareholders and by adding one member in Class III whose terms expire at the
2002 annual meeting of shareholders. X. X. Xxxxx shall be appointed to fill the
vacancy created in Class I and Xxxxxxxx Xxxx shall be appointed to fill the
vacancy created in Class III. At the next annual meeting of shareholders of FNB,
management of FNB will recommend to shareholders that those gentlemen be elected
as a member of Class I and Class III, respectively. In addition, on the
Effective Date, FNB agrees to assume the employment agreements between SWVA and
X. X. Xxxxxxxx and Xxxxxxx Xxxxxx, and as of the Effective Time, FNB shall enter
into an Addendum to the employment agreement for X. X. Xxxxxxxx and Xxxxxxx
Xxxxxx, as attached hereto as Exhibit 1.4. In addition, as of the Effective
Date, FNB shall enter into an agreement with X. X. Xxxxx in which FNB agrees to
pay Xx. Xxxxx $17,000 in consideration for his agreement not to compete with FNB
and its affiliates for a period of one year.
1.5 The Closing and Effective Date. The closing of the
transactions contemplated by this Agreement and the Plan of Merger shall take
place at the offices of FNB in Christiansburg, Virginia or at such other place
as may be mutually agreed upon by the parties. The Merger shall become effective
on the date shown on the Certificate of Merger issued by the State Corporation
Commission of Virginia effecting the Merger (the "Effective Date"). Unless
otherwise agreed upon in writing by the chief executive officers of FNB and
SWVA, subject to the conditions to the obligations of the parties to effect the
Merger as set forth in Article 6, the parties shall use their best efforts to
cause the Effective Date to occur on the first day of the month following the
month in which the conditions set forth in Sections 7.1(a) and 7.1(b) are
satisfied. All documents required by the terms of this Agreement to be delivered
at or prior to consummation of the Merger will be exchanged by the parties at
the closing of the Merger (the "Merger Closing"), which shall be held on or
before the Effective Date. FNB and SWVA shall execute and deliver to the
Virginia State Corporation Commission Articles of Merger containing a Plan of
Merger in substantially the form of Exhibit A hereto.
ARTICLE 2
Basis and Manner of Conversion
2.1 Conversion of SWVA Stock. At the Effective Date, by virtue of
the Merger, each share of the common stock, par value $0.10 per share, of SWVA
("SWVA Common Stock") issued and outstanding immediately prior to the Effective
Date will be converted into either cash (the "Cash Consideration") or shares of
common stock, par value $5.00 per share, of FNB ("FNB Common Stock"), the "Stock
Consideration," which Stock Consideration together with the Cash Consideration
(the "Merger
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Consideration"), in each case as the holder thereof shall have elected or be
deemed to have elected in accordance with Section 2.3.
In the case that the Market Value of FNB Common Stock (as defined later
in this Section 2.1) is equal to or greater than $15.30 per share and equal to
or less than $18.70 per share, the Cash Consideration will be $20.25 per share
and the Stock Consideration will equal shares of FNB Common Stock with a Market
Value of $20.25. In the case that the Market Value of FNB Common Stock is
greater than $18.70 and less than or equal to $20.00, the Stock Consideration
will equal 1.083 shares of FNB Common Stock for each outstanding share of SWVA
Common Stock, and the Cash Consideration will be $20.25. In the case that the
Market Value of FNB Common Stock is less than $15.30 and equal to or greater
than $14.00, the Stock Consideration will equal 1.324 shares of FNB Common Stock
for each outstanding share of SWVA Common Stock, and the Cash Consideration will
be $20.25.
The Market Value of FNB Common Stock will be the average of the last
reported sales prices per share of FNB Common Stock as reported on the NASDAQ
Exchange Composite Transactions Tape (as reported in The Wall Street Journal,
or, if not reported thereby, another authoritative source as chosen by FNB) for
the thirty consecutive full trading days on such exchange (even if FNB Common
Stock does not trade in each such day) ending at the close of trading on the
tenth calendar day before the Effective Date (the "Market Value" and the
"Measurement Period"). The ratio of shares of FNB's Common Stock that will be
exchanged for each outstanding share of SWVA Common Stock shall be referred to
herein as the "Exchange Ratio" and shall be rounded to the nearest thousandth
decimal point.
2.2 Allocation. Notwithstanding anything in this Agreement to the
contrary, the aggregate amount of cash to be issued to shareholders of SWVA in
the Merger shall be equal to $1,785,742 (the "Cash Amount"); provided that the
Cash Amount may be changed by FNB to accommodate the exercise by FNB of its
option to change the Cash Number and the Stock Number pursuant to the last
sentence of this Section 2.2. As used in this Agreement, the Cash Number shall
mean the aggregate number of shares of SWVA Common Stock to be converted into
the right to receive the Cash Consideration in the Merger, which shall be equal
to the Cash Amount divided by $20.25. The number of shares of SWVA Common Stock
to be converted into the right to receive Stock Consideration (the "Stock
Number") will be equal to (i) the number of shares of SWVA Common Stock issued
and outstanding immediately prior to the Effective Date of the Merger less (ii)
the sum of (A) the Cash Number and (B) the aggregate number of shares of SWVA
Common Stock to be exchanged for cash pursuant to Section 3.3. FNB shall have
the option to change the Cash Number and the Stock Number to more closely follow
the actual elections of SWVA shareholders pursuant to this Article 2, so long as
such modification to the Cash Number and the Stock Number does not prevent the
condition set forth in Section 7.1(d) from being satisfied.
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2.3 Election. Subject to allocation in accordance with the provisions
of this Article, each record holder of shares of SWVA Common Stock issued and
outstanding immediately prior to the Election Deadline (as defined in Section
3.1(i)) will be entitled, in accordance with Section 3.1, (i) to elect to
receive in respect of each such share held in such manner (A) Cash Consideration
(a "Cash Election") or (B) Stock Consideration (a "Stock Election") thus, making
an election for all Cash Consideration, all Stock Consideration, or a mixture
thereof or (ii) to indicate that such record holder has no preference as to the
receipt of Cash Consideration or Stock Consideration for all such shares held by
such holder (a "Non-Election"). Shares of SWVA Common Stock in respect of which
a Non-Election is made or as to which no election is made (collectively,
"Non-Election Shares") shall be deemed by FNB to be shares in respect of which
Cash Elections or Stock Elections have been made, as FNB shall determine.
Holders of record of shares of SWVA Common Stock who hold such shares as
nominees, trustees or in other representative capacities (a "Representative")
may submit multiple Forms of Election (as hereinafter defined), provided that
each such Form of Election covers all the shares of SWVA Common Stock held by
that Representative for a particular beneficial owner.
2.4 Allocation of Cash Election Shares. In the event that the aggregate
number of shares in respect of which Cash Elections have been made (the "Cash
Election Shares") exceeds the Cash Number, all shares of SWVA Common Stock in
respect of which Stock Elections have been made (the "Stock Election Shares")
and all Non-Election Shares will be converted into the right to receive Stock
Consideration (and cash in lieu of fractional interests in accordance with
Section 3.3), and Cash Election Shares will be converted into the right to
receive Cash Consideration or Stock Consideration in the following manner:
(i) the number of Cash Election Shares covered by each Form of
Election (as defined in Section 3.1(i)) to be converted into
Cash Consideration will be determined by multiplying the
number of Cash Election Shares covered by such Form of
Election by a fraction, (A) the numerator of which is the Cash
Number and (B) the denominator of which is the aggregate
number of Cash Election Shares rounded down to the nearest
whole number; and
(ii) all Cash Election Shares not converted into Cash
Consideration in accordance with Section 2.4(i) will be
converted into the right to receive Stock Consideration (and
cash in lieu of fractional interests in accordance with
Section 3.3).
Provided, however, that cash in lieu of fractional interests and cash to be paid
in connection with rights of dissenting shareholders, as provided in Sections
3.3 and 3.5, respectively, shall not be included in any determination of whether
this Section 2.4 shall be given effect.
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2.5 Allocation of Stock Election Shares. In the event that the
aggregate number of Stock Election Shares exceeds the Stock Number, all Cash
Election Shares and all Non-Election Shares (together, the " Cash Shares") will
be converted into the right to receive Cash Consideration, and all Stock
Election Shares will be converted into the right to receive Cash Consideration
or Stock Consideration in the following manner:
(i) the number of Stock Election Shares covered by each Form
of Election to be converted into Cash Consideration will be
determined by multiplying the number of Stock Election Shares
covered by such Form of Election by a fraction, (A) the
numerator of which is the Cash Number less the number of Cash
Shares and (B) the denominator of which is the aggregate
number of Stock Election Shares, rounded down to the nearest
whole number; and
(ii) all Stock Election Shares not converted into Cash
Consideration in accordance with Section 2.5(i) will be
converted into the right to receive Stock Consideration (and
cash in lieu of fractional interests in accordance with
Section 3.3).
2.6 No Allocation. In the event that neither Section 2.4 nor Section
2.5 is applicable, all Cash Election Shares will be converted into the right to
receive Cash Consideration, all Stock Election Shares will be converted into the
right to receive Stock Consideration (and cash in lieu of fractional interests
in accordance with Section 3.3) and Non-Election Shares will be converted into
the right to receive Cash Consideration or Stock Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3) as the Exchange Agent
shall determine.
2.7 Computations. The Exchange Agent (as defined in Section 3.1(i))
will make all computations to give effect to this Article 2.
2.8 Cancellation of Shares. As of the Effective Date of the Merger, all
such shares of SWVA Common Stock will no longer be outstanding and automatically
be cancelled and retired and will cease to exist and each holder of a
certificate formerly representing any such shares of SWVA Common Stock (a "SWVA
Certificate") will cease to have any rights with respect thereto, except the
right to receive Merger Consideration and any additional cash in lieu of
fractional shares of FNB Common Stock to be issued or paid in consideration
therefor upon surrender of such SWVA Certificate in accordance with Article 3,
without interest, subject to rights of dissenting shareholders as provided under
Section 3.5.
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ARTICLE 3
Manner of Exchange
3.1 Exchange Procedures.
(i) Not more than 45 days nor fewer than 30 days prior to the
Effective Date, First National, as the exchange agent
("Exchange Agent"), will mail a form of election (the "Form of
Election") to each shareholder of record of SWVA as of a
record date as close as practicable to the date of mailing and
mutually agreed to by SWVA and FNB. The Exchange Agent shall
enter into a written agreement with FNB and SWVA detailing its
duties and responsibilities and shall furnish evidence of
liability insurance for such activities in a form
substantially similar to Exhibit B. In addition, the Exchange
Agent will use its best efforts to make the Form of Election
available to the persons who become shareholders of SWVA
during the period between such record date and the Effective
Date. Any election to receive Merger Consideration will have
been properly made only if the Exchange Agent shall have
received on the fifth business day immediately preceding the
Effective Date (the "Election Deadline"), a Form of Election
properly completed and accompanied by a SWVA Certificate
("Certificate(s)") for the shares to which such Form of
Election relates, acceptable for transfer on the books of SWVA
(or an appropriate guarantee of delivery), as set forth in
such Form of Election. An election may be revoked only by
written notice received by the Exchange Agent prior to 5:00
p.m. on the Election Deadline. If an election is so revoked,
the Certificate(s) (or guarantee of delivery, as appropriate)
to which such election relates will be promptly returned to
the person submitting the same to the Exchange Agent.
(ii) As soon as reasonably practicable after the Effective
Date, the Exchange Agent will mail to each holder of record of
a Certificate, whose shares of SWVA Common Stock were
converted into the right to receive Merger Consideration and
those who failed to return a properly completed Form of
Election, (i) a letter of transmittal (which will specify that
delivery will be effected, and risk of loss and title to the
Certificates will pass, only upon delivery of the Certificates
to the Exchange Agent and will be in such form and have such
other provisions as the Exchange Agent may specify consistent
with this Agreement) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
the Merger Consideration.
(iii) With respect to properly made elections in accordance
with Section 3.1(i), and upon surrender in accordance with
Section 3.1(ii) of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may
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reasonably be required by the Exchange Agent, the holder of
such Certificate will be entitled to receive in exchange
therefor the Merger Consideration that such holder has the
right to receive pursuant to the provisions of Article 2,
and the Certificate so surrendered will forthwith be
canceled. In the event of a transfer of ownership of Shares
that are not registered in the transfer records of SWVA, as
the case may be, payment may be issued to a person other
than the person in whose name the Certificate so surrendered
is registered if such Certificate is properly endorsed or
otherwise in proper form for transfer and the person
requesting such issuance pays any transfer or other taxes
required by reason of such payment to a person other than
the registered holder of such Certificate or establishes to
the satisfaction of FNB that such tax has been paid or is
not applicable. Until surrendered as contemplated by this
Section 3.1, each Certificate will be deemed at any time
after the Effective Date to represent only the right to
receive upon such surrender the Merger Consideration that
the holder thereof has the right to receive in respect of
such Certificate pursuant to the provisions of Article 2. No
interest will be paid or will accrue on any cash payable to
holders of Certificates pursuant to the provisions of
Article 2.
3.2 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to the shares of SWVA Common Stock with a
record date after the Effective Date shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of SWVA Common Stock
represented thereby, and no cash payment in lieu of any fractional shares shall
be paid to any such holder pursuant to Section 3.3. Subject to the effect of
unclaimed property, escheat and other applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the Certificate
representing whole shares of SWVA Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of SWVA Common Stock to which such holder
is entitled pursuant to Section 3.3, and (ii) the amount of dividends or other
distributions, if any, with a record date after the Effective Date.
3.3 No Fractional Securities. No FNB Certificates or scrip representing
fractional shares of FNB Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional shares shall not entitle the owner
thereof to vote or to any other rights of a holder of FNB Common Stock. A holder
of Shares converted in the Merger who would otherwise have been entitled to a
fractional share of FNB Common Stock shall be entitled to receive a cash payment
(without interest) in lieu of such fractional share in an amount determined by
multiplying (i) the fractional share interest to which such holder would
otherwise be entitled by (ii) the Market Value of FNB Common Stock.
3.4 Certain Adjustments. If, after the date hereof and on or prior to
the Closing Date, the outstanding shares of SWVA Common Stock shall be changed
into a
8
different number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in stock or
other securities is declared thereon with a record date within such period, or
any similar event shall occur, the Merger Consideration will be adjusted
accordingly to provide to the holders of SWVA Common Stock, respectively, the
same economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend
or similar event.
3.5 Rights of Dissenting Shareholders. Shareholders of SWVA who object
to the Merger will be entitled to the rights and remedies set forth in sections
13.1-729 through 13.1-741 of the Virginia Stock Corporation Act.
ARTICLE 4
Representation and Warranties
4.1 Representations and Warranties of SWVA. SWVA represents and
warrants to FNB as follows:
(a) Organization, Standing and Power. (1) SWVA is a corporation
duly organized, validly existing and in good standing under the laws of
Virginia. It has all requisite corporate power and authority to carry on its
business as now being conducted and to own and operate its assets, properties
and business, and SWVA has the corporate power and authority to execute and
deliver this Agreement and perform the respective terms of this Agreement and
Plan of Merger. SWVA is duly registered as a unitary savings and loan holding
company under the 12 X.X.X.xx. 1467a. SVSB is the only subsidiary of SWVA and is
wholly-owned by it, and is a federal savings bank, duly organized, validly
existing and in good standing under the laws of the United States, is in
compliance in all material respects with all rules and regulations promulgated
by any relevant regulatory authority, has all requisite corporate power and
authority to carry on its business as now being conducted and to own and operate
its assets, properties and business, is an "insured bank" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and its
deposits are insured to the fullest extent allowed by law by the Federal Deposit
Insurance Corporation.
(2) Except as Previously Disclosed, neither SWVA nor SVSB
(collectively with SWVA, the "SWVA Companies") owns any equity securities of any
other corporation or entity.
(b) Authority. (1) The execution and delivery of this Agreement and the
Plan of Merger and the consummation of the Merger have been duly and validly
authorized by all necessary corporate action on the part of SWVA, except the
approval of shareholders. The Agreement has been approved by more than
two-thirds of SWVA's Board of Directors and represents the legal, valid, and
binding obligation of SWVA, enforceable against SWVA in accordance with its
terms (except in all such cases as enforceability may be limited by applicable
bankruptcy, insolvency, merger, moratorium
9
or similar laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(2) Neither the execution and delivery of the Agreement, the
consummation of the transactions contemplated therein, nor the compliance by
SWVA with any of the provisions thereof will (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or Bylaws of SWVA, (ii)
except as Previously Disclosed, constitute or result in the breach of any term,
condition or provision of, or constitute default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon, any property or assets of
the SWVA Companies pursuant to (A) any note, bond, mortgage, indenture, or (B)
any material license, agreement, lease or other instrument or obligation, to
which any of the SWVA Companies is a party or by which any of them or any of
their properties or assets may be bound, or (iii) subject to the receipt of the
requisite approvals referred to in Section 4.7, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to any of the SWVA
Companies or any of their properties or assets.
(c) Capital Structure. The authorized capital stock of SWVA consists of
2,225,000 shares of common stock, par value $0.10 per share ("SWVA Common
Stock"), of which 423,612 shares (including 4,328 shares held by the Management
Stock Bonus Plan of SVSB, which have not been awarded under such plan and for
which a Cash Election shall be made) are issued and outstanding, fully paid and
nonassessable, not subject to shareholder preemptive rights, and not issued in
violation of any agreement to which SWVA is a party or otherwise bound, or of
any registration or qualification provisions of any federal or state securities
laws outstanding options to purchase 64,049 shares of SWVA Common Stock; 275,000
shares of preferred stock, par value $0.10 per share ("SWVA Preferred Stock"),
none of which shares are issued and outstanding. Except as Previously Disclosed,
there are no outstanding understandings or commitments of any character pursuant
to which SWVA and any of the SWVA Companies could be required or expected to
issue shares of capital stock.
(d) Ownership, Capital Structure, and Organization of SVSB. (1) SWVA
does not own, directly or indirectly, 5% or more of the outstanding capital
stock or other voting securities of any corporation, bank or other organization
actively engaged in business except SVSB and a service corporation wholly-owned
by SVSB, Southwest Virginia Service Corporation, Inc. The outstanding shares of
capital stock of SVSB have been duly authorized and are validly issued, and are
fully paid and nonassessable and all such shares are owned by SWVA free and
clear of all liens, claims and encumbrances and were not issued in violation of
any agreement or of any regulation or qualification provisions of federal or
state securities laws. No rights are authorized, issued or outstanding with
respect to the capital stock of SVSB and there are no agreements, understandings
or commitments relating to the right of SWVA to vote or to dispose of
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said shares. None of the shares of capital stock of SVSB has been issued in
violation of the preemptive rights of any person.
(2) SVSB is a duly organized federal savings bank, validly existing
and in good standing under applicable laws. SVSB (i) has full corporate power
and authority to own, lease and operate its properties and to carry on its
business as now conducted except where the absence of such power or authority
would not have a material adverse effect on the financial condition, results of
operations or business of SWVA on a consolidated basis, and (ii) is duly
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification and where failure to do qualify would have
a material adverse effect on the financial condition, results of operations or
business of SWVA on a consolidated basis. SVSB has all federal, state, local and
foreign governmental authorizations and licenses necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, except where failure to obtain such authorization or license would
not have a material adverse effect on its business.
(e) Financial Statements. SWVA's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1999, and all other documents filed or to be filed
subsequent to June 30, 1999 under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act"), in the form filed with the SEC (in
each such case, the "SWVA Financial Statements") did not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading; and
each of the balance sheets in or incorporated by reference into the SWVA
Financial Statements (including the related notes and schedules thereto) fairly
presents and will fairly present the financial position of the entity or
entities to which it relates as of its date and each of the statements of income
and changes in stockholders' equity and cash flows or equivalent statements in
the SWVA Financial Statements (including any related notes and schedules
thereto) fairly presents and will fairly present the results of operations,
changes in stockholders' equity and changes in cash flows, as the case may be,
of the entity or entities to which it relates for the periods set forth therein,
in each case in accordance with generally accepted accounting principles
consistently applied to banks and savings and loan holding companies during the
periods involved, except as may be noted therein, subject to normal and
recurring year-end audit adjustments in the case of unaudited statements.
(f) Absence of Undisclosed Liabilities. At June 30, 1999, and at any
subsequent date reflected in such Financial Statements, none of the SWVA
Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the SWVA Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.
11
(g) Legal Proceedings; Compliance with Laws. Except as Previously
Disclosed, there are no actions, suits or proceedings instituted or pending or,
to the best knowledge of SWVA, threatened or probable of assertion against any
of the SWVA Companies, or against any property, asset, interest or right of any
of them, that are reasonably expected to have, either individually or in the
aggregate, a material adverse effect on the financial condition of SWVA on a
consolidated basis or that are reasonably expected to threaten or impede the
consummation of the transactions contemplated by this Agreement. None of the
SWVA Companies is a party to any agreement or instrument or subject to any
judgment, order, writ, injunction, decree or rule that might reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business or prospects of SWVA on a consolidated basis. Except as
Previously Disclosed, as of the date of this Agreement, none of the SWVA
Companies nor any of their properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any federal or state governmental
agency or authority charged with the supervision or regulation of depository
institutions or mortgage lenders or engaged in the insurance of deposits which
restricts or purports to restrict in any material respect the conduct of the
business of it or any of its subsidiaries or properties, or in any manner
relates to the capital, liquidity, credit policies or management of it; and
except as Previously Disclosed, none of the SWVA Companies has been advised by
any such regulatory authority that such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter or
similar submission. To the best knowledge of SWVA, the SWVA Companies have
complied in all material respects with all laws, ordinances, requirements,
regulations or orders applicable to its business (including environmental laws,
ordinances, requirements, regulations or orders).
(h) Regulatory Approvals. SWVA knows of no reason why the regulatory
approvals referred to in Section 7.1(b) should not be obtained without the
imposition of any condition of the type referred to in Section 7.1(b). SVSB is
in material compliance with the applicable provisions of the Community
Reinvestment Act and the regulations promulgated thereunder, and SVSB currently
has a CRA rating of satisfactory or better. To the knowledge of SWVA, there is
no fact or circumstance or set of facts or circumstances that would cause SVSB
to fail to comply with such provisions or cause the rating of SVSB to fall below
satisfactory.
(i) Labor Relations. None of the SWVA Companies is a party to, or is
bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it the subject of
a proceeding asserting that is has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel it to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it, pending or, to the
best of its knowledge, threatened, nor is it aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in any
other organizational activity.
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(j) Tax Matters. The SWVA Companies have filed all federal, state, and
local tax returns and reports required to be filed, and all taxes shown by such
returns to be due and payable have been paid or are reflected as a liability in
the SWVA Financial Statements or are being contested in good faith and have been
Previously Disclosed. Except to the extent that liabilities therefor are
specifically reflected in the SWVA Financial Statements, there are no federal,
state or local tax liabilities of the SWVA Companies other than liabilities that
have arisen since December 31, 1999, all of which have been properly accrued or
otherwise provided for on the books and records of the SWVA Companies. Except as
Previously Disclosed, no tax return or report of any of the SWVA Companies is
under examination by any taxing authority or the subject of any administrative
or judicial proceeding, and no unpaid tax deficiency has been asserted against
any of the SWVA Companies by any taxing authority.
(k) Property. Except as disclosed or reserved against in the SWVA
Financial Statements, all of the SWVA Companies have good and marketable title
free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the SWVA Financial Statements as being
owned by the SWVA Companies as of the dates thereof. To the best knowledge of
SWVA, all buildings, and all fixtures, equipment, and other property and assets
which are material to its business on a consolidated basis, held under leases or
subleases by the SWVA Companies are held under valid instruments enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency,
merger, moratorium and similar laws. The buildings, structures, and
appurtenances owned, leased, or occupied by the SWVA Companies are, to the best
knowledge of SWVA, in good operating condition, in a state of good maintenance
and repair and (i) comply with applicable zoning and other municipal laws and
regulations, and (ii) there are no defects therein.
(l) Reports. Since January 1, 1998, the SWVA Companies have filed all
reports and statements, together with any amendments required to be made with
respect thereto, that were required to be filed with the SEC, the Federal
Reserve, the SCC, and any other governmental or regulatory authority or agency
having jurisdiction over their operations.
(m) Employee Benefit Plans. (1) SWVA will deliver for FNB's review, as
soon as practicable, true and complete copies of all material pension,
retirement, profit-sharing, deferred compensation, stock option, bonus, vacation
or other material incentive plans or agreements, all material medical, dental or
other health plans, all cafeteria or flexible benefits plans, all life insurance
plans and all other material employee benefit plans or fringe benefit plans and
any related trust or other funding instrument, including, without limitation,
all "employee benefit plans" as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
SWVA or SVSB for the benefit of current or former employees,
13
retirees or other beneficiaries eligible to participate (collectively, the "SWVA
Benefit Plans"). Any of the SWVA Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "SWVA ERISA Plan." No SWVA Benefit Plan is or has been a
"multiemployer plan," as defined in Section 3(37) of ERISA.
(2) Except as Previously Disclosed, all SWVA Benefit Plans are
in compliance with the applicable terms of ERISA, the Internal Revenue Code of
1986, as amended (the "IRC") and any other applicable laws, rules and
regulations the breach or violation of which could result in a material
liability to SWVA on a consolidated basis. In the case of any plan intended to
be qualified under IRC Section 401, compliance with such qualification
requirements shall mean the receipt of a current, favorable determination letter
from the Internal Revenue Service based on laws changes effective through 1994
and operation of the plan in accordance with its terms or in accordance with any
subsequently enacted law for which the remedial amendment period has not yet
ended.
(3) No SWVA ERISA Plan which is subject to the minimum
funding standards of Section 302 of ERISA or IRC Section 412 has any "unfunded
current liability," as that term is defined in Section 302(d)(8)(A) of ERISA,
and the present fair market value of the assets of any such plan which is a
"defined benefit plan," as that term is defined in Section 3(35) of ERISA,
exceeds the plan's "benefit liabilities," as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors that would apply
if the plan was terminated in accordance with all applicable legal requirements.
(n) Investment Securities. Except as Previously Disclosed and except
for pledges to secure public and trust deposits and obligations under agreements
pursuant to which any of the SWVA Companies has sold securities subject to an
obligation to repurchase, none of the investment securities reflected in the
SWVA Financial Statements is subject to any restriction, contractual, statutory,
or otherwise, which would impair materially the ability of the holder of such
investment to dispose freely of any such investment at any time.
(o) Certain Contracts. (1) Except as Previously Disclosed, neither SWVA
nor any SWVA subsidiary is a party to, or is bound by, (i) any material
agreement, arrangement or commitment, (ii) any agreement, indenture or other
instrument relating to the borrowing of money by SWVA or SVSB or the guarantee
by SWVA or SVSB of any such obligation, (iii) any agreement, arrangement or
commitment relating to the employment of a consultant or the employment,
election, retention in office or severance of any present or former director or
officer, (iv) any agreement to make loans or for the provision, purchase or sale
of goods, services or property between SWVA or SVSB and any director or officer
of SWVA or SVSB, or any member of the immediate family or affiliate of any of
the foregoing, or (v) any agreement between SWVA or SVSB and any 5% or more
shareholder of SWVA; in each case other than
14
agreements entered into in the ordinary course of the banking business of SWVA
or SVSB consistent with past practice.
(2) Neither SWVA or SVSB, nor to the knowledge of SWVA, the
other party thereto, is in default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument whether entered into in
the ordinary course of business or otherwise, nor has there occurred any event
that, with the lapse of time or giving of notice or both, would constitute such
a default, other than defaults of loan agreements by borrowers from SWVA or SVSB
in the ordinary course of its business.
(p) Insurance. A complete list of all policies or binders of fire,
liability, product liability, workmen's compensation, vehicular and other
insurance held by or on behalf of the SWVA Companies has previously been
furnished to FNB and all such policies or binders are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner customary for the industry
and are deemed appropriate and sufficient by SWVA. The SWVA Companies are not in
default with respect to any provision contained in any such policy or binder and
have not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion. None of the SWVA Companies has received notice
of cancellation or non-renewal of any such policy or binder. None of the SWVA
Companies has knowledge of any inaccuracy in any application for such policies
or binders, any failure to pay premiums when due or any similar state of facts
or the occurrence of any event that is reasonably likely to form the basis for
any material claim against it not fully covered (except to the extent of any
applicable deductible) by the policies or binders referred to above. None of the
SWVA Companies has received notice from any of its insurance carriers that any
insurance premiums will be increased materially in the future or that any such
insurance coverage will not be available in the future on substantially the same
terms as now in effect.
(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of SWVA, to SWVA's best knowledge each loan reflected as an asset in
the SWVA Financial Statements or the financial statements of SVSB (i) is
evidenced by notes, agreements, or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected, and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency, and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. All loans and extensions of credit which are
subject to regulation of the Federal Reserve which have been made by SWVA and
SVSB comply therewith.
15
(2) The classification on the books and records of SWVA and
SVSB of loans and/or non-performing assets as nonaccrual, troubled debt
restructuring, OREO or other similar classification, complies in all material
respects with generally accepted accounting principles and applicable regulatory
accounting principles.
(3) Except for liens, security interests, claims, charges, or
such other encumbrances as have been appropriately reserved for in the SWVA
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no adverse claims or encumbrances on the OREO. All
title, hazard and other insurance claims and mortgage guaranty claims with
respect to the OREO have been timely filed and neither SWVA nor SVSB has been
received any notice of denial of any such claim.
(4) SWVA and SVSB are in possession of all of the OREO or, if
any of the OREO remains occupied by the mortgagor, eviction or summary
proceedings have been commenced or rental arrangements providing for market
rental rates have been agreed upon and SWVA and/or SVSB are diligently pursuing
such eviction of summary proceedings or such rental arrangements. Except as
Previously Disclosed, no legal proceeding or quasi-legal proceeding is pending
or, to the knowledge of SWVA and SVSB, threatened concerning any OREO or any
servicing activity or omission to provide a servicing activity with respect to
any of the OREO.
(5) Except as Previously Disclosed, all loans made by any of
the SWVA Companies to facilitate the disposition of OREO are performing in
accordance with their terms.
(6) The allowance for possible loan losses shown on the SWVA
Financial Statements was, and the allowance for possible loan losses shown on
the financial statements of SWVA as of dates subsequent to the execution of this
Agreement will be, in each case as of the dates thereof, adequate in all
material respects to provide for possible losses, net of recoveries relating to
loans previously charged off, on loans outstanding (including accrued interest
receivable) of the SWVA Companies and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by SWVA.
(r) Absence of Material Changes and Events. Since June 30, 1999, there
has not been any material adverse change in the condition (financial or
otherwise), aggregate assets or liabilities, cash flow, earnings or business or
SWVA, and SWVA has conducted its business only in the ordinary course consistent
with past practice.
(s) Statements True and Correct. None of the information supplied or to
be supplied by SWVA for inclusion in the Registration Statement, the Proxy
Statement/Prospectus or any other document to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and, in the case of the
Registration Statement, when it becomes effective and with respect to the Proxy
Statement/Prospectus, when first
16
mailed to SWVA shareholders, be false or misleading with respect to any material
fact or omit to state any material fact necessary in order to make the
statements therein not misleading, or, in the case of the Proxy
Statement/Prospectus or any supplement thereto, at the time of the SWVA
Shareholders' Meeting, be false or misleading with respect to any material fact
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the SWVA
Shareholders' Meeting. All documents that SWVA is responsible for filing with
the SEC or any other regulatory authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable law, including applicable provisions of federal and
state securities law.
(t) Brokers and Finders. Neither SWVA nor SVSB, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, except for RP Financial.
(u) Repurchase Agreements. With respect to all agreements pursuant to
which SWVA or SVSB has purchased securities subject to an agreement to resell,
if any, SWVA or SVSB, as the case may be, has a valid, perfected first lien or
security interest in the government securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
(v) Trust Accounts. SVSB does not provide trust services.
(w) Environmental Matters. (1) Except as Previously Disclosed, to the
best of SWVA's knowledge, neither SWVA nor SVSB owns or leases any properties
affected by toxic waste, radon gas or other hazardous conditions or constructed
in part with the use of asbestos. Each of SWVA and SVSB is in substantial
compliance with all Environmental Laws applicable to real or personal properties
in which it has a direct fee ownership or, with respect to a direct interest as
lessee, applicable to the leasehold premises or, to the best knowledge of SWVA
and SVSB, the premises on which the leasehold is situated. Neither SWVA nor SVSB
has received any Communication alleging that SWVA or SVSB is not in such
compliance and, to the best knowledge of SWVA and SVSB, there are no present
circumstances (including Environmental Laws that have been adopted but are not
yet effective) that would prevent or interfere with the continuation of such
compliance.
(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on SWVA and SVSB of any
liability arising under any Environmental Laws pending or, to the best knowledge
of SWVA and SVSB, threatened against (A) SWVA or SVSB, (B) any person or entity
whose liability for any Environmental Claim, SWVA or SVSB has or may have
retained or assumed either contractually or by operation of law, or (C)any real
or personal property which SWVA or
17
SVSB owns or leases, or has been or is judged to have managed or to have
supervised or participated in the management of, which liability might have a
material adverse effect on the business, financial condition or results of
operations of SWVA. SWVA and SVSB are not subject to any agreement, order,
judgment, decree or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability.
(3) To the best knowledge of SWVA and SVSB, there are no
legal, administrative, arbitral or other proceedings, or Environmental Claims or
other claims, causes of action or governmental investigations of any nature,
seeking to impose, or that could result in the imposition, on SWVA or SVSB of
any liability arising under any Environmental Laws pending or threatened against
any real or personal property in which SWVA or SVSB holds a security interest in
connection with a loan or a loan participation which liability might have a
material adverse effect on the business, financial condition or results of
operations of SWVA. SWVA and SVSB are not subject to any agreement, order,
judgment, decree or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability.
(4) With respect to all real and personal property owned or
leased by SWVA or SVSB, other than OREO, SWVA has made available to FNB copies
of any environmental audits, analyses and surveys that have been prepared
relating to such properties. With respect to all OREO held by SWVA or SVSB and
all real or personal property which SWVA or SVSB has been or is judged to have
managed or to have supervised or participated in the management of, SWVA has
made available to FNB the information relating to such OREO available to SWVA.
SWVA and SVSB are in compliance in all material respects with all
recommendations contained in any environmental audits, analyses and surveys
relating to any of the properties, real or personal, described in this
subsection (4).
(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against SWVA or SVSB or against any
person or entity whose liability for any Environmental Claim SWVA or SVSB has or
may have retained or assumed either contractually or by operation of law.
4.2 Representations and Warranties of FNB. FNB represents and warrants
to SWVA as follows:
a) Organization, Standing and Power. (1) FNB is a corporation
duly organized, validly existing and in good standing under the laws of
Virginia. It has all requisite corporate power and authority to carry on its
business as now being
18
conducted and to own and operate its assets, properties and business, and FNB
has the corporate power and authority to execute and deliver this Agreement and
perform the respective terms of this Agreement and Plan of Merger. FNB is duly
registered as a bank holding company under the Bank Holding Company Act of 1956.
First National Bank, a wholly owned subsidiary of FNB, is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States, is in compliance in all material respects with all
rules and regulations promulgated by any relevant regulatory authority, it has
all requisite corporate power and authority to carry on its business as now
being conducted and to own and operate its assets, properties and business, is
an "insured bank" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder and its deposits are insured to the fullest extent
allowed by law by the Bank Insurance Fund of the Federal Deposit Insurance
Corporation.
(2) FNB has Previously Disclosed its subsidiary corporations
(and the subsidiaries thereof) (the "FNB Subsidiaries" and, collectively with
FNB, the "FNB Companies"). Except as Previously Disclosed, none of the FNB
Companies owns any equity securities of any other corporation or entity.
(b) Authority. (1) The execution and delivery of this Agreement and the
Plan of Merger and the consummation of the Merger have been duly and validly
authorized by all necessary corporate action on the part of FNB, except the
approval of shareholders. The Agreement represents the legal, valid, and binding
obligation of FNB, enforceable against FNB in accordance with its terms (except
in all such cases as enforceability may be limited by applicable bankruptcy,
insolvency, merger, moratorium or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(2) Neither the execution and delivery of the Agreement, the
consummation of the transactions contemplated therein, nor the compliance by FNB
with any of the provisions thereof will (i) conflict with or result in a breach
of any provision of the Articles of Incorporation or Bylaws of FNB, (ii) except
as Previously Disclosed, constitute or result in the breach of any term,
condition or provision of, or constitute default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon, any property or assets of
the FNB Companies pursuant to (A) any note, bond, mortgage, indenture, or (B)
any material license, agreement, lease or other instrument or obligation, to
which any of the FNB Companies is a party or by which any of them or any of
their properties or assets may be bound, or (iii) subject to the receipt of the
requisite approvals referred to in Section 4.7, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to any of the FNB
Companies or any of their properties or assets.
(c) Capital Structure. The authorized capital stock of FNB consists of:
10,000,000 shares of common stock, par value $5.00 per share ("FNB Common
Stock), of which 4,084,172 shares are issued and outstanding, fully paid and
19
nonassessable, not subject to shareholder preemptive rights, and not issued in
violation of any agreement to which FNB is a party or otherwise bound, or of any
registration or qualification provisions of any federal or state securities
laws. The shares of FNB Common Stock to be issued in exchange for shares of SWVA
Common Stock upon consummation of the Merger will have been duly authorized and,
when issued in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable and subject to no preemptive rights. Except
as Previously Disclosed, there are no outstanding understandings or commitments
of any character pursuant to which FNB and any of the FNB Companies could be
required or expected to issue shares of capital stock.
(d) Ownership of the FNB Subsidiaries; Capital Structure of FNB
Subsidiaries; and Organization of the FNB Subsidiaries. (1) FNB does not own,
directly or indirectly, 5% or more of the outstanding capital stock or other
voting securities of any corporation, bank or other organization actively
engaged in business except as Previously Disclosed. The outstanding shares of
capital stock of each FNB Subsidiary have been duly authorized and are validly
issued, and are fully paid and nonassessable and all such shares are owned by
FNB or an FNB Subsidiary free and clear of all liens, claims and encumbrances
and were not issued in violation of any agreement or of any regulation or
qualification provisions of federal or state securities laws. No rights are
authorized, issued or outstanding with respect to the capital stock of any FNB
Subsidiary and there are no agreements, understandings or commitments relating
to the right of FNB to vote or to dispose of said shares. None of the shares of
capital stock of any FNB Subsidiary has been issued in violation of the
preemptive rights of any person.
(2) Each FNB Subsidiary is a duly organized corporation or
association, validly existing and in good standing under applicable laws. Each
FNB Subsidiary (i) has full corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted except
where the absence of such power or authority would not have a material adverse
effect on the financial condition, results of operations or business of FNB on a
consolidated basis, and (ii) is duly qualified to do business in the states of
the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification and where
failure to do qualify would have a material adverse effect on the financial
condition, results of operations or business of FNB on a consolidated basis.
Each FNB Subsidiary has all federal, state, local and foreign governmental
authorizations and licenses necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted, except where
failure to obtain such authorization or license would not have a material
adverse effect on the business of such FNB Subsidiary.
(e) Financial Statements. FNB's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and all other documents filed or to be
filed subsequent to December 31, 1999 under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (together with the rules and
regulations
20
thereunder, the "Exchange Act"), in the form filed with the SEC (in each such
case, the "FNB Financial Statements") did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into the FNB Financial Statements
(including the related notes and schedules thereto) fairly presents and will
fairly present the financial position of the entity or entities to which it
relates as of its date and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in the FNB
Financial Statements (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles
consistently applied to banks and bank holding companies during the periods
involved, except as may be noted therein, subject to normal and recurring
year-end audit adjustments in the case of unaudited statements.
(f) Absence of Undisclosed Liabilities. At December 31, 1999, and at
any subsequent date reflected in such Financial Statements, none of the FNB
Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the FNB Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.
(g) Legal Proceedings; Compliance with Laws. Except as Previously
Disclosed, there are no actions, suits or proceedings instituted or pending or,
to the best knowledge of FNB, threatened or probable of assertion against any of
the FNB Companies, or against any property, asset, interest or right of any of
them, that are reasonably expected to have, either individually or in the
aggregate, a material adverse effect on the financial condition of FNB on a
consolidated basis or that are reasonably expected to threaten or impede the
consummation of the transactions contemplated by this Agreement. None of the FNB
Companies is a party to any agreement or instrument or subject to any judgment,
order, writ, injunction, decree or rule that might reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
business or prospects of FNB on a consolidated basis. Except as Previously
Disclosed, as of the date of this Agreement, none of the FNB Companies nor any
of their properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, any federal or state governmental agency or authority
charged with the supervision or regulation of depository institutions or
mortgage lenders or engaged in the insurance of deposits which restricts or
purports to restrict in any material respect the conduct of the business of it
or any of its subsidiaries or properties, or in any manner relates to the
capital, liquidity, credit policies or management of it; and except as
Previously Disclosed, none of the FNB Companies has been advised by any such
regulatory authority that such authority is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding,
21
commitment letter or similar submission. To the best knowledge of FNB, the FNB
Companies have complied in all material respects with all laws, ordinances,
requirements, regulations or orders applicable to its business (including
environmental laws, ordinances, requirements, regulations or orders).
(h) Regulatory Approvals. FNB knows of no reason why the regulatory
approvals referred to in Section 7.1(b) should not be obtained without the
imposition of any condition of the type referred to in Section 7.1(b). First
National is in material compliance with the applicable provisions of the
Community Reinvestment Act and the regulations promulgated thereunder, and First
National currently has a CRA rating of satisfactory or better. To the knowledge
of FNB, there is no fact or circumstance or set of facts or circumstances that
would cause First National to fail to comply with such provisions or cause the
rating of First National to fall below satisfactory.
(i) Labor Relations. None of the FNB Companies is a party to, or is
bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it the subject of
a proceeding asserting that is has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel it to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it, pending or, to the
best of its knowledge, threatened, nor is it aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in any
other organizational activity.
(j) Tax Matters. The FNB Companies have filed all federal, state, and
local tax returns and reports required to be filed, and all taxes shown by such
returns to be due and payable have been paid or are reflected as a liability in
the FNB Financial Statements or are being contested in good faith and have been
Previously Disclosed. Except to the extent that liabilities therefor are
specifically reflected in the FNB Financial Statements, there are no federal,
state or local tax liabilities of the FNB Companies other than liabilities that
have arisen since December 31, 1999, all of which have been properly accrued or
otherwise provided for on the books and records of the FNB Companies. Except as
Previously Disclosed, no tax return or report of any of the FNB Companies is
under examination by any taxing authority or the subject of any administrative
or judicial proceeding, and no unpaid tax deficiency has been asserted against
any of the FNB Companies by any taxing authority.
(k) Property. Except as disclosed or reserved against in the FNB
Financial Statements, all of the FNB Companies have good and marketable title
free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the FNB Financial Statements as being owned
by the FNB Companies as of the dates thereof. To the best knowledge of FNB, all
buildings, and all fixtures, equipment, and other property and assets which are
material to its business on a consolidated basis, held
22
under leases or subleases by the FNB Companies are held under valid instruments
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, merger, moratorium and similar laws. The buildings, structures, and
appurtenances owned, leased, or occupied by the FNB Companies are, to the best
knowledge of FNB, in good operating condition, in a state of good maintenance
and repair and (i) comply with applicable zoning and other municipal laws and
regulations, and (ii) there are no latent defects therein.
(l) Reports. Since January 1, 1998, the FNB Companies have filed all
reports and statements, together with any amendments required to be made with
respect thereto, that were required to be filed with the SEC, the Federal
Reserve, the SCC, and any other governmental or regulatory authority or agency
having jurisdiction over their operations.
(m) Employee Benefit Plans. (1) FNB will deliver for SWVA's review, as
soon as practicable, true and complete copies of all material pension,
retirement, profit-sharing, deferred compensation, stock option, bonus, vacation
or other material incentive plans or agreements, all material medical, dental or
other health plans, all cafeteria or flexible benefits plans, all life insurance
plans and all other material employee benefit plans or fringe benefit plans and
any related trust or other funding instrument, including, without limitation,
all "employee benefit plans" as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
FNB or any FNB Subsidiary for the benefit of current or former employees,
retirees or other beneficiaries eligible to participate (collectively, the "FNB
Benefit Plans"). Any of the FNB Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "FNB ERISA Plan." No FNB Benefit Plan is or has been a
"multiemployer plan," as defined in Section 3(37) of ERISA.
(2) Except as Previously Disclosed, all FNB Benefit Plans are
in compliance with the applicable terms of ERISA, the Internal Revenue Code of
1986, as amended (the "IRC") and any other applicable laws, rules and
regulations the breach or violation of which could result in a material
liability to FNB on a consolidated basis. In the case of any plan intended to be
qualified under IRC Section 401, compliance with such qualification requirements
shall mean the receipt of a current, favorable determination letter from the
Internal Revenue Service based on laws changes effective through 1994 and
operation of the plan in accordance with its terms or in accordance with any
subsequently enacted law for which the remedial amendment period has not yet
ended.
(3) No FNB ERISA Plan which is subject to the minimum funding
standards of Section 302 of ERISA or IRC Section 412 has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
present fair market value of the assets of any such plan which is a "defined
benefit plan,"
23
as that term is defined in Section 3(35) of ERISA, exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan was terminated
in accordance with all applicable legal requirements.
(n) Investment Securities. Except for pledges to secure public and
trust deposits and obligations under agreements pursuant to which any of the FNB
Companies has sold securities subject to an obligation to repurchase, none of
the investment securities reflected in the FNB Financial Statements is subject
to any restriction, contractual, statutory, or otherwise, which would impair
materially the ability of the holder of such investment to dispose freely of any
such investment at any time.
(o) Certain Contracts. (1) Except as Previously Disclosed, neither FNB
nor any FNB subsidiary is a party to, or is bound by, (i) any material
agreement, arrangement or commitment, (ii) any agreement, indenture or other
instrument relating to the borrowing of money by FNB or any FNB Subsidiary or
the guarantee by FNB or any FNB Subsidiary of any such obligation, (iii) any
agreement, arrangement or commitment relating to the employment of a consultant
or the employment, election, retention in office or severance of any present or
former director or officer, (iv) any agreement to make loans or for the
provision, purchase or sale of goods, services or property between FNB or any
FNB Subsidiary and any director or officer of FNB or any FNB Subsidiary, or any
member of the immediate family or affiliate of any of the foregoing, or (v) any
agreement between FNB or any FNB Subsidiary and any 5% or more shareholder of
FNB; in each case other than agreements entered into in the ordinary course of
the banking business of FNB or a FNB Subsidiary consistent with past practice.
(2) Neither FNB or any FNB Subsidiary, nor to the knowledge
of FNB, the other party thereto, is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other instrument whether
entered into in the ordinary course of business or otherwise, nor has there
occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default, other than defaults of loan agreements by
borrowers from FNB or a FNB Subsidiary in the ordinary course of its business.
(p) Insurance. A complete list of all policies or binders of fire,
liability, product liability, workmen's compensation, vehicular and other
insurance held by or on behalf of the FNB Companies has previously been
furnished to SWVA and all such policies or binders are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner customary for the industry
and are deemed appropriate and sufficient by FNB. The FNB Companies are not in
default with respect to any provision contained in any such policy or binder and
have not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion. None of the
24
FNB Companies has received notice of cancellation or non-renewal of any such
policy or binder. None of the FNB Companies has knowledge of any inaccuracy in
any application for such policies or binders, any failure to pay premiums when
due or any similar state of facts or the occurrence of any event that is
reasonably likely to form the basis for any material claim against it not fully
covered (except to the extent of any applicable deductible) by the policies or
binders referred to above. None of the FNB Companies has received notice from
any of its insurance carriers that any insurance premiums will be increased
materially in the future or that any such insurance coverage will not be
available in the future on substantially the same terms as now in effect.
(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of FNB, to FNB's best knowledge each loan reflected as an asset in the
FNB Financial Statements or the financial statements of any FNB Subsidiary (i)
is evidenced by notes, agreements, or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected, and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency, and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. All loans and extensions of credit which are
subject to regulation of the Federal Reserve which have been made by FNB and the
FNB Subsidiaries comply therewith.
(2) The classification on the books and records of FNB and
each FNB Subsidiary of loans and/or non-performing assets as nonaccrual,
troubled debt restructuring, OREO or other similar classification, complies in
all material respects with generally accepted accounting principles and
applicable regulatory accounting principles.
(3) Except for liens, security interests, claims, charges, or
such other encumbrances as have been appropriately reserved for in the FNB
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no adverse claims or encumbrances on the OREO. All
title, hazard and other insurance claims and mortgage guaranty claims with
respect to the OREO have been timely filed and neither FNB nor any FNB
Subsidiary has been received any notice of denial of any such claim.
(4) FNB and each FNB Subsidiary are in possession of all of
the OREO or, if any of the OREO remains occupied by the mortgagor, eviction or
summary proceedings have been commenced or rental arrangements providing for
market rental rates have been agreed upon and FNB and/or each FNB Subsidiary are
diligently pursuing such eviction of summary proceedings or such rental
arrangements. Except as Previously Disclosed, no legal proceeding or quasi-legal
proceeding is pending or, to the knowledge of FNB and each FNB Subsidiary,
threatened concerning any OREO or any servicing activity or omission to provide
a servicing activity with respect to any of the OREO.
25
(5) Except as Previously Disclosed, all loans made by
any of the FNB Companies to facilitate the disposition of OREO are performing in
accordance with their terms.
(6) The allowance for possible loan losses shown on the FNB
Financial Statements was, and the allowance for possible loan losses shown on
the financial statements of FNB as of dates subsequent to the execution of this
Agreement will be, in each case as of the dates thereof, adequate in all
material respects to provide for possible losses, net of recoveries relating to
loans previously charged off, on loans outstanding (including accrued interest
receivable) of the FNB Companies and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by FNB.
(r) Absence of Material Changes and Events. Since December 31, 1999,
there has not been any material adverse change in the condition (financial or
otherwise), aggregate assets or liabilities, cash flow, earnings or business or
FNB, and FNB has conducted its business only in the ordinary course consistent
with past practice.
(s) Statements True and Correct. None of the information supplied or to
be supplied by FNB for inclusion in the Registration Statement, the Proxy
Statement/Prospectus or any other document to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and, in the case of the
Registration Statement, when it becomes effective and with respect to the Proxy
Statement/Prospectus, when first mailed to SWVA shareholders, be false or
misleading with respect to any material fact or omit to state any material fact
necessary in order to make the statements therein not misleading, or, in the
case of the Proxy Statement/Prospectus or any supplement thereto, at the time of
the SWVA Shareholders' Meeting, be false or misleading with respect to any
material fact or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the SWVA Shareholders' Meeting. All documents that FNB is responsible
for filing with the SEC or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law, including applicable provisions of
federal and state securities law.
(t) Brokers and Finders. Neither FNB nor any FNB Subsidiary, nor any of
their respective officers, directors or employees, has employed any broker,
finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein, except for
The Xxxxxx Xxxxxx Company.
(u) Repurchase Agreements. 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, as the case may be, has a valid,
perfected first lien or security interest in the government securities or other
collateral securing the
26
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
(v) Administration of Trust Accounts. FNB and FNB Subsidiaries have
properly administered, in all respects material and which could reasonably be
expected to be material to the business, operations or financial condition of
FNB and FNB Subsidiaries, taken as a whole, all accounts for which they act as
fiduciaries including but not limited to accounts for which they serve as
trustees, agents, custodians, personal representatives, guardians, conservators
or investment advisors, in accordance with the terms of the governing documents
and applicable state and federal law and regulation and common law. Neither FNB
nor a FNB Subsidiary, nor any director, officer or employee of FNB or a FNB
Subsidiary has committed any breach of trust with respect to any such fiduciary
account which is material to or could reasonably be expected to be material to
the business, operations or financial condition of FNB, or a FNB Subsidiary,
taken as a whole, and the accountings for each such fiduciary account are true
and correct in all material respects and accurately reflect the assets of such
fiduciary account in all material respects.
(w) Environmental Matters. (1) Except as Previously Disclosed, to the
best of FNB's knowledge, neither FNB nor any FNB Subsidiary owns or leases any
properties affected by toxic waste, radon gas or other hazardous conditions or
constructed in part with the use of asbestos. Each of FNB and the FNB
Subsidiaries is in substantial compliance with all Environmental Laws applicable
to real or personal properties in which it has a direct fee ownership or, with
respect to a direct interest as lessee, applicable to the leasehold premises or,
to the best knowledge of FNB and the FNB Subsidiaries, the premises on which the
leasehold is situated. Neither FNB nor any FNB Subsidiary has received any
Communication alleging that FNB or such FNB Subsidiary is not in such compliance
and, to the best knowledge of FNB and the FNB Subsidiaries, there are no present
circumstances (including Environmental Laws that have been adopted but are not
yet effective) that would prevent or interfere with the continuation of such
compliance.
(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on FNB and the FNB
Subsidiaries of any liability arising under any Environmental Laws pending or,
to the best knowledge of FNB and the FNB Subsidiaries, threatened against (A)
FNB or any FNB Subsidiary, (B) any person or entity whose liability for any
Environmental Claim, FNB or any FNB Subsidiary has or may have retained or
assumed either contractually or by operation of law, or (C)any real or personal
property which FNB or any FNB Subsidiary owns or leases, or has been or is
judged to have managed or to have supervised or participated in the management
of, which liability might have a material adverse effect on the business,
financial condition or results of operations of FNB. FNB and the FNB
Subsidiaries are not subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.
27
(3) To the best knowledge of FNB and the FNB Subsidiaries,
there are no legal, administrative, arbitral or other proceedings, or
Environmental Claims or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that could result in the
imposition, on FNB or any FNB Subsidiary of any liability arising under any
Environmental Laws pending or threatened against any real or personal property
in which FNB or any FNB Subsidiary holds a security interest in connection with
a loan or a loan participation which liability might have a material adverse
effect on the business, financial condition or results of operations of FNB. FNB
and the FNB Subsidiaries are not subject to any agreement, order, judgment,
decree or memorandum by or with any court, governmental authority, regulatory
agency or third party imposing any such liability.
(4) With respect to all real and personal property owned or
leased by FNB or any FNB Subsidiary, other than OREO, FNB has made available to
SWVA copies of any environmental audits, analyses and surveys that have been
prepared relating to such properties. With respect to all OREO held by FNB or
any FNB Subsidiary and all real or personal property which FNB or any FNB
Subsidiary has been or is judged to have managed or to have supervised or
participated in the management of, FNB has made available to SWVA the
information relating to such OREO available to FNB. FNB and the FNB Subsidiaries
are in compliance in all material respects with all recommendations contained in
any environmental audits, analyses and surveys relating to any of the
properties, real or personal, described in this subsection (4).
(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against FNB or any FNB Subsidiary or
against any person or entity whose liability for any Environmental Claim FNB or
any FNB Subsidiary has or may have retained or assumed either contractually or
by operation of law.
ARTICLE 5
Conduct Prior to the Effective Date
5.1 Access to Records and Properties. SWVA will keep FNB, and FNB will
keep SWVA advised of all material developments relevant to their respective
businesses prior to consummation of the Merger. Prior to the Effective Date,
FNB, on the one hand, and SWVA on the other, agree to give to the other party
reasonable access to all the premises and books and records (including tax
returns filed and those in preparation) of it and its subsidiaries and to cause
its officers to furnish the other with such financial and operating data and
other information with respect to the business and properties as the other shall
from time to time request for the purposes of verifying the warranties and
28
representations set forth herein; provided, however, that any such investigation
shall be conducted in such manner as not to interfere unreasonably with the
operation of the respective business of the other.
5.2 Confidentiality. Between the date of this Agreement and the
Effective Date, FNB and SWVA each will maintain in confidence, and cause its
directors, officers, employees, agents and advisors to maintain in confidence,
and not use to the detriment of the other party, any written, oral or other
information obtained in confidence from the other party or a third party in
connection with this Agreement or the transactions contemplated hereby unless
such information is already known to such party or to others not bound by a duty
of confidentiality or unless such information becomes publicly available through
no fault of such party, unless use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the transactions contemplated hereby or unless the
furnishing or use of such information is required by or necessary or appropriate
in connection with legal proceedings. If the Merger is not consummated, each
party will return or destroy as much of such written information as may
reasonably be requested.
5.3 Registration Statement, Proxy Statement and Shareholder
Approval. The Board of Directors of SWVA will duly call and will hold a meeting
of its shareholders as soon as practicable for the purpose of approving the
Merger (the "SWVA Shareholders' Meeting") and, subject to the fiduciary duties
of the Board of Directors of SWVA (as determined after consultation with its
counsel and as presented in writing), SWVA shall use its best efforts to solicit
and obtain votes of the holders of its Common Stock in favor of the Merger and
will comply with the provisions in its Articles of Incorporation and Bylaws
relating to the call and holding of a meeting of shareholders for such purpose;
and SWVA shall, at its own discretion, recess or adjourn the meeting if such
recess or adjournment is deemed by SWVA to be necessary or desirable. FNB and
SWVA agree to cooperate in the preparation of the Registration Statement to be
filed by FNB with the SEC (the "Registration Statement") in connection with the
issuance of FNB Common Stock in the Merger, including the proxy statement and
other proxy material of SWVA constituting a part thereof (the "Proxy
Statement"), and FNB will use its best efforts to have the Registration
Statement declared effective as promptly as possible. When the Registration
Statement or any post-effective amendment or supplement thereto shall become
effective, and at all times subsequent to such effectiveness, up to and
including the date of the SWVA Shareholders' Meeting, such Registration
Statement and all amendments or supplements thereto, with respect to all
information set forth therein furnished or to be furnished by SWVA relating to
the SWVA Companies and by FNB relating to the FNB Companies, (i) will comply in
all material respects with the provisions of the Securities Act of 1933 and any
other applicable statutory or regulatory requirements, including applicable
state blue-sky and securities laws, and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading; provided, however, in no event shall any party hereto be liable for
any untrue statement of a material fact or omission to state a material fact in
29
the Registration Statement made in reliance upon, and in conformity with,
written information concerning another party furnished by such other party
specifically for use in the Registration Statement.
5.4 Operation of the Business of FNB and SWVA. From the date hereof to
the Effective Date, FNB and SWVA will operate their respective businesses
substantially as presently operated and only in the ordinary course, and,
consistent with such operation, they will use their best efforts to preserve
intact their relationships with persons having business dealings with them.
Without limiting the generality of the foregoing, and except as provided in
Section 5.12, neither FNB nor SWVA will, without the prior written consent of
the other, which consent shall not be unreasonably withheld:
(a) Make any change in its authorized capital stock, or issue
or sell any additional shares of, securities convertible into or exchangeable
for, or options (excluding those options provided for in the 2000 FNB
Corporation Incentive Stock Compensation Plan, but the number of such options to
be issued shall not exceed 50,000), warrants or rights to purchase, its capital
stock, nor shall it purchase, redeem or otherwise acquire any of its outstanding
shares of capital stock, provided that FNB or SWVA may issue shares of common
stock pursuant to options granted or issued prior to the date hereof and FNB may
repurchase FNB Common Stock consistent with past practices;
(b) Voluntarily make any changes in the composition of its
officers, directors or other key management personnel;
(c) Make any change in the compensation or title of any
officer, director or key management employee or make any change in the
compensation or title of any other employee, other than permitted by current
employment policies in the ordinary course of business, any of which changes
shall be reported promptly to the other party provided, however, that on or
before the Effective Date, SWVA may extend the term of the employment agreements
of X. X. Xxxxxxxx and Xxxxxxx Xxxxxx for terms not to exceed 36 months and 12
months from the Effective Date, respectively;
(d) Enter into any bonus, incentive compensation, stock
option, deferred compensation, profit sharing, thrift, retirement, pension,
group insurance or other benefit plan or any employment or consulting agreement
(excluding calendar year bonuses and 2001 Sales Incentives consistent with past
practice);
(e) Incur any obligation or liability (whether absolute or
contingent, excluding suits instituted against it), make any pledge, or encumber
any of its assets, nor dispose of any of its assets in any other manner, except
in the ordinary course of its business and for adequate value, or as otherwise
specifically permitted in this Agreement, and excluding FHLB borrowings
consistent with past practice;
(f) Except as permitted by Section 5.4(a) hereof, issue or
contract to issue any shares of its Common Stock, options for shares of its
Common Stock, or securities exchangeable for or convertible into such shares;
30
(g) Knowingly waive any right to substantial value;
(h) Enter into material transactions otherwise than in the
ordinary course of its business;
(i) Alter, amend or repeal its Bylaws or Articles of
Incorporation (excluding any amendment with respect to SVSB in order to add one
director to SVSB's Board); or
(j) Propose or take any other action which would make any
representation or warranty in Section 4.1 or Section 4.2 hereof untrue.
5.5 Dividends. FNB and SWVA may declare and pay only regular periodic
cash dividends in the ordinary course of business and consistent with past
practice from the date of this Agreement through the Effective Date. Any
dividend increase by SWVA or FNB in excess of $.01 per share must be approved by
the other.
5.6 No Solicitation. Without the prior written consent of FNB, SWVA
shall not, and shall cause its officers, directors, agents, advisors and
affiliates not to, solicit or encourage inquires or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, an Acquisition Transaction (as hereinafter defined);
provided, however, that nothing contained in this Section 5.6 shall prohibit the
Board of Directors of SWVA from furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited, written bona fide proposal regarding an Acquisition Transaction if,
and only to the extent that (A) the Board of Directors of SWVA concludes in good
faith, after consultation with and consideration of the written advice of
outside counsel, that the failure to furnish such information or enter into such
discussions or negotiations would constitute a breach of its fiduciary duties to
shareholders under applicable law, and (B) the Board of Directors of SWVA
concludes in good faith that the proposal regarding the Acquisition Transaction
contains an offer of consideration that is superior to the consideration set
forth herein. SWVA shall immediately notify FNB orally and in writing of its
receipt of any such proposal or inquiry, of the material terms and conditions
thereof, and, if possible, of the identity of the person making such proposal or
inquiry. For purposes of this Agreement, "Acquisition Transaction" means any
merger, consolidation, share exchange, joint venture, business combination or
similar transaction or any purchase of all or any material portion of the assets
of an entity.
5.7 Regulatory Filings. FNB and SWVA shall prepare jointly all
regulatory filings required to consummate the transactions contemplated by the
Agreement and the Plan of Merger and submit the filings for approval with the
Federal Reserve Board and the SCC, and any other governing regulatory authority,
as soon as practicable after the date hereof. FNB and SWVA shall use their best
efforts to obtain approvals of such filings.
31
5.8 Public Announcements. Each party will consult with the other before
issuing any press release or otherwise making any public statements with respect
to the Merger and shall not issue any such press release or make any such public
statement prior to such consultations except as may be required by law.
5.9 Notice of Breach. FNB and SWVA will give written notice to the
other promptly upon becoming aware of the impending or threatened occurrence of
any event which would cause or constitute a breach of any of the
representations, warranties or covenants made to the other party in this
Agreement and will use its best efforts to prevent or promptly remedy the same.
5.10 Accounting Treatment. FNB and SWVA acknowledge that the Merger
shall be accounted for as a purchase under generally accepted accounting
principles.
5.11 Merger Consummation. Subject to the terms and conditions of this
Agreement, each party shall use its best efforts in good faith to take, or cause
to be taken, all actions, and to do or cause to be done all things necessary,
proper or desirable, or advisable under applicable laws, as promptly as
practicable so as to permit consummation of the Merger at the earliest possible
date, consistent with Section 1.5 herein, and to otherwise enable consummation
of the transactions contemplated hereby and shall cooperate fully with the other
parties hereto to that end, and each of FNB and SWVA shall use, and shall cause
each of their respective subsidiaries to use, its best efforts to obtain all
consents (governmental or other) necessary or desirable for the consummation of
the transactions contemplated by this Agreement.
5.12 FNB Acquisition Transaction. Nothing contained in this Agreement
shall prevent FNB from entering into an Acquisition Transaction with a third
party so long as FNB and its successors comply with the terms of the Merger with
SWVA.
5.13 Affiliate Agreements. SWVA shall use its best efforts to cause
each director, executive officer and other person who is an "affiliate" of SWVA
under Rule 145 of the Securities Act to deliver to FNB as soon as practicable,
and prior to the mailing of the Proxy Statement/Prospectus, executed letter
agreements in the form of Exhibit C attached hereto providing that such person
will comply with Rule 145 and will vote in favor of the Merger.
ARTICLE 6
Additional Agreements
6.1 Conversion of Stock Options. (a) On the Effective Date, all rights
with respect to SWVA Common Stock pursuant to stock options ("SWVA Options")
granted by SWVA under a SWVA stock option plan which are outstanding on the
Effective Date, whether or not they are exercisable, shall be converted into and
become rights with respect to FNB Common Stock, and FNB shall assume each SWVA
Option in
32
accordance with the terms of the stock option plan under which it was issued and
the stock option agreement by which it is evidenced. From the Effective Date
forward, (i) each SWVA Option assumed by FNB may be excised solely for shares of
FNB Common Stock, (ii) the number of shares of FNB Common Stock subject to each
SWVA Option shall be equal to the number of shares of SWVA Common Stock subject
to such option immediately prior to the Effective Date multiplied by the
Exchange Ratio and (iii) the per share exercise price under each such SWVA
Option shall be adjusted by dividing the per share exercise price under each
such option by the Exchange Ratio and rounding down to the nearest cent;
provided, however, that the terms of each SWVA Option shall, in accordance with
its terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar transaction after the
Effective Date. It is intended that the foregoing assumption shall be undertaken
in a manner that will not constitute a "modification" as defined in Section 425
of the Code, as to any stock option which is an "incentive stock option." Shares
of FNB Common Stock issuable upon exercise of SWVA Options shall be covered by
an effective registration statement on Form S-8, and FNB shall use its
reasonable best efforts to file a registration statement on Form S-8 covering
such shares as soon as possible after the Effective Date, but in no event, no
later than 30 days after the Effective Date.
6.2 Benefit Plans.
(a) Effective with the consummation of the Merger, the
Management Stock Bonus Plan of SVSB shall be terminated and all unawarded shares
(and the Merger Consideration attributable thereto) shall be forfeited to SVSB.
In addition, the SVSB ESOP (as defined in Section 6.2(c)) shall be continued and
then merged as provided Section 6.2(c) below, the SVSB Defined Benefit Plan (as
defined in Section 6.2(d)) shall be continued and then terminated as provided
Section 6.2(d) below, and participation in the FNB 401(k) plan shall be made
available to SVSB employees as provided Section 6.2(e) below. Otherwise, after
consummation of the Merger, at the option of FNB (which may be applied on a plan
or program by plan or program basis) and subject to FNB's best efforts,
employees of SWVA and SVSB shall be entitled to participate either (x) in one or
more combined plans or programs of FNB and SWVA on substantially the same basis
as similarly situated employees of FNB or First National (taking into account
all applicable factors, including but not limited to position, employment
classification, age, length of service, pay, part time or full time status, and
the like, as well as changes made in such plans and programs in the future), or
(y) in plans and programs which, subject to changes required by applicable laws
or by limitations imposed by insurance companies providing plan benefits, are
comparable to (or a continuation of), and provide for participation on
substantially the same basis, as SWVA's employee benefit plans and programs
currently in effect. If and to the extent option (x) is effectuated:
(1) (A) Coverage under FNB's plans and programs shall be
available to each employee of SWVA and SVSB and his or her dependents without
regard to any waiting period, evidence or requirement of insurability, actively
at work requirement or preexisting condition exclusion or limitation (except to
the extent and in
33
the manner any such waiting period, evidence or requirement of insurability,
actively at work requirement or exclusion or limitation applies to such employee
or dependents immediately prior to the effectuation of option (x)) and (B)
amounts paid or payable by employees for health care expenses for the portion of
the annual benefit period prior to the date as of which option (x) becomes
effective shall be credited in satisfaction of any deductible requirement and
any out-of-pocket limit for the balance of the annual benefit period which
includes such date.
(2) FNB shall treat service with SWVA and SVSB before the
consummation of the Merger as service with FNB for purposes of eligibility to
begin participation and vesting (but not benefit accruals, except in the case of
a continuation of any plan maintained by SWVA or SVSB) for purposes of all
employee benefit and seniority based plans and programs, including but not
limited to annual, sick and personal leave accruing following the consummation
of the Merger.
Nothing contained in this Section is intended to provide any third party
beneficiary rights in any current or former employee, or any spouse or dependent
thereof, of SWVA, SVSB, FNB or any FNB Subsidiary, except as otherwise required
by ERISA or other applicable law (determined without regard to third party
beneficiary contract law).
(b) Except to extent individually negotiated replacement
contracts or settlement agreements are entered into, FNB shall honor all
employment severance, consulting and other compensation contracts and agreements
Previously Disclosed and executed in writing by SWVA on the one hand and any
individual current or former director, officer or employee thereof on the other
hand, copies of which have been previously delivered by SWVA to FNB.
(c) As of the Effective Date, all SWVA and SVSB employees who
are participants in the SVSB Employee Stock Ownership Plan (the "SVSB ESOP")
shall be fully vested in their accrued benefits under the SVSB ESOP, and the
SVSB ESOP shall be continued and shall be merged into the FNB Employee Stock
Ownership Plan no later than two years after the Merger, with participation in
the FNB Employee Stock Ownership Plan extended to eligible employees of SVSB as
of the time of such plan merger. FNB shall treat service with SWVA and SVSB
before the consummation of the Merger as service with FNB for purposes of
eligibility to begin participation, vesting and future benefit accrual under its
Employee Stock Ownership Plan.
(d) As of the Effective Date, all SWVA and SVSB employees who
are participants in the SWVA defined benefit plan maintained through the
Financial Institutions Retirement Fund (the "SWVA Defined Benefit Plan") shall
be fully vested in their accrued benefits under the SWVA Defined Benefit Plan,
and all necessary steps shall be taken to cause the SWVA Defined Benefit Plan to
be terminated no later than the end of its plan year in which the Merger occurs,
in accordance with applicable law. If the SWVA Defined Benefit Plan is fully
funded on termination, any funding surplus shall be
34
used to increase accrued benefits on a basis which is nondiscriminatory under
the IRC in a manner mutually agreeable to FNB, SWVA and SVSB.
(e) Effective no later than the beginning of the first plan
year of FNB's 401(k) plan commencing after the effective date of the termination
of the SWVA Defined Benefit Plan, FNB shall make participation in its 401(k)
plan available to the eligible employees of SWVB. FNB shall treat service with
SWVA and SVSB before the consummation of the Merger as service with FNB for
purposes of eligibility to begin participation, vesting and future benefit
accrual under its 401(k) plan.
6.3 Indemnification. Following the Effective Date, FNB shall indemnify
and hold harmless any person who has rights to indemnification from SWVA, to the
maximum extent permitted under Virginia law and in accordance with SWVA's
Articles of Incorporation or Bylaws, as in effect on the date of this Agreement,
to the extent legally permitted to do so, with respect to matters occurring on
or prior to the Effective Date. FNB further agrees that any such person who has
rights to indemnification pursuant to this Section 6.3 is expressly made a third
party beneficiary of this Section 6.3 and may directly, in such person's
personal capacity, enforce such rights through an action at law or in equity or
through any other manner or means of redress allowable under Virginia law to the
same extent as if such person were a party hereto. Without limiting the
foregoing, in any case in which corporate approval may be required to effectuate
any indemnification, FNB shall direct, at the election of the party to be
indemnified, that the determination of permissibility of indemnification shall
be made by independent counsel mutually agreed upon between FNB and the
indemnified party. Upon written application, and in accordance with, and to the
extent permitted by, Virginia law, FNB will advance reasonable expenses to any
person who has rights to indemnification from SWVA. FNB shall use its reasonable
best efforts to maintain SWVA's existing directors' and officers' liability
policy, or some other policy, including FNB's existing policy, providing at
least comparable coverage, covering persons who are currently covered by such
insurance of SWVA for a period of six years after the Effective Date on terms no
less favorable than those in effect on the date hereof.
ARTICLE 7
Conditions to the Merger
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each of FNB and SWVA to effect the Merger and the
other transactions contemplated by this Agreement shall be subject to the
fulfillment or waiver at or prior to the Effective Date of the following
conditions:
(a) Shareholder Approval. Shareholders of SWVA shall have
approved all matters relating to this Agreement and the Merger required to be
approved by such shareholders in accordance with Virginia law.
35
(b) Regulatory Approvals. This Agreement and the Plan of
Merger shall have been approved by the Federal Reserve, the SCC, the Office of
Thrift Supervision and any other regulatory authority whose approval is required
for consummation of the transactions contemplated hereby, and such approvals
shall not have imposed any condition or requirement which would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement as to render inadvisable the consummation of the
Merger in the reasonable opinion of the Board of Directors of FNB or SWVA.
(c) Registration Statement. The Registration Statement
shall have been declared effective and shall not be subject to a stop order or
any threatened stop order.
(d) Tax Opinion. FNB and SWVA shall have received an
opinion of Xxxx & Valentine, L.L.P., or other counsel reasonably satisfactory to
FNB and SWVA, to the effect that the Merger will constitute a merger within the
meaning of Section 368 of the Internal Revenue Code and that no gain or loss
will be recognized by the shareholders of SWVA to the extent they receive FNB
Common Stock solely in exchange for their SWVA Common Stock in the Merger.
(e) Opinions of Counsel. SWVA shall have delivered to FNB
and FNB shall have delivered to SWVA opinions of counsel, dated as of the
Effective Date, as to such matters as they may each reasonably request with
respect to the transactions contemplated by this Agreement and in a form
reasonably acceptable to each of them.
(f) Legal Proceedings. Neither FNB nor SWVA shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
(g) Amendment of SVSB ESOP. Prior to Merger, SVSB shall
have amended the SVSB ESOP (as defined in Section 6.2(c)) to eliminate the
provision thereof (i.e., section 8.2(c)) requiring satisfaction of any
acquisition loan, allocation to participants of the remaining value of
collateral not used to satisfy any acquisition loan, and termination of such
plan on the consummation of a transaction such as the Merger.
7.2 Conditions to Obligations of FNB. The obligations of FNB to effect
the Merger shall be subject to the fulfillment or waiver at or prior to the
Effective Date of the following additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties contained herein of SWVA shall be true and
correct in all material respects as of the date of this Agreement and upon the
Effective Date with the same effect as though all such representations and
warranties had been made on the Effective Date, except (i) for any such
representations and warranties made as of a specified date, which shall be true
and correct as of such date, (ii) as expressly contemplated by this
36
Agreement, or (iii) for representations and warranties the inaccuracies of which
relate to matters that, individually or in the aggregate, do not materially
adversely affect the Merger and the other transactions contemplated by this
Agreement and FNB shall have received a certificate or certificates signed by
the Chief Executive Officer and Chief Financial Officer of SWVA dated the
Effective Date, to such effect.
(b) Performance of Obligations. SWVA shall have performed in
all material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and FNB shall have received a certificate
signed by the Chief Executive Officer of SWVA to that effect.
7.3 Conditions to Obligations of SWVA. The obligations of SWVA to
effect the Merger shall be subject to the fulfillment or waiver at or prior to
the Effective Date of the following additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties contained herein of FNB shall be true and correct
in all material respects as of the date of this Agreement and upon the Effective
Date with the same effect as though all such representations and warranties had
been made on the Effective date, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, (ii) as expressly contemplated by this Agreement, or (iii) for
representations and warranties the inaccuracies of which relate to matters that,
individually or in the aggregate, do not materially adversely affect the Merger
and the other transactions contemplated by this Agreement and SWVA shall have
received a certificate or certificates signed by the Chief Executive Officer and
Chief Financial Officer of FNB dated the Effective Date, to such effect.
(b) Performance of Obligations. FNB shall have performed in
all material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and SWVA shall have received a
certificate signed by Chief Executive Officer of FNB to that effect.
(c) Investment Banking Letter. SWVA shall have received a
written opinion in form and substance satisfactory to SWVA from RP Financial
addressed to SWVA and dated the date the Proxy Statement/Prospectus is mailed to
shareholders of SWVA, to the effect that the terms of the Merger, including the
Exchange Ratio, are fair, from a financial point of view, to SWVA.
ARTICLE 8
Termination
8.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement and the Plan of
Merger by the shareholders of SWVA, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Date:
37
(a) By the mutual consent of the Board of Directors of each
of FNB and SWVA;
(b) By the respective Boards of Directors of FNB or SWVA if
the conditions set forth in Section 7.1 have not been met or waived by FNB and
SWVA;
(c) By the Board of Directors of FNB if the conditions set
forth in Section 7.2 have not been met or waived by FNB;
(d) By the Board of Directors of SWVA if the conditions set
forth in Section 7.3 have not been met or waived by SWVA;
(e) By the respective Boards of Directors FNB or SWVA if the
Merger is not consummated by June 1, 2001.
(f) By the Board of Directors of SWVA, within five business
days after the end of the Measurement Period (as defined in Section 2.1), if the
Market Value (as defined in Section 2.1) is less than $14.00; provided, however,
that if within five calendar days after receipt of notice of termination
pursuant to this paragraph 8.1(f), FNB provides written notice to SWVA that it
shall increase the Exchange Ratio to an amount (rounded to the nearest
one-thousandth) so as to provide the same Stock Consideration that would be
received were the Market Value equal to $14.00 per share, in which case no
termination shall be deemed to have occurred pursuant to this Section 8.1(f) and
this Agreement shall remain in full force and effect in accordance with its
terms (except the Exchange Ratio shall have been so modified).
(g) By the Board of Directors of FNB, within five business
days after the end of the Measurement Period (as defined in Section 2.1), if the
Market Value (as defined in Section 2.1) is greater than $20.00; provided,
however, that if within five calendar days after receipt of notice of
termination pursuant to this paragraph 8.1(g), SWVA provides written notice to
FNB that it will agree to decrease the Exchange Ratio to an amount (rounded to
the nearest one-thousandth) so as to provide the same Stock Consideration that
would be received were the Market Value equal to $20.00 per share, in which case
no termination shall be deemed to have occurred pursuant to this Section 8.1(g)
and this Agreement shall remain in full force and effect in accordance with its
terms (except the Exchange Ratio shall have been so modified); and further
provided, however, that (i) if the Market Value (as defined in Section 2.1) is
greater than $20.00, and (ii) FNB shall have, prior to the Effective Date of the
Merger, publicly announced that it has agreed to a transaction in which control
of FNB will be acquired by another entity in an Acquisition Transaction, the
Board of Directors of FNB may not terminate the Merger pursuant to this Section
8.1(g) and the Exchange Ratio shall be 1.083.
8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement and the Merger pursuant to Section 8.1, this
Agreement shall become
38
void and have no effect, except that (i) the last sentence of Section 5.2 and
all of Sections 5.8 and 8.4 shall survive any such termination and abandonment
and (ii) no party shall be relieved or released from any liability arising out
of an intentional breach of any provision of this Agreement.
8.3 Non-Survival of Representations, Warranties and Covenants.
Except for Sections 1.3, 1.4, Article 2, Article 3, 5.4(c), 6.2, 6.3 and 8.4 of
this Agreement, none of the respective representations and warranties,
obligations, covenants and agreements of the parties shall survive the Effective
Date, provided that no such representations, warranties, obligations, covenants
and agreements shall be deemed to be terminated or extinguished so as to deprive
FNB or SWVA (or any director, officer, or controlling person thereof) of any
defense in law or equity which otherwise would be available against the claims
of any person, including without limitation any shareholder or former
shareholder of either FNB or SWVA.
8.4 Expenses. The parties provide for the payment of expenses as
follows:
(a) Except as provided below, each of the parties shall bear
and pay all costs and expenses incurred by it in connection with the
transactions contemplated herein, including fees and expenses of its own
financial consultants, accountants and counsel, except that printing expenses
shall be shared equally between FNB and SWVA.
(b) In the event FNB terminates this Agreement based on the
occurrence of a Termination Event (as defined below), SWVA shall pay to FNB a
termination fee of Two Hundred Fifty Thousand Dollars ($250,000.00) in cash
within five business days after written notice of such termination. For the
purposes of this Agreement, a "Termination Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) SWVA, without having received FNB's prior written
consent, shall have entered into an agreement with any person
to (A) acquire, merger or consolidate, or enter into any
similar transaction, with SWVA, (B) purchase, lease or
otherwise acquire all or substantially all of the assets of
SWVA, or (C) purchase or otherwise acquire directly from SWVA
securities representing 10% or more of the voting power of
SWVA;
(ii) any person shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 20%
or more of the outstanding shares of SWVA Common Stock after
the date hereof (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in
Section 13(d) of the Exchange Act, and the regulations
promulgated thereunder); or
39
(iii) any person shall have made a bona fide proposal
to SWVA by public announcement or written communication that
is or becomes the subject of public disclosure to acquire SWVA
by merger, shares exchange, consolidation, purchase of all or
substantially all of its assets or any other similar
transaction, and following such bona fide proposal the
shareholders of SWVA vote not to approve the Agreement.
Notwithstanding the foregoing, SWVA shall not be obligated to pay to FNB the
termination fee described in this Section 8.4(b) in the event that at or prior
to such time as such fee becomes payable (i) FNB and SWVA validly terminate this
Agreement pursuant to Section 8.1(a), (ii) FNB or SWVA validly terminates this
Agreement pursuant to Sections 8.1(b) [other than as a result of such
Termination Event], 8.1(c) [other than as a result of such Termination Event],
8.1(d) [other than as a result of such Termination Event] or 8.1(e) [other than
as a result of such Termination Event]. Upon payment of the termination fee and
any other amounts that may be due by SWVA to FNB hereunder, this Agreement shall
terminated as provided in Section 8.2.
(c) If this Agreement is terminated by FNB or SWVA because of
a willful and material breach by the other of any representation, warranty,
covenant, undertaking or restriction set forth herein, and provided that the
terminating party shall not have been in breach (in any material respect) of any
representation and warranty, covenant, undertaking or restriction contained
herein, then the breaching party shall bear and pay all such reasonable and
documented costs and expenses of the other party actually incurred, including
fees and expenses of consultants, investment bankers, accountants, counsel,
printers, and persons involved in the transactions contemplated by this
Agreement, including the preparation of the Registration Statement and the Joint
Proxy Statement.
(d) Except for the payment of the termination fee which shall
be paid as required by Section 8.4(b), final settlement with respect to the
payment of other fees and expenses by the parties shall be made within thirty
(30) days after the termination of this Agreement.
ARTICLE 9
General Provisions
9.1 Entire Agreement. This Agreement contains the entire agreement
among FNB and SWVA with respect to the Merger and the related transactions and
supersedes all prior arrangements or understandings with respect thereto.
9.2 Waiver and Amendment. Any term or provision of this Agreement may
be waived in writing at any time by the party which is, or whose shareholders
are, entitled to the benefits thereof, and this Agreement may be amended or
supplemented by written instructions duly executed by the parties hereto at any
time, whether before or after the
40
meetings of SWVA shareholders referred to in Section 7.1(a) hereof, except
statutory requirements and requisite approvals of shareholders and regulatory
authorities.
9.3 Descriptive Headings. Descriptive headings are for convenience only
and shall not control or affect the meaning and construction of any provisions
of this Agreement.
9.4 Governing Law. Except as required otherwise or otherwise indicated
herein, this Agreement shall be construed and enforced according to the laws of
the Commonwealth of Virginia.
9.5 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally,
telecopied or sent by recognized overnight courier service or registered or
certified mail, postage prepaid, addressed as follows:
If to FNB:
J. Xxxxxx Xxxxx, Xx. , President
FNB Corporation
000 Xxxxx Xxxxx
X. X. Xxx 000
Xxxxxxxxxxxxxx, Xxxxxxxx 00000
(Tel. 000-000-0000)
(Fax: 000-000-0000)
Copies to:
Xxxxx X. Xxxxx, Esquire
First National Bank
P. O. Xxx 000
Xxxxxxxxxxxxxx, Xxxxxxxx 00000
(Tel. 000-000-0000)
(Fax: 000-000-0000)
Xxxx X. Xxxxxxx, III, Esquire
Xxxx & Valentine, L.L.P.
0000 Xxxx Xxxx Xxxxxx, 00xx Floor (23219)
P. O. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
(Tel. 000-000-0000)
(Fax: 000-000-0000)
41
If to SWVA:
X. X. Xxxxxxxx, President
SWVA Bancshares, Inc.
000 Xxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxxx 00000-0000
(Tel: 000-000-0000)
(Fax: 000-000-0000)
Copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxxxx, Spidi & Xxxxx, PC
0000 X Xxxxxx, X.X., Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
(Tel. 000-000-0000)
(Fax: 000-000-0000)
9.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts together
shall constitute one and the same agreement.
9.7 Severability. In the event any provisions of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof. Any provision of this Agreement held invalid or unenforceable only in
part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable. Further, the parties agree that a court of competent
jurisdiction may reform any provision of this Agreement held invalid or
unenforceable so as to reflect the intended agreement of the parties hereto.
9.8 Subsidiaries. All representations, warranties, and covenants
herein, where pertinent, include and shall apply to the Subsidiaries of the
party making such representations, warranties, and covenants.
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seals to be affixed hereto, all as of the dates first written above.
FNB Corporation
By: /s/ J. Xxxxxx Xxxxx, Xx.
-----------------------------------------------
J. Xxxxxx Xxxxx, Xx.
President and Chief Executive Officer
ATTEST:
/s/Xxxxx Xxxxx
--------------
Secretary
SWVA Bancshares, Inc.
By: /s/ X. X. Xxxxxxxx
-----------------------------------------------
X. X. Xxxxxxxx
President and Chief Executive Officer
ATTEST:
/s/Xxxxxxx X. Xxxxxx
--------------------
Secretary
43
